SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 1997
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from _______ to _______
Commission file number 1-12271
CARSON, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 06-1428605
(State or other jurisdiction of incorporation (I.R.S. Employer Identification
or organization) Number)
64 Ross Road, Savannah Industrial Park
Savannah, Georgia 31405
(Address, including zip code, of principal executive offices)
Registrant's telephone number, including area code:(912) 651-3400
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes _x__ No
At May 1, 1997, 4,996,568 shares of the registrant's Class A Common Stock,
par value $0.01 per share, 1,859,677 shares of the registrant's Class B Common
Stock, par value $0.01 per share, and 8,127,937 shares of the registrant's Class
C Common Stock, par value $0.01 per share were outstanding.
<PAGE>
CARSON, INC.
INDEX
Part I. Financial Information Page
Item 1.
Condensed Consolidated Balance Sheets
March 31, 1997 and December 31, 1996............................... 3
Condensed Consolidated Statements of Operations
Three Months Ended March 31, 1997 and 1996......................... 4
Condensed Consolidated Statements of Cash Flow
Three Months Ended March 31, 1997 and 1996......................... 5
Notes to Condensed Consolidated Financial Statements............... 6-7
Item 2.
Management's Discussion and Analysis of Financial Condition
and Results of Operations.......................................... 8-11
Part II. Other Information .............................................. 12
Signatures................................................................. 13
2
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<TABLE>
CARSON, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1997 AND DECEMBER 31, 1996
(In thousands)
ASSETS
March 31, 1997 December 31, 1996
<S> <C> <C>
(Unaudited)
CURRENT ASSETS:..................................................
Cash and cash equivalents..................................... $ 3,141 $ 4,191
Accounts receivable (less allowance for doubtful accounts of
$630 and $614 at March 31, 1997 and December 31, 1996,
respectively)..... 15,159 15,117
Inventories................................................... 15,434 10,749
Other current assets.......................................... 697 1,346
-------- --------
Total current assets....................................... 34,431 31,403
PROPERTY, PLANT AND EQUIPMENT - Net of accumulated depreciation.. 16,067 15,089
INVESTMENT IN AM COSMETICS....................................... 3,283 3,187
GOODWILL......................................................... 45,513 45,801
OTHER............................................................ 3,401 2,151
---------- --------
$102,695 $97,631
======== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable.............................................. $ 6,613 $ 7,065
Accrued expenses.............................................. 3,498 5,784
Income taxes payable.......................................... 869 --
Current maturities of long-term debt.......................... 2,600 2,600
-------- --------
Total current liabilities.................................. 13,580 15,449
LONG-TERM DEBT................................................... 28,964 24,501
MINORITY INTEREST IN SUBSIDIARY.................................. 2,060 1,664
DEFERRED INCOME TAXES AND OTHER LIABILITIES...................... 1,735 1,700
STOCKHOLDERS' EQUITY:
Preferred stock............................................... - -
Common stock.................................................. 150 150
Paid-in capital............................................... 62,901 62,418
Accumulated deficit........................................... (4,895) (5.577)
Notes receivable from employee shareholders, net of discount. (1,386) (1,365)
Foreign currency translation adjustment....................... (414) (1,309)
--------- ----------
Total stockholders' equity................................. 56,356 54,317
--------- ----------
$102,695 $97,631
======== =======
See notes to condensed consolidated financial statements.
</TABLE>
3
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CARSON, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(In thousands, except per share data)
Three Months Ended March 31,
1997 1996
-------- ---------
NET SALES.................................... $17,932 $17,792
COST OF GOODS SOLD........................... 7,880 7,806
-------- --------
Gross profit.............................. 10,052 9,986
---------- --------
EXPENSES:
Selling................................... 5,724 3,452
General and administrative................ 2,729 3,141
----- -----
....................................... 8,453 6,593
-------- --------
OPERATING INCOME............................. 1,599 3,393
INTEREST EXPENSE............................. (604) (1,847)
OTHER INCOME (EXPENSE)....................... 223 147
--- ---
INCOME BEFORE INCOME TAXES................... 1,218 1,693
PROVISION FOR INCOME TAXES................... 536 825
--------- --------
NET INCOME................................... $ 682 $ 868
======= ========
NET INCOME PER SHARE......................... $ 0.05 $ 0.07
======== ========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING........................ 14,984 11,871
========= =======
See notes to condensed consolidated financial statements.
4
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CARSON, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(In thousands)
Three Months Ended March 31,
1997 1996
---------- ---------
OPERATING ACTIVITIES:
Net income................................... $ 682 $ 868
------ --------
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization............. 544 555
Bad debt provision........................ 112 109
Foreign currency translation adjustment... 895 59
Provision for deferred income taxes....... (935) 409
Other, net................................ 46 321
Change in operating assets and liabilities, net
of acquisitions:
Accounts receivable.................... (154) (1,928)
Inventories............................ (4,685) (7)
Other current assets................... 1,021 (1,002)
Accounts payable....................... (518) 955
Income taxes payable .................. 869 --
Accrued expenses....................... (2,286) (571)
------- -----
Total adjustments.................... (5,091) (1,100)
------- -------
Net cash used in operating activities (4,409) (232)
------- -----
INVESTING ACTIVITIES:
Purchase of property, plant, and equipment... (1,188) (861)
Acquisition of business, net of cash acquired 107 --
------- ----------
Net cash used in investing activities.. (1,081) (861)
-------- ---------
FINANCING ACTIVITIES:
Proceeds from issuance of long-tem debt...... 5,113 2,156
Principal payment on long-term debt.......... (650) --
Other, net................................... (23) 112
--------- --------
Net cash provided by financing activities. 4,440 2,268
------- -------
NET CHANGE IN CASH AND CASH EQUIVALENTS......... (1,050) 1,175
CASH AND CASH EQUIVALENTS - Beginning of period 4,191 378
------ ------------
CASH AND CASH EQUIVALENTS - End of period....... $ 3,141 $ 1,553
======= =========
See notes to consolidated financial statements.
5
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CARSON, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. Basis of Presentation
The accompanying condensed consolidated interim financial statements of
Carson, Inc. (the "Company") presented herein have been prepared by the Company,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in annual financial statements prepared in accordance with generally
accepted accounting principles have been omitted from these consolidated
financial statements pursuant to applicable rules and regulations of the
Securities and Exchange Commission. These financial statements should be read in
conjunction with the audited Consolidated Financial Statements and the notes
thereto of the Company's 1996 Transition Report on Form 10-K. In the opinion of
management, the accompanying unaudited financial statements contain all normal
recurring adjustments necessary to present fairly the Company's financial
position, results of operations and cash flows at the dates and for the periods
presented. Interim results of operations are not necessarily indicative of the
results to be expected for a full year. Certain prior period amounts have been
reclassified to conform with the current period presentation.
2. Inventories
Inventories are summarized as follows (in thousands):
March 31, 1997 December 31, 1997
-------------- ------------------
Raw materials......................9,565 7,017
Work-in-process....................1,730 1,236
Finished goods.....................4,139 2,496
------ --------
$10,749 $15,434
======= =======
3. Acquisitions
Effective February 1, 1997, the Company's South African subsidiary,
Carson Holdings Ltd., acquired the assets of Nu-Me in a transaction involving
the issuance of 500,000 shares of Carson Holdings Ltd. stock in a transaction
valued at approximately $767,000. In addition, Carson Holdings Ltd acquired the
assets of Restore Plus in a cash transaction for $111,700. These acquisitions
are accounted for under the purchase method of accounting.
During March 1997, the Company entered into an Asset Purchase Agreement
with Conopco, Inc. d/b/a Chesebrough-Pond's USA Co. in order to acquire the
rights to manufacture and market Cutex in the United States. Cutex is the
leading brand of nail polish remover and is also a line of nail enamels. The
purchase price approximated $41.0 million with funds provided by additional
long-term debt, and the transaction was completed on April 30, 1997. Total
revenues of Chesebrough-Pond's USA - Cutex approximated $16.7 million for the
most recent 12 month period. This acquisition will be accounted for under the
purchase method of accounting.
During March 1997, the Company entered into an Asset Repurchase Agreement
with Jean Philippe Fragrances, Inc. In connection with the termination of the
license agreement between Conopco, Inc. and Jean Philippe Fragrances, Inc. by
Carson as successor in interest to Conopco, Inc., Carson acquired certain assets
of Jean Philippe Fragrances, Inc. used in the packaging, distributing and
selling of nail enamel and nail care treatment products, nail care implements
and lipstick under the trademark Cutex in the United States and Puerto Rico on
April 30, 1997. Immediately upon execution of the Jean Philippe Repurchase
agreement on April 30, 1997, the license agreement with Jean Philippe
Frangrances, Inc. was terminated.
During April 1997, the Company completed the acquisition of the Let's Jam
product line from New Image Laboratories, Inc. This acquisition added one of the
leading hair care maintenance brands in the ethnic retail market to the
Company's portfolio of brands. The purchase price was approximately $5.6 million
cash with $4.9 million of funds provided by additional long-term debt. The
remaining $0.7 million of the purchase price has been withheld contingent upon
certain performance by New Image Laboratories, Inc. This acquisition will be
accounted for under the purchase method of accounting.
6
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4. New Accounting Pronouncement
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards ("SFAS") No. 128, "Earnings Per Share" in February 1997.
SFAS No. 128 replaces the presentation of primary earnings per share with a
presentation of basic earnings per share and requires dual presentation of basic
and diluted earnings per share on the face of the income statement for all
entities with complex capital structures. SFAS No. 128 is effective for both
interim and annual periods ending after December 15, 1997. The Company currently
has a simple capital structure and therefore expects no material effect from the
adoption of SFAS No. 128.
5. Credit Facility
On April 30, 1997, the Company entered into an Amended and Restated
Credit Agreement with Banque Indosuez, New York Branch, as agent, and the
lenders named therein. The Amended and Restated Credit Agreement replaced the
Company's existing $40 million senior credit facility with a $100 million senior
credity facility consisting of $25 million in Term A loans maturing in April
2002, $50 million in Term B loans maturing in April 2004 and $25 million in
revolving loan commitments maturing in April 2002. The proceeds of the new term
loans were used to finance the Cutex acquisition.
7
<PAGE>
Management's Discussion and Analysis of
Results of Operations and Financial Condition
OVERVIEW
Forward Looking Statements
This report on Form 10-Q as well as other public documents of the Company
contain forward-looking statements which involve risks and uncertainties,
including (i) the Company's plans to introduce new products and product
enhancements, (ii) the Company's plans to expand its international operations in
Africa, Brazil, and the Caribbean, (iii) the Company's plans to enter the ethnic
cosmetics product category, (iv) the Company's plans to enter the U.S.
professional salon market for ethnic hair care products, (v) the Company's plans
to make selective acquisitions, and (vi) the Company's marketing, distribution
and manufacturing expansion plans. The Company's actual results may differ
materially from those discussed in such forward-looking statements. When used
herein and in the Company's future filings, the terms "expects", "plans",
"intends", "estimates", "projects", or "anticipates" or similar expressions are
intended to identify forward-looking statements (within the meaning of Section
21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act")). In
addition to risk factors that may be described in the Company's filings with the
Securities and Exchange Commission (the "Commission") (including this filing and
the Company's prospectus dated October 14, 1996), such risks, uncertainties and
factors include, but are not limited to, (a) foreign business risks, (b)
industry cyclicality, (c) fluctuations in customer demand and order pattern, (d)
the seasonal nature of the business, (e) changes in pricing, (f) the
identification of suitable acquisition candidates, (g) changes in the
implementation of the Company's acquisition plans, and the availablility of
financing (h) difficulties or delays in developing and introducing new products
or the failure of consumers to accept new product offerings, (i) changes in
consumer preferences, including reduced consumer demand for the Company's
current products, (j) the nature and extent of future competition in the
Company's principal marketing areas, and (k) political, economic and demographic
developments in the United States, Africa, Brazil, the Caribbean, Europe and
other countries where the Company now does or in the future may do business and
(i) general economic conditions.
General
The Company is a leading manufacturer and marketer in the U.S. retail
ethnic hair care market for African-Americans. The Company currently sells over
70 different products in the United States and in over 60 other countries under
five principal brand names. In the three months ended March 31, 1997,
approximately 34.7% of the Company's net sales were derived from sales within
these other countries. The majority of the Company's net sales are derived from
four categories of the ethnic health and beauty aids market: hair relaxers and
texturizers (which constituted approximately 50% of the Company's net sales in
1996), hair color, shaving products and hair care maintenance products.
In July 1996, the Company's South African subsidiary, Carson Holdings, Ltd.
("Carson South Africa") sold 25.0% of its shares in an initial public offering
on the Johannesburg Stock
8
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Exchange. As a result of the issuance of these shares, the Company has reflected
in its consolidated statement of operations for periods subsequent to the share
issuance a minority interest in subsidiary earnings. The amount of the charge
reflected in this line item equals Carson South Africa's net income for the
applicable period multiplied by the percentage of the Carson South Africa shares
which are not indirectly owned by the Company. In conjunction with the South
African initial public offering, the Company's U.S. subsidiary, Carson Products
entered into an amendment to its license agreement with Carson Products
Proprietary Limited ("Carson Products, S.A."), a South African registered
company wholly owned by Carson South Africa, which provides that commencing on
April 1, 1998, Carson Products S.A. will pay to Carson Products a royalty in the
amount of 3.0% of the net sales of all licensed products. The amount of the
royalty increases to 3.5% on April 1, 1999 and 4.0% on April 1, 2000 until the
termination of the agreement. The initial term of the agreement expires on April
1, 1999; however, the agreement continues indefinitely thereafter until
terminated by either party upon 12 months written notice.
With the exception of sales by Carson Products S.A. to South Africa,
Botswana, Lesotho, Namibia and Swaziland, which are denominated in South African
Rand, all of the Company's sales are recorded in U.S. Dollars. The Company does
not view the exposure to Rand exchange rate fluctuations as significant because
the South African subsidiary incurs all of its costs in Rand. Assets and
liabilities of the Company's South African operations are translated for
consolidation purposes from South African Rand into U.S. Dollars at the rate of
currency exchange at the end of the fiscal period. Revenues and expenses are
translated at average monthly prevailing exchange rates. Resulting translation
differences are recognized as a component of stockholders' equity.
In June 1996, Carson made an investment of $3.0 million in Morningside
AM Acquisition Corp., the parent of AM Cosmetics, Inc. ("AM Cosmetics") a
leading low-cost manufacturer of cosmetics. The investment was made through the
purchase of $3.0 million of 12% cumulative, payment-in-kind preferred stock. The
Company's consolidated statements of operations for periods subsequent to June
1996 include the dividend income from this investment, although dividends are
anticipated to be paid through the issuance of additional preferred stock.
Therefore, it is anticipated that no cash will be generated from this investment
in the near future. In connection with the investment, Carson entered into a
management agreement and will enter into certain related sales agreements and
manufacturing agreements with AM Cosmetics.
Results of Operations
Three Months Ended March 31, 1997 Compared to Three Months Ended March 31, 1996
Net Sales. Net sales for the first three months ended of 1997 of $17.9 million
were essentially flat compared to the same three months ended in 1996 primarily
due to two key factors. First, although international net sales for the Company
continued to show substantial growth in the first three months of 1997, net
sales in the domestic ethnic hair care market declined. According to Information
Resources Inc. data, industry-wide sales in the domestic market for ethnic hair
care declined approximately 5.0% in the three months ended March 31, 1997
compared to the same three months of 1996. Second, the Company experienced
abnormally strong domestic net sales for the three months ended December 31,
1996 which resulted in lower sales for the first three months of 1997. Carson
South Africa continued to demonstrate strong results with an increase in net
sales of 70.0% to $2.6 million in the three months ended March 31, 1997 from
$1.5 million in the three months ended March 31, 1996.
Gross Profit. Gross profit increased slightly to $10.1 million in the three
months ended ended March 31,
9
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1997 from $10.0 million in the three months ended ended March 31, 1996. Gross
profit margin remained level at 56.1% for both the three month periods ended
March 31, 1997 and 1996.
Selling Expenses. Selling expenses increased to $5.7 million in the three months
ended March 31, 1997 from $3.5 million in the three months ended March 31, 1996,
an increase of 65.8%. As a percentage of net sales, selling expenses increased
to 31.9% from 19.4% during this period primarily as a result of extensive
advertising related to the launch of the Dark & Lovely 25th Anniversary campaign
and the fact that the Company was in the process of changing advertising
agencies early in 1996, and had ceased most advertising during this period while
awaiting new creative material.
General and Administrative Expenses. General and administrative expenses
decreased to $2.7 million in the three months ended March 31, 1997 from $3.1
million in the three months ended March 31, 1996, a decrease of 13.1%. As a
percentage of net sales, general and administrative expenses decreased to 15.2%
from 17.7% during this period. The decrease in general and administrative
expenses as a percentage of net sales was primarily a result of lower incentive
compensation expense.
Operating Income and EBITDA. As a result of the above changes, operating income
decreased to $1.6 million in the three months ended March 31, 1997 from $3.4
million in the three months ended March 31, 1996. EBITDA decreased to $2.2
million from $4.1 million during this period. EBITDA is calculated by adding
earnings before interest, income taxes, depreciation and amortization expense.
Interest Expense. Interest expense decreased to $0.6 million in the three months
ended March 31, 1997 from $1.8 million in the three months ended March 31, 1996.
The decreased interest expense is a result of the use of the proceeds from the
Company's initial public offering to retire certain debt.
Other Income; Investment Income. Other income increased primarily as a result of
the management contract entered into in June 1996 with AM Cosmetics. Under the
terms of the investment and the management agreement, the Company is entitled to
a 12% paid-in-kind dividend on its $3.0 million preferred stock investment and a
$0.5 million annual management fee. Other income and investment income includes
the effects of these transactions in the three months ended March 31, 1997.
Provision for Taxes. The provision for taxes decreased to $0.5 million in
the three months ended March 31, 1997 from $0.8 million for the three months
ended March 31, 1996. The effective tax rate was 44.0% for the three months
ended March 31, 1997 compared to 48.7% for the three months ended March 31,
1996.
Liquidity and Capital Resources
The Company completed the offering (the "Offering") of 4,818,500 shares of
Class A common stock on the New York Stock Exchange on October 18, 1996 at a
price of $14 per share. Of these shares 3,113,000 were sold by the Company with
the balance sold by selling stockholders, none of which included any members of
management or the principal investors. The Company used the net proceeds of the
Offering to repay certain indebtedness.
In conjunction with the Offering, the Company refinanced the remaining
portion of its senior bank credit facility with borrowings under a new senior
bank facility pursuant to a credit agreement dated as of October 18, 1996, which
included (i) a $15.0 million term loan A, (ii) a $10.0 million term loan B and
(iii) a $15.0 million revolving credit facility. The term loan A and revolving
credit facility bore interest at the applicable prime rate plus 0.5% or LIBOR
rate plus 2.0% and had a final maturity of six years. The term loan B bore
interest at the applicable prime rate plus 1.0% or LIBOR rate plus 2.5% and had
a final maturity of seven years.
On April 30, 1997, the Company entered into an Amended and Restated Credit
Agreement with Banque Indosuez, New York Branch, as agent, and the lenders named
therein. The Amended and Restated Credit
10
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Agreement replaced the Company's existing $40 million senior credit facility
with a $100 million senior credity facility consisting of $25 million in Term A
loans, $50 million in Term B loans and $25 million in revolving loan
commitments. The proceeds of the new term loans were used to finance the Cutex
acquisition. The term loan A and revolving credit facility bear interest at the
lower of the applicable prime rate plus 0.5% or LIBOR rate plus 2.0% and have a
final maturity date of April 2002. The term loan B bears interest at the lower
of the applicable prime rate plus 1.0% or LIBOR rate plus 2.5% and has a final
maturity date of April 2004. Each such interest rate is subject to adjustment
based on the Company's performance.
In the three months ended March 31, 1997, net cash flow used in operations
was $4.4 million largely as a result of net income of $0.7 million, $4.7 million
increase in inventory, $0.5 million decrease in accounts payable and $2.3
million decrease in accrued expenses.
Net cash used in investing activities for the three months ended March 31,
1997 totaled $1.1 million which consisted primarily of capital expenditures
necessary to maintain the Company's facilities in modern condition.
Net cash provided from financing activities for the three months ended March
31, 1997 totaled $4.4 million. This included $5.1 million of additional
borrowings offset in part by principal payments of $0.7 million and other uses.
Effective February 1, 1997, the Company's South African subsidiary, Carson
Holdings Ltd., acquired the assets of Nu-Me in a transaction involving the
issuance of 500,000 shares of Carson Holdings Ltd. stock in a transaction valued
at approximately $767,000. In addition, Carson Holdings Ltd acquired the assets
of Restore Plus in a cash transaction for $111,700. These acquisitions are
accounted for under the purchase method of accounting.
During March 1997, the Company entered into an Asset Purchase Agreement
with Conopco, Inc. d/b/a Chesebrough-Pond's USA Co. in order to acquire the
rights to manufacture and market Cutex in the United States. Cutex is the
leading brand of nail polish remover and is also a line of nail enamels. The
purchase price approximated $41.0 million with funds provided by additional
long-term debt, and the transaction was completed on April 30, 1997. Total
revenues of Chesebrough-Pond's USA - Cutex approximated $16.7 million for the
most recent 12 month period. This acquisition will be accounted for under the
purchase method of accounting.
During March 1997, the Company entered into an Asset Repurchase Agreement
with Jean Philippe Fragrances, Inc. In connection with the termination of the
license agreement between Conopco, Inc. and Jean Philippe Fragrances, Inc. by
Carson as successor in interest to Conopco, Inc., Carson acquired certain assets
of Jean Philippe Fragrances, Inc. used in the packaging, distributing and
selling of nail enamel and nail care treatment products, nail care implements
and lipstick under the trademark Cutex in the United States and Puerto Rico on
April 30, 1997. Immediately upon execution of the Jean Philippe Repurchase
agreement on April 30, 1997, the license agreement with Jean Philippe
Frangrances, Inc. was terminated.
During April 1997, the Company completed the acquisition of the Let's Jam
product line from New Image Laboratories, Inc. This acquisition added one of the
leading hair care maintenance brands in the ethnic retail market to the
Company's portfolio of brands. The purchase price was approximately $5.6 million
cash with $4.9 million of funds provided by additional long-term debt. The
remaining $0.7 million of the purchase price has been withheld contingent upon
certain performance by New Image Laboratories, Inc. This acquisition will be
accounted for under the purchase method of accounting.
The Company believes that cash flow from operating activities, existing cash
balances and available borrowings under its Amended and Restated Credit
Agreement will be sufficient to fund working capital requirements, capital
expenditures and debt service requirements in the foreseeable future.
11
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CARSON, INC.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is party to lawsuits incidental to its business. Management
believes that the ultimate resolution of these matters will not have a material
adverse impact on the business or financial condition and operations of the
Company.
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits --
10.35 Amended and Restated Credit Agreement with Banque Indosuez,
New York Branch, as agent, dated as of April 30, 1997.
27 Financial data schedule.
(b) Reports on Form 8-K --
There were no reports on Form 8-K for the three months ended March 31,
1997.
12
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CARSON, INC.
/s/ Roy Keith Date: May 14, 1997
- -------------------------------- -------------------------
Roy Keith
Chairman and Chief Executive Officer
/s/ Robert W. Pierce Date: May 14, 1997
- ------------------------------------------ -------------------------
Robert W. Pierce
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
13
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CREDIT AGREEMENT
among
CARSON PRODUCTS COMPANY
and
BANQUE INDOSUEZ, NEW YORK BRANCH,
AS AGENT,
and
THE LENDING INSTITUTIONS LISTED HEREIN
-------------------------
Dated as of October 18, 1996
and
Amended and Restated as of April 30, 1997
--------------------------
$100,000,000
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Page
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- -i-
TABLE OF CONTENTS
Page
SECTION 1. Amount and Terms of Credit......................................3
1.01. Commitments....................................................3
1.02. Minimum Amount of Each Borrowing; Maximum Number of
Borrowings................................................5
1.03. Notice of Borrowings...........................................5
1.04. Disbursement of Funds..........................................6
1.05. Notes..........................................................7
1.06. Conversions; Continuations.....................................9
1.07. Pro Rata Borrowings...........................................10
1.08. Interest......................................................10
1.09. Interest Periods..............................................11
1.10. Special Provisions Governing Reserve Adjusted
Eurodollar Loans.........................................13
1.11. Capital Requirements..........................................18
1.12. Total Loan Commitments; Limitations on Outstanding
Loan Amounts.............................................19
1.13. Letters of Credit.............................................19
1.14. Restatement Effective Date; Effect of Restatement.............30
SECTION 2. Commitments....................................................33
2.01. Voluntary Reduction of Commitments............................33
2.02. Mandatory Adjustments of Commitments, etc.....................33
2.03. Commitment Commission.........................................34
SECTION 3. Payments.......................................................35
3.01. Voluntary Prepayments.........................................35
3.02. Mandatory Prepayments.........................................36
3.03. Method and Place of Payment...................................40
3.04. Net Payments..................................................41
SECTION 4. Conditions Precedent...........................................44
4.01. Conditions Precedent to Additional Loans......................44
4.02. Conditions Precedent to All Loans.............................55
4.03. Conditions Precedent to All Letters of Credit.................57
SECTION 5. Representations, Warranties and Agreements.....................58
5.01. Corporate Status..............................................58
5.02. Corporate Power and Authority; Business.......................59
5.03. No Violation..................................................59
5.04. Litigation....................................................60
5.05. Use of Proceeds...............................................60
5.06. Governmental Approvals, etc...................................61
5.07. Investment Company Act........................................61
5.08. Public Utility Holding Company Act............................61
5.09. True and Complete Disclosure..................................62
5.10. Acquisition; Purchase Agreements..............................62
5.11. Financial Condition; Financial Statements; Projections........63
5.12. Security Interests............................................66
5.13. Tax Returns and Payments......................................66
5.14. ERISA.........................................................67
5.15. Subsidiaries..................................................68
5.16. Patents, etc..................................................69
5.17. Compliance with Laws, etc.....................................69
5.18. Properties....................................................70
5.19. Securities....................................................70
5.20. Collective Bargaining Agreements..............................70
5.21. Indebtedness Outstanding......................................71
5.22. Environmental Matters.........................................73
5.23. Environmental Investigations..................................73
5.24. Fine Products Company.........................................73
SECTION 6. Affirmative Covenants..........................................74
6.01. Information Covenants.........................................74
6.02. Books, Records and Inspections................................80
6.03. Maintenance of Property; Insurance............................81
6.04. Payment of Taxes..............................................82
6.05. Corporate Franchises..........................................82
6.06. Compliance with Statutes, etc.................................82
6.07. ERISA.........................................................83
6.08. Performance of Obligations....................................84
6.09. End of Fiscal Years; Fiscal Quarters..........................84
6.10. Use of Proceeds...............................................84
6.11. Equal Security for Loans and Notes; No Further
Negative Pledges.........................................84
6.12. Lender Meeting................................................85
6.13. Pledge of Additional Collateral...............................85
6.14. Security Interests............................................86
6.15. Environmental Events..........................................87
6.16. New Subsidiaries..............................................88
6.17. Manufacturing Agreements......................................88
SECTION 7. Negative Covenants.............................................88
7.01. Changes in Business..........................................89
7.02. Amendments or Waivers of Certain Documents...................89
7.03. Liens........................................................89
7.04. Indebtedness.................................................92
7.05. Advances, Investments and Loans..............................94
7.06. Prepayments of Indebtedness; Amendments......................95
7.07. Dividends, etc...............................................96
7.08. Transactions with Affiliates.................................97
7.09. Total Interest Coverage Ratio................................98
7.10. Fixed Charge Coverage Ratio..................................98
7.11. Leverage Ratio...............................................99
7.12. Issuance of Subsidiary Stock.................................99
7.13. Disposition of Assets........................................99
7.14. Contingent Obligations.......................................103
7.15. ERISA........................................................104
7.16. Merger and Consolidations....................................105
7.17. Sale and Lease-Backs.........................................105
7.18. Sale or Discount of Receivables..............................105
7.19. Fine Products Company........................................105
SECTION 8. Events of Default.............................................106
8.01. Payments.....................................................106
8.02. Representations, etc.........................................106
8.03. Covenants....................................................106
8.04. Default Under Other Agreements...............................107
8.05. Bankruptcy, etc..............................................107
8.06. ERISA........................................................108
8.07. Security Documents...........................................109
8.08. Guarantees...................................................109
8.09. Judgments....................................................109
8.10. Ownership....................................................110
SECTION 9. Definitions...................................................112
SECTION 10. The Agent....................................................149
10.01. Appointment................................................149
10.02. Delegation of Duties.......................................150
10.03. Exculpatory Provisions.....................................150
10.04. Reliance by the Agent......................................151
10.05. Notice of Default..........................................151
10.06. Non-Reliance on Agent and Other Banks......................152
10.07. Indemnification............................................153
10.08. The Agent in Its Individual Capacity.......................153
10.09. Successor Agent............................................153
10.10. Resignation by Agent.......................................153
SECTION 11. Miscellaneous...............................................154
11.01. Payment of Expenses, etc...................................154
11.02. Right of Setoff............................................155
11.03. Notices....................................................156
11.04. Benefit of Agreement.......................................157
11.05. No Waiver; Remedies Cumulative.............................160
11.06. Payments Pro Rata..........................................160
11.07. Calculations; Computations.................................161
11.08. Governing Law; Submission to Jurisdiction; Venue...........161
11.09. Counterparts...............................................162
11.10. Effectiveness..............................................162
11.11. Headings Descriptive.......................................163
11.12. Amendment or Waiver........................................163
11.14. Survival...................................................163
11.15. Domicile of Loans..........................................164
11.16. Waiver of Jury Trial.......................................164
11.17. Independence of Covenants..................................164
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ANNEX I - List of Banks
ANNEX II - Bank Addresses
ANNEX III - Schedule of Existing Debt
ANNEX IV - Schedule of Subsidiaries
ANNEX V - Schedule of Collective Bargaining Agreements
ANNEX VI - Summary of Corporate Insurance Policies
ANNEX VII - Schedule of Liens
ANNEX VIII - List of Mortgaged Real Property
ANNEX IX - Schedule of Litigation
ANNEX X - Schedule of Consents
ANNEX XI - Schedule of Restrictions
ANNEX XII - Environmental Matters
ANNEX XIII - Taxes
ANNEX XIV - Schedule of Intellectual Property
ANNEX XV - Schedule of Existing Leases
ANNEX XVI - Compliance with Laws
Exhibit A - Form of Revolving Note
Exhibit B-1 - Form of A Term Note
Exhibit B-2 - Form of B Term Note
Exhibit C-1 - Form of Opinion of Milbank, Tweed, Hadley & McCloy
Exhibit C-2 - Form of Local Counsel Opinion
Exhibit D - Form of Mortgage
Exhibit E - Form of Holdings Guarantee
Exhibit F-1 - Form of Borrower Securities Pledge Agreement
Exhibit F-2 - Form of Holdings Securities Pledge Agreement
Exhibit G - Form of Borrower Intellectual Property Security
Agreement
Exhibit H - Form of Borrower General Security Agreement
Exhibit I-1 - Form of Notice of Assignment
Exhibit I-2 - Form of Assignment and Assumption Agreement
Exhibit J - Form of Notice of Borrowing
Exhibit K - Form of Notice of Conversion/Continuation
Exhibit L - Form of Officer's Solvency Certificate
Exhibit M - Form of Borrowing Base Certificate
Exhibit N - Form of Officer's Certificate Regarding Environmental
Review
Exhibit O - Form of Landlord Lien Assurance Agreement
Exhibit P - Form of Consolidated Financial Plan
Exhibit Q - Form of Non-U.S. Lender Certificate
Exhibit R - Form of Subsidiary Guarantee
Exhibit S - Cutex Manufacturing Agreement
Exhibit T - Form of AM Manufacturing Agreement
<PAGE>
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AMENDED AND RESTATED CREDIT AGREEMENT, dated as of October 18, 1996,
amended as of April 8, 1997 and amended and restated as of April 30, 1997 (the
"Agreement"), among CARSON PRODUCTS COMPANY, a Delaware corporation (the
"Borrower"), the lending institutions listed in Annex I (each a "Bank" and,
collectively, the "Banks") and the New York branch of BANQUE INDOSUEZ
("Indosuez") as the agent and collateral agent for the Banks (in such capacity,
the "Agent"). Unless otherwise defined herein, all capitalized terms used herein
and defined in Section 9 are used herein as so defined.
