<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
---------
FORM 10-Q
---------
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
OR
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
COMMISSION FILE NUMBER: 0-21773
FIREARMS TRAINING SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 57-0777018
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7340 MCGINNIS FERRY ROAD
SUWANEE, GEORGIA 30024
(Address of principal executive offices)
TELEPHONE NUMBER (770) 813-0180
(Registrant's telephone number, including area code)
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
--- ---
As of October 30, 1997, there were (1) 20,408,456 shares of the
Registrant's Class A Common Stock and (2) no shares of the Registrant's Class B
Common Stock outstanding.
<PAGE> 2
FIREARMS TRAINING SYSTEMS, INC.
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page No.
--------
<S> <C> <C>
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
Condensed Consolidated Statements of Income
Three and six months ended September 30, 1997 and 1996 ...... 3
Condensed Consolidated Balance Sheets
September 30, 1997 and March 31, 1997 ....................... 4
Condensed Consolidated Statements of Cash Flows
Six months ended September 30, 1997 and 1996 ................ 5
Notes to Condensed Consolidated Financial Statements ........ 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION
AND RESULTS OF OPERATIONS ................................... 7
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS ........................................... 12
ITEM 5. OTHER INFORMATION............................................ 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ............................ 13
SIGNATURES .................................................. 14
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FIREARMS TRAINING SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
September 30, September 30,
--------------------- --------------------
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues $19,415 $25,404 38,024 $39,138
Cost of revenues 9,105 11,419 17,346 17,980
------- ------- ------- -------
Gross profit 10,310 13,985 20,678 21,158
------- ------- ------- -------
Operating expenses:
Selling, general and administrative
expenses 3,959 4,717 7,891 7,513
Research and development expenses 1,433 869 2,796 1,831
Depreciation and amortization 208 111 384 203
------- ------- ------- -------
Total operating expenses 5,600 5,697 11,071 9,547
------- ------- ------- -------
Operating income 4,710 8,288 9,607 11,611
======= ======= ======= =======
Other (expense) income, net:
Interest (expense) income, net (1,466) (2,076) (2,920) (1,980)
Nonrecurring recapitalization expenses - (1,120) - (1,120)
Other (expense) income, net 20 39 (7) 108
------- ------- ------- -------
Total other (expense) income, net (1,446) (3,157) (2,927) (2,992)
======= ======= ======= =======
Income before income taxes 3,264 5,131 6,680 8,619
Provision for income taxes 1,175 2,008 2,405 3,281
------- ------- ------- -------
Net income $ 2,089 $ 3,123 $ 4,275 $ 5,338
======= ======= ======= =======
Earnings per share $ 0.10 $ 0.19 $ 0.20 $ 0.33
======= ======= ======= =======
Weighted average common and common
equivalent shares outstanding 21,464 16,029 21,578 16,029
======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated statements.
3
<PAGE> 4
FIREARMS TRAINING SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
SEPTEMBER 30, March 31,
1997 1997
------------ ---------
(Unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 3,601 $ 1,663
Accounts receivable, net 18,837 20,690
Inventories 13,452 11,965
Prepaid expenses and other current assets 193 477
Deferred income taxes 1,520 1,491
-------- --------
Total current assets 37,603 36,286
Property and equipment, net 3,182 2,660
Escrow and other deposits 170 171
Other assets 4,552 3,004
-------- --------
$ 45,507 $ 42,121
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,068 $ 4,538
Accrued liabilities 6,869 7,400
Income taxes payable 78 653
Deferred warranty revenue and reserves 2,609 1,757
Current maturities of long-term debt 3,864 1,588
-------- --------
Total current liabilities 15,488 15,936
-------- --------
Long-term debt, less current maturities 56,736 57,012
-------- --------
Other noncurrent liabilities 427 551
-------- --------
Stockholders' equity:
Class A common stock -- --
Additional paid-in-capital 112,346 112,331
Accumulated (deficit) earnings (139,527) (143,802)
Cumulative foreign currency translation adjustment 37 93
-------- --------
Total stockholders' (deficit) equity (27,144) (31,378)
-------- --------
$ 45,507 $ 42,121
======== ========
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated statements.
4
<PAGE> 5
FIREARMS TRAINING SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six months ended
September 30,
--------------------------
1997 1996
--------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 4,275 $ 5,338
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 693 350
Stock grant -- 120
Deferred income taxes (29) (377)
Changes in assets and liabilities:
Accounts receivable, net 1,853 (680)
Inventories (1,337) 224
Prepaid expenses and other current assets 284 (705)
Escrow and other deposits 1 53
Accounts payable (2,470) (778)
Accrued liabilities (531) 1,316
Income taxes payable (568) 21
Deferred revenues and reserves 802 91
Noncurrent liabilities (124) (6)
--------- ---------
Total adjustments (1,426) (371)
--------- ---------
Net cash provided by operating activities 2,849 4,967
--------- ---------
Cash flows from investing activities:
Payments for business acquisitions (2,157) --
Additions to property and equipment, net (707) (432)
--------- ---------
Net cash used in investing activities (2,864) (432)
--------- ---------
Cash flows from financing activities:
Borrowings of long-term debt 2,000 110,000
Repayments of long-term debt -- (200)
Proceeds from sales of common stock 9 36,756
Repurchase of common stock -- (151,850)
Deferred financing costs -- (6,411)
--------- ---------
Net cash provided by
(used in) financing activities 2,009 (11,705)
--------- ---------
Effect of changes in foreign exchange rates (56) --
--------- ---------
Net increase (decrease) in cash 1,938 (7,170)
Cash, beginning of period 1,663 8,121
--------- ---------
Cash, end of period $ 3,601 $ 951
========= =========
Supplemental disclosures of cash paid for:
Interest $ 2,693 $ 130
========= =========
Income taxes $ 2,346 $ 3,541
========= =========
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated statements.
5
<PAGE> 6
FIREARMS TRAINING SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION.
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q
and Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments, consisting of normal recurring adjustments, considered
necessary for a fair presentation have been included. Operating results for
the three and six months ended September 30, 1997 are not necessarily
indicative of the results that may be expected for the year ended March 31,
1998. For further information, refer to the company's consolidated
financial statements and footnotes thereto for the year ended March 31,
1997.
2. INVENTORY.
Inventories consist primarily of simulators, computer hardware, projectors,
and component parts. Inventories are valued at the lower of cost (on a
first-in, first-out basis) or market. Cost includes materials, labor, and
manufacturing overhead. Market is defined as net realizable value.
Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
September 30, March 31,
1997 1997
------------- ---------
<S> <C> <C>
Raw materials $ 7,534 $ 8,233
Work in progress 3,972 2,816
Finished Goods 1,946 916
------- -------
$13,452 $11,965
======= =======
</TABLE>
6
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This Management's Discussion and Analysis of Financial Condition and Results of
Operations should be read in conjunction with the Management's Discussion and
Analysis of Financial Condition and Results of Operations contained in the
Company's most recently filed Form 10-K and Form 10-Q.
RESULTS OF OPERATIONS
Three Months Ended September 30, 1997 and 1996
Revenues. Revenues decreased $6.0 million, or 23.6%, to $19.4 million for the
three months ended September 30, 1997 as compared to $25.4 million for the three
months ended September 30, 1996. Sales to U.S. military customers for the three
months ended September 30, 1997, decreased by $5.4 million, or 39.0%, to $8.4
million, primarily due to decreased sales to the U.S. Marine Corps. Sales to
U.S. law enforcement customers for the three months ended September 30, 1997
increased by $1.0 million, or 91.5%, to $2.1 million primarily attributable to
the delivery of systems to the FBI. Sales to international customers for the
three months ended September 30, 1997 decreased by $1.6 million, or 16.0%, to
$8.6 million. Sales to U.S. Hunter/Sports customers were unchanged at $0.3
million.
Cost of Revenues. Cost of revenues decreased $2.3 million, or 20.3%, to $9.1
million for the three months ended September 30, 1997 as compared to $11.4
million for the three months ended September 30, 1996. As a percentage of
revenues, cost of revenues increased to 46.9% for the three months ended
September 30, 1997 as compared to 44.9% for the three months ended September 30,
1996. The higher cost of sales as a percentage of revenue achieved in the second
quarter fiscal 1998 as compared to the second quarter fiscal 1997 was primarily
attributable to customer and product mix changes and the Company attaining
better operating leverage in the second quarter fiscal 1997.
Gross Profit. As a result of the foregoing, gross profit decreased $3.7 million,
or 26.3%, to $10.3 million, or 53.1% of revenues, for the three months ended
September 30, 1997 as compared to $14.0 million, or 55.1% of the revenues, for
the three months ended September 30, 1996.
Total Operating Expenses. Total operating expenses decreased $0.1 million, or
1.7%, to $5.6 million for the three months ended September 30, 1997 as compared
to $5.7 million for the three months ended September 30, 1996. Total operating
expenses as a percentage of revenues increased to 28.8% for the three months
ended September 30, 1997 from 22.4% for the three months ended September 30,
1996 due primarily to a $0.6 million, or 64.9%, increase in research and
development ("R&D") costs as part of continued efforts in developing new and
improving existing products. Selling, General & Administrative ("S, G & A")
expenses decreased $0.8 million, or 16.1%, primarily due to several one-time
charges in the second quarter of fiscal 1997 as compared to the second quarter
of fiscal 1998.
Operating Income. As a result of the foregoing, operating income decreased $3.6
million, or 43.2%, to $4.7 million, or 24.3% of revenues, for the three months
ended September 30, 1997 as
7
<PAGE> 8
compared to $8.3 million, or 32.6% of revenues, for the three months ended
September 30, 1996.
Other (Expense) Income, net. Net interest expense totaled $1.5 million, or 7.6%
of revenues for the three months ended September 30, 1997 as compared to $2.1
million, or 8.2% for the three months ended September 30, 1996. The decrease in
net interest expense was a result of the repayment of a portion of debt incurred
in connection with a Recapitalization in July 1996 (the "Recapitalization") with
the proceeds from the initial public offering. Other (expense) income, net also
includes a nonrecurring charge for the second quarter of fiscal 1997 of $1.1
million for expenses incurred in connection with the Recapitalization.
Provision for Income Taxes. The effective tax rate decreased to 36.0% of income
before income taxes for the three months ended September 30, 1997 as compared to
39.1% of income before taxes for the three months ended September 30, 1996. This
decrease was primarily attributable to certain nonrecurring expenses incurred in
connection with the Recapitalization, which were not deductible for income tax
purposes in fiscal 1997.
Net Income. As a result of the foregoing, net income as reported decreased $1.0
million, or 33.1%, to $2.1 million ($0.10 per share), or 10.8% of revenues for
the three months ended September 30, 1997 as compared to $3.1 million ($0.19 per
share), or 12.3% of revenues for the three months ended September 30, 1996.
Pro Forma Results. The following pro forma results for fiscal 1997 give effect
to the Recapitalization and the initial public offering of the Company's common
stock on November 26, 1996 (the "Offering") as if each occurred at the beginning
of the respective periods. The pro forma results exclude the nonrecurring
expenses incurred in connection with the Recapitalization and the extraordinary
loss related to the early extinguishment of debt and reflect interest expense
for all periods presented, based on the senior bank debt of $58.6 million
outstanding after the Offering. The historical net income for the three months
ended September 30, 1997 was $2.1 million ($0.10 per share), or 10.8% of
revenues, a decrease of $2.3 million from the $4.4 million ($0.20 per share), or
17.3% of revenues, pro forma net income for three months ended September 30,
1996.
Six Months Ended September 30, 1997 and 1996
Revenues. Revenues decreased $1.1 million, or 2.8%, to $38.0 million for the six
months ended September 30, 1997 as compared to $39.1 million for the six months
ended September 30, 1996. This decrease was attributable to a $3.7 million
decrease, or 17.3%, to $17.6 million in sales to the U.S. military due primarily
to a decrease in sales to the U.S. Marine Corps. This decrease was partially
offset by an increase of $2.2 million, or 16.3%, to $15.9 million, in
international sales, primarily due to the delivery of orders to two
international customers totaling approximately $10.2 million. Sales to U.S. law
enforcement customers for the six months ended September 30, 1997 increased by
$0.4 million, or 10.5%, to $3.9 million. Sales to U.S. Hunter/Sports customers
were unchanged at $0.6 million.
Cost of Revenues. Cost of revenues decreased $0.6 million, or 3.5%, to $17.3
million for the six months ended September 30, 1997 as compared to $18.0 million
for the six months ended September 30, 1996. As a percentage of revenues, cost
of revenues decreased to 45.6% for the six
8
<PAGE> 9
months ended September 30, 1997 as compared to 45.9% for the six months ended
September 30, 1996.
Gross Profit. As a result of the foregoing, gross profit decreased $0.5 million,
or 2.3% to $20.7 million, or 54.4% of revenues, for the six months ended
September 30, 1997 as compared to $21.2 million, or 54.1% of the revenues, for
the six months ended September 30, 1996.
Total Operating Expenses. Total operating expenses increased $1.5 million, or
16.0% to $11.1 million for the six months ended September 30, 1997 as compared
to $9.5 million for the six months ended September 30, 1996. Total operating
expenses as a percentage of revenues increased to 29.1% for the six months ended
September 30, 1997 from 24.4% for the six months ended September 30, 1996. S, G
& A expenses increased $0.4 million, or 5.0%. Also, R&D costs increased $1.0
million, or 52.7%, from the six months ended September 30, 1996 to the six
months ended September 30, 1997 due to continued efforts in developing new and
improving existing products.
Operating Income. As a result of the foregoing, operating income decreased $2.0
million, or 17.3%, to $9.6 million, or 25.3% of revenues, for the six months
ended September 30, 1997 as compared to $11.6 million, or 29.7% of revenues, for
the six months ended September 30, 1996.
Other (Expense) Income, net. Net interest expense totaled $2.9 million, or 7.7%
of revenues for the six months ended September 30, 1997 as compared to $2.0
million, or 5.1% for the six months ended September 30, 1996. The increase in
net interest expense is a result of the debt incurred in connection with the
Recapitalization. Other (expense) income, net also includes a nonrecurring
charge of $1.1 million for expenses incurred in connection with the
Recapitalization.
Provision for Income Taxes. The effective tax rate decreased to 36.0% of income
before income taxes for the six months ended September 30, 1997 as compared to
38.1% of income before taxes for the six months ended September 30, 1996. This
decrease was primarily attributable to certain nonrecurring expenses incurred in
connection with the Recapitalization, which were not deductible for income tax
purposes in fiscal 1997.
Net Income. As a result of the foregoing, net income as reported decreased $1.1
million, or 19.9%, to $4.3 million ($0.20 per share), or 11.2% of revenues for
the six months ended September 30, 1997 as compared to $5.3 million ($0.33 per
share), or 13.6% of revenues for the six months ended September 30, 1996.
Pro Forma Results. The following pro forma results for fiscal 1997 give effect
to the Recapitalization and the Offering as if each occurred at the beginning of
the respective periods. The pro forma results exclude the nonrecurring expenses
incurred in connection with the Recapitalization and the extraordinary loss
related to the early extinguishment of debt and reflect interest expense for all
periods presented, based on the senior bank debt of $58.6 million outstanding
after the Offering. The historical net income for the six months ended September
30, 1997 was $4.3 million ($0.20 per share), or 11.2% of revenues, a decrease of
$1.4 million from the $5.7 million ($0.26 per share) pro forma net income for
six months ended September 30, 1996.
9
<PAGE> 10
BACKLOG
Backlog, representing customer orders that have been contracted for future
delivery, totaled approximately $44.0 million at September 30, 1997.
Approximately 75.2% and 20.4% of this backlog was attributable to international
and U.S. military customers, respectively.
Contracts with U.S. and other governments may generally be terminated by the
customer in whole or in part for default or its convenience if such termination
would be in the best interest of the customer. Accordingly, there can be no
assurance that the Company's backlog will result in future revenues. However,
these contracts generally provide for reimbursement of costs incurred through
the date of termination.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal liquidity and capital needs are to fund debt service,
working capital and capital expenditures necessary to support its growth. Net
working capital was $22.1 million at September 30, 1997 and $20.4 million at
March 31, 1997.
The Company's operating activities generated cash of $2.9 million in the six
months ended September 30, 1997 and $5.0 million in the six months ended
September 30, 1996. The $2.1 million decrease in net cash provided by operations
was primarily due to the decrease in accounts payable due to the timing of
payments to vendors.
The Company's investing activities used cash of $2.9 million for the six months
ended September 30, 1997 and $0.4 million for the six months ended September 30,
1996. The Company's primary investing activity in the six month period ended
September 30, 1997 was the purchase of the ICAT division from SBS Technologies
on June 26, 1997 for $2,150,000, including transaction costs. The Company's
other use of cash for investing activities for the six months ended September
30, 1997 was capital expenditures that were primarily for equipment used in
manufacturing, R&D and general administration.
The Company's financing activities provided cash of $2.0 million for the six
months ended September 30, 1997. The Company's primary financing activity in the
six month period ended September 30, 1997, was the net borrowing of $2.0 million
from its credit facility to finance the purchase of the ICAT division from SBS
Technologies on June 26, 1997.
The Company amended and restated its NationsBank Credit Agreement ("Credit
Agreement") on October 15, 1997. The amended Credit Agreement incorporated
several important changes, including, but not limited to, the following: (i)
increased the available borrowings under the revolving line of credit from $15
million to $25 million; (ii) increased the annual capital expenditures basket
from $3 million to $5 million; (iii) reduced the interest rate on the Tranche B
Term Loan Eurodollar borrowings by 0.50%; (iv) added flexibility for future
acquisitions by including a $10 million aggregate acquisition basket; and (v)
permitted foreign currency letters of credit. All members of the current bank
syndicate participated in the amended and restated Credit Agreement.
10
<PAGE> 11
The Company's indebtedness and the related covenants will have several important
effects on its future operations, including, but not limited to, the following:
(i) a portion of the Company's cash flow from operations must be dedicated to
the payment of interest on and principal of its indebtedness and will not be
available for other purposes; (ii) the Company's ability to obtain additional
financing in the future for working capital, capital expenditures, R&D,
acquisitions, general corporate purposes or other purposes may be limited; and
(iii) the Company's level of indebtedness could limit its flexibility in
reacting to business developments and changes in its industry and economic
conditions generally.
The Company believes that cash flow from operations and borrowings available
under its credit agreement will be sufficient to meet the Company's presently
anticipated working capital, capital expenditure and debt service needs for at
least the next 12 months.
OTHER
The Company continues to make deliveries to and is actively pursuing additional
business from all branches of the U.S. military. One of the most important
business opportunities in this regard is the forthcoming U.S. Army contract for
the purchase of Engagement Skills Trainers (EST). On October 28, 1997, the U.S.
Army issued a draft Request for Proposal ("RFP") and Management believes that
the final RFP will be issued shortly. The U.S. Army has indicated that it will
require a side-by-side demonstration of competing bidders' products in December,
1997 and that it intends to award the contract in the first calendar quarter of
1998. If the Company is the successful bidder, it is unlikely that it would
obtain and deliver significant orders under this contract before fiscal 1999,
beginning April 1, 1998.