W I T N E S S E T H :
WHEREAS, the Borrower, the Banks and Indosuez, as Agent, are parties
to a Credit Agreement dated as of October 18, 1996, as amended as of April 8,
1997 (the "Existing Credit Agreement"), pursuant to which the Banks initially
made available to the Borrower a loan facility in an aggregate amount equal to
$40,000,000 for the purpose of, among other things, providing a portion of the
financing to permit the Borrower to refinance existing indebtedness, which
refinancing has been completed;
WHEREAS, the Existing Credit Agreement was amended as of April 8,
1997, to increase the Existing B Term Loans in an aggregate amount of
$5,000,000, to finance the acquisition by the Borrower of certain assets of New
Image Laboratories, Inc., a California corporation ("New Image"), which
acquisition has been completed;
WHEREAS, Carson, Inc., a Delaware corporation and the parent
corporation of the Borrower ("Holdings"), has entered into a purchase agreement,
dated as of March 27, 1997 (including the exhibits and schedules thereto, the
"Cutex Purchase Agreement"), with CONOPCO, Inc. d/b/a CHESEBROUGH-PONDS USA CO.,
a subsidiary of Unilever plc. ("CONOPCO"), to effect the purchase of all of the
assets of the Cutex division of CONOPCO (the "Cutex Acquisition"), for
consideration consisting of $37,500,000 cash (excluding related fees and
expenses) plus the Target Inventory Amount of $600,000 (prior to adjustment as
provided in the Cutex Purchase Agreement);
WHEREAS, Holdings has entered into a repurchase agreement, dated as
of March 27, 1997 (including the exhibits and schedules thereto, the "Jean
Philippe Purchase Agreement" and, together with the Cutex Purchase Agreement,
the "Purchase Agreements"), with Jean Philippe Fragrances, Inc., a Delaware
corporation ("Jean Philippe" and, together with CONOPCO, the "Sellers"), to
effect the purchase of certain assets of Jean Philippe (the "Jean Philippe
Acquisition" and, together with the Cutex Acquisition, the "Acquisition") for
consideration consisting of $50,000 cash and the value of the inventory of
approximately $3,287,853.46;
WHEREAS, Holdings shall contribute to the Borrower all assets
acquired by it in the Acquisition, and the Borrower shall pay to Holdings the
cost of the Acquisition;
WHEREAS, pursuant to scheduled amortizations under the Existing
Credit Agreement, there is presently outstanding $13,750,000 principal amount of
Existing A Term Loans, $14,950,000 principal amount of Existing B Term Loans and
$8,736,900.31 principal amount of Existing Revolving Loans;
WHEREAS, in order to finance the Acquisition, the Borrower wishes to
amend and restate the Existing Credit Agreement in order to, among other things,
(i) increase the Total Commitment by $56,300,000 to $100,000,000, (ii) increase
the A Term Loan Facility by $11,250,000 (the "Additional A Term Loan") to
$25,000,000, (iii) increase the B Term Loan Facility by $35,050,000 (the
"Additional B Term Loan") to $50,000,000 and (iv) increase the Revolving Loan
Commitment by $10,000,000 (the "Additional Revolving Loan Commitment") to
$25,000,000;
WHEREAS, Holdings will execute an amended Guarantee and an amended
Securities Pledge Agreement, secured by a pledge of the shares of capital stock
of the Borrower, guaranteeing the Borrower's obligations hereunder;
WHEREAS, the Borrower will execute an amendment to the Deed to
Secure Debt and an amended Securities Pledge Agreement, Intellectual Property
Security Agreement and General Security Agreement, pledging the assets of the
Borrower as security for its obligations hereunder;
WHEREAS, the Borrower desires to incur Loans from the Banks, the
proceeds of which will be applied, to the extent necessary, to consummate the
Acquisition, to provide working capital to the Borrower, to pay certain fees and
expenses incurred in connection with the Acquisition and for general corporate
purposes; and
WHEREAS, the Banks are willing to make available the credit
facilities provided for herein.
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Credit.
1.01. Commitments. Subject to and upon the terms and conditions
herein set forth, each Bank severally agrees, in the case of any Borrowing under
the A Term Loan Facility or the B Term Loan Facility, in each case, on the
Closing Date and, 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, to make a Loan or Loans to the
Borrower, which Loans shall be drawn under the Loan Facility (including the
Revolving Portion and Term Portion thereof), as set forth below.
(a) Loans under the Term Portion of the Loan Facility (each a "Term
Loan" and, collectively, the "Term Loans") may be made to the Borrower
under the A Term Loan Facility (each an "A Term Loan" and, collectively,
the "A Term Loans") or the B Term Loan Facility (each a "B Term Loan" and,
collectively, the "B Term Loans").
(i) Each Existing A Term Loan and Existing B Term Loan
outstanding immediately prior to the Closing Date shall continue and
remain outstanding.
(ii) Each Additional A Term Loan under the A Term Loan Facility
(A) shall be made to the Borrower as a single drawing on the Closing
Date, (B) except as hereinafter provided, shall initially be made as
a Base Rate Loan and, 60 days after the Closing Date or such earlier
time as the Agent may agree, shall, at the option of the Borrower,
be Base Rate Loans or Reserve Adjusted Eurodollar Loans; provided
that all Term Loans made by all Banks pursuant to the same Borrowing
shall, unless otherwise specifically provided herein, consist
entirely of Loans of the same Type and (C) shall not exceed for any
Bank at any time outstanding the aggregate principal amount which
equals the A Term Loan Commitment of such Bank.
(iii) Each Additional B Term Loan under the B Term Loan Facility
(A) shall be made to the Borrower as a single drawing on the Closing
Date, (B) except as hereinafter provided, shall initially be made as
a Base Rate Loan and, 60 days after the Closing Date or such earlier
time as the Agent may agree, shall, at the option of the Borrower,
be Base Rate Loans or Reserve Adjusted Eurodollar Loans; provided
that all Term Loans made by all Banks pursuant to the same Borrowing
shall, unless otherwise specifically provided herein, consist
entirely of Loans of the same Type and (C) shall not exceed for any
Bank at any time outstanding the aggregate principal amount which
equals the B Term Loan Commitment of such Bank.
(b) Immediately prior to the Closing Date, the principal amount of
all Revolving Loans of the outstanding Loans (the "Existing Revolving
Loans") was $8,736,900.31. On the Closing Date, the aggregate outstanding
principal amount of the Existing Revolving Loans shall be automatically
converted to an equivalent principal amount of Revolving Loans hereunder
and shall be deemed to be Revolving Loans and included in the Revolving
Loan Commitment for all purposes under this Agreement, the Notes and the
other Credit Documents. Loans under the Revolving Portion of the Loan
Facility (each a "Revolving Loan" and, collectively, the "Revolving
Loans") (i) shall be made at any time and from time to time on and after
the Closing Date (including up to an additional $3,000,000 on the Closing
Date for purposes of financing the Acquisition and paying related fees and
expenses; provided that the Borrower has utilized the full amount of the
Total Term Loan Commitment for financing the Acquisition and paying
related fees and expenses) and prior to the Revolving Loan Commitment
Termination Date, (ii) except as hereinafter provided, shall initially be
Base Rate Loans and, 60 days after the Closing Date or such earlier time
as the Agent may agree, shall, at the option of the Borrower, be Base Rate
Loans or Reserve Adjusted Eurodollar Loans; provided that all Revolving
Loans made by all Banks pursuant to the same Borrowing shall, unless
otherwise specifically provided herein, consist entirely of Loans of the
same Type, (iii) may be repaid and reborrowed in accordance with the
provisions hereof, (iv) shall not exceed for any Bank at any time
outstanding the Revolving Loan Commitment of such Bank at such time and
(v) shall not be made pursuant to a particular Notice of Borrowing if the
aggregate principal amount of Revolving Loans then outstanding, after
giving effect to the Revolving Loan requested by such Notice of Borrowing,
plus the then outstanding Letters of Credit Usage, after giving effect to
the issuance of all Letters of Credit subject to outstanding requests for
issuance, would exceed the lesser of the Borrower's Borrowing Base as
shown in the Borrowing Base Certificate that was last required to be
delivered pursuant to Section 6.01 or the Total Revolving Loan Commitment.
Notwithstanding anything to the contrary contained above, the aggregate
amount of the Revolving Loans outstanding on the Closing Date shall not
exceed $8,000,000.
1.02. Minimum Amount of Each Borrowing; Maximum Number of Borrowings
1.02. Minimum Amount of Each Borrowing; Maximum Number of Borrowings. The
minimum aggregate principal amount of a Borrowing of Term Loans consisting of
Reserve Adjusted Eurodollar Loans or Base Rate Loans shall be the Minimum
Borrowing Amount and, if greater, shall be in integral multiples of $100,000;
provided, however, that the Banks' Term Loan Commitments shall terminate, on a
pro rata basis, with respect to any portion of the Total Term Loan Commitments
not utilized by the Borrower on the Closing Date. The minimum aggregate
principal amount of a Borrowing of Revolving Loans consisting of Reserve
Adjusted Eurodollar Loans or Base Rate Loans shall be the Minimum Borrowing
Amount (other than a Borrowing of Base Rate Loans such that the total amount of
Revolving Loans and Letters of Credit Usage to be outstanding after giving
effect to such Borrowing shall be equal to the Total Revolving Commitment) and,
if greater, shall be in integral multiples of $100,000. More than one Borrowing
may be incurred on any date; provided that at no time shall there be outstanding
more than 6 Borrowings of Reserve Adjusted Eurodollar Loans.
1.03. Notice of Borrowings. Whenever the Borrower desires that the
Banks make Reserve Adjusted Eurodollar Loans under the Revolving Loan Facility
it shall give the Agent at the Agent's Office prior to 10:00 A.M. (New York
time) at least three Business Days' prior written notice (or telephonic notice
promptly confirmed in writing) of each such Borrowing of Reserve Adjusted
Eurodollar Loans. Whenever the Borrower desires that the Banks make Base Rate
Revolving Loans on a same-day basis under the Revolving Loan Facility it shall
give the Agent at the Agent's office prior to 10:00 A.M. (New York time) written
notice (or telephonic notice promptly confirmed in writing) of each such
Borrowing of Base Rate Loans. Each such notice, which shall be substantially in
the form of Exhibit J hereto (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 have been
satisfied and shall specify (i) the aggregate principal amount in U.S. dollars
of the Loans to be made pursuant to such Borrowing, all of which shall be
specified in such manner as is necessary to comply with all limitations on
Revolving Loans outstanding hereunder, including without limitation,
availability under the Borrowing Base, (ii) the date of Borrowing (which shall
be a Business Day) and (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. The
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 1:00 P.M. (New York
time) on the date specified in each Notice of Borrowing, each Bank will make
available to the 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
Agent to the account specified therefor by the Agent or if no account is so
specified at the Agent's Office and the Agent will make such funds available to
the Borrower, no later than 4:00 P.M. (New York time) on the date specified in
each 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 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 Agent its
portion of the Borrowing or Borrowings to be made on such date, the Agent may
assume that such Bank has made such amount available to the Agent on such date
of Borrowing, and the 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 Agent by such Bank and the Agent has made available same to the Borrower,
the Agent shall be entitled to recover such corresponding amount from such Bank.
If such Bank does not pay such corresponding amount forthwith upon the Agent's
demand therefor, the Agent shall promptly notify the Borrower, and the Borrower
shall upon the Agent's request immediately pay such corresponding amount to the
Agent. The 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
Agent to the Borrower to the date such corresponding amount is recovered by the
Agent, at a rate per annum equal to (x) if paid by such Bank, the Federal Funds
Rate or (y) if paid by the Borrower (and/or one or more other Credit Parties),
the then applicable rate of interest, calculated in accordance with Section
1.08, for the respective Loans. The Agent shall also be entitled to recover from
any Bank an amount equal to any other losses incurred by the Agent as a result
of the failure of such Bank to provide such 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 shall be evidenced (i) if
Revolving Loans, by a promissory note (each, a "Revolving Note" and,
collectively, the "Revolving Notes") duly executed and delivered by the Borrower
substantially in the form of Exhibit A hereto, with blanks appropriately
completed in conformity herewith, and (ii) if Term Loans, by a promissory note
(an "A Term Note" or a "B Term Note," respectively, as the case may be, and,
collectively, the "Term Notes") duly executed and delivered by the Borrower,
substantially in the form of Exhibits B-1 and B-2 hereto, respectively, each
with blanks appropriately completed in conformity herewith.
(b) The Revolving Note of the Borrower issued to each Bank shall (i)
be executed by the Borrower, (ii) be payable to the order of such Bank and be
dated the Closing Date, (iii) 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, (iv) mature, with
respect to each Loan evidenced thereby, on the Final Revolving Loan Maturity
Date, (v) be subject to mandatory prepayment as provided in Section 3.02, (vi)
bear interest as provided in the appropriate clause of Section 1.08 in respect
of the Base Rate Loans and Reserve Adjusted Eurodollar Loans, as the case may
be, evidenced thereby and (vii) be entitled to the benefits of this Agreement
and the other applicable Credit Documents.
(c) Each of the Term Notes of the Borrower issued to each Bank shall
(i) be executed by the Borrower, (ii) be payable to the order of such Bank and
be dated the Closing Date, (iii) be in a stated principal amount equal to the A
Term Loan Commitment of such Bank or the B Term Loan Commitment of such Bank, as
the case may be, and be payable in the aggregate principal amount of the A Term
Loans or the B Term Loans evidenced thereby, (iv) mature, with respect to each
Loan evidenced thereby, on the Final A Term Loan Maturity Date with respect to
the A Term Loans and the Final B Term Loan Maturity Date with respect to the B
Term Loans represented thereby, as the case may be, (v) be subject to mandatory
prepayment as provided in Section 3.02, (vi) bear interest as provided in the
appropriate clause of Section 1.08 in respect of the Base Rate Loans and Reserve
Adjusted Eurodollar Loans, as the case may be, evidenced thereby and (vii) be
entitled to the benefits of this Agreement and the other applicable Credit
Documents.
(d) 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 Loans evidenced thereby. Failure to make any
such notation shall not affect the Borrower's or any Credit Party's obligations
hereunder or under the other applicable Credit Documents in respect of such
Loans.
1.06. Conversions The Borrower shall have the option to convert on
any Business Day commencing on the earlier of receipt of the Agent's approval or
60 days after the Closing Date all or a portion (which portion shall not be less
than the Minimum Borrowing Amount) of the outstanding principal amount of the
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 that (i) 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, (ii) 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 Borrowing Amount, (iii) one Type of Loan may only be continued as or
converted into Reserve Adjusted Eurodollar Loans if no Default or Event of
Default is in existence on the date of the conversion, (iv) 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 (v) 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 portions thereof
will mature within 30 days of such proposed conversion. Each such conversion (or
continuation) shall be effected by the Borrower by giving the Agent at the
Agent's Office prior to 10:00 A.M. (New York time) at least three Business Days'
(or one 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 to be converted into or continued and, if to be
converted into or continued as Reserve Adjusted Eurodollar Loans, the Interest
Period to be initially applicable thereto. The 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 on the last day
of any Interest Period in respect of any Borrowing of Reserve Adjusted
Eurodollar Loans, 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. 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 A Term Loan Commitments, B
Term Loan Commitments or Revolving 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 and (ii) the applicable Interest
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 to a Base
Rate Loan) at a rate per annum equal to the sum of (i) the relevant Eurodollar
Rate and (ii) the applicable Interest Margin.
(c) Overdue principal and, to the extent permitted by law, overdue
interest in respect of each Loan shall bear interest at a rate per annum equal
to the sum of (i) the rate of interest applicable to such Loan and (ii) 2%;
provided that the amount of the overdue principal of each Reserve Adjusted
Eurodollar Loan shall bear interest at the rate of interest applicable thereto
plus 2% for the balance of the then current Interest Period.
(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 beginning June 1997;
(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 date of such Interest Period; and (iii) in respect of
each Loan, on any prepayment (on the amount 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(b).
(f) The 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, or
conversion into or continuation of, a Borrowing of Reserve Adjusted Eurodollar
Loans, it shall have the right to elect, by giving the 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 such Borrower,
be a one, two, three or six month period. 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 in respect of such Borrowing
shall commence on the date on which the next preceding Interest Period
expires;
(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 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 the Final Revolving Loan
Maturity Date (in the case of Revolving Loans) or the Final A Term Loan
Maturity Date (in the case of A Term Loans) or the Final B Term Loan
Maturity Date (in the case of B 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 thereof is required to make a scheduled payment of principal with
respect to the Term Loans if, after giving effect to the selection of such
Interest Period, the aggregate principal amount of A Term Loans and B Term
Loans maintained as Reserve Adjusted Eurodollar Loans with Interest
Periods ending after such date of scheduled payment of principal would
exceed the amount of A Term Loans and B Term Loans, respectively,
permitted to be outstanding after such scheduled payment of principal.
1.10. Special Provisions Governing Reserve Adjusted
Eurodollar L1.10. Special Provisions Governing Reserve Adjusted Eurodollar
Loans. Notwithstanding any 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 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 confirmed in
writing) to the Borrower thereof and to each Bank.
(b) In the event that (x) in the case of clause (i) below, the Agent
or (y) in the case of clause (ii) or (iii) below, any Bank shall have
determined (which determination shall, absent demonstrable error, be
final, conclusive and binding upon all parties hereto):
(i) on any date for determining the Eurodollar Rate for any
Interest Period that, by reason of any changes arising on or after
the Effective 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;
(ii) 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 (x) any change
since the Effective Date (including changes proposed or published
prior to the Effective Date) in any applicable law, governmental
rule, regulation, guideline or order (or in the interpretation or
administration thereof and including the introduction of any new law
or governmental rule, regulation, guideline 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), including a change in the basis of taxation of
payments to any Bank of the principal of or interest on the Notes or
any other amounts payable hereunder (except for changes in the rate
of tax on, or determined by reference to, the net income or profits
of such Bank pursuant to the laws of the jurisdiction in which it is
organized or in which its principal office or applicable lending
office is located or any subdivision thereof or therein) and/or (y)
other circumstances affecting such Bank, the interbank eurodollar
market, or the position of such Bank in such market; or
(iii) 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 law, governmental rule, regulation,
guideline or order (or would conflict with any such governmental
rule, regulation, guideline or order not having the force of law
even though the failure to comply therewith would not be unlawful),
or has become impracticable as a result of a contingency occurring
after the Effective Date which materially and adversely affects the
interbank eurodollar market;
then, and in any such event, the Agent in the case of clause (i) above or
such Bank in the case of clause (ii) or (iii) above shall promptly give
notice (by telephone confirmed in writing) in accordance with Section
1.10(h) hereof to the Borrower of the Loan affected and, in the case of
clause (ii) or (iii) to the Agent, of such determination (which notice the
Agent shall promptly transmit to each of the other Banks). Thereafter (x)
in the case of clause (i) above, Reserve Adjusted Eurodollar Loans shall
no longer be available until such time as the Agent notifies the Borrower
and the Banks that the circumstances giving rise to such notice by the
Agent no longer exist, and any Notice of Borrowing or Notice of
Conversion/Continuation given by the Borrower with respect to the
borrowing of or conversion into (or continuation of) Reserve Adjusted
Eurodollar Loans which have not yet been incurred shall be deemed
rescinded by the Borrower, (y) in the case of clause (ii) above, the
Borrower shall pay to such Bank, within 10 Business Days after a written
demand therefor, such additional amounts (in the form of an increased rate
of, or a different method of calculating, interest or otherwise as such
Bank in its reasonable discretion shall determine) 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) hereof
as to the additional amounts owed to such Bank, setting forth in
reasonable detail the basis for the calculation thereof, submitted to the
Borrower shall, absent demonstrable error, be final, conclusive and
binding upon all parties hereto) and (z) in the case of clause (iii)
above, the Borrower shall take one of the actions specified in Section
1.10(c) 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)(ii) or (iii),
the Borrower may (and in the case of a Reserve Adjusted Eurodollar Loan
affected pursuant to Section 1.10(b)(iii) 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, cancel said Notice of
Borrowing or Notice of Conversion/Continuation by giving the Agent
telephonic notice (confirmed promptly 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)(ii) or (iii), or (ii) if
the affected Reserve Adjusted Eurodollar Loan is then outstanding, upon at
least three Business Days' notice to the Agent, 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 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) Anything herein to the contrary notwithstanding, if on any
Interest Rate Determination Date no Eurodollar Rate is available by reason
of the inability of the Agent to determine such interest rate in
accordance with the definition thereof, the Agent shall give the Borrower
and each Bank prompt notice thereof and the Loans requested to be made as
Reserve Adjusted Eurodollar Loans shall, subject to the applicable notice
requirements, be made as Base Rate Loans.
(e) Each Bank agrees that, as promptly as practicable after it
becomes aware of the occurrence of any event or the existence of a
condition that would cause it to be an affected Bank under Section 1.10(b)
(ii) or (iii), 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)(ii) 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)(iii) 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
materially adversely affect such Loans or such Bank. The Borrower hereby
agrees to pay all reasonable 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 that Bank (which request shall be accompanied
by a written notice pursuant to Section 1.10(h) setting forth in
reasonable detail the basis for the calculation of such amounts), for all
reasonable losses, expenses and liabilities (including, without
limitation, such factors as any interest paid by that Bank to lenders of
funds borrowed by it to make or carry its Reserve Adjusted Eurodollar
Loans and any loss sustained by that Bank in connection with re-employment
of such funds (based upon the difference between the amount earned in
connection with re-employment of such funds and the amount payable by the
Borrower if such funds had been borrowed or remained outstanding)) which
that 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
that Bank) a Borrowing of any such 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, (ii) if any prepayment
or conversion (as required by Sections 3.01 and 3.02, by acceleration or
otherwise) of any of such Bank's Reserve Adjusted Eurodollar Loans to the
Borrower occurs on a date which is not the last day of the Interest Period
applicable to that Loan, (iii) if any prepayment of any such Bank's
Reserve Adjusted Eurodollar Loans to the Borrower 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 to the Borrower 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, legal and regulatory restrictions and commercial
considerations) to designate a different lending office if the making of
such a designation would avoid the need for, or reduce the amount of, 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 the foregoing
paragraphs of this Section 1.10 as promptly as practicable, but in any
event within 90 days, after such Bank obtains actual knowledge thereof;
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 1.10 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)(ii) 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. If any Bank shall have determined that
the adoption or effectiveness after the Effective Date of any applicable law,
rule or regulation regarding capital adequacy, or any change therein, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or 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
(including in each case any such change proposed or published prior to the date
hereof), has or would have the effect of reducing the rate of return on such
Bank's or such Bank's parent's capital or assets 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 Bank's Commitment or any
Loan), then from time to time, within 15 Business Days after demand by such Bank
(with a copy to the 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. Each Bank, upon determining in good faith that
any additional amounts will be payable pursuant to this Section 1.11, will give
prompt written notice thereof to the Borrower, which notice shall set forth in
reasonable detail the basis of the calculation of such additional amounts,
although any delay in giving any notice shall not release or diminish any of the
Borrower's obligations to pay additional amounts pursuant to this Section 1.11.
1.12. Total Loan Commitments; Limitations on Outstanding Loan
Amounts 1.12. Total Loan Commitments; Limitations on Outstanding Loan Amounts.
The original amount of the (i) Total Commitments is $100,000,000, (ii) Total A
Term Loan Commitments is $25,000,000, (iii) Total B Term Loan Commitments is
$50,000,000 and (iv) Total Revolving Loan Commitments is $25,000,000, including
up to $5,000,000 of Letters of Credit. Anything contained in this Agreement to
the contrary notwithstanding, (a) in no event shall the sum of the aggregate
principal amount of all outstanding Term Loans and Revolving Loans of any Bank
at any time exceed such Bank's portion of the Total Commitments, (b) in no event
shall the sum of the aggregate principal amount of all Term Loans and Revolving
Loans from all Banks at any time exceed the Total Commitments and (c) in no
event shall the Total Utilization of Revolving Loan Commitments and Letters of
Credit Usage exceed the Total Revolving Loan Commitments.
1.13. Letters of Credit.
(A) Letters of Credit. Subject to the terms and conditions of this
Agreement 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 pursuant to Section 1.03, the
Borrower may request, 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 (i) 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
then outstanding, after giving effect to the making of all Revolving Loans then
requested by all outstanding but unfunded Notices of Borrowing, would exceed the
lesser of the Borrower's Borrowing Base as would be shown in the Borrowing Base
Certificate that was last required to be delivered pursuant to Section 6.01 or
the Total Revolving Loan Commitment then in effect, (ii) in no event shall any
Issuing Bank issue (w) any Letter of Credit having an expiration date later than
ten (10) Business Days prior to the Final Revolving Loan Maturity Date, after
giving effect to any possible renewal of such Letter of Credit pursuant to the
proviso to the following clause (ii)(x), (x) subject to the foregoing clause
(ii)(w), any Letter of Credit having an expiration date more than one year after
its date of issuance; provided that, subject to the foregoing clause (ii)(w),
this clause (x) shall not prevent any Issuing Bank from issuing a Letter of
Credit containing a provision to the effect that such Letter of Credit will
automatically be renewed annually for a period not to exceed one year, so long
as such renewable Letter of Credit provides that it shall not at any time be
renewed for an additional year if (I) the Borrower notifies the Issuing Bank in
writing one Business Day prior to the applicable renewal date that the Borrower
elects to allow the Letter of Credit to expire without being renewed, or (II)
the Issuing Bank or the Required Banks notify the Borrower in writing, prior to
the date set forth in such Letter of Credit as the date by which the beneficiary
thereof is to be notified whether such Letter of Credit is to be renewed, that
such Letter of Credit shall not be so renewed, in which case such Letter of
Credit shall not be so renewed, (y) any Letter of Credit, the initial stated
amount of which is less than $5,000, or (z) any Letter of Credit (I) which is
governed by laws other than the laws of the State of New York, without regard to
the principles of conflicts of laws, or (II) as to which the beneficiary is not
required, by acceptance of the Letter of Credit, to be subject to the exclusive
jurisdiction of any competent state or federal court in the State of New York
with regard to such Letter of Credit and (iii) the Borrower shall not request
that any Issuing Bank issue and no Issuing Bank shall 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. The issuance of any Letter of
Credit in accordance with the provisions of this Section 1.13 shall be given
effect in the calculation of the aggregate principal amount of Revolving Loans
outstanding and the Letters of Credit Usage and shall require the satisfaction
of each condition set forth in Sections 4.02 and 4.03.
Immediately upon the issuance of each Letter of Credit, each Bank
other than the Issuing Bank or Banks shall be deemed to, and hereby agrees to,
be irrevocably obligated to reimburse the Issuing Bank (such reimbursement
obligation of each Bank in each Letter of Credit being hereinafter referred to
as its "Letter of Credit Participation") under such Letter of Credit and each
drawing thereunder in an amount equal to such Bank's pro rata share (determined
on the basis of such Bank's Revolving Loan Commitment) of the maximum amount
which is or at any time may become available to be drawn thereunder.
Each Letter of Credit may provide that the Issuing Bank may (but
shall not be required to) pay the beneficiary thereof upon the occurrence of an
Event of Default and the acceleration of the maturity of the Revolving Loans or,
if payment is not then due to the beneficiary, provide for the deposit of funds
in an account to secure payment to the beneficiary and that any funds so
deposited shall be paid to the beneficiary of the Letter of Credit if conditions
to such payment are satisfied or returned to the Issuing Bank for distribution
to the Banks (or, if all Obligations shall have been indefeasibly paid in full,
to the Borrower) if no payment to the beneficiary has been made and the final
date available for drawings under the Letter of Credit has passed. Each payment
or deposit of funds by an Issuing Bank as provided in this paragraph shall be
treated for all purposes of this Agreement as a drawing duly honored by such
Issuing Bank under the related Letter of Credit.
(B) Request for Issuance. Whenever the Borrower desires the issuance
of a Letter of Credit, it shall deliver to the Agent a request for 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
changes in any such documents and certificates; 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 any Letter of Credit, the Issuing
Bank shall be responsible only to determine that the documents and certificates
required to be delivered under that Letter of Credit have been delivered and
that they comply on their face with the requirements of that Letter of Credit.