The foregoing forward looking statements are subject to a number of factors
which could cause actual results to differ as described above and under Item 5
"Other Information".
11
<PAGE> 12
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is involved in legal proceedings from time to time in the ordinary
course of its business. As of the date of this filing, there are no legal
proceedings pending against the Company which management believes are material.
ITEM 5. OTHER INFORMATION
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995:
Certain statements in this filing, and elsewhere (such as in other filings by
the Company with the Commission, press releases, presentations by the Company or
its management and oral statements) constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements of
the Company to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Such
factors include, among other things, (i) those described above including the
timing and size of, and the Company's success in competing for, new contracts
awarded by military and other government customers; (ii) significant variability
in the Company's quarterly revenues and results of operations as a result of
variations in the number and size of the Company's shipments in a particular
quarter while a significant percentage of its operating expenses are fixed in
advance; (iii) concentrations of revenues from a few large customers who vary
from one period to the next; (iv) the high percentage of sales to military and
law enforcement authorities whose orders are subject to extensive government
regulations, termination for a variety of factors and budgetary constraints; (v)
a significant proportion of international sales which may be subject to
political, monetary and economic risks; (vi) the relatively undeveloped nature
of the market for small and supporting arms training simulators and the need for
continued adoption of simulation training systems if the market is to expand;
(vii) the potential for increased competition; (viii) the Company's ability to
attract and retain key personnel and adapt to changing technologies; and (ix)
other factors described in the Company's Form 10-K for the fiscal year ended
March 31, 1997 under the caption Part I and in the Company's Prospectus under
the caption "Risk Factors".
12
<PAGE> 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following documents are filed with this report as exhibits:
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
10.01 Amended and Restated Credit Agreement, dated October 15, 1997, among
the Company, NationsBank, N.A. (South) and the other Lenders named
therein.
11.01 Statement regarding computation of earnings per common share.
27.01 Financial Data Schedule (for SEC use only).
</TABLE>
(b) No reports on Form 8-K were filed during the quarter ended September
30, 1997.
13
<PAGE> 14
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.
DATED: November 10, 1997
FIREARMS TRAINING SYSTEMS, INC.
(Registrant)
/s/ Peter A. Marino
--------------------------------------------
Peter A. Marino
President and Chief Executive Officer
/s/ David A. Apseloff
-------------------------------------------
David A. Apseloff
Chief Financial Officer,
Treasurer and Assistant Secretary
(Principal Financial and Accounting Officer)
14
<PAGE> 1
EXHIBIT 10.01
================================================================================
AMENDED AND RESTATED
CREDIT AGREEMENT
DATED AS OF OCTOBER 15, 1997
AMONG
FIREARMS TRAINING SYSTEMS, INC., AS PARENT,
FATS, INC., AS BORROWER,
THE LENDERS NAMED HEREIN
AND
NATIONSBANK, N.A.,
AS AGENT
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE SECTION PAGE
- ------- ------- ----
<S> <C>
ARTICLE I DEFINITIONS.......................................................... 1
SECTION 1.01. Defined Terms................................................. 1
SECTION 1.02. Terms Generally............................................... 28
SECTION 1.03. Types of Borrowings........................................... 28
ARTICLE II THE CREDITS......................................................... 29
SECTION 2.01. Restructuring of Loans........................................ 29
SECTION 2.02. Commitment to Make Loans...................................... 29
SECTION 2.03. Loans......................................................... 30
SECTION 2.04. Notice of Borrowings.......................................... 32
SECTION 2.05. Notes; Repayment of Loans..................................... 33
SECTION 2.06. Fees.......................................................... 33
SECTION 2.07. Interest on Loans............................................. 34
SECTION 2.08. Default Interest.............................................. 35
SECTION 2.09. Alternate Rate of Interest.................................... 35
SECTION 2.10. Termination and Reduction of
Commitments................................................... 35
SECTION 2.11. Conversion and Continuation of Term Borrowings................ 36
SECTION 2.12. Mandatory Repayments and Prepayments.......................... 38
SECTION 2.13. Optional Prepayment........................................... 43
SECTION 2.14. Reserve Requirements: Change in Circumstances................. 44
SECTION 2.15. Change in Legality............................................ 46
SECTION 2.16. Indemnity..................................................... 46
SECTION 2.17. Pro Rata Treatment............................................ 47
SECTION 2.18. Sharing of Setoffs............................................ 47
SECTION 2.19. Payments...................................................... 48
SECTION 2.20. Taxes......................................................... 48
SECTION 2.21. Assignment of Commitments Under Certain Circumstances;
Duty to Mitigate.............................................. 50
SECTION 2.22. Letters of Credit............................................. 51
ARTICLE III REPRESENTATIONS AND WARRANTIES..................................... 57
SECTION 3.01. Organization; Powers.......................................... 57
SECTION 3.02. Authorization................................................. 57
SECTION 3.03. Enforceability................................................ 58
SECTION 3.04. Consents and Governmental Approvals........................... 58
SECTION 3.05. Financial Statements; Undisclosed Liabilities................. 58
SECTION 3.06. No Material Adverse Change.................................... 58
SECTION 3.07. Title to Properties; Possession Under Leases; Intellectual
Property...................................................... 58
SECTION 3.08. Subsidiaries.................................................. 60
SECTION 3.09. Litigation; Compliance with Laws.............................. 60
SECTION 3.10. Agreements.................................................... 61
SECTION 3.11. Federal Reserve Regulations................................... 62
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SECTION 3.12. Investment Company Act; Public Utility Holding Company Act.... 62
SECTION 3.13. Use of Proceeds............................................... 62
SECTION 3.14. Tax Returns................................................... 62
SECTION 3.15. No Material Misstatements..................................... 62
SECTION 3.16. Employee Benefit Plans........................................ 63
SECTION 3.17. Government Contracting Matters................................ 63
SECTION 3.18. Security Documents............................................ 65
SECTION 3.19. Solvency...................................................... 66
SECTION 3.20. Transactions with Affiliates.................................. 66
SECTION 3.21. Ownership..................................................... 66
SECTION 3.22. Insurance..................................................... 67
SECTION 3.23. Labor Matters................................................. 67
SECTION 3.24. Licenses; Permits............................................. 68
ARTICLE IV CONDITIONS OF LENDING............................................... 68
SECTION 4.01. Conditions Precedent to the Effective Date.................... 68
SECTION 4.02. All Credit Events............................................. 71
ARTICLE V AFFIRMATIVE COVENANTS................................................ 72
SECTION 5.01. Existence; Businesses and Properties.......................... 72
SECTION 5.02. Insurance..................................................... 72
SECTION 5.03. Obligations and Taxes......................................... 74
SECTION 5.04. Financial Statements, Reports, etc............................ 74
SECTION 5.05. Other Information............................................. 77
SECTION 5.06. ERISA......................................................... 78
SECTION 5.07. Maintaining Records; Access to Properties and Inspections..... 78
SECTION 5.08. Use of Proceeds............................................... 78
SECTION 5.09. Interest Rate Protection Agreements........................... 78
SECTION 5.10. Fiscal Year................................................... 79
SECTION 5.11. Compliance with Environmental Laws; Preparation of
Environmental Reports......................................... 79
SECTION 5.12. Further Assurances............................................ 79
SECTION 5.13. Certain Post-Closing Matters.................................. 80
ARTICLE VI NEGATIVE COVENANTS.................................................. 80
SECTION 6.01. Indebtedness.................................................. 80
SECTION 6.02. Negative Pledge............................................... 81
SECTION 6.03. Sale and Lease-Back Transactions.............................. 82
SECTION 6.04. Investments, Loans and Advances............................... 82
SECTION 6.05. Mergers, Acquisitions and Other Transactions.................. 84
SECTION 6.06. Dividends, Distributions and Other Restricted Payments........ 85
SECTION 6.07. Impairment of Security Interests.............................. 86
SECTION 6.08. Limitation on Restrictions on Subsidiary Dividends, etc....... 87
SECTION 6.09. No Other Negative Pledges..................................... 87
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SECTION 6.10. Transactions with Affiliates.................................. 87
SECTION 6.11. Nature of Business............................................ 88
SECTION 6.12. Sales of Receivables.......................................... 88
SECTION 6.13. Certain Amendments............................................ 88
SECTION 6.14. Capital Expenditures.......................................... 88
SECTION 6.15. Financial Covenants........................................... 89
ARTICLE VII EVENTS OF DEFAULT.................................................. 90
ARTICLE VIII THE AGENT, SWINGLINE LENDER AND ISSUING BANK...................... 94
SECTION 8.01. Appointment and Authorization................................. 94
SECTION 8.02. Liability of Agent............................................ 94
SECTION 8.03. Action by Agent............................................... 95
SECTION 8.04. Successor Agents.............................................. 95
SECTION 8.05. Agent and Affiliate........................................... 96
SECTION 8.06. Indemnification............................................... 96
SECTION 8.07. Credit Decision............................................... 96
ARTICLE IX MISCELLANEOUS....................................................... 97
SECTION 9.01. Notices....................................................... 97
SECTION 9.02. Survival of Agreement......................................... 97
SECTION 9.03. Binding Effect................................................ 98
SECTION 9.04. Successors and Assigns........................................ 98
SECTION 9.05. Expenses; Indemnity........................................... 101
SECTION 9.06. Right of Setoff............................................... 103
SECTION 9.07. Applicable Law................................................ 103
SECTION 9.08. Waivers; Amendment............................................ 104
SECTION 9.09. Interest Rate Limitation...................................... 105
SECTION 9.10. Entire Agreement.............................................. 105
SECTION 9.11. Severability.................................................. 105
SECTION 9.12. Counterparts.................................................. 105
SECTION 9.13. Headings...................................................... 106
SECTION 9.14. Remedies...................................................... 106
SECTION 9.15. Jurisdiction; Consent to Service of Process; Waiver of Jury
Trial......................................................... 106
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Schedules
Schedule 2.02(c) Revolving Credit Commitments
Schedule 2.02(d) Swingline Commitment
Schedule 3.05(b) Undisclosed Liabilities
Schedule 3.06 Material Adverse Changes
Schedule 3.07(b) Property
Schedule 3.08 Subsidiaries
Schedule 3.09(a) Litigation
Schedule 3.10(a) Material Contracts
Schedule 3.17(a) Government Contracting Matters
Schedule 3.18(e) Security Interests
Schedule 3.18(d) Mortgages
Schedule 3.20 Transactions with Affiliates
Schedule 3.23(a) Labor Matters
Schedule 3.24 Licenses and Permits
Schedule 6.01(a) Permitted Indebtedness
Schedule 6.02(a) Liens
Schedule 6.04(a)(i) Investments
Exhibits
Exhibit A-1 Form of Tranche A Term Note
Exhibit A-2 Form of Tranche B Term Note
Exhibit A-3 Form of Revolving Credit Note
Exhibit A-4 Form of Swingline Note
Exhibit B-1 Form of Parent's Consent and Agreement
Exhibit B-2 Form of Borrower's Consent and Agreement
Exhibit C Form of Supplemental Agreement
Exhibit D Form of Notice of Borrowing
Exhibit E Form of Assignment and Acceptance
Exhibit F Form of Certificate of Financial Officer
Exhibit G Form of Intercompany Note
Exhibit H [Intentionally omitted.]