Promptly after receipt of a request for issuance of a Letter of Credit and the
determination of the Issuing Bank thereof, the 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).
(C) Determination of Issuing Bank.
(1) Upon receipt by the Agent of a request for issuance pursuant to
Section 1.13(B) with respect to a Letter of Credit, in the event the Agent
elects to issue such Letter of Credit, the Agent shall so notify the Borrower,
and the Agent shall be the Issuing Bank with respect thereto. In the event that
the Agent, in its sole discretion, elects not to issue such Letter of Credit,
the 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 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 the Agent not to issue such Letter of Credit, the Agent 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. In no event shall any Bank be an
Issuing Bank if such Bank would incur increased costs pursuant to Section
1.13(H) as a result of being the Issuing Bank, unless consented to by the
Borrower. No Issuing Bank shall issue any Letter of Credit denominated in a
currency other than Dollars.
(2) Each Issuing Bank that elects to issue a Letter of Credit shall
promptly give written notice to the Agent and each other Bank of the information
required under Sections 1.13(B)(i)-(iv) relating to the Letter of Credit.
(D) Payments 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 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 Agent and such
Issuing Bank prior to 10:00 A.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
Agent requesting the Banks to make Revolving Loans 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 satisfaction or waiver of the conditions
specified in Section 4.02, the Banks shall, on the date of such drawing, make
Revolving Loans that are Base Rate Loans in the amount of such drawing, the
proceeds of which shall be applied directly by the Agent to reimburse such
Issuing Bank for the amount of such drawing; and provided further that if, for
any reason, proceeds of Revolving Loans are not received by such Issuing Bank on
such date in an amount equal to the amount of such drawing, the Borrower shall
reimburse such Issuing Bank, on the Business Day (which shall be a business day
under the laws of the jurisdiction of such Issuing Bank) immediately following
the date of such drawing, in an amount in same day funds equal to the excess of
the amount of such drawing over the amount of such Revolving Loans, if any, that
are so received, plus accrued interest on such amount at the rate set forth in
Section 1.13(F)(1)(i).
(E) Payment by Banks. In the event that 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, 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 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 from 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.
(1) The Borrower agrees to pay the following amount with respect to
all Letters of Credit:
(i) 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 pursuant to
Section 1.13(D)) at a rate which is equal to the interest rate then
applicable to 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 Base Rate Loans during
such period; provided that if the Banks make a Revolving Loan on any day
the proceeds of which are to be applied to payment of the amount paid by
such Issuing Bank, the Borrower shall not be obligated to pay interest on
such amount for such day pursuant to this clause (i); and
(ii) 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.
(2) The Borrower agrees to pay to the 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 day of each fiscal quarter of the Borrower 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.
(3) 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) 1/4% of the maximum amount available at
any time to be drawn under such Letter of Credit or (B) $1,500.
Amounts payable under clauses (1)(i) and (2) of this Section 1.13(F)
shall be paid to the Agent on behalf of the Banks. The Agent shall promptly
distribute to each Bank its pro rata share of such amount. Amounts payable under
clauses (1)(ii) and (3) of this Section 1.13(F) shall be paid directly 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:
(1)any lack of validity or enforceability of any Letter of Credit;
(2)the existence of any claim, setoff, defense or other right that
the Borrower or any Affiliate of 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;
(3)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;
(4)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;
(5)any other circumstance or happening whatsoever that is similar to any of
the foregoing; or
(6)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 any judicial
or regulatory authority of any law, regulation, rule, decree or regulatory
requirement or (b) compliance by any Issuing Bank or any Bank with any
direction, request or requirement (whether or not having the force of law) of
any governmental or monetary authority including, without limitation, Regulation
D:
(i) such Issuing Bank or any Bank shall be subject to any tax, levy,
charge or withholding of any nature or to any variation thereof or to any
penalty with respect to the maintenance or fulfillment of its obligations
under this Section 1.13, whether directly or by such being imposed on or
suffered by such Issuing Bank or any Bank; provided, however, that no
payment shall be required to be made by the Borrower pursuant to this
clause (i) with respect to changes in the rate of any tax on or measured
by the net income of a Bank (including any franchise or similar tax so
measured) pursuant to the income tax laws of the United States or of the
jurisdiction in which it is incorporated or organized or the jurisdiction
where such Bank's lending office is located;
(ii) 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 participations therein purchased by any Bank; or
(iii) there shall be imposed on such Issuing Bank or any Bank any
other condition regarding this Section 1.13, any Letter of Credit or any
participation therein;
and the result of the foregoing is to directly or indirectly 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 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
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
participations 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 Agent by that Issuing Bank or any Bank, as the case may be,
shall, except for demonstrable error, be final, conclusive and binding for all
purposes.
If any Bank shall be entitled to payments under this Section 1.13,
such Bank, within a reasonable time after becoming entitled to such payments,
shall (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 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 the Bank,
be otherwise disadvantageous to such Bank.
(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 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
government or Governmental Authority (all such acts or omissions herein called
"Government Acts").
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
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; and (viii) for any consequences
arising from causes beyond the control of such Issuing Bank, including, without
limitation, any Government Acts. None of the above shall affect, impair, or
prevent the vesting of any of such Issuing Bank's rights or powers hereunder.
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 put such Issuing Bank
under any resulting liability to the Borrower.
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 solely 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.
1.14. Restatement Effective Date; Effect of Restatement.
(a) This Agreement shall become effective as provided in Section 11.10.
(b) Upon the effectiveness of this Agreement in accordance
with the terms hereof:
(i) the terms and conditions of the Existing Credit Agreement shall
be restated in their entirety, but only with respect to the rights, duties
and obligations among the Agent, the Banks, Holdings and any other
Guarantor and the Borrower accruing from and after the Restatement
Effective Date;
(ii) this Agreement shall not in any way release or impair the
rights, duties, obligations or Liens created pursuant to the Existing
Credit Agreement or any other Credit Document or affect the relative
priorities thereof, in each case to the extent in force and effect
hereunder and thereunder as of the Restatement Effective Date and except
as modified hereby or thereby or by documents, instruments and agreements
executed and delivered in connection herewith or therewith, and all of
such rights, duties, obligations and Liens are ratified and affirmed by
the parties hereto;
(iii) notwithstanding any other provisions of this Agreement, all
indemnification obligations of the Borrower under the Existing Credit
Agreement and any other Credit Document shall survive the execution and
delivery of this Agreement and shall continue in full force and effect for
the benefit of the Agent and the Banks;
(iv) the obligations incurred under the Existing Credit Agreement
shall, to the extent outstanding on the Restatement Effective Date,
continue to be outstanding under this Agreement and shall not be deemed to
be paid, released, discharged or otherwise satisfied by the execution of
this Agreement, and this Agreement shall not be deemed to constitute a
refinancing, substitution or novation of such obligations;
(v) all of the outstanding loans under the Existing Credit Agreement
immediately prior to the Closing Date of each Bank which shall be a party
to this Agreement (for each such Bank, such amount, the "Existing Loan
Amount") shall be automatically converted into, and shall, as of the
Closing Date, constitute a portion of, A Term Loans, B Term Loans and
Revolving Loans in the amounts set forth on Annex I hereto;
(vi) the execution, delivery and effectiveness of this Agreement
shall not operate as a waiver of any right, power or remedy of any of the
Banks or the Agent under the Existing Credit Agreement, nor constitute a
waiver of any covenant, agreement or obligation of the Borrower under the
Existing Credit Agreement, except to the extent that any such covenant,
agreement or obligation is no longer set forth in this Agreement or is
modified hereby;
(vii) any and all references in the Credit Documents to the Existing
Credit Agreement shall, without further action of the parties, be deemed a
reference to the Existing Credit Agreement as restated by this Agreement,
and as this Agreement shall be further amended or amended and restated
from time to time hereafter; and
(viii) on the Restatement Effective Date, the Banks holding notes (each
an "Existing Bank" and together, the "Existing Banks") executed and
delivered under the Existing Credit Agreement (the "Existing Notes") shall
surrender such Existing Notes to the Borrower or deliver a certificate to
the Agent certifying that such Existing Notes have been lost and cannot be
found, which certificate shall be accompanied by a standard indemnity by
such Existing Bank to the Borrower reasonably acceptable to the Agent and
the Borrower with respect to such lost Existing Notes; upon the Agent's
receipt of such Existing Notes or certificate (and indemnity) from each
Existing Bank, as the case may be, and the Borrower shall execute and
deliver to the Agent for delivery to each Existing Bank (A) an A Term Note
in the principal amount of such Existing Bank's A Term Loan Commitment in
accordance with the provisions of Section 1.01(a)(i) (including that
portion of such Existing Bank's Existing Loan Amount converted into A Term
Loans pursuant to Section 1.14(b)(v)), (B) a B Term Note in the principal
amount of such Existing Bank's B Term Loan Commitment in accordance with
the provisions of Section 1.01(a)(i) (including that portion of such
Existing Bank's Existing Loan Amount converted into B Term Loans pursuant
to Section 1.14(b)(v)) and (C) a Revolving Note in the principal amount of
such Bank's Revolving Loan Commitment in accordance with the provisions of
Section 1.01(b) (including that portion of such Existing Bank's Existing
Loan Amount converted into Revolving Loans pursuant to Section
1.14(b)(v)).
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 Agent at the Agent's Office (which notice the Agent shall promptly
transmit to each of the Banks), the Borrower shall have the right, without
premium or penalty, to terminate the unutilized portion of the Total Revolving
Loan Commitments, in part or in whole; provided that (x) any such termination
shall apply to proportionately and permanently reduce the Revolving Loan
Commitment of each of the Banks and (y) any partial reduction pursuant to this
Section 2.01 shall be in the amount of at least $500,000 and integral multiples
of $100,000 in excess of that amount; provided, further, that the Total
Revolving Loan Commitments shall not be reduced to an amount less than the
aggregate Revolving Loans and Letters of Credit Usage then outstanding.
2.02. Mandatory Adjustments of Commitments, etc.. (a) The
Total Revolving Loan Commitments shall terminate on the Revolving Loan
Commitment Termination Date.
(b) The Total A Term Loan Commitments shall terminate as to the
amount of any portion of the Total A Term Loan Commitments not utilized by the
Borrower on the Closing Date.
(c) The Total B Term Loan Commitments shall terminate as to the
amount of any portion of the Total B Term Loan Commitments not utilized by the
Borrower on the Closing Date.
(d) The Total Term Loan Commitments shall automatically be reduced,
on a pro rata basis, between the Total A Term Loan Commitments and the Total B
Term Loan Commitments, by the amount of any reduction of the funding necessary
for the Acquisition (excluding any purchase price adjustments relating to
working capital of the Borrower, which shall be used to repay Revolving Loans).
(e) The Total Term Loan Commitments shall be reduced on the date on
which any payments of principal on the Term Loans are made (other than pursuant
to Section 3.02(A)(a)) in an aggregate amount equal to such payments.
(f) Each reduction to the Total A Term Loan Commitments or the Total
B Term Loan Commitments or termination of the Total Revolving Loan Commitments
pursuant to this Section 2.02 shall apply proportionately to the A Term Loan
Commitment, the B Term Loan Commitment or the Revolving Loan Commitment, as the
case may be, of each Bank.
(g) The Total Revolving Loan Commitments shall be permanently
reduced in the amount and at the time of any payment on the Loans required to be
applied to the Revolving Loans or the Revolving Loan Commitment pursuant to
Section 3.02(B)(a).
2.03. Commitment Commission. The Borrower agrees to pay the Agent a
commitment commission ("Commitment Commission") for the account of each Bank for
the period from and including the Closing Date to but not including the date the
Total Revolving Loan Commitments have been terminated, computed at a rate equal
to 1/4% per annum on the daily average Unutilized Commitment of such Bank.
Accrued Commitment Commission shall be due and payable in arrears on the last
Business Day of each March, June, September and December commencing June 1997
and on the Revolving Loan Commitment Termination Date, based on the actual
number of days elapsed over a year of 360 days.
SECTION 3. Payments.
3.01. Voluntary Prepayments. The Borrower shall have the right to
prepay Term Loans and Revolving Loans in whole or in part from time to time,
without premium or penalty, on the following terms and conditions: (i) the
Borrower shall give the 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, in the case of Reserve Adjusted
Eurodollar Loans, the specific Borrowing or Borrowings pursuant to which 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 Agent to each of the Banks; (ii) each partial prepayment of any Borrowing
shall be in an aggregate principal amount of at least $500,000 and integral
multiples of $100,000 in excess of that amount; provided 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; and (iii) Reserve Adjusted Eurodollar Loans may only
be prepaid pursuant to this Section 3.01 on the last day of an Interest Period
applicable thereto. Voluntary prepayments of Term Loans shall be applied to the
prepayment of the outstanding principal amount of Term Loans pro rata between
the A Term Loans and the B Term Loans. Voluntary prepayments of Loans under the
A Term Loan Facility shall be applied to the prepayment of the outstanding
principal amount of A Term Loans pro rata to all remaining Scheduled A Term
Loans Principal Payments such that each Scheduled A Term Loans Principal Payment
then remaining shall be reduced by an amount equal to the product of (A) such
payment and (B) a fraction of which the numerator is equal to the amount of such
Scheduled A Term Loans Principal Payment then remaining and the denominator is
equal to the amount of all Scheduled A Term Loans Principal Payments remaining.
Voluntary prepayments of Loans under the B Term Loan Facility shall be applied
to the prepayment of the outstanding principal amount of B Term Loans pro rata
to all remaining Scheduled B Term Loans Principal Payments such that each
Scheduled B Term Loans Principal Payment then remaining shall be reduced by an
amount equal to the product of (A) such payment and (B) a fraction of which the
numerator is equal to the amount of such Scheduled B Term Loans Principal
Payment then remaining and the denominator is equal to the amount of all
Scheduled B Term Loans Principal Payments remaining.
3.02. Mandatory Prepayments.
(A) Requirements:
(a) The Borrower shall prepay the outstanding principal amount of
the A Term Loans, the B Term Loans or the Revolving Loans, as the case may
be, on any date on which the aggregate outstanding principal amount of
such Loans (after giving effect to any other repayments or prepayments on
such day together with, in the case of Revolving Loans, the outstanding
principal amount of Letters of Credit Usage) exceeds the Total A Term Loan
Commitments, the Total B Term Loan Commitments or the Total Revolving Loan
Commitments, as the case may be, in the amount of such excess.
(b) If the aggregate principal amount of outstanding Revolving Loans
and 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 of this Agreement (such amount is hereinafter
referred to as the "Excess"), then the Borrower shall prepay its Revolving
Loans in a principal amount equal to such Excess no later than two
Business Days after the Borrower has delivered, or was required to
deliver, such Borrowing Base Certificate to the Agent and the Banks.
(c) The Borrower shall cause to be paid each Scheduled A Term Loans
Principal Payment on the A Term Loans until the A Term Loans are paid in
full in the amounts and at the times specified in the definition of
Scheduled A Term Loans Principal Payments to the extent that prepayments
have not previously been applied to such Scheduled A Term Loans Principal
Payments (and such Scheduled A Term Loans Principal Payments have not
otherwise been reduced) pursuant to the terms hereof.
(d) The Borrower shall cause to be paid each Scheduled B Term Loans
Principal Payment on the B Term Loans until all B Term Loans are paid in
full, in the amounts and at the time specified in the definition of
Scheduled B Term Loans Principal Payments to the extent that prepayments
have not previously been applied to such Scheduled B Term Loans Principal
Payments (and such Scheduled B Term Loans Principal Payments have not
otherwise been reduced) pursuant to the terms hereof.
(e) As promptly as practicable, but in any event within five
Business Days of the date of receipt by Holdings, the Borrower and/or any
of the Borrower's Subsidiaries, as the case may be, of Net Cash Proceeds
or Net Financing Proceeds, an amount equal to such Net Cash Proceeds or
Net Financing Proceeds shall be applied as provided in Section 3.02(B)(a);
provided that with respect to any Net Cash Proceeds of the sale of equity
securities of Holdings, the Borrower or any of its Subsidiaries, clause
(g) of this Section 3.02(A) will govern and that with respect to any Net
Cash Proceeds from any Destruction or Taking, clause (i) of this Section
3.02(A) will govern.
(f) As promptly as practicable, but in any event within 90 days
after the last day of each fiscal year of the Borrower, commencing with
fiscal year 1997, an amount equal to 50% of Excess Cash Flow for such
fiscal year shall be applied as provided in Section 3.02(B)(a).
(g) As promptly as practicable, but in any event within five
Business Days of the date of the receipt thereof by Holdings, the Borrower
and/or any of its Subsidiaries, an amount equal to 100% of the proceeds
received by the Borrower or Holdings (including capital contributions,
other than those referred to in clauses (i) and (ii) of this paragraph
(g), received by the Borrower or any of its Subsidiaries) or such
Subsidiary (net of underwriting discounts and commissions and other costs
and expenses directly associated therewith) of the sale after the Closing
Date of equity securities (other than proceeds from the issuance of
capital stock (i) of Holdings, the Borrower or any of its Subsidiaries
pursuant to any pension, stock option, profit sharing or other employee
benefit plan or agreement of Holdings, the Borrower or any of its
Subsidiaries in the ordinary course of business or (ii) by a Subsidiary to
another Subsidiary or to the Borrower) shall be applied as provided in
Section 3.02(B)(a).
(h) As promptly as practicable, but in any event within five
Business Days of the date of the receipt thereof by the Borrower or any of
its Subsidiaries, an amount equal to 100% of any surplus net assets of any
Pension Plan returned to the Borrower or any of its Subsidiaries shall be
applied as provided in Section 3.02(B)(a).
(i) At the Agent's discretion, on the date of receipt thereof by
Holdings, the Borrower and/or any of its Subsidiaries, an amount equal to
100% of any proceeds received due to loss, damage, destruction or
condemnation of or to Assets (collectively, "Loss Proceeds"), less any
portion of such proceeds not in excess of $500,000, in the aggregate, per
fiscal year to be used for rebuilding, repairing or 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 Mortgages
and the Security Documents) within 180 days of receipt of such Loss
Proceeds (or such longer periods as may be consented to by the Agent,
which consent shall not be unreasonably withheld) shall be delivered by
Holdings, the Borrower and/or its Subsidiaries to the Agent to be held by
the Agent in a cash collateral account bearing interest payable to the
Borrower at a rate per annum (meaning 360 days) equal to the Federal Funds
Rate. Upon the Borrower's request, Agent shall release such proceeds to
the Borrower for reinvestment, rebuilding, repair or replacement as
described above. To the extent the Borrower fails to use any or all of
such released proceeds for such rebuilding, repair or replacement of
assets within 180 days (or such longer periods as may be consented to by
the Agent, which consent shall not be unreasonably withheld) of such
release, the Borrower shall, at the Agent's discretion, return the unused
portion of such released funds to the Agent and authorize and direct the
Agent to apply such proceeds as provided in Section 3.02(B)(a).
(j) As promptly as practicable, but in any event within five
Business Days of the date of receipt by Holdings, the Borrower and/or its
Subsidiaries of any tax refund, an amount equal to 100% of such refund
paid to Holdings, the Borrower and/or any of its Subsidiaries shall be
applied as provided in Section 3.02(B)(a); provided that such refund or
refunds are not promptly applied by Holdings, the Borrower and/or any of
its Subsidiaries to the payment of future tax liabilities.
(B) Application:
(a) Prepayments to be applied pursuant to this Section 3.02(B)(a)
shall be applied without penalty or premium (other than Reserve Adjusted
Eurodollar Rate breakage costs, if any) as follows: (i) first, to the Term
Portion, pro rata between the Scheduled A Term Loans Principal Payments
and the Scheduled B Term Loans Principal Payments, in pro rata order of
maturity; and (ii) second, to repay Revolving Loans; provided that
prepayments required by Section 3.02(A)(b) hereof shall be applied first
to repay Revolving Loans.
(b) With respect to each prepayment of Loans required by Section
3.02(A), the Borrower shall give the Agent two Business Days notice and
may designate the Types of Loans and the specific Borrowing or Borrowings
which are to be prepaid; provided that (i)(x) Reserve Adjusted Eurodollar
Loans may be designated for prepayment pursuant to this Section 3.02 only
on the last day of an Interest Period applicable thereto unless all
Reserve Adjusted Eurodollar Loans with Interest Periods ending on such
date of required prepayment and all Base Rate Loans have been or are
concurrently being paid in full and (y) 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 pro rata among such Loans.
In the absence of a designation by the Borrower, the 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, under
Section 1.10(f).
3.03. 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
1:00 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 Agent or if no account has been so specified at the
Agent's Office, it being understood that written notice by the Borrower to the
Agent to make a payment from the funds in the Borrower's account at the Agent's
Office shall constitute the making of such payment to the extent of such funds
held in such account. The Agent will thereafter cause to be distributed on the
same day (if payment is actually received by the Agent in New York prior to 1:00
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 Agent in full on the same day (if
payment is actually received by the Agent prior to 1:00 P.M. (New York time) on
such day), the 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 Agent until the date the Agent pays such amount to such Bank.
(b) Any payments under this Agreement which are made by the Borrower
later than 1:00 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.
3.04. Net Payments. (a) Except as provided in Section 3.04(d)
hereof, all payments by the Borrower under this Agreement or under any Credit
Document shall be made without set-off 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, levies, imposts, duties or
other charges of whatsoever nature imposed by any government or any political
subdivision or taxing authority thereof, other than any tax on or measured by
the net income of a Bank (including without limitation franchise taxes and
branch profits taxes) pursuant to the laws of the United States or any political
subdivision thereof or of the jurisdiction in which it is incorporated or the
jurisdiction where such Bank's lending office is located or in which it has any
other contacts or connection that would subject it to taxation therein
(collectively, "Taxes")) shall not be less than the amounts otherwise specified
to be paid under this Agreement and/or any Credit Document. A certificate as to
the calculation of any additional amounts payable to a Bank under this Section
3.04 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.
(b) Without prejudice to the provisions of clause (a) of this
Section 3.04, and except as provided in Section 3.04(d) hereof, if any Bank, or
the 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 the other Credit Documents by such Bank, or the Agent on its behalf, or
any liability for Tax in respect of any such payment is imposed, levied or
assessed against any Bank, or the 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 clause (b), computed in a
manner consistent with clause (a) of this Section 3.04. A certificate by such
Bank, or the 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.
(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 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 claims entitlement to a complete
exemption from U.S. federal withholding tax on interest paid by the 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 3.04(c)(i) agrees to furnish
to the Borrower and the Agent (x) a certificate substantially in the form of
Exhibit Q hereto and (y) 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 3.04(c)(i) hereof agrees to provide subsequently to the Borrower and the
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
3.04(c)(ii) only if it is entitled to claim an 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 Agent in writing.
(d) The Borrower shall not be required to pay any increased amount
on account of Taxes pursuant to Section 3.04(a) or (b) to any Bank or 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 3.04(c)
hereof, (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 3.04(c)(i) hereof, 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 the Borrower in accordance with the provisions of this Section
3.04, 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
3.04, such Bank, within a reasonable time after becoming entitled to such
payments, shall (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
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.
SECTION 4. Conditions Precedent.
4.01. Conditions Precedent to Additional Loans. The obligations of
the Banks to make the Additional Loans to the Borrower hereunder are subject, at
the time of the making of each such Additional Loan (except as otherwise
hereinafter indicated), to the satisfaction of the following conditions:
(A) Credit Agreement. The Borrower shall have duly executed
and delivered this Agreement.
(B) Officer's Certificates. On the Closing Date, the Agent shall
have received (i) a certificate dated such date signed by an appropriate
officer of the Borrower stating that all of the applicable conditions set
forth in Sections 4.01(D), (E), (F), (I), (K), (L), (N), (P), (Q), (R),
(S), (T), (U), (V) and (W) (in each case disregarding any reference
therein that such condition be deemed satisfactory by the Agent and/or the
Required Banks) have been satisfied in all material respects (without
giving effect to any materiality or similar exceptions contained therein)
or waived as of such date and (ii) a certificate with respect to
environmental matters, substantially in the form set forth on Exhibit N
hereto.
(C) Opinions of Counsel. On the Closing Date, the Agent shall have
received an opinion or opinions addressed to each of the Banks and dated
the Closing Date, each in form and substance satisfactory to the Agent,
from (i) Milbank, Tweed, Hadley & McCloy, counsel to the Borrower and
Holdings, which opinion shall address the matters contained in Exhibit C-1
hereto and (ii) local Georgia counsel to the Borrower, which opinions
shall address the matters contained in Exhibit C-2 hereto.
(D) Corporate Proceedings. All corporate and legal proceedings and
all instruments and agreements in connection with the transactions
contemplated by the Credit Documents shall be satisfactory in form and
substance to the Agent, and the 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 Agent
reasonably may have requested from Holdings, the Borrower and any
Affiliate of any thereof in connection therewith, such documents and
papers where appropriate to be certified by proper corporate or
governmental authorities. Without limiting the foregoing, the Agent shall
have received (i) evidence satisfactory to it that the Board of Directors
of each of Holdings and the Borrower shall have approved and recommended
the Acquisition, (ii) resolutions of the Board of Directors of Holdings,
the Borrower or any Affiliate thereof approving and authorizing such
documents and actions as are contemplated hereby in form and substance
satisfactory to the Agent including without limitation the execution and
delivery of all Credit Documents, certified by its corporate secretary or
an assistant secretary as being in full force and effect without
modification or amendment, and (iii) signature and incumbency certificates
of officers of Holdings, the Borrower or any Affiliate thereof executing
instruments, documents or agreements required to be executed in connection
with the Acquisition.
(E) Consummation of Acquisition. On the Closing Date, the
Acquisition shall be consummated concurrently with the making of the
Additional Loans hereunder and the assets acquired in the Acquisition
shall have been contributed to the Borrower.
(F) Manufacturing Agreements. On the Closing Date, the Borrower
shall have entered into the Cutex Manufacturing Agreement, in the form of
Exhibit S hereto, and, within 30 days after the Closing Date, the Borrower
shall have entered into the AM Manufacturing Agreement, substantially in
the form of Exhibit T annexed hereto, and reasonably acceptable to the
Agent.
(G) Organizational Documentation, etc. On or prior to the Closing
Date, the Agent shall have received copies of a true and complete
certified copy of the following documents of each of Holdings and the
Borrower, the provisions of which shall be reasonably satisfactory to the
Agent:
(1) Its respective Certificate of Incorporation, which shall
be certified and be accompanied by a good standing certificate from
the Secretary of State of the State of Delaware or its respective
jurisdiction of incorporation and good standing certificates from
the jurisdictions in which it is qualified to do business as a
foreign corporation, each to be dated a recent date prior to the
Closing Date;
(2) Its respective By-laws, certified as of the
Closing Date by its corporate secretary.
(H) Solvency. On the Closing Date, the Banks shall have received the
Officers' Solvency Certificate, substantially in the form of Exhibit L
annexed hereto, in form and substance satisfactory to the Agent,
supporting the conclusions that, after giving effect to the Acquisition
and the contemplated borrowings in connection herewith, the Borrower and
its Subsidiaries will not be insolvent, will not be rendered insolvent by
the indebtedness incurred in connection herewith, will not be left with
unreasonably small capital with which to engage in their respective
businesses and will not have incurred debts, including Contingent
Obligations, beyond their respective abilities to pay such debts as they
mature.
(I) Options and Warrants. There shall be no outstanding capital
stock (or right, option, warrant or other arrangement to acquire such
capital stock) of the Borrower, other than that owned by Holdings.
(J) Notes. There shall have been delivered to the Agent for the
account of each of the Banks the Term Notes and the Revolving Notes
executed by the Borrower in the amount and maturity and as otherwise
provided herein.
(K) Certain Fees. All reasonable costs, fees and expenses
(including, without limitation, reasonable legal fees and expenses)
payable to Indosuez by the Borrower pursuant to the letter agreement
between Holdings and Indosuez dated March 27, 1997 shall have been paid in
full and the Borrower shall have paid or have caused to be paid the
commitment and other fees and expenses (including, without limitation,
reasonable legal fees and expenses) contemplated hereby and/or in
connection with the other Credit Documents; provided that the aggregate
costs, fees and expenses shall not exceed $4,000,000.
(L) Conditions Relating to Mortgaged Real Property and Real
Property. On or prior to the Closing Date, the Borrower shall have caused
to be delivered to the Agent, on behalf of the Banks, the following
documents and instruments:
(i) a Mortgage encumbering each Mortgaged Real Property in
favor of the Agent, as Collateral Agent for the benefit of the
Banks, duly executed and acknowledged by the Credit Party that is
the owner of or holder of an interest in such Mortgaged Real
Property, and otherwise in form for recording in the recording
office of each political subdivision where each such Mortgaged Real
Property is situated, together with such certificates, affidavits,
questionnaires or returns as shall be required in connection with
the recording or filing thereof to create a lien under applicable
law, and such UCC-1 financing statements and other similar
statements as are contemplated by the counsel opinions described in
Section 4.01(C)(ii) in respect of such Mortgage, all of which shall
be in form and substance reasonably satisfactory to the Agent, and
any other instruments necessary to grant a mortgage lien under the
laws of any applicable jurisdiction, which Mortgage and financing
statements and other instruments shall be effective to create a
first priority Lien on such Mortgaged Real Property subject to no
Liens other than Prior Liens;
(ii) with respect to each Mortgaged Real Property, such
consents, approvals, amendments, supplements, estoppels, tenant
subordination agreements or other instruments as necessary or
required to consummate the transactions contemplated hereby or as
shall reasonably be deemed necessary by the Agent in order for the
owner or holder of the fee or leasehold interest constituting such
Mortgaged Real Property to grant the Lien contemplated by the
Mortgage with respect to such Mortgaged Real Property;
(iii) with respect to each Mortgage, a policy (or commitment to
issue a policy) of title insurance insuring (or committing to
insure) the Lien of such Mortgage as a valid first mortgage Lien on
the real property described therein in an amount not less than 115%
of the fair market value thereof as determined by appraisal reports,
which policies (or commitment) shall (a) be issued by the Title
Company, (b) include such reinsurance arrangements (with provisions
for direct access) as shall be reasonably acceptable to the Agent,
(c) contain a "tie-in" or "cluster" endorsement (if applicable and
if available under applicable law) (i.e., policies which insure
against losses regardless of location or allocated value of the
insured property up to a stated maximum coverage amount) and have
been supplemented by such endorsements (or where such endorsements
are not available, opinions of special counsel reasonably acceptable
to the Agent to the extent that such opinions can be obtained at a
cost which is reasonable with respect to the value of the Real
Property subject to such Mortgage) as shall be reasonably requested
by the Agent (including, without limitation, endorsements on matters
relating to usury, first loss, last dollar, contiguity (as
applicable), revolving credit, doing business, zoning, variable rate
and so-called comprehensive coverage over covenants and
restrictions) and (d) contain only such exceptions to title as shall
be Prior Liens or are otherwise agreed to by the Agent on or prior
to the Closing Date with respect to such Mortgaged Real Property;
(iv) with respect to each Mortgaged Real Property, a
Survey;
(v) with respect to each Mortgaged Real Property, policies or
certificates of insurance as required by the Mortgage relating
thereto, which policies or certificates shall comply with the
insurance requirements contained in such Mortgage;
(vi) with respect to each Mortgaged Real Property, UCC,
judgment and tax lien searches confirming that the personal property
comprising a part of such Mortgaged Real Property is subject to no
Liens other than Prior Liens;
(vii) with respect to each Mortgaged Real Property, such
affidavits, certificates, information (including financial data) and
instruments of indemnification (including, without limitation, a
so-called "gap" indemnification) as shall be required to induce the
Title Company to issue the policy or policies (or commitment) and
endorsements contemplated in subparagraph (iii) above;
(viii) evidence reasonably acceptable to the Agent of payment by
the Borrower of all title insurance premiums, search and examination
charges, survey costs and related charges, mortgage recording taxes,
fees, charges, costs and expenses required for the recording of the
Mortgages and issuance of the title insurance policies referred to
in subparagraph (iii) above;
(ix) with respect to each Real Property or Mortgaged Real
Property, copies of all Leases in which a Credit Party holds the
landlord's, tenant's or other interest and any other agreements
relating to possessory interests in such Real Property or Mortgaged
Real Property. To the extent any of the foregoing affect any
Mortgaged Real Property, such Leases shall be reasonably acceptable
to the Agent; and
(x) with respect to each Mortgaged Real Property, an Officers'
Certificate or other evidence reasonably satisfactory to the Agent
that as of the date thereof, to the best of such officer's
knowledge, there (a) have been issued and are in effect valid and
proper certificates of occupancy or other local equivalents for the
use then being made of such Mortgaged Real Property to the extent
currently required by law in the jurisdiction in which such
Mortgaged Real Property is located which certificates if not
obtained or maintained would have a material adverse effect upon the
value of the Mortgaged Real Property and that there is not
outstanding any citation, violation or similar notice indicating
that such Mortgaged Real Property contains conditions which are not
in compliance in all material respects with local codes or
ordinances relating to building or fire safety or structural
soundness, (b) has not occurred any Taking or Destruction of any
Mortgaged Real Property that has not been repaired or restored
except as set forth therein and (c) is no litigation regarding
boundary lines, encroachment or possession of any Mortgaged Real
Property and no state of facts known to any Credit Party which could
give rise to any such claim, except as set forth therein.
(M) Financial Statements, etc. Prior to the Closing Date, the Agent
shall have received audited financial statements including a balance sheet
and statements of income and shareholders' equity and cash flows of
Holdings and its consolidated Subsidiaries for the fiscal period ended
December 31, 1996, which audited financial statements shall reflect no
material changes from the unaudited financial statements previously
delivered to the Agent. The Borrower shall have delivered to the Agent pro
forma financial statements for the Borrower and its consolidated
Subsidiaries for the fiscal year ended December 31, 1997, after giving
effect to the Acquisition, and interim financial statements for the
Borrower and its consolidated Subsidiaries through February 28, 1997. The
Borrower shall have delivered to the Agent financial projections with
respect to the Borrower for the fiscal years ending December 31, 1998
through December 31, 2001, inclusive, 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, reasonably satisfactory to the
Agent; provided, however, that in addition to the financial projections
referred to above, the Borrower shall also have delivered to the Agent
financial projections on a monthly basis for each of the monthly periods
from the Closing Date through December 31, 1997. Since the time of the
preparation of such financial projections, no fact or facts have come to
the attention of the Borrower to cause the Borrower to believe that any of
the estimates and assumptions on which such projections are based are not
reasonable.
(N) Insurance. Set forth on Annex VI is a summary of all insurance
policies maintained by the Borrower and its Subsidiaries, and the
insurance coverage provided for the Borrower and its Subsidiaries by such
insurance policies shall be reasonably satisfactory to the Agent.
(O) Performance Bonds. On the Closing Date, the Agent shall be
reasonably satisfied that the Borrower will be able to service and
maintain any performance bonds that may be required in the ordinary course
of business on reasonable terms and conditions.
(P) Indebtedness, etc. On or prior to the Closing Date and except as
set forth on Annex X, the Borrower and its Subsidiaries shall have
received all necessary consents or waivers or amended, supplemented or
otherwise modified, repaid or defeased their outstanding Indebtedness in a
manner and on terms reasonably satisfactory to the Agent such that there
exists no default or potential default with respect to such Indebtedness
or under any note, evidence of indebtedness, mortgage, deed of trust,
security document or other agreement relating to such Indebtedness and
such indentures, notes, evidences of indebtedness, mortgages, deeds of
trust or other agreements relating to such Indebtedness shall not, other
than as set forth on Annex XI, contain any restriction on the ability of
the Borrower or any of its Subsidiaries to enter into the Mortgages,
Pledge Agreements or the granting of any Lien in favor of the Banks in
connection therewith, or contain any financial covenants, agreements or
tests applicable to the Borrower or any of its Subsidiaries. Annex VII
sets forth a true list of all Liens other than Permitted Encumbrances on
the property of the Borrower and its Subsidiaries as of the Closing Date.
(Q) Management Agreement and Employment Agreements. Each of the
Management Agreement and the Employment Agreements shall remain in full
force and effect and shall be reasonably satisfactory to the Agent.
(R) Security Documents and Guarantees. Any required Security
Documents (other than those previously executed and delivered in
connection with the Existing Credit Agreement) and Guarantees (other than
those previously executed and delivered in connection with the Existing
Credit Agreement) shall have been duly executed and delivered by the
respective parties thereto and there shall have been delivered to the
Agent (i) certificates representing all Pledged Securities, together with
executed and undated stock powers and/or assignments in blank, (ii)
evidence of the filing and due execution of appropriate financing
statements under the provisions of the UCC, applicable domestic or local
laws, rules or regulations in each of the offices where such filing is
necessary or appropriate to grant to the Agent, as collateral security for
the payment and performance of the Obligations including, without
limitation, the Additional Loans, a perfected first priority Lien in the
Collateral superior to and prior to the rights of all third persons and
subject to no other Liens other than Prior Liens, (iii) 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 any Credit Party under such Security Documents as debtor and
which are filed in those jurisdictions in which any of the Collateral is
located and the jurisdictions in which each Credit Party's principal place
of business is located, none of which, except as set forth in the
applicable Security Documents, shall encumber the Collateral covered or
intended or purported to be covered by the Security Documents, and (iv)
evidence that arrangements have been made for the prompt completion of all
recordings and filings of each Security Document related to Mortgaged Real
Property and delivery to the Agent of such other security and other
documents as may be necessary or, in the reasonable opinion of Agent,
desirable to perfect the Liens created, or purported or intended to be
created, by the Security Documents.
(S) Consents, Etc. All material governmental and third party
approvals and consents (including, without limitation, all material
approvals and consents required in connection with any environmental
statutes, rules or regulations), if any, in connection with the
transactions contemplated by the Credit Documents and otherwise referred
to herein or therein to be completed on or before the Closing Date 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 judgment of the
Agent or the Required Banks, materially adverse conditions upon the
consummation of the Acquisition. There shall not exist any adverse
judgment, order, injunction or other restraint issued or filed with
respect to the making of the Loans hereunder or the consummation of the
Acquisition.
(T) Borrowing Base Certificate. Prior to the initial Revolving Loan,
the Agent and the Banks shall have received and the Agent and the Required
Banks shall be satisfied (both as to form and substance) with a pro forma
Borrowing Base Certificate which shall be prepared as of a date prior to
the Closing Date and which shall indicate that the Borrowing Base on the
Closing Date will exceed the initial Borrowings under the Revolving
Portion by not less than $5,000,000.
(U) Leases. All Capital Leases and Operating Leases of the Borrower
outstanding immediately prior to the Acquisition shall remain outstanding
after giving effect to the Acquisition, on terms satisfactory to the
Agent.
(V) Acquisition Documents. All terms of the Acquisition Documents
(including, without limitation, the amount and form of consideration
included in the purchase price and conditions contained therein) and any
amendments thereto shall be in form and substance reasonably satisfactory
to the Agent; and at the Closing Date each of the conditions to purchase
contained in the Acquisition Documents shall have been satisfied in all
material respects (or waived in writing, such waiver to be reasonably
satisfactory to the Agent) to the reasonable satisfaction of the Agent.
(W) Conditions Relating to Existing Security Documents. Each
Security Document and Guarantee executed prior to the Closing Date in
connection with the Existing Credit Agreement shall be in full force and
effect. With respect to each such Security Document, on or prior to the
Closing Date, the Borrower shall have caused to be delivered to the Agent,
on behalf of the Banks, the following documents and instruments:
(i) an amendment, duly executed by the Borrower, to secure the
Additional A Term Loans, Additional B Term Loans and Revolving Loans
pari passu with the Existing Loans, and otherwise in form and
substance reasonably satisfactory to the Agent;
(ii) all certificates representing all Pledged Securities (if
certificated) listed in such amendments, together with executed and
undated stock powers and/or assignments in blank;
(iii) appropriate financing statements and statement amendments
or comparable documents of, and executed by, the appropriate
entities in proper form for filing under the provisions of the UCC
and applicable domestic or local laws, rules or regulations in each
of the offices where such filing is necessary or appropriate to
grant or confirm to the Agent a perfected first priority Lien on
such Collateral superior to and prior to the rights of all third
persons and subject to no other Liens, other than Prior Liens;
(iv) certified copies of Requests for Information (Form UCC-11
or equivalent), or equivalent reports or lien search reports listing
all effective financing statements or comparable documents which
name any Credit Party under such Security Documents as debtor and
which are filed in those jurisdictions in which any of the
Collateral under such Security Documents is located, none of which,
except as set forth on the applicable Security Documents, shall
encumber the Collateral covered or intended or purported to be
covered by such Security Documents; and
(v) evidence of the completion of all recordings and filings
of each amendment and delivery of such other security and other
documents as may be necessary or, in the opinion of the Agent,
desirable to perfect, or confirm the perfection of, the Liens
created, or purported or intended to be created, by the Security
Documents.
The acceptance of the proceeds of each Borrowing of Additional Loans
shall constitute a representation and warranty by each Credit Party to each of
the Banks that all of the applicable conditions specified above (in each case
disregarding any reference therein that such condition be deemed satisfactory by
the Agent and/or the Required Banks) 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 Agent at the Agent's Office (or such other location as may be specified
by the 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 Agent.
4.02. Conditions Precedent to All Loans. The obligation of
the Banks to make all Loans (which term shall not include a conversion or
continuation of a Loan) is subject, at the time of each such Loan, to the
satisfaction of the following conditions:
(A) Effectiveness. This Agreement shall have become effective as
provided in Section 11.10.
(B) No Default; Representations and Warranties. At the time of the
making of each Loan and also after giving effect thereto (i) there shall
exist no Default or Event of Default and (ii) all representations and
warranties made by any Credit Party contained herein or in the other
Credit Documents in effect at such time shall be true and correct in all
material respects 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 on and as of such
other date.
(C) Documentation and Opinions of Counsel. The Agent shall have
received such documentation and opinion or opinions, addressed to each of
the Banks, from counsel to each Credit Party as may be reasonably
required, with reasonable notice under the circumstances, by, and shall be
reasonably satisfactory to the Agent, from (i) such counsel to each Credit
Party as reasonably requested by the Agent and (ii) appropriate local
counsel, which opinions shall cover such matters as reasonably requested
by, and be in form and substance reasonably satisfactory to, the Agent.
(D) 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, T, U or X of the Board of Governors of the
Federal Reserve System.
(E) Borrowing Base Certificate. The Agent and the Required Banks
shall have received and 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 shall
constitute a representation and warranty by each Credit Party to each of the
Banks that all of the applicable conditions specified in Section 4.02 (in each
case disregarding any reference therein that such condition be deemed
satisfactory by the Agent and/or the Required Banks) have been satisfied or
waived.
All of the certificates, legal opinions and other documents and
papers referred to in this Section 4.02, unless otherwise specified, shall be
delivered to the Agent at the Agent's Office (or such other location as may be
specified by the Agent) for the account of each of the Banks and in sufficient
counterparts for each of the Banks and shall be satisfactory in form and
substance to the Agent.
4.03. Conditions Precedent to All Letters of Credit. The right of
the Borrower to obtain the issuance of any Letter of Credit that the relevant
Issuing Bank determines to issue in its sole discretion hereunder is subject to
prior or concurrent satisfaction of all of the following conditions:
(A) Required Documentation. On or prior to the date of issuance of a
Letter of Credit, the Agent shall have received, in accordance with the
provisions of Section 1.13(B), a request for issuance with respect to such
Letter of Credit (the furnishing by the Borrower of each such request for
issuance shall be deemed to constitute a representation and warranty of
the Borrower to the effect that the conditions set forth in Section 4.02
(in each case disregarding any reference therein that such condition be
deemed satisfactory by the Agent and/or the Required Banks) are satisfied
as of the date of delivery and will be satisfied on the relevant date of
issuance), all other information specified in Section 1.13(B), and such
other documents as the Issuing Bank may reasonably require in connection
with the issuance of such Letter of Credit.
(B) Conditions. On the date of issuance of each such Letter of
Credit, all conditions precedent described in Section 4.02 shall be
satisfied to the same extent as though the issuance of such Letter of
Credit were the making of a Revolving Loan.
SECTION 5. Representations, Warranties and Agreements. In order to
induce the Banks to enter into this Agreement and to make the Loans provided for
herein, each of Holdings and the Borrower makes the following representations
and warranties to, and agreements with, 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 Acquisition and the related
transactions and as of the date of each such Loan unless such representation and
warranty expressly indicates that it is being made as of any specific date):
5.01. Corporate Status. Each Credit Party (i) is a duly organized
and validly existing corporation in good standing under the laws of the
jurisdiction of its organization; (ii) has the corporate or other organizational
power and authority and, other than as set forth on Annex X, has obtained all
requisite governmental licenses, authorizations, consents and approvals to own
and operate its property and assets and to transact the business in which it is
engaged and presently proposes to engage including, without limitation, those in
compliance with or required by the Environmental Laws except as described in
Annex XII hereto and except for those governmental licenses, authorizations,
consents or approvals the failure of which to be so obtained would not have a
Materially Adverse Effect and (iii) is duly qualified and is authorized to do
business and is in good standing in all jurisdictions where it is required to be
so qualified and where the failure to be so qualified would have a Materially
Adverse Effect.
5.02. Corporate Power and Authority; Business. (a) Each Credit Party
has the corporate power and authority to execute, deliver and carry out the
terms and provisions of the Credit Documents to which it is a party and has
taken all necessary corporate action to authorize the execution, delivery and
performance of the Credit Documents to which it is a party. Each Credit Party
has duly executed and delivered each Credit Document to which it is a party and
each such Credit Document constitutes the legal, valid and binding obligation of
such Person enforceable against such Person in accordance with its terms except
as may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to or affecting creditors' rights generally and except as
such enforceability may be limited by the application of general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).
(b) Holdings was incorporated on May 10, 1995 and consummated an
initial public offering of its common stock on October 18, 1996; and the
Borrower was incorporated as Aminco, Inc. in Delaware on March 20, 1990. Prior
to the Closing Date, Holdings will not have engaged in any business or incurred
any liabilities except for activities, expenses and liabilities incident to its
organization or its initial public offering and to the carrying out of the
transactions contemplated by the Credit Documents and the Acquisiton.
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 (i) will contravene any applicable provision
of any law, statute, rule, regulation, order, writ, injunction or decree of any
court or governmental instrumentality, (ii) will conflict or be inconsistent
with or result in any breach of any of the terms, covenants, conditions or
provisions of, or constitute a default under, or (other than pursuant to the
Security Documents) 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 or its Subsidiaries pursuant to the terms of any indenture, mortgage, deed
of trust, material agreement or other material instrument to which any Credit
Party or its Subsidiaries is a party or by which it or any of its property or
assets is bound or to which it may be subject or (iii) will violate any
provision of the charter or by-laws of any Credit Party or its Subsidiaries,
except, in each such case, where such contravention, conflict, inconsistency,
breach, default, creation, imposition, obligation or violation does not have a
Materially Adverse Effect. The consummation of the Acquisition and the terms of
the financing in connection therewith will not conflict or be inconsistent with
or result in any breach of any of the terms, covenants, conditions or provisions
of, or constitute a default under, or 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 Holdings or the
Borrower or any of their respective Subsidiaries pursuant to the terms of, any
indenture, mortgage, deed of trust, material instrument or material agreement
relating to Indebtedness for borrowed money or the equivalent thereof or other
material agreement to which Holdings or the Borrower or any of their respective
Subsidiaries is a party or by which it or any of its property or assets is bound
or to which it may be subject, except, in each such case, where such conflict,
inconsistency, breach, default, creation, imposition or obligation does not have
a Materially Adverse Effect.
5.04. Litigation. Except as set forth on Annex IX, there are no
actions, judgments, suits or proceedings pending or, to Holdings' or the
Borrower's knowledge, threatened in any court of competent jurisdiction with
respect to any Credit Party or its Subsidiaries that are, individually or in the
aggregate, likely to have a Materially Adverse Effect.
5.05. Use of Proceeds. (a) All the proceeds of all Term
Loans to be made hereunder shall be utilized to provide a portion of the
financing required to consummate the Refinancing and to pay related fees
and expenses.
(b) Up to $3,000,000 of the proceeds of Revolving Loans made on the
Closing Date may be used by the Borrower on the Closing Date to provide a
portion of the financing required to consummate the Acquisition and to pay
related fees and expenses and the remaining proceeds of Revolving Loans may be
utilized to finance the ongoing working capital requirements of the Borrower and
its Subsidiaries and for general corporate purposes.
(c) Neither the making of any Loan hereunder, nor the use of the
proceeds thereof, will violate or be inconsistent with the provisions of
Regulation G, T, 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 by, any third party or any foreign or domestic Governmental
Authority (other than those orders, consents, approvals, licenses,
authorizations or validations which, if not obtained or made, would not have a
Materially Adverse Effect or which have previously been obtained or made and
except for filings to perfect security interests granted pursuant to the
Security Documents) is required to authorize or is required in connection with
(i) the execution, delivery and performance of any Credit Document or the
transactions contemplated therein or (ii) the legality, validity, binding effect
or enforceability of any Credit Document. At the time of the making of the
Loans, there does not exist any judgment, order, injunction or other restraint
issued or filed with respect to the making of Loans or the performance by the
Credit Parties of their obligations under the Credit Documents.
5.07. Investment Company Act. None of Holdings, the Borrower or
their respective Subsidiaries is, or will be after giving effect to the
transactions contemplated hereby, an "investment company" or a company
"controlled" by an "investment company," within the meaning of the Investment
Company Act of 1940, as amended.
5.08. Public Utility Holding Company Act. None of Holdings, the
Borrower or their respective Subsidiaries is, or will be after giving effect to
the transactions contemplated hereby, a "holding company," or a "subsidiary
company" of a "holding company," or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
5.09. True and Complete Disclosure. All factual information (taken
as a whole) heretofore or contemporaneously furnished by or on behalf of
Holdings, the Borrower or any of their Subsidiaries in writing to any Bank
(including, without limitation, all information contained in the Credit
Documents) for purposes of or in connection with this Agreement or any
transaction contemplated herein is (or was, on the date of making the Initial
Loans), and all other such factual information (taken as a whole) hereafter
furnished by or on behalf of any such Person in writing to any Bank will be,
true and accurate in all material respects on the date as of which such
information is dated or certified and not incomplete by omitting to state any
material fact necessary to make such information not misleading at such time in
light of the circumstances under which such information was provided. The
projections and pro forma financial information contained in such materials are
based on good faith estimates and assumptions believed by such Persons to be
reasonable at the time made. There is no fact known to any Credit Party which
has a Materially Adverse Effect which has not been disclosed herein or in such
other documents, certificates and written statements furnished to the Banks for
use in connection with the transactions contemplated hereby.
5.10. Acquisition; Purchase Agreements. (a) At the Closing
Date, the Acquisition shall concurrently be consummated.
(b) At the time of making the Additional Loans, all necessary
governmental and third-party approvals (including, without limitation, those
pursuant to the HSR Act) (except as set forth on Annex X hereto) in connection
with the transactions contemplated by the Acquisition Documents and otherwise
referred to therein have been or, prior to the time when required, will have
been, obtained and remain in effect, and all applicable waiting periods have or,
prior to the time when required, will have, expired without, in all such cases,
any action being taken by any competent authority which has a Materially Adverse
Effect on the transactions contemplated by the Acquisition Documents. At the
time of the making of the Additional Loans, there does not exist any adverse
judgment, order, injunction or other restraint issued or filed with respect to
the transactions contemplated by the Acquisition Documents and the consummation
of the Acquisition.
(c) As of the Closing Date, all representations and warranties of
the Borrower and Holdings, as the case may be, and, to the best knowledge of the
Borrower, of the Sellers set forth in the Purchase Agreements were true and
correct in all material respects as of the time as of which such representations
and warranties were made and shall be true and correct in all material respects
as of the Closing Date as if such representations and warranties were made on
and as of such date, unless such representation and warranty expressly indicates
that it is being made as of any other specific date.
5.11. Financial Condition; Financial Statements; Projections. (a) No
Credit Party is entering into the arrangements contemplated hereby and by the
other Credit Documents, or intends to make any transfer or incur any obligations
hereunder or thereunder with actual intent to hinder, delay or defraud either
present or future creditors. On and as of the Closing Date, on a pro forma basis
after giving effect to the Acquisition and to all Indebtedness incurred and
Liens and Guarantees created, or to be created, by each Credit Party in
connection with the Acquisition, (w) the Borrower does not expect that final
judgments against any Credit Party 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, such Credit Party 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 and the earliest
reasonable time at which such judgments might be rendered and the cash available
to each 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 their Contingent Obligations)); (x) no Credit Party 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 amounts
to be payable on or in respect of debts of such Credit Party and the amounts
referred to in the preceding clause (w)); (y) each Credit Party, after taking
into account all other anticipated uses of the cash of such Credit Party,
anticipates being able to pay all amounts on or in respect of debts of such
Credit Party when such amounts are required to be paid; and (z) each Credit
Party will have sufficient capital with which to conduct its present and
proposed business and the property of such Credit Party does not constitute
unreasonably small capital with which to conduct its present or proposed
business. For purposes of this Section 5.11, "debt" means any liability on a
claim, and "claim" means a (i) 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 (ii)
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. On the date of each Borrowing (and after giving effect to all
Borrowings as of such date), the representations set forth in this Section
5.11(a) shall be true and correct with respect to each Credit Party on such
date.
(b) The Borrower has heretofore delivered to the Banks the
consolidated audited financial statements including a balance sheet as at
December 31, 1996 and statements of income and shareholders' equity and cash
flows of Holdings and its consolidated Subsidiaries for the fiscal period ended
December 31, 1996. All the financial statements referred to in the preceding
sentence were prepared in accordance with GAAP consistently applied. Such
financial statements present fairly, in all material respects, the consolidated
financial position of the Borrower and its consolidated Subsidiaries for each of
the periods covered thereby. There has also been delivered the pro forma (after
giving effect to the Acquisition) consolidated balance sheet of the Borrower and
its consolidated Subsidiaries as at December 31, 1996, which presents a good
faith estimate of the consolidated pro forma financial condition of the Borrower
and its consolidated Subsidiaries at the date thereof, and interim financial
statements for the Borrower and its consolidated Subsidiaries through February
28, 1997. Except as contemplated hereby, since December 31, 1996 (on a pro forma
basis after giving effect to the Acquisition) no event or events have occurred
that are likely to have a Materially Adverse Effect.
(c) There have heretofore been delivered to the Banks pro forma
consolidated income projections for the Borrower and its Subsidiaries, pro forma
consolidated balance sheet projections for the Borrower and its Subsidiaries and
pro forma consolidated cash flow projections for the Borrower and its
Subsidiaries, all for the fiscal years ending December 31, 1997 through December
31, 2001, inclusive, as well as such financial projections on a monthly basis
for each of the monthly periods from the Closing Date through December 31, 1997
(the "Projected Financial Statements"), which give effect to the Acquisition and
all Indebtedness and Liens incurred or created in connection with the
Acquisition. The Projected Financial Statements are based on estimates and
assumptions which are 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.
(d) As of the Closing Date, except as adequately reflected or
reserved against in the financial statements and the notes thereto described in
Section 5.11(b) or as set forth in Annexes IX, XII and XVI, there were no
liabilities or obligations with respect to Holdings, the Borrower or any of
their respective Subsidiaries of any nature whatsoever (whether absolute,
accrued, contingent or otherwise and whether or not due) which, either
individually or in the aggregate, would be material to Holdings, the Borrower or
any of their respective Subsidiaries, except as incurred by any Credit Party in
connection with the Acquisition. As of the Closing Date, the Borrower knows of
no basis for the assertion against Holdings, the Borrower or any of their
respective Subsidiaries of any liability or obligation of any nature whatsoever
that is not adequately reflected in the financial statements described in
Section 5.11(b) or (c) or otherwise disclosed herein, except as incurred by any
Credit Party in connection with the Acquisition, which, either individually or
in the aggregate, could reasonably be expected to be material to Holdings, the
Borrower or any of their respective Subsidiaries.
5.12. Security Interests. At all times after the execution of the
Security Documents, as amended by the documents set forth in Section 4.01(W)(i),
the Security Documents create, in favor of the Collateral Agent for the benefit
of the Banks, as security for the obligations purported to be secured thereby, a
valid and enforceable perfected first priority security interest in and Lien
upon all of the Collateral as collateral security for the payment and
performance of the Obligations, including, without limitation, the Additional
Loans, superior to and prior to the rights of all third persons and subject to
no Liens, except Prior Liens applicable to such Collateral. The mortgagor under
each Mortgage has good and marketable title to the Mortgaged Real Property free
and clear of all Liens other than Prior Liens and Liens expressly permitted by
the applicable Mortgage. 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 all items of Collateral (other than the
Mortgaged Real Property) covered by such Security Document free and clear of all
Liens except Prior Liens and Liens expressly permitted by the applicable
Security Document. No filings or recordings are required in order to perfect or
confirm the perfection of the security interests created under any Security
Document except for filings or recordings required in connection with any such
Security Document which shall have been made prior to or contemporaneously with
the execution and delivery thereof.
5.13. Tax Returns and Payments. Except as set forth on Annex XIII
hereto, each Credit Party has filed all material tax returns required to be
filed by it and has paid all material taxes and assessments payable by it which
have become due, other than those not yet delinquent and except for those
contested in good faith and for which adequate reserves have been established.
Except as set forth on Annex XIII hereto, each Credit Party has paid, or has
provided adequate reserves (in accordance with GAAP) for the payment of, all
material 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. The Borrower knows of
no proposed tax assessment against the Borrower or any of its Subsidiaries that
could reasonably be expected to have a Materially 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 that such
reserves or other appropriate provisions, if any, as shall be required in
conformity with GAAP shall have been made or provided therefor.
5.14. ERISA. (A) Each Credit Party and its ERISA Affiliates are in
compliance with all applicable provisions of ERISA and the regulations and
published interpretations thereunder with respect to all employee benefit plans,
Pension Plans and Multiemployer Plans except for any failures to comply which,
individually or in the aggregate, would not have a Materially Adverse Effect.
(B) No Termination Event has occurred or is reasonably expected to
occur with respect to any Pension Plan which resulted or would result in a
liability to any Credit Party or any ERISA Affiliate.
(C) The sum of the amount of unfunded benefit liabilities
(determined in accordance with Statement of Financial Accounting Standards No.
87) under all Title IV Plans (excluding each Title IV Plan with an amount of
unfunded benefit liabilities of zero or less) is not more than $2,500,000. As of
the Closing Date, there are no unfunded benefit liabilities (within the meaning
of Section 4001(a)(18) of ERISA) under any Title IV Plans.
(D) As of the Closing Date, no Credit Party nor any ERISA Affiliate
has any obligation to contribute to or any liability or potential liability
(including, but not limited to, actual or potential withdrawal liability) with
respect to any employee benefit plan of the type described in Sections 4063 and
4064 of ERISA or in Section 413(c) of the Code. Each Credit Party and their
ERISA Affiliates have complied in all material respects with the requirements of
ERISA Section 515 with respect to each Multiemployer Plan. The aggregate
potential withdrawal payments, as determined in accordance with Title IV of
ERISA, of each Credit Party and their ERISA Affiliates with respect to all
Multiemployer Plans does not exceed $2,500,000. No Credit Party nor any ERISA
Affiliate has incurred or reasonably expects to incur any withdrawal liability
under Section 4201 et seq. of ERISA to any Multiemployer Plan or any employee
benefit plan of the type described in Sections 4063 and 4064 of ERISA or in
Section 413(c) of the Code.
(E) No Credit Party nor any ERISA Affiliate has incurred any
accumulated funding deficiency (whether or not waived) with respect to any
Pension Plan.
(F) No Credit Party nor any ERISA Affiliate has or reasonably
expects to become subject to a Lien in favor of any Pension Plan under Section
302(f) or 307 of ERISA or Section 401(a)(29) or 412(n) of the Code.
(G) Assuming that no portion of the Loans to be advanced hereunder
is attributable, directly or indirectly, to the assets of any employee benefit
plan, the execution, performance and delivery of the Credit Documents by any
party thereto will not involve any prohibited transaction within the meaning of
Section 406 of ERISA or Section 4975 of the Code for which an exemption
therefrom is not available.
As used in this Section 5.14, the term "accumulated funding
deficiency" has the meaning specified in Section 302 of ERISA and Section 412 of
the Code, and the term "employee benefit plan" has the meaning specified in
Section 3(3) of ERISA.