Exhibit I [Intentionally omitted.]
Exhibit J Form of Agency Account Agreement
Exhibit K Form of Mortgage
Exhibit L Form of Acknowledgement of Subordination
Exhibit M-1 Form of Opinion of Counsel to the Loan Parties
Exhibit M-2 Form of Georgia Local Counsel Opinion
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AMENDED AND RESTATED CREDIT AGREEMENT dated as of October 15, 1997,
among FIREARMS TRAINING SYSTEMS, INC., a Delaware corporation, FATS, INC., a
Delaware corporation, the financial institutions listed on the signature pages
hereof and NATIONSBANK, N.A. (formerly known as NationsBank, N.A. (South)), as
Agent, Swingline Lender and Issuing Bank.
The Borrower (such term, and all other capitalized terms in this
paragraph, being used as hereinafter defined) requested, and the Lenders
extended, on the Closing Date, credit to the Borrower in the aggregate principal
amount of up to $85,000,000, in the form of (a) Tranche A Term Loans made by the
Lenders on the Closing Date in an aggregate principal amount of up to
$30,000,000, (b) Tranche B Term Loans made by the Lenders on the Closing Date in
an aggregate principal amount of up to $40,000,000, (c) Revolving Loans made by
the Lenders at any time and from time to time during the Revolving Credit
Availability Period in an aggregate principal amount at any time outstanding of
up to $15,000,000, (d) Swingline Loans made by the Swingline Lender at any time
and from time to time during the Revolving Credit Availability Period in an
aggregate principal amount at any time outstanding of up to $2,000,000 and (e)
Letters of Credit (other than Foreign Currency Letters of Credit) to be issued
by the Issuing Bank at any time and from time to time during the Letter of
Credit Availability Period in an aggregate principal amount at any time
outstanding not in excess of $7,500,000; provided that the sum at any time of
outstanding Revolving Loans, Swingline Loans and Letters of Credit did not
exceed $15,000,000. The Borrower has requested that the Lenders increase their
commitments to make Revolving Loans from $15,000,000 to $25,000,000, permit
Foreign Currency Letters of Credit to be issued by the Issuing Bank during the
Letter of Credit Availability Period in an aggregate principal Dollar Equivalent
amount at any time not in excess of $10,000,000 and to make certain other
amendments and modifications to the Original Credit Agreement. The Lenders are
willing to make such modifications and amendments to the Original Credit
Agreement upon the terms and subject to the conditions set forth herein.
Accordingly, the parties hereto agree that, on the Effective Date, this Amended
Agreement will become effective and the Original Credit Agreement will be
amended to read in full as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms. As used in this Amended Agreement, the
following terms shall have the meanings specified below:
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
"ABR Loan" shall mean any ABR Term Loan, ABR Revolving Loan or
Swingline Loan.
"ABR Revolving Loan" shall mean any Revolving Loan bearing interest at
a rate determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
<PAGE> 7
"ABR Term Borrowing" shall mean a Borrowing comprised of ABR Term
Loans.
"ABR Term Loan" shall mean any Term Loan bearing interest at a rate
determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"additional amounts" shall have the meaning assigned to such term in
Section 2.20(a).
"Adjusted LIBO Rate" shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/100 of 1%) equal to the product of (a) the
Eurodollar Rate in effect for such Interest Period and (b) Statutory Reserves.
"Administrative Questionnaire" shall mean, with respect to each Lender,
the administrative questionnaire in the form submitted to such Lender by the
Agent and returned to the Agent duly completed by such Lender.
"Affiliate" shall mean, when used with respect to a specified person,
another person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the person
specified.
"Agency Agreement" shall mean the Agency Agreement dated as of January
1, 1997 between Parent and Borrower.
"Agency Account Agreement" shall mean an agency account agreement among
the Borrower or any Domestic Subsidiary, the Agent and a financial institution
in which the Borrower or such Domestic Subsidiary maintains a deposit account,
in substantially the form attached hereto as Exhibit J, as amended from time to
time.
"Agent" shall mean NationsBank, N.A., in its capacity as agent for the
Lenders hereunder, and its successors in such capacity.
"Aggregate Revolving Credit Exposure" shall mean the aggregate amount
of the Revolving Credit Lenders' Revolving Credit Exposure.
"Alternate Base Rate" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greater of
(a) the Prime Rate in effect on such day and (b) the sum of (i) the Federal
Funds Effective Rate in effect on such day and (ii) .50%. If the Agent shall
have determined that it is unable to ascertain the Federal Funds Effective Rate
for any reason, including the inability of the Agent to obtain sufficient
quotations in accordance with the terms hereof, the Alternate Base Rate shall be
determined without regard to clause (b) of the first sentence of this
definition, as appropriate, until the circumstances giving rise to such
inability no longer exist. Any change in the Alternate Base Rate due to a change
in the Prime Rate or the Federal Funds Effective Rate shall be effective on the
effective date of such change in the Prime Rate or the Federal Funds Effective
Rate, respectively,
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without notice to the Borrower.
"Amended Agreement" shall mean this Amended and Restated Credit
Agreement, as amended, modified or supplemented from time to time.
"Applicable ABR Margin" shall mean (a) with respect to any Tranche A
Term Loan, Revolving Loan or Swingline Loan outstanding on any day:
(i) 1.25%, if such day falls within a Level I Pricing
Period;
(ii) 1.50%, if such day falls within a Level II Pricing
Period; and
(iii) 1.75%, if such day falls within a Level III Pricing
Period; and
(b) with respect to any Tranche B Term Loan outstanding on any day,
2.50%.
"Applicable Eurodollar Margin" shall mean (a) with respect to any
Tranche A Term Loan or Revolving Loan outstanding on any day:
(i) 2.25%, if such day falls within a Level I Pricing
Period;
(ii) 2.50%, if such day falls within a Level II Pricing
Period; and
(iii) 2.75%, if such day falls within a Level III Pricing
Period; and
(b) with respect to any Tranche B Term Loan outstanding on any day,
3.00%.
"Applicable Laws" shall have the meaning assigned to such term in
Section 3.09(b).
"Applicable Percentage" of any Lender shall mean a fraction (expressed
as a percentage), the numerator of which is such Lender's Revolving Credit
Commitment and the denominator of which is the aggregate of all Lenders'
Revolving Credit Commitments.
"Asset Sale" shall mean any sale, lease, transfer, assignment,
Condemnation, Casualty (in the case of Casualty, to the extent covered by
insurance) or other disposition of assets (including Intellectual Property and
other intangibles), business units, individual business assets or property of
the Parent, the Borrower or any of the Subsidiaries made after the Closing Date,
including the sale, transfer or disposition of any Capital Stock or real
property; provided, however, that none of the following shall be deemed to be an
Asset Sale: (a) the sale of inventory (other than to Subsidiaries) in the
ordinary course of business; and (b) the sale, lease, transfer, assignment or
other disposition of assets (other than in connection with any Casualty or
Condemnation) of the Borrower or any Subsidiary (i) to the Borrower or any
Wholly Owned Subsidiary which is a Domestic Subsidiary, (ii) to any Wholly Owned
Subsidiary which is a Foreign Subsidiary, so long as such transaction is
permitted by paragraph (G) of Section 6.05(a), (iii) to any other person, so
long as the fair market value of
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<PAGE> 9
all property disposed of pursuant to this clause (iii) does not exceed $150,000
in the aggregate in any fiscal year, (iv) in connection with the liquidation for
the account of the Borrower or any Subsidiary of Cash Equivalents or (v) to the
extent that such assets consist of damaged, worn out or obsolete tangible
assets, so long as the fair market value of all property disposed of pursuant to
this clause (v) does not exceed $500,000 in the aggregate in any fiscal year;
provided that the foregoing definition shall not be deemed to imply that any
such Asset Sale is permitted under this Amended Agreement.
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Lender and its assignee, and accepted by the Agent, in the
form attached hereto as Exhibit E or such other form as shall be approved by the
Agent.
"Assignment and Assumption Agreement" shall mean the Assignment and
Assumption Agreement dated as of January 1, 1997 among the Parent, the Borrower
and the Agent.
"Balance Sheet" shall have the meaning assigned to such term in Section
3.05.
"Board" shall mean the Board of Governors of the Federal Reserve System
of the United States.
"Borrower" shall mean FATS, Inc.
"Borrower's Consent" shall mean the Borrower's Consent and Agreement
dated as of the Effective Date between the Borrower and the Agent in the form
attached hereto as Exhibit B-2.
"Borrowing" shall mean a group of Loans of a single Class and Type made
by the Lenders on a single date and as to which a single Interest Period is in
effect.
"Breakage Event" shall have the meaning assigned to such term in
Section 2.16.
"Business Day" shall mean any day (other than a day which is a
Saturday, Sunday or legal holiday in the State of North Carolina or New York) on
which banks are open for business in Charlotte, North Carolina and New York
City; provided, however, that, when used in connection with a Eurodollar Loan,
the term "Business Day" shall also exclude any day on which commercial banks are
not open for international business (including dealings in dollar deposits) in
London.
"Capital Expenditures" shall mean, for any period, the sum of (a) all
expenditures (whether paid in cash or other consideration or accrued as a
liability) which would, in accordance with GAAP, be included on a consolidated
statement of cash flows of the Borrower and its Consolidated Subsidiaries for
such period as additions to property, plant and equipment, Capital Lease
Obligations or similar items and (b) to the extent not covered by clause (a)
hereof, all expenditures (whether paid in cash or other consideration or accrued
as a liability) of the Borrower and its Consolidated Subsidiaries for such
period to acquire by
4
<PAGE> 10
purchase or otherwise the business, property or fixed assets of, or stock or
other evidences of beneficial ownership of, any other person (other than the
portion of such expenditures allocable in accordance with GAAP to net current
assets); provided that the foregoing shall exclude (i) all such expenditures to
the extent made with Insurance Proceeds or Condemnation Awards, (ii) de minimis
expenditures which individually are less than $2,500 (so long as the exclusion
of such de minimis items is in accordance with GAAP) and (iii) expenditures for
Permitted Acquisitions.
"Capital Lease Obligations" of any person shall mean the obligations of
such person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such person under GAAP
and, for the purposes of this Amended Agreement, the amount of such obligations
at any time shall be the capitalized amount thereof at such time determined in
accordance with GAAP.
"Capital Stock" of any person shall mean any and all shares,
partnership and other interests, rights to purchase, warrants, options,
participations or other equivalents of or interests in (however designated) the
equity of such person.
"Cash Capital Expenditures" shall mean, for any period, all Capital
Expenditures paid in cash during such period.
"Cash Dividends" shall mean, for any period, the aggregate amount of
dividends paid in cash during such period.
"Cash Equivalents" shall mean:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States
of America (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States of America),
in each case maturing within 180 days from the date of acquisition
thereof;
(b) investments in commercial paper maturing within 180 days
from the date of acquisition thereof and having, at such date of
acquisition, the highest credit rating obtainable from Standard &
Poor's Corporation or from Moody's Investors Service, Inc.,
respectively;
(c) investments in certificates of deposit, banker's
acceptances and time deposits maturing within 180 days from the date of
acquisition thereof issued or guaranteed by or placed with, and money
market deposit accounts issued or offered by, any domestic office of
any Lender or any commercial bank organized under the laws of the
United States of America or any State thereof which has a combined
capital and surplus and undivided profits of not less than
$500,000,000;
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<PAGE> 11
(d) money market funds substantially all of whose assets are
comprised of securities of the types described in (a) through (c)
above;
(e) cash deposits in any Deposit Account covered by an Agency
Account Agreement or in any cash collateral account with the Agent
required by, and maintained in accordance with, this Amended Agreement
or any Collateral Document; and
(f) other investment instruments approved in writing by the
Agent and offered by financial institutions which have a combined
capital and surplus and undivided profits of not less than
$500,000,000.
"Cash Interest Expense" shall mean, for any period, the gross amount of
interest expense of the Borrower and its Consolidated Subsidiaries, determined
on a consolidated basis in accordance with GAAP, during such period, including
(a) the portion of any payments or accruals with respect to Capital Lease
Obligations that are allocable to interest expense in accordance with GAAP, (b)
all amounts paid (net of any amounts received) pursuant to Interest Rate
Protection Agreements during such period and (c) all fees, charges, discounts
and other costs paid in respect of Indebtedness during such period, but, in each
case, excluding any non-cash interest expense.
"Cash Tax Expense" shall mean, for any period, the amount of expense
for Federal, state, local and other income taxes of the Borrower and its
Consolidated Subsidiaries, determined on a consolidated basis in accordance with
GAAP (assuming the Borrower was deemed to be the common parent of an affiliated
group (within the meaning of Section 1504 of the Code) of which only the
Borrower and the Subsidiaries were members), for such period, but excluding
deferred income tax expense.
"Casualty" shall mean any casualty or other loss, damage or
destruction.
"Centre Entities" shall mean Centre Capital Investors II, L.P., a
Delaware limited partnership, Centre Partners Coinvestment, L.P., a Delaware
limited partnership, Centre Capital Offshore Investors II, L.P., a Bermuda
limited partnership, and Centre Capital Tax-exempt Investors II, L.P., a
Delaware limited partnership.
"Change in Control" shall mean the occurrence of any of the following
events: (a) the Parent shall fail to own 100% of the Capital Stock of the
Borrower (on a fully diluted basis), (b) any person or "group" (within the
meaning of Rule 13d-5 under the Exchange Act), together with its Affiliates,
other than the Permitted Investors, shall beneficially own, directly or
indirectly, an amount of the outstanding Capital Stock of the Parent entitled to
29% or more of the Total Voting Power of the Parent, (c) the Permitted Investors
shall beneficially own, directly or indirectly, an amount of the outstanding
capital stock of the Parent entitled to less than 30% of the Total Voting Power
of the Parent, or (d) the failure at any time of a majority of the seats
(excluding vacant seats) on the board of directors of the Parent to be occupied
by persons who were nominated by the affirmative vote of members of such board
of directors who are officers or Affiliates of the Permitted Investors.
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<PAGE> 12
"Charges" shall have the meaning assigned to such term in Section 9.09.
"Class" shall have the meaning assigned to such term in Section 1.03.
"Closing Date" shall mean July 31, 1996.
"Code" shall mean the Internal Revenue Code of 1986, as the same may be
amended from time to time.
"Collateral" shall mean all the collateral pledged or purported to be
pledged pursuant to any of the Collateral Documents.
"Collateral Documents" shall mean the Security Agreement, the Pledge
Agreement, the Perfection Certificate, the Agency Account Agreements, the
Mortgages, the Parent's Consent, the Borrower's Consent and the Subsidiaries'
Consent and all other security agreements, financing statements and other
documents and instruments executed and delivered pursuant to the terms hereof or
thereof in order to secure any Obligations, perfect any Lien granted to the
Agent for the benefit of the Secured Parties pursuant thereto or otherwise
protect the interests of the Secured Parties, including each agreement executed
in connection with (i) the pledge of Capital Stock of F.A.T.S. Singapore PTE
LTD. and Firearms Training Systems Netherlands B.V. and (ii) the granting of a
security interest in or assignment of (or any equivalent thereof) (A) any
foreign collection account, operating account or investment account and (B) any
rights to receive payments with respect to any Government Contract.
"Commitment" shall mean, with respect to any Lender, such Lender's
Tranche A Term Loan Commitment, Tranche B Term Loan Commitment, Revolving Credit
Commitment and Swingline Commitment, as applicable.
"Commitment Fee" shall have the meaning assigned to such term in
Section 2.06(a).
"Commonly Controlled Entity" shall mean an entity, whether or not
incorporated, which is under common control with the Borrower within the meaning
of Section 4001 of ERISA or is part of a group which includes the Borrower and
which is treated as a single employer under Section 414 of the Code.
"Condemnation" shall mean any taking of property, or any part thereof
or interest therein, for public or quasi-public use under the power of eminent
domain, by reason of any public improvement or condemnation proceeding, or in
any other manner.
"Condemnation Award" shall mean all proceeds of any Condemnation or
transfer in lieu thereof.
"Consolidated Subsidiaries" shall mean, for any person, all
subsidiaries of such person that should be consolidated with such person for
financial reporting purposes in accordance
7
<PAGE> 13
with GAAP.
"Control" shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
person, whether through the ownership of voting securities, by contract or
otherwise, and "Controlling" and "Controlled" shall have meanings correlative
thereto.
"Current Assets" shall mean, as of any date, all assets which would, in
accordance with GAAP, be included on a consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of such date as current assets.
"Current Liabilities" shall mean, as of any date, all liabilities which
would, in accordance with GAAP, be included on a consolidated balance sheet of
the Borrower and its Consolidated Subsidiaries as of such date as current
liabilities.
"Debt Issuance" shall mean the issuance after the Closing Date of any
Indebtedness by the Parent, the Borrower or any of the Subsidiaries (other than
any Indebtedness permitted by paragraph (b), (c), (d), (e), (f) or (g) of
Section 6.01), provided that the foregoing definition shall not be deemed to
imply that any such issuance of Indebtedness is permitted under this Amended
Agreement.
"Default" shall mean any event or condition which upon notice, lapse of
time or both would constitute an Event of Default.
"Deposit Account" shall mean any demand, time, savings, passbook,
collection, operating, investment or other like type of account relating in any
way to the assets or business of the Borrower or any Subsidiary.