5.15. Subsidiaries. Annex IV hereto lists each direct and
indirect Subsidiary of Holdings existing on the Closing Date.
5.16. Patents, etc. Each Credit Party owns or possesses adequate
licenses or other rights to use all patents, patent applications, trademarks,
trademark applications, servicemarks, servicemark applications, trade names,
copyrights, trade secrets and know how (collectively, the "Intellectual
Property"), including, without limitation, Intellectual Property acquired in the
Acquisition, that are necessary for the operation of their respective businesses
as presently conducted and as proposed to be conducted. No claim is pending or,
to the best of the Borrower's knowledge, threatened to the effect that the
Borrower or any of its Subsidiaries infringes upon the asserted rights of any
other person under any Intellectual Property, and to the best of the Borrower's
knowledge 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 Materially Adverse Effect. No claim is pending or, to the best of the
Borrower's knowledge, threatened to the effect that any such Intellectual
Property owned or licensed by the Borrower or any of its Subsidiaries or which
the Borrower or any of its Subsidiaries otherwise has the right to use is
invalid or unenforceable by the Borrower or such Subsidiary, and, to the best of
the Borrower's knowledge, 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 Materially Adverse Effect.
5.17. Compliance with Laws, etc. Except as set forth in Annex XVI
hereto, each Credit Party is in material compliance with all material laws and
regulations, including without limitation those relating to equal employment
opportunity and employee safety but excluding Environmental Laws (as to which
Section 5.22 is applicable), in all jurisdictions in which it is presently doing
business, and each Credit Party will comply and cause each of its Subsidiaries
to comply with all such laws and regulations which may be imposed in the future
in jurisdictions in which it or such Subsidiary may then be doing business in
each such case other than those the non-compliance with which would not have a
Materially Adverse Effect.
5.18. Properties. The Borrower and each of its Subsidiaries have
good and marketable title to and beneficial ownership of all their respective
properties owned by them, including after the Closing Date all property
reflected in the most recent balance sheet referred to in Section 5.11(b) and
except as sold or otherwise disposed of since the date of such balance sheet in
the ordinary course of business, free and clear of all Liens, other than Prior
Liens and Permitted Encumbrances. The Borrower and each Subsidiary thereof hold
all material licenses, certificates of occupancy or operation and similar
certificates and clearances of municipal and other authorities necessary to own
and operate the Mortgaged 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 the Mortgaged Real Property. There
are no actual defaults or defaults alleged in writing or, to the best knowledge
of the Borrower, threatened defaults, in each case of a material nature with
respect to any leases of real property under which the Borrower or any of its
Subsidiaries is lessor or lessee.
5.19. Securities. On the Closing Date, the common stock of the
Borrower and of each Subsidiary whose stock is being pledged as of the Closing
Date will be duly authorized, issued and delivered and will be fully paid,
nonassessable and free of preemptive rights. There are not, as of the Closing
Date and thereafter, any existing options, warrants, calls, subscriptions,
convertible or exchangeable securities, rights, agreements, commitments or
arrangements for any person to acquire any capital stock of the Borrower or any
other securities convertible into, exchangeable for or evidencing the right to
subscribe for any such capital stock.
5.20. Collective Bargaining Agreements. Set forth on Annex V hereto
is a list and description (including dates of termination) of all collective
bargaining or similar agreements between or applicable to the Borrower and its
Subsidiaries as of the date hereof and any union, labor organization or other
bargaining agent in respect of the employees of the Borrower and its
Subsidiaries on the date indicated in Annex V hereto.
5.21. Indebtedness Outstanding. Set forth on Annex III hereto is a
complete list and description of all Indebtedness of Holdings, the Borrower and
their Subsidiaries (other than the Loans) that will be outstanding immediately
after the Closing Date and set forth on Annex III hereto is a complete list and
description of all Indebtedness of Holdings, the Borrower and their Subsidiaries
that will be repaid, defeased, transferred or otherwise terminated on or prior
to the Closing Date.
5.22. Environmental Matters. (A) Except as set forth in Annex XII
hereto, each of the Borrower and its Subsidiaries and the properties and assets
used in its businesses (including the Real Properties) is in compliance in all
material respects with all applicable Environmental Laws, which compliance
includes, without limitation, the possession of all material licenses, permits,
registrations and other governmental authorizations (collectively,
"Environmental Authorizations") required under applicable Environmental Laws,
and compliance in all material respects with the terms and conditions thereof,
and there are no circumstances of a nature which may materially prevent or
interfere with such compliance in the future. Except as set forth in Annex XII
hereto, neither the Borrower nor any of its Subsidiaries has been notified by
any Governmental Authority or, has any basis to believe, that any such
Environmental Authorizations will be modified, suspended or revoked or cannot be
renewed or otherwise maintained in the ordinary course of business. Except as
set forth in Annex XII hereto, in the last five years, neither the Borrower nor
any of its Subsidiaries has received any communication, whether from a
Governmental Authority, citizen group, employee or otherwise, that alleges that
the Borrower or any of its Subsidiaries or any of the properties or assets used
in their respective businesses (including the Real Properties) is not in
compliance with Environmental Laws.
(B) Except as set forth in Annex XII hereto, there is no
Environmental Notice that (i) is pending or, to the best knowledge of the
Borrower or any of its Subsidiaries, threatened against the Borrower or any of
its Subsidiaries or (ii) is pending or, to the best knowledge of the Borrower or
any of its Subsidiaries, 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 the Borrower or any of its
Subsidiaries.
(C) Except as set forth in Annex XII hereto, to the best knowledge
of the Borrower and its 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 the Borrower or any of its 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 (i) could reasonably be expected to result in the
incurrence of costs in excess of $50,000, individually, under Environmental Laws
or (ii) could reasonably be expected to form the basis of any Environmental
Notice against or with respect to the Borrower or any of its Subsidiaries, or
against any person or entity whose liability for any Environmental Notice may
have been retained or assumed by or could be imputed or attributed by law or
contract to the Borrower or any of its Subsidiaries.
(D) Except as set forth in Annex XII hereto, without in any way
limiting the generality of the foregoing, (i) there are, and to the best
knowledge of the Borrower and its Subsidiaries, 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 the Borrower or any of
its Subsidiaries (or any predecessor in interest of any of them), (ii) there
are, and, to the best knowledge of the Borrower and its Subsidiaries, have been
no polychlorinated biphenyls used or stored by the Borrower or any of its
Subsidiaries, located on, at or under property (including the Real Properties)
owned, operated, leased or used by the Borrower or any of its Subsidiaries,
(iii) there are and have been no properties (including the Real Properties)
currently or formerly owned, operated, managed, leased or used by the Borrower
or any of its Subsidiaries (or any predecessor in interest of any of them) at
which Hazardous Materials generated, used, owned, managed, stored or controlled
by the Borrower or any of its Subsidiaries (or any predecessor in interest of
any of them) may have been disposed of or otherwise released into the
Environment except such disposals or other releases which were both (a) in
compliance with Environmental Laws and Environmental Authorizations and (b)
could not result in costs in excess of $50,000, individually, under
Environmental Laws 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 the Borrower or any of its Subsidiaries.
(E) Prior to the Closing Date, the Borrower and each of its
Subsidiaries shall have made all notifications, registrations and filings 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 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 Agent prior to the
Closing Date.
5.23. Environmental Investigations. All material environmental
investigations, studies, audits, assessments or reviews conducted of which the
Borrower is in possession in relation to the current or prior business of the
Borrower or any Subsidiary or any Real Property or facility now or previously
owned, operated, leased, used or controlled by the Borrower or any of its
Subsidiaries, including, without limitation those relating to compliance with or
liability under any Environmental Law, have been delivered to the Agent through
its attorneys, Cahill Gordon & Reindel.
5.24. Fine Products Company. As of the date of this Agreement and as
of the Closing Date, Fine Products Company, a Georgia corporation ("Fine
Products"), has capital of $145,000 and has no other assets or, to the best of
the Borrower's knowledge, liabilities of any kind (other than its rights and
obligations under the purchase agreement dated as of February 1, 1994 between
Fine Products, Aminco Delaware and Gilliam Candy Co., Inc., and certain tax
attributes). There are no actions, claims, judgments, suits or proceedings
pending or, to the Borrower's knowledge, threatened in any court of competent
jurisdiction with respect to Fine Products and the Borrower is not aware of any
facts or circumstances which would provide the basis for the assertion against
Fine Products of any such actions, claims, suits or proceedings.
SECTION 6. Affirmative Covenants. The Borrower covenants and agrees
that on the Closing Date and thereafter for so long as this Agreement is in
effect and until the Commitments have terminated and the Loans together with
interest, fees and all other Obligations incurred hereunder are 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 the Agent, who will distribute copies 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 consolidated balance sheet
of the Borrower and its Subsidiaries as at the end of such fiscal year and
the related consolidated statements of income, of shareholders' equity and
of cash flows 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 independent certified public
accountants of recognized national standing, 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 applied on a basis
consistent with prior years (except for such changes with which the
independent certified public accountants concur) and the examination by
such accountants was conducted in accordance with generally accepted
auditing standards.
(b) As soon as available and in any event within 45 days after the
close of each of the first three quarterly accounting periods in each
fiscal year of the Borrower, the consolidated balance sheet of the
Borrower and its Subsidiaries as at the end of such quarterly accounting
period and the related consolidated statements of income, of shareholders'
equity and of cash flows for such quarterly accounting period and for the
elapsed portion of the fiscal year ended with the last day of such
quarterly accounting period, setting forth in comparative form the same
information for the corresponding periods of the prior fiscal year.
(c) As soon as practicable and in any event within 30 days after the
end of the month of April 1997 and each month thereafter, (i) the
consolidated balance sheet of the Borrower and its Subsidiaries as at the
end of such period and (ii) the related consolidated statements of income
and cash flows of the Borrower each in the form customarily prepared by
management, in each case for such fiscal month and for the period from the
beginning of the then current fiscal year to the end of such fiscal month,
setting forth in comparative form the same information for the
corresponding periods of the prior fiscal year (including a comparison of
such monthly financial results against the budgets required to be
submitted pursuant to subsection (e) hereof, together with a brief
narrative discussion and analysis prepared by management describing the
Borrower's results of operations for such fiscal month.
(d) Together with each delivery of financial statements of the
Borrower and its Subsidiaries pursuant to subsection (a) above, 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 7.04, 7.05, 7.07 (as to the Borrower only) and 7.09
through 7.11 (inclusive) of this Agreement 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 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 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 7.04, 7.05,
7.07 (as to the Borrower only) and 7.09 through 7.11 (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 Borrower has taken, is taking and proposes to take with
respect thereto.
(e) Within 30 days after the commencement of each fiscal year,
annual budgets of the Borrower and its Subsidiaries, substantially in the
form of Exhibit P hereto, in reasonable detail for each month of such
fiscal year, as customarily prepared by management for its internal use,
setting forth, with appropriate discussion, the principal assumptions upon
which such budgets are based, and including (i) forecasted consolidated
balance sheets, consolidated statements of operations, of stockholders'
equity and of cash flows of the Borrower and its Subsidiaries on a
consolidated basis for such periods, (ii) the amount of forecasted capital
expenditures for such fiscal periods, and (iii) forecasted compliance with
Sections 7.09-7.11; provided that if any such forecast indicates that the
Borrower may not be in compliance with any provision of this Agreement at
some future date, such forecast shall not constitute a Default or an Event
of Default or anticipatory or other breach thereof. Together with each
delivery of financial statements pursuant to Section 6.01(c), a comparison
of the current year to date financial results against the budgets required
to be submitted pursuant to this subsection (e) shall be presented.
(f) At the time of the delivery of the financial statements provided
for in Sections 6.01(a), (b) and (c), a certificate of the chief executive
officer, chief financial officer, controller, chief accounting officer or
other Authorized Officer of the Borrower to the effect that such financial
statements are true and complete in all material respects and 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(c), at the time of delivery of such statements for the months ended
September 30, December 31, March 31 and June 30, beginning with the month
ended June 30, 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 7.09 through 7.11 (inclusive)) as at the
end of such fiscal period or year, as the case may be.
(g) Promptly upon receipt thereof, a copy of each annual "management
letter" submitted to 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.
(h) Promptly upon their becoming available, copies of all
consolidated financial statements, reports, notices and proxy statements
sent or made available generally by the Borrower or any Subsidiary of the
Borrower to its security holders (other than to the Borrower or another
Subsidiary), 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 Subsidiary of the Borrower to the public concerning material
developments in the business of the Borrower and its Subsidiaries.
(i) Promptly upon any Senior Officer obtaining knowledge (w) of any
condition or event which constitutes a Default or Event of Default, or
becoming aware 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, (x) that any Person has given any written notice to the
Borrower or any Subsidiary of the Borrower 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 (y) 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 Borrower has taken, is taking and proposes to take
with respect thereto.
(j) (i) Promptly upon any Senior Officer obtaining knowledge of the
institution of, or written threat of, any action, suit, proceeding,
governmental investigation or arbitration against or affecting Holdings,
the Borrower or any of its Subsidiaries or any property of Holdings, 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 Holdings,
the Borrower or any of its Subsidiaries aggregating $500,000 or more
(exclusive of claims covered by insurance policies of Holdings, 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 any
institution of, or written threat of, any action, suit, proceeding,
governmental investigation or arbitration (not previously reported)
against or affecting Holdings, the Borrower or any of its Subsidiaries or
any property of Holdings, 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 Holdings, the Borrower or any of its
Subsidiaries aggregating $250,000 or more (exclusive of claims covered by
insurance policies of Holdings, 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(j), 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 and (iv) promptly upon any Senior Officer obtaining
knowledge of any material dispute in respect of or the institution of, or
written threat of, any action, suit, proceeding, governmental
investigation or arbitration in respect of any material contract of the
Borrower or any of its Subsidiaries, 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.
(k) Within 90 days of the last day of each fiscal year of the
Borrower, a summary report, substantially in the form of Annex VI hereto,
outlining all material insurance coverage maintained as of the date of
such report by the Borrower and its Subsidiaries and outlining all
material insurance coverage planned to be maintained by the Borrower and
its Subsidiaries in the subsequent fiscal year.
(l) To the extent reasonably requested by the 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 Subsidiaries.
(m) Within fifteen (15) days after the last Business Day of each
month, the Borrower shall deliver to Agent for distribution to each Bank a
borrowing base certificate in the form of Exhibit M hereto (the "Borrowing
Base Certificate") detailing the Borrower's Eligible Accounts Receivable
and Eligible Inventory as of the last day of such month, certified as
complete and correct on behalf of the Borrower by a Senior Officer or any
other Authorized Officer. In addition, each Borrowing Base Certificate
shall have attached to it such additional schedules and/or other
information as the Agent may reasonably request. If the Borrower fails to
deliver any such Borrowing Base Certificate within twenty-five (25) days
after the end of any such 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.
(n) (i) On or prior to the Closing Date and within 90 days after the
commencement of each fiscal year, a complete and accurate list of the
officers and directors of the Borrower and (ii) within 30 days of any
change in personnel affecting the accuracy of such list, a notice
specifying such change in personnel.
(o) 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 Subsidiary has an investment, as from
time to time may be reasonably requested by any Bank and may be reasonably
available to the Borrower.
(p) The Borrower shall deliver to the Agent, within 15 days after
filing with the SEC, copies of Holdings' annual report and of the
information, documents and other reports (or copies of such portions of
any of the foregoing as the SEC may by rules and regulations prescribe)
which is filed by Holdings with the SEC pursuant to Section 13 or 15(d) of
the Exchange Act within the time periods prescribed under such rules and
regulations. In addition, the Borrower shall cause Holdings' annual
reports to shareholders and any quarterly or other financial reports
furnished by Holdings to shareholders generally to be filed with the
Agent.
6.02. Books, Records and Inspections. The Borrower will, and will
cause each of its Subsidiaries to, keep true books of records and accounts in
which full and correct entries will be made of all their 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 Subsidiaries to, permit, upon reasonable prior notice to
the chief financial officer, controller, chief accounting officer or any other
Authorized Officer of the Borrower, officers and designated representatives of
the Agent or any Bank to visit and inspect any of the properties or assets of
the Borrower and any of its Subsidiaries in whomsoever's possession, and to
examine the books of account of the Borrower and any of its Subsidiaries and
discuss the affairs, finances and accounts of the Borrower and of any of its
Subsidiaries with, and be advised as to the same by, its and their officers and
independent accountants (in the presence of such officers), all at such
reasonable times during regular business hours and intervals and to such
reasonable extent as the Agent or any Bank may reasonably request.
6.03. Maintenance of Property; Insurance. (a) The Borrower will, and
will cause each of its Subsidiaries to, exercise commercially reasonable efforts
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 and from time to time will make or cause to be made all repairs,
renewals and replacements thereof which the Borrower deems appropriate in its
commercially reasonable judgment and will maintain and renew as necessary all
licenses, permits and other clearances necessary in its commercially reasonable
judgment to use and occupy such properties of the Borrower and each Subsidiary,
as the case may be.
(b) The Borrower will, and will cause each of its Subsidiaries to,
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 will, and will cause each of its Subsidiaries to, 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.
(c) Without limiting subsection 6.03(b) above, the Borrower will,
and will cause each of its Subsidiaries to, maintain in full force the insurance
coverages specified in the Mortgages and the other 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 material 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 material 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 that
neither the Borrower nor any Subsidiary shall be required to pay any such tax,
assessment, charge, levy or claim that is being contested in good faith and by
proper proceedings timely instituted and diligently conducted if it has
maintained adequate reserves with respect thereto in accordance with GAAP.
6.05. Corporate Franchises. The Borrower will do, and will cause
each Subsidiary to do, or cause to be done, all things necessary to preserve and
keep in full force and effect its existence, rights and authority, except where
such failure to keep in full force and effect such rights and authority would
not have a Materially Adverse Effect.
6.06. Compliance with Statutes, etc. The Borrower will, and will
cause each Subsidiary to, comply with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all Governmental
Authorities, in respect of the conduct of its business and the ownership of its
property, other than non-compliance which would not have a Materially Adverse
Effect; provided that with respect to non-compliance with Environmental Laws
which is disclosed in Annex XII hereto, the Borrower will, and will cause each
Subsidiary to, comply with such Environmental Laws as soon as practicable.
6.07. ERISA. The Borrower will furnish to the Agent, who will
distribute to each of the Banks:
(a) promptly upon the Borrower'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 a Credit Party or its ERISA Affiliates in the aggregate in excess of
$200,000, a written notice specifying the nature thereof, what action the
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 a 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 the
preceding paragraph (a); (ii) upon the request of the Agent each Schedule
B (Actuarial Information) to the annual report (Form 5500 Series) filed by
a 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 Agent, the most recent actuarial
valuation report for each Title IV Plan; and (iv) all notices received by
the Credit Parties or any of their 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 the preceding paragraph (a).
6.08. Performance of Obligations. The Borrower will, and will cause
each of its 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 which it is bound or to which it
is a party, except where such nonperformance would not have a Materially Adverse
Effect.
6.09. End of Fiscal Years; Fiscal Quarters. The Borrower will, for
financial reporting purposes, and will cause each of its Subsidiaries to, have
its (i) fiscal years end on December 31, and (ii) fiscal quarters end on or
about March 31, June 30, September 30 and December 31.
6.10. Use of Proceeds. All proceeds of the Term Loans and
Revolving Loans shall be used as provided in Section 5.05.
6.11. Equal Security for Loans and Notes; No Further Negative
Pledges 6.11. Equal Security for Loans and Notes; No Further Negative Pledges.
(a) If the Borrower or any of its Subsidiaries shall create or assume any Lien
upon any of its property or assets, whether now owned or hereafter acquired and
whether or not such property or assets constitutes Collateral, other than
Permitted Encumbrances (unless prior written consent to the creation or
assumption thereof shall have been obtained from the Agent and the Required
Banks), it shall make or cause to be made effective provisions whereby the
Obligations will be secured by such Lien equally and ratably with any and all
other Indebtedness thereby secured as long as any such Indebtedness shall be
secured; provided that this covenant shall not be construed as consent by the
Agent and the Required Banks to any violation by the Borrower of the provisions
of Section 7.03.
(b) 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
Subsidiaries shall enter into any agreement prohibiting the creation or
assumption of any Lien upon its properties or assets, whether now owned or
hereafter acquired.
6.12. Lender Meeting. The Borrower will participate in a meeting of
the Banks once during each fiscal year to be held at a location and a time
selected by the Borrower and reasonably acceptable to the Agent unless the
Required Banks determine in their sole discretion that such meeting is
unnecessary and so inform the Borrower.
6.13. Pledge of Additional Collateral. Concurrently with the
execution and delivery by any Subsidiary of a Subsidiary Guarantee, the Borrower
will cause such Subsidiary to take all necessary action to grant the Collateral
Agent a perfected first Lien in all of the real and personal property of such
Subsidiary (to the extent permitted by applicable law) to secure the payment and
performance of the Obligations and such Subsidiary's obligations and liabilities
under its Subsidiary Guarantee; and promptly, and in any event within 30 days
after the acquisition of assets of a type that, but for the fact that such
assets shall have been acquired after the Closing Date, would have constituted
Collateral, the Borrower will, and will cause each of its Subsidiaries to, take
all necessary action to grant the Collateral Agent a perfected first Lien in
such newly acquired assets (such personal property and assets of a Subsidiary
executing a Subsidiary Guarantee and such newly acquired assets are referred to
herein collectively as the "Additional Collateral"). Such action to be taken by
the Borrower and the Subsidiaries shall include, without limitation, the
execution and delivery of security agreements, and/or supplements thereto, and
other instruments and documents, all in form and substance reasonably
satisfactory to the Collateral Agent, the filing of appropriate financing
statements under the provisions of the UCC, applicable domestic or local laws,
rules or regulations in each of the offices where such filing is necessary or
appropriate, and the delivery of such opinions of counsel with respect to the
foregoing as the Collateral Agent shall reasonably require; provided this
Section 6.13 shall not apply to any assets subject to Liens permitted under
Section 7.03(i). Furthermore, promptly, and in any event within 30 days, after
the acquisition of an interest in Real Property within the United States not
held as of the Closing Date (the "Additional Real Property"), the Borrower will,
and will cause such of its Subsidiaries acquiring such an interest to, take such
actions and execute such documents as the Agent shall reasonably require to
confirm the Lien of a Mortgage (including, without limitation, satisfaction of
the conditions set forth in Sections 4.01(C)(ii) and (L)), or execute a new
Mortgage, with respect to such Additional Real Property. All costs and expenses
arising from any action taken by the Agent or any Bank in connection with the
pledge of Additional Collateral or Additional Real Property pursuant to this
Section 6.13, including, without limitation, reasonable costs of counsel for the
Agent, shall be payable by the Borrower to the Agent or the Bank incurring such
cost or expense within 10 Business Days after demand therefor. All agreements,
instruments and documents executed or delivered pursuant to or in furtherance of
this Section 6.13, and all amendments, modifications and supplements thereto
from time to time entered into, are and shall be within the definition of
"Security Documents."
6.14. Security Interests. The Borrower will, and will cause each of
its Subsidiaries to, perform any and all acts and execute any and all documents
(including, without limitation, the execution, amendment or supplementation 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 domestic jurisdiction which are
necessary in order to maintain or confirm in favor of the Collateral Agent for
the benefit of the Banks a valid and perfected Lien on the Collateral and any
Additional Collateral as collateral security for the payment and performance of
the Obligations, including, without limitation, the Additional Loans, subject to
no Liens except for Prior Liens and Liens permitted by the applicable Security
Documents. The Borrower shall, as promptly as practicable after the filing of
any financing statements, deliver to the 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 judgment of the Agent, desirable to perfect the Lien created, or
purported or intended to be created, by each Security Document.
6.15. Environmental Events. (i) The Borrower will, and will cause
each of its Subsidiaries to, comply with any and all Environmental Laws, other
than non-compliance which could not reasonably be expected to result in
liability under any Environmental Laws in excess of $250,000 individually or in
the aggregate with any other liability under any Environmental Laws; provided
that with respect to non-compliance with Environmental Laws which is disclosed
in Annex XII hereto, the Borrower will, and will cause each of its Subsidiaries
to, comply with such Environmental Laws as soon as practicable.
(ii) The Borrower will promptly give notice to the Agent upon
determining the existence of (a) any violation of any Environmental Laws, (b)
any Environmental Notice or (c) any release or threatened release of Hazardous
Materials at, on, upon, under or from any of the Real Properties or any facility
or equipment thereat in excess of a reportable quantity or allowable standard or
level under any Environmental Laws, or in a manner and/or amount which could
reasonably be expected to result in liability under any Environmental Laws, in
each case in excess of $250,000 individually or in the aggregate with any other
liability under any Environmental Laws (other than any such events disclosed in
Annex XII).
(iii) In the event of the presence of Hazardous Materials on any of
the Real Properties which is in violation of, or which could reasonably be
expected to result in liability under, any Environmental Laws, in each case in
excess of $250,000 individually or in the aggregate with any other liability
under any Environmental Laws, the Borrower or any of its 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 violation or liability.
(iv) Accompanying each quarterly Compliance Certificate required
under Section 6.01(f) hereof, the Company shall include a statement of the
status of each matter identified in Annex XII and each matter for which notice
has been given under Section 6.15(ii) hereof indicating the action that has been
taken, additional action required, and, to the extent practicable, an estimate
of the completion date and future cost for each matter until each matter has
been completely addressed.
6.16. New Subsidiaries. In addition to its obligations with respect
to Section 6.13, if, after the date hereof, the Borrower or any Subsidiary shall
create or acquire any Subsidiary, the Borrower shall, concurrently with the
creation or acquisition of such Subsidiary, (i) cause such Subsidiary to execute
and deliver to the Agent a Subsidiary Guarantee, substantially in the form of
Exhibit R annexed hereto, guaranteeing the Borrower's Obligations hereunder and
(ii) take all necessary actions and execute such agreements, instruments and
documents, including, without limitation, stock powers executed in blank, and
deliver such opinions of counsel with respect thereto, as the Agent may
reasonably require to cause all of the capital stock of such Subsidiary owned or
controlled by the Borrower to be pledged to the Collateral Agent to secure the
Borrower's Obligations hereunder such that the Collateral Agent has a valid and
perfected first-priority security interest in such pledged capital stock.
6.17. Manufacturing Agreements. The Borrower has entered into the
Cutex Manufacturing Agreement, substantially in the form of Exhibit S hereto,
and such agreement remains in full force and effect unless terminated in
accordance with its terms. The Borrower agrees that, within 30 days after the
Closing Date, it will enter into the AM Manufacturing Agreement, substantially
in the form of Exhibit T hereto, and reasonably acceptable to the Agent.
SECTION 7. Negative Covenants. The Borrower hereby covenants and
agrees that as of the Closing Date and thereafter for so long as this Agreement
is in effect and until the Commitments have terminated and the Loans together
with interest, fees and all other Obligations incurred hereunder are paid in
full (except as otherwise agreed or consented to or waived, in writing, by the
Required Banks):
7.01. Changes in Business. Other than asset dispositions permitted
under Section 7.13, the Borrower will not, and will not permit any of its
Subsidiaries to, materially alter its businesses from that conducted by the
Borrower or such Subsidiary at the Closing Date and the business generally
described in Holdings' Annual Report to Shareholders and Transition Report on
Form 10-K for fiscal period 1996, and lines of business reasonably related
thereto.
7.02. Amendments or Waivers of Certain Documents. The
Borrower will not, and will not permit any of its Subsidiaries to, amend
or otherwise change the terms of any Existing Debt.
7.03. Liens. The Borrower will not, and will not permit any
Subsidiary 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 other Liens
expressly permitted by such Security Document. The Borrower will not, and will
not permit any of its 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
Subsidiary which does not constitute Collateral 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;
(b) Liens in respect of property or assets of the Borrower or any of
its 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
(x) which do not in the aggregate materially detract from the value of
such property or assets or materially impair the use thereof in the
operation of the business of the Borrower or any of its Subsidiaries or
(y) which are being contested in good faith by appropriate proceedings,
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 Subsidiaries and do not in
the aggregate materially detract from the value of the property and assets
of the Borrower and its Subsidiaries taken as a whole;
(c) Liens in connection with any attachment or judgment (including
judgment or appeal bonds) for amounts of less than $500,000 individually
or less than $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 judgment it secures shall, within 60
days after the entry thereof, not have been discharged or execution
thereof not been 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) subject to the provisions of Section 7.17 and, with respect to
any Mortgaged Real Property, to the provisions of any applicable Mortgage,
(i) Leases with respect to the assets or properties of the Borrower
entered into in the ordinary course of the Borrower's business and
subordinate in all respects to the Liens granted and evidenced by the
Security Documents, (ii) foreign Leases and (iii) Existing Leases and any
extensions, renewals or replacements thereof;
(f) 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 respective 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;
(g) zoning and building by-laws 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
Subsidiaries as such property is used as of the Closing Date;
(h) Liens securing Indebtedness of a Subsidiary owing to the
Borrower or a Wholly Owned Subsidiary of the Borrower;
(i) Liens upon real or tangible or intangible personal property
acquired or constructed by the Borrower or its Subsidiaries after the date
hereof or on such property or equity securities of a Person at the time
such Person becomes a Subsidiary of the Borrower or any of its
Subsidiaries; provided that (i) 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, (ii) the principal
amount of the Indebtedness secured by such Lien does not exceed 100% of
the fair value (as determined in good faith by the board of directors of
the Borrower) of the respective property at the time it was so acquired or
constructed, (iii) the Indebtedness secured by the Lien is not created
more than 180 days after the later of the acquisition, completion of
construction, repair, improvement, addition or commencement of full
operation of the property subject to the Lien, (iv) such Lien does not
extend to or cover any other property other than such item of property and
(v) the incurrence of such Indebtedness secured by such Lien is permitted
by Section 7.04;
(j) 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;
and
(k) Liens on inventory and receivables in connection with
the South African Credit Agreement.