"Determination Date" shall mean:
(a) in connection with the issuance of, or participation in, any new
Foreign Currency Letter of Credit, the Business Day of such issuance or
participation;
(b) in connection with the extension of any existing Foreign Currency
Letter of Credit, the Business Day of such extension;
(c) the date of any reduction of the Revolving Credit Commitments
pursuant to the terms of Section 2.10; or
(d) for purposes of Section 2.12(c), the second Business Day after the
first and the fifteenth day of each calendar month.
"Disqualified Stock" of any person shall mean (a) any Capital Stock of
such person which by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable or exercisable), upon the happening
of any event or otherwise (i) matures or is
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<PAGE> 14
mandatorily redeemable or subject to any mandatory repurchase requirement,
pursuant to a sinking fund obligation or otherwise, (ii) is convertible into or
exchangeable or exercisable for Indebtedness or Disqualified Stock or (iii) is
redeemable or subject to any mandatory repurchase requirement at the option of
the holder thereof, in whole or in part, in each case on or prior to the first
anniversary of the Tranche B Maturity Date and (b) if such person is a
Subsidiary, any Preferred Stock of such person.
"Dollar Amount" shall mean (a) with respect to dollars or an amount
denominated in dollars, such amount and (b) with respect to an amount of any
Foreign Currency or an amount denominated in such Foreign Currency, the Dollar
Equivalent of such amount on the applicable date contemplated in this Amended
Agreement.
"Dollar Equivalent" shall mean, on any date, with respect to an amount
denominated in a Foreign Currency, the amount of dollars into which the Agent
could, in accordance with its practice from time to time in the interbank
foreign exchange market, convert such amount of such Foreign Currency at its
spot selling rate of exchange effective for that date for the immediate exchange
of such currencies (inclusive of all reasonable related costs of conversion, if
any are actually incurred and based on the market rates available to the Agent)
applicable to the relevant transaction at or about 11:00 a.m., Charlotte, North
Carolina time, on such date.
"dollars" or "$" shall mean lawful money of the United States of
America.
"Domestic Subsidiaries" shall mean all Subsidiaries incorporated or
organized under the laws of the United States of America, any State thereof or
the District of Columbia.
"EBITDA" shall mean, for any period, (a) Net Income for such period,
plus, (b) the following to the extent deducted in computing such Net Income: (i)
interest expense, (ii) tax expense, (iii) depreciation and amortization of
tangible and intangible assets and (iv) other non-cash charges or non-cash
losses, in each case for the Borrower and its Consolidated Subsidiaries,
determined on a consolidated basis in accordance with GAAP, minus (c) the
following to the extent added in computing such Net Income: (i) interest income
and (ii) any non-cash income or non-cash gains, in each case for the Borrower
and its Consolidated Subsidiaries, determined on a consolidated basis in
accordance with GAAP.
"Effective Date" shall have the meaning assigned to such term in
Section 4.01.
"Environmental Laws" shall mean any and all applicable present and
future (when implemented) treaties, laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by any Governmental Authority, relating in any way
to the environment, preservation or reclamation of natural resources, the
management, Release or threatened Release of any Hazardous Material or to health
and safety matters, including the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986, 42 U.S.C. Sections 9601 et seq. (collectively
"CERCLA"), the Solid Waste Disposal Act, as amended by the Resource Conservation
and
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Recovery Act of 1976 and Hazardous and Solid Waste Amendments of 1984, 42 U.S.C.
Sections 6901 et seq., the Federal Water Pollution Control Act, as amended by
the Clean Water Act of 1977, 33 U.S.C. Sections 1251 et seq., the Clean Air Act
of 1970, as amended 42 U.S.C. Sections 7401 et seq., the Toxic Substances
Control Act of 1976, 15 U.S.C. Sections 2601 et seq., the Occupational Safety
and Health Act of 1970, as amended, 29 U.S.C. Sections 651 et seq., the
Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. Sections
11001 et seq., the Safe Drinking Water Act of 1974, as amended, 42 U.S.C.
Sections 300(f) et seq., the Hazardous Materials Transportation Act, 49 U.S.C.
Sections 5101 et seq., and any similar or implementing state or local law, and
all amendments or regulations promulgated under any of the foregoing.
"Environmental Permit" shall mean any permit, approval, authorization,
certificate, license, variance, filing or permission required by or from any
Governmental Authority pursuant to any Environmental Law.
"Equity Issuance" shall mean the issuance after the Closing Date of any
Capital Stock or receipt of any capital contribution (other than a Qualifying
Capital Contribution) by the Parent, the Borrower or any of the Subsidiaries,
provided that the foregoing definition shall not be deemed to imply that any
such Equity Issuance is permitted under this Amended Agreement.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as the same may be amended from time to time.
"Eurodollar Borrowing" shall mean a Borrowing comprised of Eurodollar
Loans.
"Eurodollar Loan" shall mean any Eurodollar Term Loan or Eurodollar
Revolving Loan.
"Eurodollar Rate" shall mean, with respect to any Eurodollar Borrowing
for any Interest Period, the rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) appearing on Telerate Page 3750 (or any successor page)
as the London interbank offered rate for deposits in dollars at approximately
11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period. If for any reason
such rate is not available, the term "Eurodollar Rate" shall mean, for any
Eurodollar Borrowing for any Interest Period, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen
LIBO Page as the London interbank offered rate for deposits in dollars at
approximately 11:00 a.m. (London time) two Business Days prior to the first day
of such Interest Period for a term comparable to such Interest Period; provided,
however, that if more than one rate is specified on Reuters Screen LIBO Page,
the applicable rate shall be the arithmetic mean of all such rates.
"Eurodollar Revolving Loan" shall mean any Revolving Loan bearing
interest at a rate determined by reference to the Adjusted LIBO Rate in
accordance with the provisions of Article II.
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<PAGE> 16
"Eurodollar Term Borrowing" shall mean a Borrowing comprised of
Eurodollar Term Loans.
"Eurodollar Term Loan" shall mean any Term Loan bearing interest at a
rate determined by reference to the Adjusted LIBO Rate in accordance with the
provisions of Article II.
"Event of Default" shall have the meaning assigned to such term in
Article VII.
"Excess Cash Flow" shall mean, for any period, the excess of (a) the
sum, without duplication, of (i) EBITDA for such period, (ii) extraordinary cash
income, if any, business interruption insurance proceeds, if any, and cash gains
attributable to sales of assets out of the ordinary course of business, if any,
during such period to the extent that any such extraordinary cash income, such
insurance proceeds or such cash gain (A) is not included in EBITDA for such
period and (B) is not required to be utilized in connection with a payment made
(or to be made) by the Borrower pursuant to Section 2.12(e) and (iii) the
amount, if any, by which Working Capital decreased during such period over (b)
the sum, without duplication, of (i) Cash Tax Expense for such period, (ii) Cash
Interest Expense for such period, (iii) Cash Capital Expenditures for such
period, (iv) Scheduled Principal Payments for such period, (v) optional and
mandatory prepayments of the principal of Loans made during such period (except
pursuant to Section 2.12(f)), but only to the extent that such prepayments by
their terms cannot be reborrowed or redrawn and, in the case of any mandatory
prepayment made during such period, only to the extent that the Net Cash
Proceeds of the Prepayment Event giving rise to such prepayment are included in
EBITDA for such period, and (vi) the amount, if any, by which Working Capital
increased during such period.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Excluded Taxes" shall have the meaning assigned in such term in
Section 2.20(a).
"Existing Issuing Bank" shall mean NationsBank, N.A. (formerly known as
NationsBank, N.A. (South), in its capacity as issuer of letters of credit under
the Original Credit Agreement.
"Existing Letters of Credit" shall have the meaning set forth in
Section 2.22(m).
"Facilities" shall mean the Tranche A Term Loans, the Tranche B Term
Loans, the Revolving Loans and the Letters of Credit provided or participated in
by the Lenders to the Borrower pursuant to this Amended Agreement and the other
Loan Documents.
"FATS UK" shall mean Firearms Training Systems Limited, a United
Kingdom corporation.
"Federal Funds Effective Rate" shall mean, for any day, the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System
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<PAGE> 17
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average of the quotations for
the day of such transactions received by the Agent from three Federal funds
brokers of recognized standing selected by it. Each change in the Federal Funds
Effective Rate shall be effective on the date thereof, without notice to the
Borrower.
"Fee Letter" shall have the meaning assigned to such term in Section
2.06(b).
"Fees" shall mean the Commitment Fees, the other fees payable pursuant
to the Fee Letter and the Letter of Credit Fees.
"Financial Officer" of any corporation shall mean the chief financial
officer, principal accounting officer or similar officer of such corporation.
"Financial Statements" shall have the meaning assigned to such term in
Section 3.05(a).
"Foreign Currency" shall mean any currency other than dollars that is
acceptable to the Agent in its reasonable discretion.
"Foreign Currency Letter of Credit" shall mean any Letter of Credit
denominated in a Foreign Currency.
"Foreign Currency Letter of Credit Exposure" shall mean all Letter of
Credit Exposure attributable to Foreign Currency Letters of Credit.
"Foreign Subsidiary" shall mean any Subsidiary which is not a Domestic
Subsidiary.
"GAAP" shall mean United States generally accepted accounting
principles, applied on a consistent basis.
"Governmental Authority" shall mean any Federal, state, local or
foreign governmental department, commission, board, bureau, authority, agency,
court, instrumentality or judicial or regulatory body or entity.
"Government Contract" shall have the meaning assigned to such term in
Section 3.17(a).