7.04. Indebtedness. The Borrower will not, and will not
permit any of its Subsidiaries to, contract, create, incur, assume or
suffer to exist any Indebtedness, except:
(a) Indebtedness incurred pursuant to the Credit Documents;
(b) Existing Debt and any refinancing, extension, renewal,
rearrangement or replacement thereof; provided 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;
(c) Interest Rate Agreements, if any;
(d) $1,000,000 of Indebtedness outstanding at any time to finance
the cost of the acquisition or construction of real or personal tangible
or intangible property (including Capital Leases), and any refinancing,
extension, renewal, rearrangement or replacement thereof; provided that
such Indebtedness (or the refinancing thereof) shall not exceed 100% of
the fair value of such property; and provided, further, that such
Indebtedness (or the refinancing thereof) is not secured by any Lien other
than a Lien referred to in clause (i) of Section 7.03;
(e) other unsecured Indebtedness not exceeding $1,000,000 in
the aggregate at any time outstanding;
(f) Indebtedness owed to Morningside under the Management
Agreement;
(g) Indebtedness of the Borrower to any of its Wholly Owned
Subsidiaries or of any Subsidiary to the Borrower or another Wholly Owned
Subsidiary of the Borrower (but only so long as such Indebtedness is held
by the Borrower or its Wholly Owned Subsidiary);
(h) Indebtedness in respect of performance bonds, return-of-money
bonds, surety and appeal bonds and other similar obligations incurred by
the Borrower or any of its Subsidiaries in the ordinary course of
business, provided such Indebtedness does not exceed $100,000 at any time
outstanding;
(i) Indebtedness of any Subsidiary incurred pursuant to the
issuance of a Guarantee by such Subsidiary as required by Section
6.16 of this Agreement; and
(j) Indebtedness of Carson Holdings Limited pursuant to the South
African Credit Agreement in an amount not exceeding the equivalent of
US$2,000,000 in the aggregate at any time outstanding; provided that such
Indebtedness is not secured by any Lien other than a Lien referred to in
Section 7.03(k).
7.05. Advances, Investments and Loans. The Borrower will not, and
will not permit any of its Subsidiaries to, lend money or credit or make
advances to any Person, or purchase or acquire any stock, obligations or
securities of, or any other interest in, or make any capital contribution to any
Person, except:
(a) investments in Cash and Cash Equivalents;
(b) 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 (including debt obligations) received in connection
with the bankruptcy or reorganization of suppliers and customers and in
settlement of delinquent obligations of, and other disputes with,
customers and suppliers arising in the ordinary course of business;
(d) investments in and advances to Credit Parties;
(e) investments in any Wholly Owned Subsidiary of the Borrower or
another Subsidiary, or any Person which, as a result of such investment,
becomes a Wholly Owned Subsidiary of the Borrower or another Subsidiary;
provided that such Wholly Owned Subsidiary is engaged in a business
related to that of the Borrower and its Subsidiaries in compliance with
Section 7.01;
(f) transactions between the Borrower and any of its Wholly Owned
Subsidiaries and between Wholly Owned Subsidiaries permitted under
Sections 7.04(g) and 7.08(i);
(g) loans or advances made by the Borrower to its officers,
directors and employees in the ordinary course of business not to exceed
$500,000 in the aggregate outstanding at any time;
(h) investments made as a result of the receipt of non-cash proceeds
from any Asset Sale made pursuant to and in compliance with Section 7.13;
(i) investments in Interest Rate Agreements permitted under
Section 7.04(c);
(j) other investments, loans or advances not to exceed
$500,000 in the aggregate outstanding at any time;
(k) loans, advances and/or investments (in each case evidenced by
notes that shall constitute Pledged Collateral) by the Borrower in Carson
Holdings Limited in an amount not to exceed the equivalent of US$2,000,000
in the aggregate at any one time outstanding; and
(l) investments in the Rights Offering in an amount not to
exceed the equivalent of US$4,500,000 in the aggregate.
7.06. Prepayments of Indebtedness; Amendments. Other than in
accordance with Section 3.01, (i) The Borrower will not, and will not permit any
of its 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 or preferred stock, as the case may be, in each case until all
Obligations under this Agreement have been satisfied in full; provided that the
Borrower and any of its Subsidiaries may make such a payment, prepayment,
redemption, acquisition or exchange using the proceeds of Indebtedness permitted
to be incurred by Section 7.04 to refinance or replace such Indebtedness.
(ii) The Borrower will not, and will not permit any of its
Subsidiaries to: amend, modify or change any of the Management Agreement,
Employment Agreements, Manufacturing Agreements, the Certificate of
Incorporation (including, without limitation, by the filing of any certificate
of designation) or By-laws of the Borrower (or of Holdings to the extent such
amendment, modification or change is adverse to the Banks as Banks), or any
agreement entered into by the Borrower (or by Holdings to the extent such
amendment, modification or change is adverse to the Banks as Banks) with respect
to its capital stock, or enter into any new agreement with respect to the
capital stock of the Borrower (or of Holdings to the extent such new agreement
is adverse to the Banks as Banks), in each case without the prior consent of the
Agent.
7.07. Dividends, etc. The Borrower will not, and will not permit any
of its Subsidiaries to, declare or pay any dividends (other than dividends or
distributions payable in shares of capital stock of the Borrower or any of its
Subsidiaries, other than redeemable stock) or return any capital to, its
stockholders or authorize or make any other distribution, payment or delivery of
property or cash to its stockholders 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 Subsidiaries to purchase or otherwise
acquire for consideration any shares of any class of the capital stock of the
Borrower or any other Subsidiary, 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"), except that (i) any direct or indirect Subsidiary of the Borrower
may pay Dividends to its parent corporation if such parent corporation is the
Borrower or a Wholly Owned Subsidiary of the Borrower, (ii) the Borrower or any
Subsidiary of the Borrower may pay to Holdings any amounts required (x) for the
payment of any taxes payable (A) by Holdings or (B) by Holdings, the Borrower
and/or its Subsidiaries on a consolidated, combined or unitary basis or (y) with
respect to the purchase price for the Acquisition and related transactions,
(iii) the Borrower or any of its Subsidiaries may purchase capital stock held by
employees of the Borrower or any of its Subsidiaries pursuant to any employee
stock option or other benefit plan thereof upon the termination, retirement or
death of any such employee in accordance with the provisions of any such plan in
an amount not greater than $250,000 in any calendar year; provided that the
Borrower may purchase capital stock pursuant to the Employment Agreement with
Dr. Leroy Keith without regard to such limitation; and (iv) the Borrower or any
of its Subsidiaries may make payments to Affiliates pursuant to and in
compliance with Section 7.08 hereof.
7.08. Transactions with Affiliates. The Borrower will not, and will
not permit any Subsidiary 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 securities of the Borrower or with any
Affiliate of the Borrower other than on terms and conditions substantially as
favorable to the Borrower or such 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
securities of the Borrower or an Affiliate; provided that the foregoing
restrictions shall not apply to (i) transactions between the Borrower and any of
its Wholly Owned Subsidiaries and between Wholly Owned Subsidiaries, (ii)
transactions between Holdings and the Borrower to the extent otherwise expressly
permitted under this Agreement, (iii) payments to Morningside pursuant to the
Management Agreement for management services not to exceed $350,000 in any
fiscal year, plus reimbursement of reasonable out-of-pocket expenses, (iv) the
payment of reasonable fees to Indosuez and its Affiliates for financial
services, such fees not to exceed the usual and customary fees for similar
services, (v) loans and other advances made by the Borrower to its officers,
directors and employees permitted under Section 7.05(g), (vi) the payment of
customary outside directors' fees, customary indemnification arrangements and
customary director and officer liability insurance and (vii) the issuance of
capital stock of the Borrower or any of its Subsidiaries, pursuant to any
pension, stock option, profit sharing or other employee benefit plan or
agreement of the Borrower or any of its Subsidiaries in the ordinary course of
business.
7.09. Total Interest Coverage Ratio. The Borrower will not permit
the ratio of (i) Consolidated EBITDA of the Borrower (for the 12 month period
ending at the end of the most recent fiscal quarter of the Borrower) to (ii)
annualized Consolidated Interest Expense for the Test Period (which, for
purposes of this Section 7.09 only, shall include only Cash interest expense) of
the Borrower for any Test Period ending during any period listed below to be
less than the ratio set forth opposite such period below:
Period Ratio
July 1, 1997 through and including September
30, 1997.................................. 3.00 to 1.00
October 1, 1997 through and including September 3.50 to 1.00
30, 1998..................................
October 1, 1998 and thereafter............... 4.00 to 1.00
7.10. Fixed Charge Coverage Ratio. The Borrower will not permit the
ratio of (i) Consolidated EBITDAC of the Borrower minus cash taxes paid by the
Borrower to (ii) the sum of (A) Consolidated Interest Expense (which, for
purposes of this Section 7.10 only, shall include only Cash interest expense) of
the Borrower and (B) the amount of scheduled mandatory payments on account of
principal of Indebtedness made by the Borrower for any Test Period ending on or
after the following dates (based on results beginning July 1, 1997) to be less
than the ratio set forth opposite such dates below:
Period Ratio
September 30, 1997 through and
including September 30, 1998................ 1.00 to 1.00
October 1, 1998 and thereafter................. 1.10 to 1.00
7.11. Leverage Ratio. The Borrower will not permit the ratio of (i)
Indebtedness of the Borrower and its Subsidiaries to (ii) Consolidated EBITDA of
the Borrower (for the 12 month period ending at the end of the most recent
fiscal quarter of the Borrower) for any date ending during any period listed
below to be more than the ratio set forth opposite such period below:
Period Ratio
May 1, 1997 through and including September 30, 4.00 to 1.00
1997 .................
October 1, 1997 through and including June 30, 3.50 to 1.00
1998 .......................
July 1, 1998 through and including December 31, 3.00 to 1.00
98......................
January 1, 1999 and thereafter......... 2.50 to 1.00
7.12. Issuance of Subsidiary Stock. The Borrower will not
and will not permit any of its Subsidiaries directly or indirectly to issue,
sell, assign, pledge or otherwise encumber or dispose of any shares of such
Subsidiaries' capital stock or other equity securities (or warrants, rights or
options to acquire capital stock or convertible securities or other equity
securities) of such Subsidiary, except to the Borrower or any other Wholly Owned
Subsidiary of the Borrower (in each case other than directors' or nominees'
qualifying shares or shares of capital stock required to be owned by foreign
nationals under applicable law); provided, however, that nothing contained in
this Section 7.12 shall prohibit the issuance of capital stock of Carson
Holdings Limited in accordance with the terms of the Carson Holdings Limited
Share Incentive Trust, as in effect on the date hereof or the Rights Offering.
7.13. Disposition of Assets. (A) The Borrower will not, and will not
permit any of its Subsidiaries to, dispose of all or any part of its interest in
any asset, except that the Borrower and its Subsidiaries may sell or otherwise
dispose of assets so long as either (i) such sales are approved by the Required
Banks (subject to the provisions of Section 11.12 hereof); (ii) such sales are
for at least the fair market value of such assets and the aggregate amount of
such asset sales is less than $500,000 in any 12-month period and, in any such
case, the Borrower or such Subsidiary complies with the mandatory prepayment 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; (iii) such sales are of inventory and in
the ordinary course of business; (iv) such sales or other dispositions are (A)
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 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 Subsidiary, as the case may be, (B) for at least the fair market
value of such equipment, (C) not in excess of $100,000 individually or $250,000
per year in the aggregate for sales of such equipment and (D) the proceeds of
the sales of such equipment are used within 90 days of such sales to (1)
purchase equipment used in substantially similar lines of business or (2) repay
Indebtedness under this Credit Agreement pursuant to Sections 3.01 or 3.02; (v)
such sales or other dispositions do not exceed $50,000 individually and are for
at least the fair market value of such assets or as to such other dispositions,
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 that in no case shall
sales pursuant to this clause (v) exceed an aggregate of $100,000 in any fiscal
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;
(vi) such sales consist of the licensing or sublicensing of the Borrower's or
any of its Subsidiaries' Intellectual Property in the ordinary course of
business; or (vii) such sales are 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.
The consideration received by the Borrower and its Subsidiaries from
each sale of assets permitted by subsections (i) and (ii) above, other than with
respect to such sales involving consideration of not more than $100,000 in the
aggregate in any fiscal year, shall be payable by the purchaser 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.
(B) Upon compliance with the conditions in subsection A of this
Section 7.13, the Release Conditions and the Partial Release Conditions (each as
hereinafter defined), the Borrower shall be entitled to receive from Collateral
Agent an instrument in form and substance reasonably satisfactory to the
Borrower (each, a "Release"), releasing the Lien of the Mortgage with respect to
all or any portion of a Mortgaged Real Property (each, a "Released Real
Property"). The Borrower shall exercise its rights under this Section by
delivering to Collateral Agent a notice (each, a "Release Notice"), which shall
refer to this Section, describe with particularity the proposed Released Real
Property and be accompanied by (i) four counterparts of the Release fully
executed and acknowledged by all necessary parties other than Collateral Agent,
(ii) executed counterparts of UCC termination statements necessary to terminate
the Lien of the applicable Mortgage and (iii) an Officer's Certificate
certifying that no Default or Event of Default shall have occurred and the
parties executing any and all documents in connection with the Release (other
than Collateral Agent) were duly authorized to do so (collectively, the "Release
Conditions"). In the event the proposed Released Property consists of less than
all of the Mortgaged Real Property subject to a single Mortgage, the Partial
Release Conditions must be satisfied in order for the Borrower to receive the
Release.
(C) Collateral Agent's obligation to deliver a Release in respect of
less than all of the Mortgaged Real Property subject to a single Mortgage shall
be contingent upon the satisfaction of the conditions in subsection A of this
Section 7.13 and the Release Conditions as well as the following conditions
(collectively, the "Partial Release Conditions"):
(i) following the sale, transfer or other disposition of and release
of the Lien of the applicable Mortgage with respect to the proposed
Released Real Property, the remaining Mortgaged Real Property shall have
utility services and access to public roads, rail spurs and other
transportation structures sufficient and necessary in the reasonable
opinion of the Borrower for the continued use of such Mortgaged Real
Property in the manner utilized prior to the Release;
(ii) following the sale, transfer or other disposition of the
proposed Released Real Property, the remaining Mortgaged Real Property
shall comply in all material respects with applicable laws, rules,
regulations and ordinances relating to environmental protection, zoning,
land use, configuration and building and workplace safety (except for such
non-compliance which has been previously consented to by the Collateral
Agent);
(iii) following the sale, transfer or other disposition of the
proposed Released Real Property, the value of the remaining Mortgaged Real
Property shall not be less than the value of such remaining Mortgaged Real
Property prior to the Release due to such sale, transfer or other
disposition;
(iv) the Title Company shall be prepared to issue an endorsement to
the Banks' title insurance policy relating to the Mortgaged Real Property
confirming that after the proposed release, the Lien of the applicable
Mortgage continues unimpaired as a first priority Lien upon the remaining
Mortgaged Real Property subject only to Prior Liens, those Liens permitted
by the Mortgage or previously consented to by the Collateral Agent;
(v) the Borrower shall cause to have been delivered to Collateral
Agent a Survey reasonably acceptable to the Agent of the Mortgaged Real
Property remaining after the proposed Released Real Property has been
released; and
(vi) the Borrower shall cause to have been delivered to Collateral
Agent an Officer's Certificate certifying that the conditions set forth in
subsections (i) through (v) have been satisfied.
(D) Collateral Agent shall execute, acknowledge (if applicable) and
deliver to the Borrower counterparts of the documents described in subsection
B(i) and (ii) within 10 Business Days after receipt by Collateral Agent of a
Release Notice provided that the Release Conditions and the Partial Release
Conditions (if applicable) have been satisfied. The Borrower shall (i) execute,
deliver, obtain and record such instruments as Collateral Agent may require,
including, without limitation, amendments to the Security Documents or this
Agreement and, (ii) deliver to Collateral Agent such evidence of the
satisfaction of the Release Conditions and the Partial Release Conditions as
Collateral Agent may require and (iii) cause the Title Company to issue the
endorsement referred to in subsection C(iv). The Borrower shall reimburse
Collateral Agent, Agent and the Banks upon demand for all reasonable costs or
expenses incurred in connection with any actions taken pursuant to this Section
7.13.
7.14. Contingent Obligations. The Borrower will not, and
will not permit any of its Subsidiaries to, directly or indirectly, create
or become or be liable with respect to any Contingent Obligation except:
(i) guarantees resulting from endorsement of instruments for
deposit or collection in the ordinary course of business;
(ii) Interest Rate Agreements, if any;
(iii) obligations arising as a direct consequence of the
Acquisition including, without limitation, pursuant to the Cutex
Manufacturing Agreement;
(iv) obligations with respect to the Indebtedness permitted
to be incurred under Section 7.04; and
(v) other Contingent Obligations not to exceed $250,000
outstanding at any one time.
7.15. ERISA. The Credit Parties will not, and will not
permit any of their ERISA Affiliates to:
(i) engage in any transaction in connection with which the Borrower
or any of its ERISA Affiliates could be subject to either a tax imposed by
Section 4975(a) of the Code or the corresponding civil penalty assessed
pursuant to Section 502(i) of ERISA, which penalties and taxes for all
such transactions could reasonably be expected to be in an aggregate
amount in excess of $500,000;
(ii) permit to exist any accumulated funding deficiency, for which a
waiver has not been obtained from the Internal Revenue Service, with
respect to any Pension Plan;
(iii) permit to exist any failure to make contributions or any
unfunded benefits liability which creates, or with the passage of time
would create, a statutory lien or requirement to provide security under
ERISA or the Code in favor of the PBGC or any Pension Plan, Multiemployer
Plan or other entity;
(iv) permit the sum of the amount of unfunded benefit liabilities
(determined in accordance with Statement of Financial Accounting Standards
No. 87) under all Title IV Plans (excluding each Title IV Plan with an
amount of unfunded benefit liabilities of zero or less) to exceed
$2,500,000 for a period in excess of twelve months; or
(v) fail to make any payment to any Multiemployer Plan that it or
any of its ERISA Affiliates may be required to make under such
Multiemployer Plan, any agreement relating to such Multiemployer Plan, or
any law pertaining thereto.
As used in this Section 7.15, the term "accumulated funding
deficiency" has the meaning specified in Section 302 of ERISA and Section 412 of
the Code, and the term "amount of unfunded benefit liabilities" has the meaning
specified in Section 4001(a)(18) of ERISA.
7.16. Merger and Consolidations. No Credit Party will merge or
consolidate with or into any other entity; provided that any Subsidiary of the
Borrower may be merged or consolidated with or into (i) the Borrower, if the
Borrower is the continuing or surviving corporation or (ii) any other such
Subsidiary, if the continuing or surviving corporation is a Wholly Owned
Subsidiary of the Borrower.
7.17. Sale and Lease-Backs. The Borrower will not, and will not
permit any of its 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 now owned or
hereafter acquired, (i) which the Borrower or any of its Subsidiaries has sold
or transferred or is to sell or transfer to any other Person (other than in
connection with the Acquisition) or (ii) which the Borrower or any such
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 Subsidiary to any Person in connection with such lease, if in the case of
clause (i) or (ii) 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 with one year of each other or are with the same other Person.
7.18. Sale or Discount of Receivables. The Borrower will not, nor
will it permit any of its Subsidiaries to, sell, with or without recourse, or
discount (other than in connection with trade discounts or arrangements
necessitated by the creditworthiness of the other party, in each case in the
ordinary course of business consistent with past practice) or otherwise sell for
less than the face value thereof, notes receivable or accounts receivable owed
to it by its third party customers or suppliers.
7.19. Fine Products Company. The Borrower will not, and will not
permit any Subsidiary to, transfer any cash or other property to Fine Products,
other than transfers of cash in amounts needed to enable Fine Products to pay
amounts not to exceed $25,000 in the aggregate then required to be paid by Fine
Products to Persons that are not Affiliates of the Borrower. The Borrower will
not permit Fine Products to engage in any business activity.
SECTION 8. Events of Default. Upon the occurrence and during
the continuance of any of the following specified events (each an "Event
of Default"):
8.01. Payments. The Borrower shall (i) default in the payment when
due of any principal of the Loans, (ii) default, and such default shall continue
for two or more Business Days, in the payment when due of any interest on the
Loans or under any other Credit Document or (iii) fail to pay any other amounts
owing hereunder for five Business Days after receiving notice thereof; or
8.02. Representations, etc. Any representation, warranty or
statement made or deemed made by operation of Section 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 Section 4.01, 4.02 or 4.03; or
8.03. Covenants. Any Credit Party shall (a) default in the due
performance or observance by it of any term, covenant or agreement contained in
Section 6.11, 6.13, 6.14, 6.16 or Section 7 hereof or Section 1.1 of any
Mortgage or (b) default in the due performance or observance by it of any other
term, covenant or agreement contained in this Agreement or any Security Document
and such default shall continue unremedied for a period of at least thirty days
(or, in the case of Section 6.15(iii), five Business Days) after the date of
such default; or
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 $500,000 or more individually or $1,000,000 or more
in the aggregate, for all Credit Parties and their Subsidiaries, 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 to permit the holder or holders of such
Indebtedness (or a trustee or agent on behalf of such holder or holders) to
cause any such Indebtedness to become due prior to its stated maturity; or (b)
any such Indebtedness of any Credit Party or any of its respective Subsidiaries
shall be declared to be due and payable, or required to be prepaid other than by
a regularly scheduled required prepayment, prior to the stated maturity thereof;
or
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
or any of its Subsidiaries and the petition is not controverted within 20 days,
or is not dismissed for a period of 60 consecutive 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 of its Subsidiaries; or any Credit Party or any of its Subsidiaries
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 any of its Subsidiaries; or there is commenced against any
Credit Party or any of its Subsidiaries any such proceeding which remains
undismissed for a period of 60 consecutive days; or any Credit Party or any of
its Subsidiaries is adjudicated insolvent or bankrupt; or any order of relief or
other order approving any such case or proceeding is entered and continues
unstayed for a period of 60 consecutive days; or any Credit Party or any of its
Subsidiaries 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 consecutive days; or any Credit Party or any of its Subsidiaries
makes a general assignment for the benefit of creditors; or any corporate action
is taken by any Credit Party or any of its Subsidiaries for the purpose of
effecting any of the foregoing; or
8.06. ERISA. (i) Any "reportable event" as described in Section 4043
of ERISA or the regulations thereunder (excluding those events for which the
requirement for notice has been waived by regulation by the PBGC), or any other
event or condition, which the Required Banks determine constitutes reasonable
grounds under Section 4042 of ERISA for the termination of any Title IV Plan by
the PBGC or for the appointment by the appropriate United States District Court
of a trustee to administer or liquidate any Title IV Plan shall have occurred;
or
(ii) A trustee shall be appointed by a United States District
Court to administer any Title IV Plan; or
(iii) The PBGC shall institute proceedings to terminate any Title IV
Plan or to appoint a trustee to administer any Title IV Plan; or
(iv) A Credit Party or any of its ERISA Affiliates shall become
liable to the PBGC or any other party under Section 4062, 4063, 4064 or 4069 of
ERISA with respect to any Title IV Plan; or
(v) A Credit Party or any of its ERISA Affiliates shall
become liable to any Multiemployer Plan under Section 4201 et seq. of
ERISA;
if the sum of each of such Credit Party's and its ERISA Affiliates' various
liabilities (such liabilities to include, without limitation, any liability to
the PBGC or to any other party under Section 4062, 4063, 4064 or 4069 of ERISA
with respect to any Title IV Plan, or to any Multiemployer Plan under Section
4201 et seq. of ERISA) which the Required Banks determine could reasonably be
expected to be incurred as a result of such events listed in subclauses (i)
through (v) above exceeds $1,000,000; or
8.07. Security Documents. Any Security Document shall cease to be in
full force and effect, or shall cease to give the Collateral Agent the Liens,
rights, powers and privileges purported to be created thereby, in favor of the
Collateral Agent, superior to and prior to the rights of all third Persons and
subject to no Liens other than Prior Liens and Liens expressly permitted by the
applicable Security Document or any judgment creditor having a Lien against any
item of Collateral shall commence legal action to foreclose such Lien or
otherwise exercise its remedies against any item of Collateral; or
8.08. Guarantees. Any Guarantee or any provisions thereof shall
cease to be in full force or effect in all material respects, or the Guarantor
thereunder or Person acting by or on behalf of such Guarantor shall deny or
disaffirm such Guarantor's obligations under such Guarantee or the Guarantor
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; or
8.09. Judgments. One or more judgments or decrees shall be entered
against any Credit Party or any of its Subsidiaries involving a liability of
$500,000 or more in the case of any one such judgment or decree or $1,000,000 or
more in the aggregate for all such judgments and decrees for all Credit Parties
and their 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; or
8.10. Ownership. (i) Holdings shall own less than 100% (on a fully
diluted basis) of the issued and outstanding capital stock of the Borrower,
other than securities issued in the ordinary course of business under any stock
option or other benefit plan available to the employees or directors of the
Borrower or any of its Subsidiaries (each of clauses (i), (ii) and (iii) of this
Section 8.10 a "Change of Control Event"); or
(ii) (x) DNL Partners, Limited Partnership, together with the DNL
Affiliates, in the aggregate, cease to own or control at least more than 50% of
the Total Voting Power of Holdings, or (y) in the event that DNL Partners,
Limited Partnership distributes to its partners (pursuant to the terms of its
partnership agreement) all of the capital stock of Holdings owned by DNL
Partners, Limited Partnership, if, following such distribution, DNL Partners,
Limited Partnership, together with the DNL Affiliates, in the aggregate, cease
to own or control at least 33-1/3% of the Total Voting Power of Holdings;
provided that, for purposes of the calculations made pursuant to this paragraph
(ii) (I) in the event any shares of Class B Common Stock of Holdings are
converted into either shares of Class A Common Stock or Class C Common Stock of
Holdings (in any combination), then all such shares of Class A Common Stock
and/or Class C Common Stock issued upon such conversion shall be excluded and
(II) in the event shares of capital stock of Holdings are issued by Holdings as
consideration in whole or in part for the acquisition, directly or indirectly,
of another entity and the Aggregate Market Value of such shares of stock so
issued is more than $25,000,000, then all shares of capital stock of Holdings
issued in connection with such acquisition shall be excluded. For purposes of
the foregoing proviso the term "Aggregate Market Value" means (a) the average
closing price per share of the relevant class of Holdings capital stock during
the ten consecutive trading day period preceding the tenth trading day
immediately preceding the closing date of the acquisition transaction with
respect to which such shares are to be issued, times (b) the number of shares of
such class of capital stock issued by Holdings in such acquisition transaction.
The closing price for any day shall be the last reported sale price regular way
or, in case no such reported sale takes place on such day, the average of the
closing bid and asked prices regular way for such day, in each case (1) on The
New York Stock Exchange as reported on the NYSE composite tape as reported in
The Wall Street Journal or another newspaper of general circulation in the
Borough of Manhattan, City of New York, New York customarily published on each
business day or (2) if the relevant shares of capital stock are not listed on
The New York Stock Exchange, on the principal national securities exchange on
which the relevant shares of capital stock of Holdings are listed or to which
such shares are admitted to trading or (3) if the relevant shares of capital
stock are not listed or admitted to trading on a national securities exchange,
in the over-the-counter market as reported by NASDAQ or any comparable system or
(4) if the relevant shares of capital stock are not listed on NASDAQ or a
comparable system, or if for any other reason the current market price per share
cannot be determined pursuant to the foregoing provisions of this paragraph, the
current market price per share shall be the fair market value thereof as
determined in good faith by the Board of Directors of the Company;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Agent shall, upon the written request of the
Required Banks, by written notice to the Borrower, take any or all of the
following actions, without prejudice to the rights of the Agent or any Bank to
enforce its claims against the Borrower, except as otherwise specifically
provided for in this Agreement (provided that if an Event of Default specified
in Section 8.05 shall occur, with respect to any Credit Party, the result which
would occur upon the giving of written notice by the Agent as specified in
clauses (i) and (ii) below shall occur automatically without the giving of any
such notice): (i) declare the Total Commitments terminated, whereupon the
Commitment of each Bank shall forthwith terminate immediately and any accrued
and unpaid Commitment Commission shall forthwith become due and payable without
any other notice of any kind; (ii) 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 (iii) enforce, as Collateral Agent
(or direct the Collateral 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 the Agreement, it ceases (or is waived, pursuant to
the terms, and to the extent, of such waiver).
SECTION 9. Definitions. As used herein, the following terms shall
have the meanings herein specified unless the context otherwise requires.
Defined terms in this Agreement shall include in the singular number the plural
and in the plural the singular:
"A Term Loan" has the meaning provided in Section 1.01(a).
"A Term Loan Commitment" means, with respect to each Bank, the
amount set forth opposite such Bank's name on Annex I hereto directly below the
column entitled "Commitments -- A Term," as the same may be reduced from time to
time pursuant to Sections 2.01, 2.02, 3.02 and/or 8.
"A Term Loan Facility" means the Loan Facility evidenced by
the Total A Term Loan Commitments.
"A Term Note" has the meaning provided in Section 1.05(a).
"Account" means all of the "accounts" of the Borrower and its
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 (i) accounts receivable, including, without
limitation, all accounts created by or arising from all of the Borrower's and
its Subsidiaries' sales of goods or rendition of services or licensing or
subleasing of any of the Borrower's and its Subsidiaries' Intellectual Property;
(ii) unpaid seller's rights (including rescission, replevin, reclamation and
stopping in transit) relating to the foregoing or arising therefrom; (iii)
rights to any goods represented by any of the foregoing, including returned or
repossessed goods; (iv) reserves and credit balances held by the Borrower and
its Subsidiaries with respect to any such accounts receivable or any account
debtor; (v) guarantees or collateral for any of the foregoing; and (vi)
insurance policies or rights relating to any of the foregoing.
"Acquisition" has the meaning set forth in the recitals hereto.
"Acquisition Documents" means each of the Purchase Agreements
and each of the Manufacturing Agreements.
"Additional A Term Loan" has the meaning set forth in the
recitals hereto.
"Additional B Term Loan" has the meaning set forth in the
recitals hereto.
"Additional Collateral" has the meaning provided in
Section 6.13.
"Additional Loans" means, collectively, the Additional A Term Loan,
the Additional B Term Loan and the Revolving Loans.
"Additional Real Property" has the meaning provided in
Section 6.13.
"Additional Revolving Loan Commitment" has the meaning set
forth in the recitals hereto.
"Additional Term Loans" means, collectively, the Additional A Term
Loan and the Additional B Term Loan.
"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 that neither Indosuez nor any
Affiliate of Indosuez 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 (i) to
vote 10% or more of the securities having ordinary voting power for the election
of directors of such corporation or (ii) 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.
"Agent" means Indosuez, or any successor thereto appointed in
accordance herewith, in its capacity as agent and collateral agent for the
Banks.
"Agent's Office" means the office of the Agent located at 1211
Avenue of the Americas, 7th Floor, New York, New York 10036, or such other
office in New York as the Agent may hereafter designate in writing as such to
the other parties hereto.
"Agreement" means this Amended and Restated Credit Agreement, as the
same may after its execution be amended, supplemented or otherwise modified from
time to time in accordance with the terms hereof.
"AM Manufacturing Agreement" means the manufacturing agreement to be
entered into within 30 days after the Closing Date by the Borrower and AM
Cosmetics, Inc., relating to the manufacturing by AM Cosmetics, Inc. of certain
products for the Borrower.
"Asset Sale" means the sale, transfer or other disposition, to the
extent consummated after the Closing Date, (x) by Holdings of the Securities of
the Borrower held by it to any Person or (y) by the Borrower or any Subsidiary
of the Borrower to any Person other than the Borrower or any Wholly Owned
Subsidiary of the Borrower of any asset of the Borrower or such Subsidiary
(other than, in each such case, (i) transactions included in the definition of
Net Financing Proceeds, (ii) 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, (iii) sales, transfers or other
dispositions of inventory in the ordinary course of business and/or 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 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
Subsidiary, as the case may be, effected in compliance with Section 7.13A(iv) or
(v), and (iv) sales or other dispositions pursuant to Section 7.13A(v), (vi) or
(vii).
"Authorized Officer" means any senior officer of the Borrower or
Holdings, as the case may be, designated as such in writing to the Agent by the
Borrower or Holdings, as the case may be, to the extent reasonably acceptable to
the Agent.
"B Term Loan" has the meaning provided in Section 1.01(a).
"B Term Loan Commitment" means, with respect to each Bank, the
amount set forth opposite such Bank's name on Annex I hereto directly below the
column entitled "Commitments -- B Term" as the same may be reduced from time to
time pursuant to Sections 2.01, 2.02, 3.02 and/or 8.
"B Term Loan Facility" means the Loan Facility evidenced by
the Total B Term Loan Commitments.
"B Term Note" has the meaning provided in Section 1.05(a).
"Bank" has the meaning provided in the first paragraph of this
Agreement and in Section 11.04.
"Bankruptcy Code" has the meaning provided in Section 8.05.
"Base Rate" means the higher of (x) 1/2% per annum in excess of the
Federal Funds Rate and (y) the rate which the Agent announces from time to time
as its prime lending rate, as in effect from time to time. The rate the Agent
announces as its prime lending rate is a reference rate and does not necessarily
represent the lowest or best rate actually charged to any customer. The 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.
"Base Rate Loan" means each Loan bearing interest based on the Base
Rate as provided in Section 1.08(a).
"Borrower" means Carson Products Company, a Delaware
corporation.
"Borrower General Security Agreement" means the Borrower General
Security Agreement substantially in the form of Exhibit H hereto, except for
such changes therein as shall have been approved by the Agent and the Required
Banks, 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.
"Borrower Intellectual Property Security Agreement" means the
Borrower Intellectual Property Security Agreement substantially in the form of
Exhibit G hereto, except for such changes therein as shall have been approved by
the Agent and the Required Banks, 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.
"Borrower Pledge Agreement" means the Borrower Securities Pledge
Agreement substantially in the form of Exhibit F-1 hereto, except for such
changes therein as shall have been approved by the Agent and the Required Banks,
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.
"Borrowing" means the incurrence pursuant to a Notice of Borrowing
and the Loan Facility of one Type of Loan by a 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
Periods.
"Borrowing Base" means an amount equal to the sum of (i) 80% of the
Eligible Accounts Receivable and (ii) 50% of the Eligible Inventory.
"Borrowing Base Certificate" has the meaning provided in
Section 6.01.
"Business Day" means (i) for all purposes other than as covered by
clause (ii) below, any day excluding Saturday, Sunday and any day which shall be
in The City of New York or Savannah, Georgia a legal holiday or a day on which
banking institutions are authorized by law or other governmental actions to
close and (ii) 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 (i) and which is also
a day for trading by and between banks in 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.
"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.
"Carson Holdings Limited" means a South African subsidiary of
the Borrower.
"Carson Holdings Limited Share Incentive Trust" means the trust
pursuant to which certain additional shares of common stock of Carson Holdings
Limited may be issued from time to time.
"Cash" means money, currency or a credit balance in a Deposit
Account.
"Cash Equivalents" means (i) 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 one year from the date of acquisition, (ii) 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 Standard & Poor's Ratings Group ("S&P") or the
equivalent thereof by Moody's Investors Service, Inc. ("Moody's") having
maturities of not more than one year from the date of acquisition, (iii) U.S.
dollar denominated time deposits, certificates of deposit and bankers'
acceptances of (x) any Bank, (y) any domestic commercial bank of recognized
standing having capital and surplus in excess of $250,000,000 or (z) 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,
(iv) 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 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, (v) repurchase agreements with
any Bank or any primary dealer in U.S. government securities 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 (vi)
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 (i)
through (iv) above.
"Certificate of Incorporation" means the respective
certificates of incorporation of Holdings or the Borrower.
"Change of Control" has the meaning provided in Section 8.10.
"Closing Date" means the date on or before April 30, 1997 on which
the Additional Loans are made and the consummation of the Acquisition occurs.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Collateral" means all of the Pledged Collateral, Pledged Securities
and Mortgaged Real Property and all Additional Collateral and Additional Real
Property to the extent not otherwise included in any of the foregoing.
"Collateral Agent" means Indosuez in its capacity as
collateral agent for the Banks.
"Collective Bargaining Agreement" means the Collective
Bargaining Agreement set forth in Annex V.
"Commercial Letter of Credit" means any letter of credit or similar
instrument issued for the account of the Borrower 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 Subsidiaries in the ordinary
course of business of the Borrower or such Subsidiaries.
"Commitment" means, with respect to each Bank, such Bank's A Term
Loan Commitment, B Term Loan Commitment and Revolving Loan Commitment.
"Commitment Commission" has the meaning provided in
Section 2.03.
"Compliance Certificate" means a certificate issued pursuant to
Section 6.01(f) signed by a chief financial officer, controller, chief
accounting officer or other Authorized Officer of the Borrower.
"CONOPCO" has the meaning set forth in the recitals hereto.
"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 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 Subsidiaries, in conformity with GAAP, but excluding expenditures
made in connection with the replacement, substitution or restoration of assets
(i) to the extent financed from insurance proceeds paid on account of the loss
of or damage to the assets being replaced or restored, (ii) with awards of
compensation arising from the taking by eminent domain or condemnation of the
assets being replaced or (iii) with regard to equipment that is purchased
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 that
Consolidated Capital Expenditures shall in any event include the purchase price
paid in connection with the acquisition of any other Person (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 Compensation Expense" for any Person means, for any
period, the consolidated compensation expense incurred by such Person during
such period (x) in connection with long-term incentive compensation arrangements
entered into by such Person or any of its consolidated Subsidiaries with
officers and employees of such Person or any consolidated Subsidiary of such
Person prior to the consummation of the Holdings IPO and (y) in connection with
issuances of shares of the capital stock of such Person or any of its
consolidated Subsidiaries to directors, officers and/or employees of such Person
or any of its consolidated Subsidiaries prior to the consummation of the
Holdings IPO, in each such case determined on a consolidated basis for such
Person and its consolidated Subsidiaries in conformity with GAAP.
"Consolidated Current Assets" means, with respect to any Person as
at any date of determination, the total assets of such Person and its
consolidated Subsidiaries which may properly be classified as current assets on
a consolidated balance sheet of such Person and its Subsidiaries (provided that
with respect to the Borrower, there shall be added to such amount the amount of
LIFO reserve as reflected in the then most recent consolidated financial
statements of the Borrower delivered by the Borrower pursuant to Section
6.01(a), (b) and (c)), all as determined on a consolidated basis for such Person
and its consolidated 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 Subsidiaries which may properly be classified as current
liabilities (other than the current portion of any Loans and of any Existing
Indebtedness) on a consolidated balance sheet of such Person and its
consolidated Subsidiaries in accordance with GAAP.
"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
Subsidiaries in conformity with GAAP.
"Consolidated EBITDA" for any Person means, for any period, the
difference between (A) the sum of the amounts for such period of (i)
Consolidated Net Income, (ii) Consolidated Interest Expense, (iii) Consolidated
Tax Expense, (iv) Consolidated Depreciation Expense, (v) Consolidated
Compensation Expense and (vi) Consolidated Amortization Expense less (B) the sum
of the amounts for such period of (i) interest income, (ii) net gains on sales
of assets to the extent included in Consolidated Net Income, whether or not
extraordinary (excluding sales in the ordinary course of business) and other
extraordinary gains, as adjusted for the impact of the application of the
last-in, first-out (LIFO) method of valuing inventory (to the extent such
adjustments are non-Cash), which adjustment is made by (x) adding to the sum in
clause (A) above the amount of LIFO provision for such period, if any, which had
the effect of decreasing the Consolidated Net Income of the Borrower and its
Subsidiaries for such period or (y) adding to the sum in clause (B) above the
amount of LIFO recovery for such period, if any, which had the effect of
increasing the Consolidated Net Income of the Borrower and its Subsidiaries for
such period, and (iii) for the Borrower only, non-cash compensation expense
related to and in connection with the chief executive officer's Employment
Agreement, all as determined on a consolidated basis for such Person and its
consolidated Subsidiaries in accordance with GAAP.
"Consolidated EBITDAC" for any Person means, for any period,
Consolidated EBITDA for such period minus Consolidated Capital Expenditures for
such period.
"Consolidated Interest Expense" for any Person means, for any
period, the sum of (x) total interest expense (including that attributable to
Capital Leases in accordance with GAAP) and (y) total cash dividends paid on any
preferred stock, in each case of such Person and its Subsidiaries on a
consolidated basis with respect to all outstanding Indebtedness and preferred
stock of such Person and its Subsidiaries, including, without limitation, all
commissions, discounts and other fees and charges 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 Subsidiaries in accordance with GAAP.
For purposes of clause (y) above, dividend requirements shall be increased to an
amount representing the pretax earnings 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 1 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
fiscal 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 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 Subsidiaries in conformity with GAAP;
provided that there shall be excluded (i) the income (or loss) of any other
Person (other than consolidated Subsidiaries of such Person) in which any third
Person (other than such Person or any of its consolidated Subsidiaries) has a
joint interest, except to the extent of the amount of dividends or other
distributions actually paid to such Person or any of its Subsidiaries by such
other Person during such period, (ii) the income (or loss) of any other Person
accrued prior to the date it becomes a consolidated Subsidiary of such Person or
is merged into or consolidated with such Person or any of its consolidated
Subsidiaries or such other Person's assets are acquired by such Person or any of
its consolidated Subsidiaries, and (iii) the income of any consolidated
Subsidiary of such Person to the extent that the declaration or payment of
dividends or similar distributions by that consolidated 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 Subsidiary.
"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 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 and amounts that are permitted by Section 7.14. 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 (i) this Agreement, (ii) each Note, (iii)
each Guarantee and (iv) each Security Document.
"Credit Party" means at all times Holdings and the Borrower and each
Subsidiary of the Borrower that pledges any stock, grants any Lien or issues any
Guarantee pursuant to any Credit Document.
"Cutex Manufacturing Agreement" means the manufacturing agreement
dated as of April 30, 1997 between the Borrower and CONOPCO relating to the
manufacture by CONOPCO of certain products for the Borrower.
"Cutex Purchase Agreement" has the meaning set forth in the
recitals hereto.
"Default" means any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Destruction" has the meaning assigned to that term in each
Mortgage.
"Dividends" has the meaning provided in Section 7.07.
"DNL Affiliates" means Vincent A. Wasik, S. Garrett
Stonehouse, Lawrence E. Bathgate, II and Morningside, in each case
together with Affiliates thereof, any member of the immediate family of
any of the foregoing, or any trust or foundation for the benefit of any of
the foregoing.
"Dollars" means United States Dollars.
"Effective Date" has the meaning provided in Section 11.10.
"Eligible Accounts Receivable" means, as at any applicable date of
determination, the aggregate face amount of the Borrower's and its Subsidiaries'
Accounts included in clause (i) of the definition of Account hereunder
(excluding any Accounts set forth in clauses (ii) through (vi) of such
definition), without duplication, in each case less (without duplication) the
aggregate amount of all reserves, limits and deductions with respect to such
Accounts set forth below and less the aggregate amount of all returns,
discounts, claims, rebates, offsets, 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 Agent in its sole discretion, no individual Account shall be deemed to be an
Eligible Account Receivable if:
(a) the Borrower or its Subsidiary does not have legal and
valid title to the Account; 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 to
an Affiliate of the Borrower; or
(d) the Account or any portion thereof is unpaid more than 90 days
after the original invoice date, with respect to Accounts the invoice for
which provides that payment is due in 60 days or less from the date of
such invoice; or
(e) the Account is unpaid more than 30 days after the original
payment due date, with respect to Accounts the invoice for which provides
that payment is due more than 60 days from the date of such invoice;
provided, however, that the aggregate amount of all invoices providing for
payment more than 60 days from the date of the invoice that may constitute
Eligible Accounts Receivable shall not exceed 7 1/2% in face value of all
Accounts of the Borrower and its Subsidiaries then outstanding at any one
time; or
(f) such Account, when aggregated with all other Accounts of the
same account debtor (or any Affiliate thereof), exceeds twenty percent in
face value of all Accounts of the Borrower and its Subsidiaries then
outstanding, to the extent of such excess; or
(g) (i) 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, (ii) 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 (iii) 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
(h) the account debtor for such Account 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
(i) the Agent does not have a valid and perfected first priority
security interest in such Account (subject only to a tax lien being
contested in good faith and by appropriate proceedings and permitted by
Section 7.03(a)); or
(j) the sale to the account debtor for such Account is on a
consignment, sale on approval, guaranteed sale or sale-and-return basis or
pursuant to any written agreement requiring repurchase or return (other
than return arrangements in the ordinary course of business consistent
with the past business practices of the Borrower); or
(k) such Account is from an account debtor (or any Affiliate
thereof) and fifty percent (50%) 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
(l) fifty percent (50%) or more, in face amount, of other Accounts
from the same account debtor for such Account are not deemed Eligible
Accounts Receivable hereunder; or
(m) the account debtor for such Account is a foreign
Governmental Authority; or
(n) such 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. ss. 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 7 1/2% in face value of all Eligible Accounts of the
Borrower and its Subsidiaries then outstanding, or (ii) the Borrower has
assigned the Account to the Agent in compliance with the provisions of
such Act; or
(o) the account debtor for such Account is outside the United States
or Canada or incorporated in or conducting substantially all of its
business in any jurisdiction located outside the United States, unless the
sale is (i) on letter of credit or sight draft, guaranty or acceptance
terms, consistent with past business practices of the Borrower, not to
exceed 5% in face value of all Eligible Accounts of the Borrower and its
Subsidiaries then outstanding or (ii) such Account is otherwise approved
by and reasonably acceptable to the Agent; or
(p) the Agent determines in good faith in accordance with its
internal credit policies that such 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 (p) shall not become ineligible
until the Agent shall have given the Borrower five Business Days' advance
notice of such determination; or
(q) the goods giving rise to such Account have not been shipped or
the services giving rise to such Account have not been performed by the
Borrower or the Account otherwise does not represent a final sale; or
(r) such 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 includes
such Accounts as the Borrower requests and that the Agent approves in advance,
in writing and in its sole discretion (or if the aggregate face amount to be
approved exceeds $750,000 at any one time, the approval of the Required Banks
has been obtained in writing).
"Eligible Assignee" means (i) a commercial bank organized under the
laws of the United States, or any State thereof, and having total assets in
excess of $500,000,000; (ii) 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 $250,000,000; (iii) a finance company, insurance
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 (iv) an entity managed by a Bank or
Affiliate of a Bank; provided that the Commitment held by such entity is less
than $20,000,000; and, in each such case, which is otherwise reasonably
acceptable to the Borrower.
"Eligible Inventory" means (A) the gross amount of Inventory of the
Borrower and its Subsidiaries, valued at the lower of cost (on a FIFO basis) or
market, which (i) is owned solely by the Borrower or its Subsidiary and with
respect to which the Borrower or its Subsidiary has good, valid and marketable
title; (ii) is stored on property that is either (a) owned or leased by the
Borrower or its Subsidiary or (b) owned or leased by a warehouseman that has
contracted with the Borrower or its Subsidiary to store Inventory on such
warehouseman's property (provided that, with respect to Inventory contracted to
be stored on property leased by the Borrower or its Subsidiary, the Borrower or
its Subsidiary shall deliver to the Agent immediately following the execution of
such storage contract a Landlord Lien Assurance and, with respect to the
Inventory stored on property owned or leased by a warehouseman, the Borrower or
its Subsidiary shall deliver to the Agent acknowledgment agreements executed by
such warehouseman); (iii) is subject to a valid, enforceable and first priority
Lien in favor of the Agent (subject to a tax lien being contested in good faith
and by appropriate proceedings and permitted by Section 7.03(a), and except with
respect to Eligible Inventory stored at sites described in clause (ii)(b) above,
for Liens for normal and customary warehouseman charges); (iv) is located in the
United States; and (v) is not, in the reasonable judgment of the Agent, obsolete
or slow moving in relation to customary industry practice, and which otherwise
conforms to the requirements for eligibility contained in clauses (i) - (iv)
hereof; (B) less the amount of any goods returned or rejected by the Borrower's
or its Subsidiaries' customers and goods in transit to third parties (other than
to the Borrower's or its Subsidiaries' agents or warehousemen that comply with
clause (A)(ii)(b) above); and (C) less the amount of any reserves for special
order goods and market value declines in accordance with GAAP. In addition to
the foregoing, Eligible Inventory shall include such items of the Borrower's and
its Subsidiaries' Inventory as the Borrower shall request and that the Agent
approves in advance, in writing and in its sole discretion (or if the aggregate
amount to be approved exceeds $500,000 at any one time, the approval of the
Required Banks has been obtained).
"Employment Agreements" means the employment agreements between the
Borrower and (i) Joyce Roche, dated as of June 7, 1995, as amended, (ii) Dennis
E. Smith, dated as of June 7, 1995, as amended, and (iii) Dr. Leroy Keith dated
as of August 23, 1995, as amended.
"Environment" shall mean 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" has the meaning provided in
Section 5.22.
"Environmental Laws" shall mean all federal, state, local and
foreign laws, codes, regulations, ordinances, requirements, directives, orders,
common law, and administrative or judicial interpretations thereof that may be
enforced by any Governmental Authority or court, relating to pollution, the
protection of human health, the protection of the Environment, or the emission,
discharge, disposal or other release or threatened release of Hazardous
Materials in or into the Environment.
"Environmental Notice" shall mean 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.
"ERISA Affiliate" means any entity, whether or not incorporated,
which is under common control or would be considered a single employer with a
Credit Party within the meaning of Section 414(b), (c) or (m) 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, (i) the arithmetic average (rounded to the
nearest 1/100 of 1%) of the offered quotation to leading banks in the interbank
Eurodollar market by each of the Reference Banks for dollar deposits in such
Reference Bank 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%) by (ii) 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 that if any Reference Bank fails to provide the Agent
with its aforesaid rate, then the Eurodollar Rate shall be determined based on
the rate or rates provided to the Agent by a bank designated by the Required
Banks and reasonably approved by the Borrower.
"Event of Default" has the meaning provided in Section 8.
"Excess Cash Flow" means, without duplication, for any Person for
any period for which such amount is being determined, (i) Consolidated Net
Income, minus (ii) any amount which is both (x) included in Consolidated Net
Income and (y) required to be applied to the prepayment of the Loans pursuant to
Section 3.02(A), plus (minus) (iii) 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 (plus) (iv) additions (reductions)
to working capital for such period (i.e., the increase or decrease in
Consolidated Current Assets (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 3.02(A)(e) of such Person from the
beginning to the end of such period) of such Person minus the increase or
decrease in Consolidated Current Liabilities) minus (v) the amount of
Consolidated Capital Expenditures that are paid other than from the proceeds of
borrowings in such period minus (vi) Scheduled A Term Loans Principal Payments,
Scheduled B Term Loans Principal Payments and voluntary prepayments of Loans not
subject to reborrowing made during such period. For purposes of the foregoing
and without duplication, Consolidated Net Income will exclude (x) all net losses
on the sale of capital assets or out of the ordinary course of business and (y)
all write-downs of capital assets.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Existing A Term Loans" means Loans outstanding under the A Term
Loan Facility immediately prior to the Closing Date.
"Existing B Term Loans" means Loans outstanding under the B Term
Loan Facility immediately prior to the Closing Date.
"Existing Bank and Existing Banks" have the meaning provided
in Section 1.14(b)(viii).
"Existing Credit Agreement" has the meaning set forth in the
recitals hereto.
"Existing Debt" means the Indebtedness of the Borrower and its
Subsidiaries set forth on Annex III.
"Existing Leases" means the Leases of the Borrower and its
Subsidiaries set forth on Annex XV.
"Existing Loan Amount" has the meaning provided in Section
1.14(b)(v).
"Existing Notes" has the meaning provided in Section
1.14(b)(viii).
"Existing Revolving Loans" means Loans outstanding under the
Revolving Loan Commitment immediately prior to the Closing Date.
"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 leading banks in extending overnight loans to other leading banks.
"Final A Term Loan Maturity Date" means the last Business Day
of March, 2002.
"Final B Term Loan Maturity Date" means the last Business Day
of March, 2004.
"Final Revolving Loan Maturity Date" means the last Business
Day of March, 2002.
"Financing Proceeds" means the cash (other than Net Cash Proceeds or
proceeds of any sale, transfer or other disposition of assets excluded from the
definition of "Asset Sale" by the exceptions contained therein) received by the
Borrower and/or any of its Subsidiaries, directly or indirectly, from any
financing transaction of whatever kind or nature, including without limitation
from any incurrence of Indebtedness, any mortgage or pledge of an asset or
interest therein (including a transaction which is the substantial equivalent of
a mortgage or pledge), from the sale of tax benefits, from a lease to a third
party and a pledge of the lease payments due thereunder to secure Indebtedness,
from a joint venture arrangement, from an exchange of assets and a sale of the
assets received in such exchange, or any other similar arrangement or technique
whereby the Borrower or any of its Subsidiaries obtains Cash in respect of an
asset, net of direct costs associated therewith. Financing Proceeds shall not
include any amounts with respect to (i) the incurrence or refinancing of the
Total Revolving Loan Commitment, (ii) the incurrence or refinancing of
Indebtedness permitted by Sections 7.04(a), (b), (c) and (d) effected in
accordance with the applicable provisions of such Sections, or (iii)
transactions between any of the Borrower, Holdings and any Wholly Owned
Subsidiaries of the Borrower.
"Fine Products" has the meaning provided in Section 5.24.
"FIRREA" means the Financial Institutions Reform, Recovery &
Enforcement Act of 1989, as amended from time to time, and any successor
statute.
"Foreign Bank" has the meaning provided in Section 3.04(c).
"GAAP" means generally accepted accounting principles in the United
States of America as in effect on the Effective Date, it being understood and
agreed that determinations in accordance with GAAP for purposes of Sections 5,
6, 7 and 8 and all defined terms as used in this Agreement, are subject (to the
extent provided therein) to Section 11.07(a).
"General Security Agreements" means and includes the Borrower
General Security Agreement and any other general security agreements delivered
pursuant to Section 6.13 or 6.14.
"Government Acts" has the meaning provided in Section 1.13(I).
"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.
"Guarantee" means and includes, once executed and delivered, each of
the Holdings Guarantee and each Subsidiary Guarantee.
"Guarantor" for purposes of this Agreement means, individually, each
of Holdings and each Subsidiary which executes a Subsidiary Guarantee.
"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.
"Holdings" means Carson, Inc., a Delaware corporation.
"Holdings Guarantee" means the Holdings Guarantee substantially in
the form of Exhibit E hereto, except for such changes as shall have been
approved by the Agent and the Required Banks, 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.
"Holdings IPO" means the initial public offering of common stock of
Holdings, consummated on October 18, 1996.
"Holdings Pledge Agreement" means the Holdings Securities Pledge
Agreement substantially in the form of Exhibit F-2 hereto, except for such
changes therein as shall have been approved by the Agent and the Required Banks,
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.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
"Indebtedness" of any Person means, without duplication, (i) all
indebtedness of such Person for borrowed money, (ii) 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, other than current
liabilities in respect of the foregoing, liabilities for accumulated
postretirement benefit obligations and liabilities for deferred compensation,
(iii) the face amount of all letters of credit issued for the account of such
Person and, without duplication, all drafts drawn and unpaid thereunder, (iv)
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, (v) all Capitalized Lease Obligations of such Person, (vi) 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, (vii) all obligations of such Person under Interest Rate Agreements
and (viii) all Contingent Obligations of such Person; provided that Indebtedness
shall not include trade payables, accrued expenses, accrued dividends and
accrued income taxes, in each case arising in the ordinary course of business.
"Indosuez" means Banque Indosuez, New York Branch.
"Initial Bank" means a Bank that was an original signatory to
this Agreement.
"Initial Loans" means such Loans made under the Existing
Credit Agreement.
"Intellectual Property" has the meaning provided in Section
5.16.
"Intellectual Property Security Agreements" means and includes the
Borrower Intellectual Property Security Agreement and any other intellectual
property security agreements delivered pursuant to Section 6.13 or 6.14.
"Interest Margin" means, in respect of (i) Base Rate Loans that are
(a) A Term Loans, 0.50%, (b) B Term Loans, 1.00% and (c) Revolving Loans, 0.50%;
and (ii) Reserve Adjusted Eurodollar Loans that are (a) A Term Loans, 2.00%, (b)
B Term Loans, 2.50% and (c) Revolving Loans, 2.00%; provided that on or after
April 30, 1998, upon the Borrower's delivery of a Compliance Certificate in
compliance with Section 6.01(f), the Interest Margin with respect to Reserve
Adjusted Eurodollar Loans and Base Rate Loans shall be reduced by the rate per
annum set forth below until the next such Compliance Certificate is delivered or
required to be delivered if the leverage ratio of the Borrower pursuant to
Section 7.11 is as follows:
Total Ratio of Consolidated
Indebtedness to Consolidated Reduction in Per Annum
EBITDA______________________ Rate of Interest Margin
A Term Revolver
Below 2.00:1.00 but equal to or in .25% .25%
excess of 1.50:1.00
Below 1.50:1.00 .50% .50%
; provided, however, that in the event that (i) the ratio described above
exceeds 2.00:1.00 or (ii) the Compliance Certificate required by Section 6.01(f)
is not delivered as required, none of the reductions set forth above shall
apply.
"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 the Borrower is a party, designed to protect the Borrower
or any of its Subsidiaries against fluctuations in interest rates.
"Interest Rate Determination Date" means each date for calculating
the Eurodollar Rate for purposes of determining the interest rate in respect of
an Interest Period. The Interest Rate Determination Date shall be the second
Business Day prior to the first day of the related Interest Period for a Reserve
Adjusted Eurodollar Loan.
"Inventory" means all of the inventory of the Borrower and its
Subsidiaries (on a consolidated basis) including without limitation: (i) all raw
materials, work in process, parts, components, assemblies, supplies and
materials used or consumed in the business of the Borrower and its Subsidiaries;
(ii) all goods, wares and merchandise, finished or unfinished, held for sale or
lease or leased or furnished or to be furnished under contracts of service; and
(iii) all goods returned or repossessed by the Borrower or any of its
Subsidiaries.
"Issuing Bank" means the Bank that agrees or is otherwise obligated
to issue a Letter of Credit, determined as provided in Section 1.13(C).
"Jean Philippe Purchase Agreement" has the meaning set forth
in the recitals hereto.
"Landlord Lien Assurance" means, with respect to any Real Property
leased by the Borrower or any of its Subsidiaries for use as a retail facility
or for the storage of Inventory, either (i) an agreement executed by the
landlord of such Real Property substantially in the form of Exhibit O hereto or
(ii) a legal opinion or other evidence, in each case reasonably satisfactory to
the Agent, that the laws of the jurisdiction or jurisdictions applicable to the
lease and the retail or storage facility do not give rise to any Lien in favor
of the landlord with respect to Inventory located at such facility.
"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 the Borrower
pursuant to Section 1.13.
"Letter of Credit Participation" has the meaning provided in
Section 1.13(A).
"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 under all Letters of Credit then issued and outstanding
plus (ii) the aggregate amount of all drawings under Letters of Credit honored
by all Issuing Banks and not theretofore reimbursed by the Borrower; provided,
however, the Letters of Credit Usage of an Issuing Bank shall be deemed to be
only such portion of the Letters of Credit Usage of such Issuing Bank which
other Banks have not bought by participation pursuant to Section 1.13(A).
"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 and every Term Loan or Revolving Loan.
"Loan Facility" means the credit facility evidenced by the
Total Term Loan Commitments and the Total Revolving Loan Commitments.
"Loss Proceeds" has the meaning provided in Section 3.02(A)(i).
"Management Agreement" means the management assistance agreement
between Morningside and the Borrower dated as of August 23, 1995, as amended.
"Manufacturing Agreements" means, collectively, the Cutex
Manufacturing Agreement and the AM Manufacturing Agreement.
"Materially Adverse Effect" means, (i) with respect to Holdings and
the Borrower and its Subsidiaries, any materially adverse effect (both before
and after giving effect to the Acquisition and the financing thereof and the
other transactions contemplated hereby) with respect to the operations,
business, properties, assets, liabilities (contingent or otherwise) or financial
condition or prospects of Holdings and the Borrower and its Subsidiaries, taken
as a whole, or (ii) 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 (w) a materially adverse change described in clause (i)
with respect to Holdings and the Borrower and its Subsidiaries, taken as a
whole, (x) the inability of any Credit Party to perform in any material respect
its Obligations hereunder or the inability of the Banks to enforce in any
material respect their rights purported to be granted hereunder or the
Obligations (including realizing on the Collateral), or (y) a materially adverse
effect on the ability to effect (including hindering or unduly delaying) the
Acquisition and the other transactions contemplated hereby on the terms
contemplated hereby and thereby.
"Minimum Borrowing Amount" means $100,000.
"Morningside" means Morningside Capital Group, LLC, a Connecticut
limited liability company.