"Guarantee" of or by any person shall mean any obligation, contingent
or otherwise, of such person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other person (the "primary obligor") in any
manner, whether directly or indirectly, and including any obligation of such
person, direct or indirect, (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or to purchase (or to advance
or supply funds for the purchase of) any security for the payment of such
Indebtedness, (b) to purchase property, securities or services for the purpose
of assuring the
12
<PAGE> 18
owner of such Indebtedness of the payment of such Indebtedness or (c) to
maintain working capital, equity capital or other financial statement condition
or liquidity of the primary obligor so as to enable the primary obligor to pay
such Indebtedness; provided, however, that the term Guarantee shall not include
endorsements for collection or deposit, in either case in the ordinary course of
business.
"Guarantee Agreements" shall mean the Parent Guarantee Agreement and
the Subsidiaries Guarantee Agreement.
"Guarantor" shall mean any party to either Guarantee Agreement.
"Hazardous Materials" shall mean all explosive or radioactive
substances or wastes, hazardous or toxic substances or wastes, pollutants,
solid, liquid or gaseous wastes, including petroleum or petroleum distillates,
asbestos or asbestos containing materials, polychlorinated biphenyls ("PCBs") or
PCB-containing materials or equipment, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"ICAT Acquisition" shall mean the purchase by the Borrower of the
assets of the ICAT simulation division of SBS Technologies, Inc. for an
aggregate consideration not in excess of $2,200,000.
"Indebtedness" of any person shall mean, without duplication, (a) all
obligations of such person for borrowed money or with respect to deposits or
advances of any kind made with or to such person, (b) all obligations of such
person evidenced by bonds, debentures, notes or similar instruments, including
certificates issued in connection with an asset securitization, (c) all
obligations of such person upon which interest charges are customarily paid, (d)
all obligations of such person under conditional sale or other title retention
agreements relating to property or assets purchased by such person, (e) all
obligations of such person issued or assumed as the deferred purchase price of
property or services, (f) all Indebtedness of others secured by (or for which
the holder of such Indebtedness has an existing right, contingent or otherwise,
to be secured by) any Lien on property owned or acquired by such person, whether
or not the obligations secured thereby have been assumed, (g) all Guarantees by
such person of Indebtedness of others, (h) all Capital Lease Obligations of such
person, (i) all obligations of such person in respect of Interest Rate
Protection Agreements, (j) all obligations of such person, contingent or
otherwise, as an account party in respect of letters of credit and bankers'
acceptances and (k) all obligations of such person to contribute money or other
property to any other person. The Indebtedness of any person shall include,
without duplication, the Indebtedness of any partnership in which such person is
a general partner and of any trust or other entity formed or utilized in
connection with a securitization of assets of such person. Notwithstanding the
foregoing, (i) the Indebtedness of any person shall exclude all trade accounts
payable arising in the ordinary course of business and (ii) the Indebtedness of
the Borrower shall exclude accrued expenses in accordance with GAAP.
"Indemnified Party" shall have the meaning assigned to such term in
Section 9.05(b).
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<PAGE> 19
"Indemnity, Subrogation and Contribution Agreement" shall mean the
Indemnity, Subrogation and Contribution Agreement, dated as of October 1, 1997,
between the Borrower, each Subsidiary and the Agent for the Lenders.
"Insurance Proceeds" shall mean all insurance proceeds (other than
business interruption insurance proceeds), damages, awards, claims and rights of
action with respect to any Casualty.
"Intellectual Property" shall mean all patents, patent rights, patent
applications, licenses, inventions, trade secrets, know how, proprietary
techniques (including processes and substances), trademarks, servicemarks,
tradenames and copyrights.
"Intercompany Notes" shall mean the promissory notes issued as
contemplated by Section 6.04(a)(ii), in the form attached hereto as Exhibit G.
"Interest Payment Date" shall mean, with respect to any Loan, all of
the following to the extent applicable: (a) the last day of the Interest Period
applicable to the Borrowing of which such Loan is a part, (b) if such Loan is
part of any Eurodollar Borrowing with an Interest Period of more than three
months' duration, each day that would have been an Interest Payment Date had
successive Interest Periods of three months' duration been applicable to such
Borrowing, (c) if such Loan is part of any Eurodollar Borrowing, the date of any
repayment or prepayment of the Eurodollar Borrowing of which such Loan is a
part, (d) if such Loan is part of an ABR Borrowing of any Class, the date of any
repayment or prepayment of the ABR Borrowing of which such Loan is a part, but
only if such repayment or prepayment would repay or prepay in full all ABR Loans
of such Class, and (e) if such Loan is a part of any Eurodollar Borrowing, any
conversion of such Borrowing to a Borrowing of a different Type.
"Interest Period" shall mean (a) as to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing or on the last day of the
immediately preceding Interest Period applicable to such Borrowing, as the case
may be, and ending on the numerically corresponding day (or, if there is no
numerically corresponding day, on the last day) in the calendar month that is 1,
2, 3, 4, 5 or 6 months thereafter, as the Borrower may elect, subject to the
availability thereof, as determined by the Agent, and (b) as to any ABR
Borrowing, the period commencing on the date of such Borrowing or on the last
day of the immediately preceding Interest Period applicable to such Borrowing,
as the case may be, and ending on the earlier of (i) the next succeeding March
31, June 30, September 30 or December 31 and (ii) with respect to any Tranche A
Term Loan, Tranche B Term Loan, Revolving Loan or Swingline Loan, the Tranche A
Maturity Date, Tranche B Maturity Date, Revolving Credit Maturity Date or
Swingline Maturity Date, respectively; provided, however, that if any Interest
Period would end on a day other than a Business Day, such Interest Period shall
be extended to the next succeeding Business Day unless, in the case of a
Eurodollar Borrowing only, such next succeeding Business Day would fall in the
next calendar month, in which case such Interest Period shall end on the next
preceding Business Day. Interest shall accrue from and including the first day
of an Interest Period to, but excluding, the last day of
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<PAGE> 20
such Interest Period.
"Interest Rate Protection Agreement" shall mean any interest rate swap,
collar, cap, foreign currency exchange agreement or other arrangement requiring
payments contingent upon interest or exchange rates.
"Issuing Bank" shall mean NationsBank, N.A., in its capacity as the
issuer of Letters of Credit, and its successors in such capacity; provided that
"Issuing Bank" shall mean the Existing Issuing Bank, in its capacity as the
issuer of the Existing Letters of Credit, insofar as such term is used in
relation to the Existing Letters of Credit.
"Landlord Waiver" shall mean each of the Landlord Waiver and Consents,
in form and substance satisfactory to the Agent made by the Landlords of the
Borrower's Georgia offices for the benefit of the Agent and the Secured Parties.
"Lender" shall mean each financial institution listed on the signature
pages hereof, each assignee which becomes a Lender pursuant to Section 9.04(b),
and their respective successors. Unless the context clearly indicates otherwise,
the term "Lenders" shall include the Swingline Lender.
"Letter of Credit" shall mean any Standby Letter of Credit or Trade
Letter of Credit issued pursuant to Section 2.22, including the Existing Letters
of Credit.
"Letter of Credit Availability Period" shall mean the period from and
including the Closing Date to but excluding the earlier of (a) the date five
Business Days prior to the Revolving Credit Maturity Date and (b) the
termination of the Revolving Credit Commitments of the Lenders in accordance
with the terms hereof.
"Letter of Credit Disbursement" shall mean a payment or disbursement
made by the Issuing Bank pursuant to a Letter of Credit (including an Existing
Letter of Credit).
"Letter of Credit Exposure" shall mean at any time the sum of (a) the
aggregate undrawn amount of all outstanding Letters of Credit (including the
Existing Letters of Credit) plus (b) the aggregate amount of all Letter of
Credit Disbursements not yet reimbursed by the Borrower as provided in Section
2.22. The Letter of Credit Exposure of any Lender at any time shall mean its
Applicable Percentage of the aggregate Letter of Credit Exposure at such time.
"Letter of Credit Fees" shall mean the fees payable to the Issuing Bank
and the Lenders pursuant to Section 2.22(g).
"Level I Pricing Period" shall mean, subject to Section 2.07(c), any
period during which (a) the Leverage Ratio is less than 3.00:1.00 and (b) no
Default or Event of Default has occurred and is continuing.
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<PAGE> 21
"Level II Pricing Period" shall mean, subject to Section 2.07(c), any
period during which the Leverage Ratio is greater than or equal to 3.00:1.00 but
less than 4.00:1.00 and (b) no Default or Event of Default has occurred and is
continuing.
"Level III Pricing Period" shall mean any period which is not a Level I
Pricing Period or Level II Pricing Period.
"Leverage Ratio" as of any date shall mean the ratio of (a) Total Debt
as of the end of the Reference Period with respect to such date to (b) EBITDA
for such Reference Period.
"Lien" shall mean, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, easement, restriction, restrictive covenant, lease,
sublease, option, charge, security interest, financing statement or encumbrance
of any kind in respect of such asset and (b) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities. For purposes hereof, the Borrower or any Subsidiary shall be deemed
to own subject to a lien any asset which it has acquired or holds subject to the
interest of a vendor or a lessor under any conditional sale agreement, capital
lease or title retention agreement relating to such asset.
"Loan Documents" shall mean (a) this Amended Agreement, (b) the Notes,
(c) the Letters of Credit, (d) the Guarantee Agreements, (e) the Indemnity,
Subrogation and Contribution Agreement, (f) the Intercompany Notes, (g) the
Collateral Documents, (h) any Interest Rate Protection Agreements entered into
by the Borrower with any Lender or Affiliate thereof as permitted hereunder, (i)
any Supplemental Agreements, and (j) the Assignment and Assumption Agreement.