"Mortgage" means a term loan and revolving credit mortgage (or deed
of trust or deed to secure debt, as the case may be), assignment of rents,
security agreement and fixture filing creating and evidencing a Lien on a
Mortgaged Real Property, which shall be substantially in the form of Exhibit D
hereto, containing such schedules and including such additional provisions and
other deviations from such Exhibit as shall be necessary to conform such
document to applicable or local law or as shall be customary under applicable or
local law and which shall be dated the date of delivery thereof and made by the
owner (fee or leasehold, as the case may be) of the Mortgaged Real Property
described therein for the benefit of the Collateral Agent, as mortgagee (or
beneficiary, as the case may be), assignee and secured party, 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.
"Mortgaged Real Property" means each Real Property designated on
Annex VIII which shall be subject to a Mortgage.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA with respect to which any Credit Party or any of
their respective ERISA Affiliates is or has been required to contribute or
otherwise may have liability.
"Net Award" has the meaning assigned to that term in each
Mortgage.
"Net Cash Proceeds" means:
(a) with respect to any Asset Sale, the aggregate cash payments
received by Holdings, the Borrower and/or any of the Borrower's
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 that,
with respect to taxes, expenses shall only include taxes to the extent
that taxes are payable in cash in the current year or in the next
succeeding year with respect to the current year as a result of such Asset
Sale; and
(b) with respect to any Taking or Destruction, the Net Award or Net
Proceeds, as applicable, resulting therefrom, to be applied as Net Cash
Proceeds under this Agreement pursuant to the provisions of Sections
1.13.3 and 1.13.4 of the Mortgages;
provided, further, that Net Cash Proceeds shall not include any amounts or items
included in the definition of Financing Proceeds or Net Financing Proceeds
(including in any proviso appearing therein).
"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 as a result thereof in the current year or in the next
succeeding year with respect to the current year as a result of the transaction
generating Net Financing Proceeds.
"Net Proceeds" has the meaning assigned to that term in each
Mortgage.
"New Image" has the meaning set forth in the recitals hereto.
"Note" means any Revolving Note or Term Note.
"Notice of Borrowing" has the meaning provided in Section 1.03.
"Notice of Conversion/Continuation" has the meaning provided
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
Agent or any Bank pursuant to the terms of this Agreement or any other Credit
Document or secured by any of the Security Documents.
"Officers' Certificate" means, as applied to any corporation, a
certificate executed on behalf of such corporation by its Chairman of the Board
(if an officer) or its President or one of its Vice Presidents and by its Chief
Financial Officer or its Treasurer or any Assistant Treasurer; provided that
every Officers' Certificate with respect to compliance with a condition
precedent to the making of any Loan hereunder shall include (i) 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, (ii) a statement that, in the opinion of the signers, they
have made or have caused to be made such examination or investigation as is
necessary to enable them to express an informed opinion as to whether or not
such condition has been complied with, and (iii) a statement as to whether, in
the opinion of the signers, such condition has been complied with.
"Officers' Solvency Certificate" means the Officers' Solvency
Certificate in the form set forth as Exhibit L hereto.
"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.
"Partial Release Conditions" has the meaning provided in
Section 7.13(C).
"PBGC" means 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 any Credit Party or their
respective ERISA Affiliates or as to which any Credit Party or their respective
ERISA Affiliates may have liability.
"Permitted Encumbrances" has the meaning provided in Section
7.03.
"Person" means any individual, partnership, joint venture, firm,
corporation, association, trust or other enterprise or any Governmental
Authority.
"Pledge Agreements" means and includes the Holdings Pledge
Agreement, the Borrower Pledge Agreement, and any securities pledge agreements
(including, without limitation, any supplements or amendments to any of the
foregoing) delivered pursuant to Section 6.13, 6.14 or 6.16.
"Pledged Collateral" means all the Pledged Collateral as defined in
each of the General Security Agreements and in the Intellectual Property
Security Agreements.
"Pledged Securities" means all the securities and other collateral
in which a security interest is purported to be granted to the Agent for the
benefit of the Banks by each of the Pledge Agreements, including, without
limitation, all Pledged Collateral as defined therein.
"Portion" means the Term Portion or the Revolving Portion.
"Prior Liens" means Liens which, pursuant to the provisions of any
Security Document, are or may be superior to the Lien of such Security Document.
"Projected Financial Statements" has the meaning provided in
Section 5.11(c).
"Purchase Agreements" means, collectively, the Cutex Purchase
Agreement and the Jean Philippe Purchase Agreement.
"Real Property" means all right, title and interest of the Borrower
or any of its Subsidiaries (including, without limitation, any leasehold estate)
in and to a parcel of real property owned, leased or operated by the Borrower or
any of its Subsidiaries together with, in each case, all of the Borrower's or
such Subsidiaries' right, title and interest in and to all improvements and
appurtenant fixtures, equipment, personal property, easements and other property
and rights incidental to the ownership, lease or operation thereof.
"Release" has the meaning provided in Section 7.13(B).
"Release Conditions" has the meaning provided in Section
7.13(B).
"Release Notice" has the meaning provided in Section 7.13(B).
"Released Real Property" has the meaning provided in Section
7.13(B).
"Reference Banks" means Indosuez, Chase Bank and Citibank, N.A.
"Regulation D" means Regulation D 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 reserve requirements.
"Regulation G" means Regulation G 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.
"Regulation T" means Regulation T 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.
"Regulation U" means Regulation U 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.
"Regulation X" means Regulation X 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.
"Required Banks" means at any time (i) Banks holding at least 51% of
the Total Commitments held by Banks (or, if the Total Commitments shall have
been terminated, Banks holding at least 51% of the outstanding Loans) or (ii)
two Banks if there are only two Banks holding 100% of the Total Commitments and
at least one of such Banks holds an aggregate Commitment of at least $5,000,000;
provided 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 (x) such document, agreement, certificate or other
writing was delivered in its final form to the Banks prior to the Effective Date
(or if amended or modified thereafter, the Agent has reasonably determined such
amendment or modification not to be material), (y) such document, agreement,
certificate or other writing is satisfactory to the Agent and (z) Banks holding
more than 33-1/3% of the Total Commitments held by Banks have not objected in
writing to such document, agreement, certificate or other writing to the Agent
prior to the Closing Date.
"Reserve Adjusted Eurodollar Loan" means each Loan bearing interest
based on the Eurodollar Rate as provided in Section 1.08(b).
"Restatement Effective Date" has the meaning provided in
Section 11.10.
"Restoration" has the meaning assigned to that term in each
Mortgage.
"Revolving Loan Commitment" means, with respect to each Bank, the
amount set opposite such Bank's name on Annex I hereto directly below the column
entitled "Commitments -- Revolver," as the same may be reduced from time to time
pursuant to Sections 2.01, 3.02 and/or 8.
"Revolving Loan Commitment Termination Date" means the
Business Day immediately preceding the Final Revolving Loan Maturity Date.
"Revolving Loans" has the meaning provided in Section 1.01(b).
"Revolving Note" has the meaning provided in Section 1.05(a).
"Revolving Portion" means, at any time, the portion of the Loan
Facility evidenced by the Total Revolving Loan Commitments.
"Rights Offering" means the offering on or about June 1997 by Carson
Holdings Limited to its shareholders of rights to acquire additional shares of
common stock on a pro rata basis.
"Scheduled A Term Loans Principal Payments" means, with respect to
the principal payments on the A Term Loans on the last Business Day of each
month set forth below, the U.S. dollar amount set forth opposite thereto:
Scheduled A Term Loan
Date Principal Payment
June 1997 $ 625,000
September 1997 625,000
December 1997 625,000
March 1998 625,000
June 1998 625,000
September 1998 625,000
December 1998 625,000
March 1999 625,000
June 1999 1,562,500
September 1999 1,562,500
December 1999 1,562,500
March 2000 1,562,500
June 2000 1,562,500
September 2000 1,562,500
December 2000 1,562,500
March 2001 1,562,500
June 2001 1,875,000
September 2001 1,875,000
December 2001 1,875,000
March 2002 1,875,000
"Scheduled B Term Loans Principal Payments" means, with
respect to the principal payments on the B Term Loans on the last Business
Day of each month set forth below, the U.S. dollar amount set forth
opposite thereto:
Scheduled B Term Loan
Date Principal Payment
June 1997 $ 125,000
September 1997 125,000
December 1997 125,000
March 1998 125,000
June 1998 125,000
September 1998 125,000
December 1998 125,000
March 1999 125,000
June 1999 125,000
September 1999 125,000
December 1999 125,000
March 2000 125,000
June 2000 125,000
September 2000 125,000
December 2000 125,000
March 2001 125,000
June 2001 125,000
September 2001 125,000
December 2001 125,000
March 2002 125,000
June 2002 5,937,500
September 2002 5,937,500
December 2002 5,937,500
March 2003 5,937,500
June 2003 5,937,500
September 2003 5,937,500
December 2003 5,937,500
March 2004 5,937,500
"SEC" means the Securities and Exchange Commission or any
successor thereto.
"SEC Regulation D" means Regulation D as promulgated under the
Securities Act, as the same may be in effect from time to time.
"Securities" means any stock, shares, 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 participations in temporary or interim certificates for the purchase
or acquisition of, or any right to subscribe to, purchase or acquire, any of the
foregoing.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Documents" means each of the Mortgage, the Pledge
Agreements, the Borrower General Security Agreement, the Intellectual Property
Security Agreement and any other documents utilized to pledge as Collateral for
the Obligations any property or assets of whatever kind or nature.
"Senior Officer" means any of the chief executive officer, chief
financial officer, controller, chief accounting officer, chief operating
officer, treasurer or any executive vice president of the Borrower.
"South African Credit Agreement" means a South African inventory and
receivables facility between Carson Holdings Limited and a South African bank of
up to the equivalent of US$2,000,000 dollars, which shall be nonrecourse to
Holdings and its Subsidiaries other than Carson Holdings Limited and Carson
Products (Proprietary) Limited and which shall be reasonably acceptable to the
Agent.
"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 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, concurrent with or following the sale of any real property or transfer
of 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.
"Subsidiary" of any Person means and includes (i) 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 (ii) 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 each guarantee substantially in the
form of Exhibit R hereto, executed and delivered by a Subsidiary in accordance
with the terms hereof, except for such changes as shall have been approved by
the Agent, as the same may after its execution be amended, supplemented or
otherwise modified from time to time in accordance with the terms hereof and
thereof; provided, however, that (subject to change if applicable law is
modified from that in effect on the Closing Date), Carson Holdings Limited and
its subsidiaries shall not be required to execute a Subsidiary Guarantee.
"Survey" means a survey of any Mortgaged Real Property (and all
improvements thereon): (i) prepared by a surveyor or engineer licensed to
perform surveys in the state where such Mortgaged Real Property is located, (ii)
dated (or redated) not earlier than six months prior to the date of delivery
thereof unless there shall have occurred within six months prior to such date of
delivery any exterior construction on the site of such Mortgaged Real Property,
in which event such survey shall be dated (or redated) after the completion of
such construction or if such construction shall not have been completed as of
such date of delivery, not earlier than 20 days prior to such date of delivery,
(iii) certified by the surveyor (in a manner reasonably acceptable to the Agent)
to the Agent and the Title Company and (iv) complying in all respects with the
minimum detail requirements of the American Land Title Association as such
requirements are in effect on the date of preparation of such survey.
"Taking" has the meaning assigned to that term in each
Mortgage.
"Target Inventory Amount" means $600,000.
"Taxes" has the meaning provided in Section 3.04.
"Term Loans" has the meaning provided in Section 1.01(a).
"Term Notes" has the meaning provided in Section 1.05(a).
"Term Portion" means, at any time, the portion of the Loan Facility
evidenced by the Total Term Loan Commitments.
"Termination Event" means (i) 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 (ii) the withdrawal of any Credit
Party or any of their respective 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 (iii) 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 (iv) 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 (v) any other event or condition which might constitute reasonable
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Title IV Plan, or (vi) the complete or partial
withdrawal (within the meaning of Sections 4203 and 4205, respectively, of
ERISA) of any Credit Party or any of their respective ERISA Affiliates from a
Multiemployer Plan, or (vii) the insolvency or reorganization (within the
meaning of Sections 4245 and 4241, respectively, of ERISA) or termination of any
Multiemployer Plan, or (viii) the failure to make any payment or contribution to
any Pension Plan or Multiemployer Plan or the making of any amendment to any
Pension Plan which could result in the imposition of a lien or the posting of a
bond or other security.
"Test Period" means the shorter of (i) the four consecutive complete
fiscal quarters of the Borrower then last ended or (ii) the period of all
complete fiscal quarters of the Borrower since the Closing Date.
"Title Company" means Ticor Title Insurance or such other title
insurance or abstract company as shall be selected by the Borrower and
reasonably acceptable to the Required Banks.
"Title IV Plan" means any Pension Plan described in Section 4021(a)
of ERISA, and not excluded under Section 4021(b) of ERISA.
"Total A Term Loan Commitments" means the sum of the A Term Loan
Commitments of each of the Banks.
"Total B Term Loan Commitments" means the sum of the B Term Loan
Commitments of each of the Banks.
"Total Commitments" means the sum of the Total Term Loan
Commitments and the Total Revolving Loan Commitments.
"Total Revolving Loan Commitments" means the sum of the Revolving
Loan Commitments of each of the Banks.
"Total Term Loan Commitments" means the sum of the A Term Loan
Commitments and the B Term Loan Commitments of each of the Banks.
"Total Utilization of Revolving Loan Commitments" means, at any date
of determination, the sum of the aggregate principal amount of all Revolving
Loans then outstanding.
"Total Voting Power" means the total combined voting power in the
election of directors of all shares of capital stock then outstanding.
"Type" of Loan means either a Base Rate Loan or a Reserve
Adjusted Eurodollar Loan.
"UCC" means the Uniform Commercial Code as in effect in the State of
New York or any other applicable jurisdiction in the United States.
"Unutilized Commitment" for any Bank at any time means, on and after
the Closing Date, the unutilized Revolving Loan Commitment of such Bank, after
taking into effect the Letters of Credit Usage.
"Wholly Owned Subsidiary" of any Person means 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 or shares
of capital stock required to be owned by foreign nationals under applicable law,
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 Agent (such term to include the Agent acting as Collateral
Agent or in any other representative capacity under any other Credit Document)
of such Bank to act as specified herein and in the other Credit Documents and
each such Bank hereby irrevocably authorizes the Agent 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 Agent by the terms of this Agreement and the other Credit Documents,
together with such other powers as are reasonably incidental thereto. The Agent
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
Agent shall not 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 the Agent. The provisions of this Section 10 are solely for the benefit
of the Agent 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, the Agent shall act solely as 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 Agent may 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. The 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 the Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates shall be
(i) 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 (ii) responsible in any
manner to any of the Banks for any recitals, statements, representations or
warranties by the Borrower, any Subsidiary of the Borrower or any of their
respective officers contained in this Agreement, any other Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this Agreement or any
other Document or for any failure of the Borrower or any Subsidiary of the
Borrower or any of their respective officers to perform its obligations
hereunder or thereunder. The 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 the Borrower or any Subsidiary of the Borrower.
The Agent shall not 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 the Agent to the Banks or by or on behalf of the Borrower
to the 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. The 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 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 Agent. The 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. The
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
11.12, 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. The Agent shall not 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 the Borrower or any other 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 Agent
receives such a notice, the Agent shall give prompt notice thereof to the Banks.
The Agent shall take such action with respect to such Default or Event of
Default as shall be reasonably directed by the Required Banks; provided that,
unless and until the Agent shall have received such directions, the 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 Agent and Other Banks. Each Bank expressly
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates have made any representations
or warranties to it and that no act by the Agent hereinafter taken, including
any review of the affairs of the Borrower or any Subsidiary of the Borrower,
shall be deemed to constitute any representation or warranty by the Agent to any
Bank. Each Bank represents to the Agent that it has, independently and without
reliance upon the 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 Borrower and its
Subsidiaries 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 the 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 Borrower and its Subsidiaries. Except for notices,
reports and other documents expressly required to be furnished to the Banks by
the Agent hereunder, the Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning the business,
operations, assets, property, financial and other conditions, prospects or
creditworthiness of the Borrower or any of its Subsidiaries which may come into
the possession of the Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates.
10.07. Indemnification. The Banks agree to indemnify the Agent in
its capacity as such or in any other representative capacity under any other
Credit Document ratably according to their aggregate Commitments, 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 the 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 the Agent under or in connection with
any of the foregoing, but only to the extent that any of the foregoing is not
paid by the Borrower or any of its Subsidiaries or any Guarantor; provided that
no Bank shall be liable to the Agent for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting solely from the Agent's gross
negligence or willful misconduct. If any indemnity furnished to the Agent for
any purpose shall, in the opinion of the Agent, be insufficient or become
impaired, the 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 Agent in Its Individual Capacity. The Agent and its
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Borrower, its Subsidiaries and other Affiliates of the
Borrower as though the Agent were not the Agent hereunder. With respect to the
Loans made by it and all Obligations owing to it, the Agent shall have the same
rights and powers under this Agreement as any Bank and may exercise the same as
though it were not the Agent, and the terms "Bank" and "Banks" shall include the
Agent in its individual capacity.
10.09. Successor Agent. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, the term "Agent" shall include such
successor agent effective upon its appointment, and the resigning Agent's
rights, powers and duties as Agent shall be terminated, without any other or
further act or deed on the part of such former Agent or any of the parties to
this Agreement. After the retiring Agent's resignation hereunder as 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 Agent under this Agreement.
10.10. Resignation by Agent. (A) The 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 Agent of
appointment pursuant to subsections B and C below or as otherwise provided
below.
(B) Upon any such notice of resignation of the Agent, the Required
Banks shall appoint a successor 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 $1
billion.
(C) If a successor Agent shall not have been so appointed within
said 30 Business Day period, the resigning Agent with the consent of the
Borrower shall then appoint a successor 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 $1 billion) who shall serve as
Agent until such time, if any, as the Required Banks appoint a successor Agent
as provided above.
(D) If no successor Agent has been appointed pursuant to subsection
B or C by the 30th Business Day after the date such notice of resignation was
given by the resigning Agent, such Agent's resignation shall become effective
and the Required Banks shall thereafter perform all the duties of Agent
hereunder until such time, if any, as the Required Banks appoint a successor
Agent as provided above.
SECTION 11. Miscellaneous.
11.01. Payment of Expenses, etc. The Borrower agrees to: (i) whether
or not the transactions herein contemplated are consummated, pay all reasonable
out-of-pocket costs and expenses of the Agent in connection with the
negotiation, preparation, execution and delivery of the Credit Documents and the
documents and instruments referred to therein (subject to the terms of the
letter agreement dated March 27, 1997) and any amendment, waiver or consent
relating thereto (including, without limitation, the reasonable fees and
disbursements of Cahill Gordon & Reindel and local counsel issuing opinions
pursuant to Section 4.01(C)) with prior notice to the Borrower of the engagement
of any counsel and of each of the Banks 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; (ii) 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 (iii)
indemnify Agent, Collateral 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 arising from or relating to acts or
omissions occurring after the Agent or any Bank takes possession of, uses,
operates, manages, controls or sells the Mortgaged 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 Agent or any Bank or of the agents of the 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 Acquisition 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, bad faith 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 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.
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 mailed,
telegraphed, telexed, telecopied, cabled or delivered, if to the Borrower,
Carson Products Company, 64 Ross Road, Savannah, GA 31405, Attention: Chief
Financial Officer, with a copy to Morningside Capital Group, LLC, 1 Morningside
Drive, North, Suite 200, Westport, CT 06880, Attention: President, or if to
another Credit Party, to its address specified in the other relevant Credit
Documents, as the case may be; if to the Agent or any Bank, at its address
specified for the Agent or such Bank on Annex II hereto; 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 mailed,
telegraphed, telexed, telecopied, or cabled or sent by overnight courier, be
effective two days after being deposited in the mails, when delivered to the
telegraph company, cable company or overnight courier, as the case may be, or
when sent by telex or telecopier, except that notices and communications to the
Agent shall not be effective until received by the 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 that no Credit Party may 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 participations in its
rights and/or obligations hereunder shall be limited as set forth below in this
Section 11.04; provided 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 participations 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;
provided, however, that any such assignment or participation shall not result in
the Borrower paying additional amounts as of the time of such assignment
pursuant to Section 1.10(e), 1.11, 1.13 or 3.04.
(b) Each Bank shall have the right to transfer, assign or grant
participations in all or any part of its remaining Loans, Notes and/or
Commitments hereunder on the basis set forth below in this clause (b). Subject
to Section 11.04(c) hereof, each Bank may furnish any information concerning the
Borrower in the possession of such Bank from time to time to assignees and
participants (including prospective assignees and participants).
(A) Assignments. Each Bank, with the written consent of the Agent
and the Borrower, which consent shall not be unreasonably withheld, which
shall be evidenced on the notice in the form of Exhibit I-1 hereto, may
assign pursuant to an Assignment Agreement substantially in the form of
Exhibit I-2 hereto all or a portion of its Loans, Notes and/or Commitments
hereunder pursuant to this clause (b)(A) to one or more Eligible
Assignees; provided that any such assignment pursuant to this clause
(b)(A) shall not result in the Borrower paying additional amounts as of
the time of such assignment pursuant to Section 1.10(e), 1.11, 1.13 or
3.04. Any assignment pursuant to this clause (b)(A) will become effective
five Business Days after the Agent's receipt of (i) a written notice in
the form of Exhibit I-1 hereto from 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 Agent's recording of such sale,
assignment, transfer or negotiation; provided 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. The Borrower shall issue new Notes
to the Eligible Assignee 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 clause (b)(A), the Eligible Assignee
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 Agent shall maintain at its address
specified in Annex II hereto 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 Commitment of, and principal amount of
the Loans owning 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 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 Agent or any Bank at any
reasonable time and from time to time upon reasonable prior notice.
(B) Participations. Each Bank may transfer, grant or assign
participations in all or any part of such Bank's Loans, Notes and/or
Commitments hereunder pursuant to this clause (b)(B) to any Person;
provided 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
(x) change the scheduled final maturity date of any of the Loans, Notes or
Commitments in which such participant is participating or (y) reduce the
principal amount, interest rate or fees applicable to any of the Loans,
Notes or Commitments in which such participant is participating or
postpone the payment of any interest or fees or (z) release all or
substantially all of the Collateral; and provided, further that any
participation pursuant to this Section 11.04(b)(B) shall not result in the
Borrower paying additional amounts as of the time of such participation
pursuant to Section 1.10(e), 1.11, 1.13 or 3.04. 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 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 that such participant shall
be considered to be a "Bank" for purposes of Sections 11.02 and 11.06(b).
(c) The Agent and the Banks agree to keep confidential (and to cause
their respective officers, directors, employees, agents and representatives to
keep confidential) all information, materials and documents furnished to the
Agent or any Bank (the "Information"). Notwithstanding the foregoing, the Agent
and each Bank shall be permitted to disclose Information (i) to such of its
officers, directors, employees, agents and representatives 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 the Agent or such Bank on a non-confidential
basis from a source other than Holdings, the Borrower, or any of their
respective subsidiaries, officers, directors, employees, agents or
representatives or (C) was available to the Agent or such Bank on a
non-confidential basis prior to its disclosure to the Agent or such Bank by the
Borrower, Holdings or any of their respective subsidiaries; (iv) to the extent
the Borrower, Holdings or any of their respective 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; or (vi)
pursuant to Section 11.04(b) hereof; provided 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(c).
11.05. No Waiver; Remedies Cumulative. No failure or delay on the
part of the 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 the 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 the 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 the Agent
or the Banks to any other or further action in any circumstances without notice
or demand.
11.06. Payments Pro Rata. (a) The 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.
(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 that if all or any
portion of such excess amount is 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. (a) The financial statements to
be furnished to the Banks pursuant hereto shall be made and prepared in
accordance with GAAP consistently applied throughout the periods involved
(except as set forth in the notes thereto or as otherwise disclosed in writing
by the Borrower to the Banks); provided that, except as otherwise specifically
provided herein, all computations determining compliance with Sections 5, 6, 7
and 8 and all definitions used in this Agreement for any purpose shall utilize
accounting principles and policies in effect at the time of the preparation of,
and in conformity with those used to prepare, the historical financial
statements delivered to the Banks pursuant to Section 4.01(M).
(b) 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 interest on Reserve Adjusted Eurodollar Loans and
Commitment Commission shall be made on the actual number of days elapsed over a
year of 360 days.
11.08. Governing Law; Submission to Jurisdiction; Venue. (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. 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
of 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 further
irrevocably consents to the service of process out of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to the respective Credit Party at
its address for notices pursuant to Section 11.03, such service to become
effective 15 days after such mailing. Each Credit Party hereby irrevocably
appoints the Borrower and such other persons as may hereafter be selected by the
Borrower irrevocably agreeing in writing to serve as its agent for service of
process in respect of any such action or proceeding. Nothing herein shall affect
the right of the Agent or any Bank to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise proceed against
any Credit Party in any other jurisdiction.
(b) Each Credit Party 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 clause (a) above
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 delivered shall be 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
Agent.
11.10. Effectiveness. This Agreement shall become effective on the
date (the "Restatement Effective Date") on which the Borrower and each of the
Banks shall have signed a copy hereof (whether the same or different copies) and
shall have delivered the same to the Agent at the Agent's Office or, in the case
of the Banks, shall have given to the Agent telephonic (confirmed in writing),
written, telex or telecopy notice (actually received) at such office that the
same has been signed and mailed to it. The Agent will give the Borrower and each
Bank prompt written notice of the occurrence of the Restatement Effective Date.
11.11. 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.
11.12. 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 Borrower and the Required Banks; provided that no such
change, waiver, discharge or termination shall, without the consent of each
affected Bank and the Agent, (i) 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), (ii) release all or a substantial portion of the
Collateral or Guarantees (except as expressly permitted by the Credit
Documents), (iii) amend, modify or waive any provision of this Section, or
Section 1.10, 1.11, 3.04, Section 8, 10.07, 11.01, 11.02, 11.04, 11.06, 11.07(b)
or 11.12, (iv) reduce any percentage specified in, or otherwise modify, the
definition of Required Banks or (v) consent to the assignment or transfer by any
Credit Party of any of its rights and obligations under this Agreement. No
provision of Section 10 may be amended without the consent of the Agent.
11.14. Survival. All indemnities set forth herein including,
without limitation, in Section 1.11, 3.04, 10.07 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.
11.15. 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 Section
1.10(e), 1.11, 1.13 or 3.04.
11.16. Waiver of Jury Trial. Each of the parties to this Agreement
hereby irrevocably waives all right to a trial by jury in any action, proceeding
or counterclaim arising out of or relating to this Agreement, the Credit
Documents or the transactions contemplated hereby or thereby.
11.17. 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, another covenant shall
not avoid the occurrence of a Default or an Event of Default if such action is
taken or condition exists.
<PAGE>
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============================================================================
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.
CARSON PRODUCTS COMPANY
By:
Name:
Title:
<PAGE>
Credit Agreement among Carson Products Company, Banque Indosuez
and the Banks listed herein.
BANQUE INDOSUEZ, NEW YORK BRANCH
as Agent and Collateral Agent
By:
Name:
Title:
By:
Name:
Title:
INDOSUEZ CAPITAL FUNDING II,
LIMITED
By: INDOSUEZ CAPITAL,
as Portfolio Advisor
By:
Title:
INDOSUEZ CAPITAL FUNDING III,
LIMITED
By: INDOSUEZ CAPITAL,
as Portfolio Advisor
By:
Title:
<PAGE>
============================================================================
============================================================================
ANNEX I
List of Banks Commitments
Revolver A Term B Term
Banque Indosuez, New York Branch $25,000,000 $20,989,583 $46,268,750
Indosuez Capital Funding II, Limited $ -- $4,010,417 $ --
Indosuez Capital Funding III, $ -- $ -- $3,731,250
Limited
Assignment Banks Commitments
<PAGE>
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-2-
============================================================================
ANNEX II
Agent and Bank Addresses
Banque Indosuez, New York Branch
1211 Avenue of the Americas
7th Floor
New York, New York 10036
Indosuez Capital Funding II, Limited
1211 Avenue of the Americas
7th Floor
New York, New York 10036
Indosuez Capital Funding III, Limited
1211 Avenue of the Americas
7th Floor
New York, New York 10036
<PAGE>
Assignment Banks
<PAGE>
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============================================================================
ANNEX III
Existing Debt
<PAGE>
============================================================================
============================================================================
ANNEX IV
Subsidiaries
<PAGE>
============================================================================
============================================================================
ANNEX V
Collective Bargaining Agreements
<PAGE>
============================================================================
============================================================================
ANNEX VI
INSURANCE
<PAGE>
============================================================================
============================================================================
DRAFT: 10/18/96 AWP:07640093.20
ANNEX VII
Liens
<PAGE>
============================================================================
============================================================================
ANNEX VIII
Mortgaged Real Property
<PAGE>
============================================================================
============================================================================
ANNEX IX
Litigation
<PAGE>
============================================================================
============================================================================
ANNEX X
Consents
<PAGE>
============================================================================
============================================================================
ANNEX XI
Restrictions
<PAGE>
============================================================================
============================================================================
DRAFT: 10/18/96 AWP:07640093.20
ANNEX XII
Environmental Matters
<PAGE>
============================================================================
============================================================================
ANNEX XIII
Taxes
<PAGE>
============================================================================
============================================================================
ANNEX XIV
Schedule of Intellectual Property
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated financial statements of the Company for the period ended March 31,
1997 and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 3,141,000
<SECURITIES> 0
<RECEIVABLES> 15,789,000
<ALLOWANCES> 630,000
<INVENTORY> 15,434,000
<CURRENT-ASSETS> 34,431,000
<PP&E> 17,258,000
<DEPRECIATION> 1,191,000
<TOTAL-ASSETS> 102,695,000
<CURRENT-LIABILITIES> 13,580,000
<BONDS> 0
0
0
<COMMON> 150
<OTHER-SE> 56,206,000
<TOTAL-LIABILITY-AND-EQUITY> 102,695,000
<SALES> 17,932,000
<TOTAL-REVENUES> 17,932,000
<CGS> 7,880,000
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 112,000
<INTEREST-EXPENSE> 604,000
<INCOME-PRETAX> 1,218,000
<INCOME-TAX> 536,000
<INCOME-CONTINUING> 682,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 682,000
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