"Loan Parties" shall mean the Borrower, the Subsidiaries, the Centre
Entities, the Parent and any other person which becomes a pledgor under any
Pledge Agreement.
"Loans" shall mean any or all of the Tranche A Term Loans, the Tranche
B Term Loans, the Revolving Loans and the Swingline Loans.
"Margin Stock" shall have the meaning assigned to such term under
Regulation U.
"Material Adverse Change" shall mean either (i) any material adverse
change in the material existing agreements and relationships, business,
financial condition or results of operations of the Borrower and the
Subsidiaries, taken as a whole, other than changes relating to the economy in
general or the defense, law enforcement or simulations industries in general and
not specifically relating to the Borrower or a Subsidiary, or (ii) any damage,
destruction, loss or claim, whether or not covered by insurance, or condemnation
or other taking that has a Material Adverse Effect on the Borrower or the
Subsidiaries.
"Material Adverse Effect" shall mean (a) a materially adverse effect on
the material existing agreements and relationships, business, financial
condition or results of operations of the Borrower and the Subsidiaries, taken
as a whole, (b) a material impairment of the ability of
16
<PAGE> 22
the Borrower and the Subsidiaries to perform their material obligations under
the Loan Documents, taken as a whole, or (c) a material impairment of the rights
of or benefits available to the Lenders under the Loan Documents, taken as a
whole. In determining whether any individual event would result in a Material
Adverse Effect, notwithstanding that such event does not itself have such
effect, a Material Adverse Effect shall be deemed to have occurred if the
cumulative effect of such event and all other then existing events would result
in a Material Adverse Effect.
"Material Contracts" shall have the meaning assigned to such term in
Section 3.10(a).
"Material Intellectual Property" shall have the meaning assigned to
such term in Section 3.07(c).
"Maximum Rate" shall have the meaning assigned to such term in Section
9.09.
"Mortgage" shall mean each mortgage, assignment of rents, security
agreement and fixture filing, or deed of trust, assignment of rents and fixture
filing, or similar instrument creating and evidencing a lien on a real property
and other property and rights incidental thereto, which shall be substantially
in the form of Exhibit K hereto (with such conforming changes appropriate for a
fee mortgage or a leasehold mortgage as shall be satisfactory to the Agent),
containing such schedules and including such exhibits as shall not be
inconsistent with the provisions of Section 4.01(d) of the Original Credit
Agreement or shall be necessary to conform such instrument to applicable local
law and which shall be dated the date of delivery thereof and made by the owner
of the real property described therein for the benefit of the Agent, as
mortgagee (or beneficiary), assignee and secured party for the benefit of the
Secured Parties, as the same may at any time be amended, modified or
supplemented in accordance with the terms thereof and hereof and, in each case,
for such changes therein (whether before or after the execution and delivery
thereof) as are otherwise permitted by Section 9.08.
"Mortgaged Properties" shall mean the owned real properties and
leasehold interests identified as "Mortgaged Properties" on Schedule 3.07(b) and
each other owned real property or leasehold interest required to be subjected to
a Mortgage under Section 5.12.
"Multiemployer Plan" shall mean a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"NCMI" shall mean NationsBanc Capital Markets, Inc.
"Net Cash Proceeds" shall mean: (a) with respect to any Asset Sale, (i)
the gross amount of cash proceeds (including Insurance Proceeds and Condemnation
Awards in the case of any Casualty or Condemnation unless such Insurance
Proceeds or Condemnation Awards (A) are Reinvestment Funds or (B) are to be used
for repair, restoration or replacement pursuant to plans approved by the
Required Lenders) actually paid to or actually received by the Parent, the
Borrower or any Subsidiary in respect of such Asset Sale (including cash
proceeds subsequently received at any time in respect of such Asset Sale in
respect of non-cash
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<PAGE> 23
consideration initially received or otherwise), less (ii) the sum of (A) the
amount, if any, of all taxes (other than income taxes) and the Borrower's
good-faith best estimate of all income taxes (to the extent that such amount
shall have been set aside for the purpose of paying such taxes when due), and
customary fees, brokerage fees, commissions, costs and other expenses (other
than those payable to the Borrower, any Subsidiary or any Affiliate of the
Borrower) that are incurred in connection with such Asset Sale and are payable
by the seller or the transferor of the assets or property to which such Asset
Sale relates, but only to the extent not already deducted in arriving at the
amount referred to in clause (a)(i) above, (B) appropriate amounts that must be
set aside as a reserve in accordance with GAAP against any liabilities
associated with such Asset Sale and (C) if applicable, the amount of
Indebtedness secured by a Lien permitted under Section 6.02 that has been repaid
or refinanced as required in accordance with its terms with the proceeds of such
Asset Sale; and (b) with respect to any Equity Issuance or Debt Issuance, the
gross amount of cash proceeds paid to or received by the Parent, the Borrower or
any Subsidiary in respect of such Equity Issuance or Debt Issuance, as the case
may be, net of underwriting discounts and commissions or placement fees,
investment banking fees, legal fees, consulting fees, accounting fees and other
customary fees and expenses directly incurred by the Parent, the Borrower or any
Subsidiary in connection therewith.
"Net Income" shall mean, for any period, net income (or loss) of the
Borrower and its Consolidated Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP; provided that there shall be
excluded from such calculation of net income (or loss) (a) the income of any
person in which any other person (other than the Borrower or any of the
Subsidiaries) has any interest, except to the extent of the amount of dividends
or other distributions actually paid to the Borrower or any Wholly Owned
Subsidiary by such person during such period, (b) the income (or loss) of any
person accrued prior to the date it becomes a Subsidiary or is merged into or
consolidated with the Borrower or any of the Subsidiaries or the date such
person's assets are acquired by the Borrower or any of the Subsidiaries, (c) the
income of any Subsidiary to the extent that the declaration or payment of
dividends or similar distributions by such 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 such Subsidiary, (d) any after-tax gains or losses attributable to
sales of assets out of the ordinary course of business and (e) (to the extent
not included in clauses (a) through (d) above) any non-cash extraordinary gains
or non-cash extraordinary losses.
"Net Worth" shall mean, as of any date, the total of all amounts which
would in accordance with GAAP be included on a consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of such date as (a) the par or
stated value of all outstanding Capital Stock of the Borrower, (b) paid in
capital or capital surplus relating to such Capital Stock and (c) any retained
earnings or earned surplus less (i) any accumulated deficit and (ii) any amounts
attributable to Disqualified Stock.
"New Lending Office" shall have the meaning assigned to such term in
Section 2.20(e).
"Non-U.S. Lender" shall have the meaning assigned to such term in
Section 2.20(e).
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<PAGE> 24
"Notes" shall mean the Tranche A Term Notes, the Tranche B Term Notes,
the Swingline Note and the Revolving Credit Notes.
"Obligations" shall mean (a) the Borrower's obligations in respect of
the due and punctual payment of principal of and interest (including interest
accruing after the filing of a petition initiating any proceeding referred to in
paragraph (g) or (h) of Article VII of this Amended Agreement) on the Loans and
all amounts drawn under the Letters of Credit when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, (b) all Fees, expenses, indemnities and expense reimbursement
obligations of the Borrower under the Original Credit Agreement, this Amended
Agreement or any other Loan Document and (c) all other obligations, monetary or
otherwise, of the Borrower or any of the other Loan Parties under any Loan
Document (including any Interest Rate Protection Agreement entered into by the
Borrower after the Closing Date with any Lender or Affiliate of a Lender as
permitted under this Amended Agreement) to which it is a party, in each case,
whether now owing or hereafter existing.
"Original Credit Agreement" shall mean the Credit Agreement dated as of
July 31, 1996 among the Parent, the lenders named therein and NationsBank, N.A.
(South), as Agent and Issuing Bank, as amended, modified or supplemented from
time to time.
"Other Taxes" shall have the meaning assigned to such term in Section
2.20(b).
"Parent" shall mean Firearms Training Systems, Inc.
"Parent's Consent" shall mean the Parent's Consent and Agreement dated
as of the Effective Date between the Parent and the Agent in the form attached
hereto as Exhibit B-1.
"Parent Guarantee Agreement" shall mean the Guarantee Agreement dated
as of January 1, 1997 between the Parent and the Agent, as amended by the
Parent's Consent and as such Parent Guarantee Agreement may be further amended
from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA or any successor thereto.
"Perfection Certificate" shall mean a certificate from the Borrower and
the Subsidiaries dated July 31, 1996.
"Permitted Acquisition" shall mean (A) the ICAT Acquisition, (B) the
Simulation Acquisition and (C) one or more non-hostile acquisitions by the
Borrower or any Domestic Subsidiary of assets or Capital Stock (other than
Margin Stock) of any other person so long as (i) in the case of an acquisition
of assets, such assets are to be used, and in the case of an acquisition of
Capital Stock, the person so acquired is engaged, in a line of business
substantially similar or directly related to the business of the Borrower and
its Subsidiaries as of the Effective Date (including training services that
compliment the Borrower's existing
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<PAGE> 25
business and live fire), (ii) the Borrower shall have provided the Lenders with
the financial information required by Section 5.04(g) and such other information
as the Lenders shall reasonably request, (iii) on the date of such acquisition
and immediately after giving effect thereto, the representations and warranties
set forth in Article III shall be true and correct in all material respects with
the same effect as though made on and as of such date and no Default or Event of
Default shall exist, (iv) on the date of such acquisition and immediately after
giving effect thereto, the Borrower shall be in compliance with the covenants
set forth in Article VI hereto on a pro forma basis, (v) in the case of an
acquisition of Capital Stock of a person, then simultaneously with any such
acquisition, the Agent for the benefit of the Secured Parties shall be granted
(A) in the case of a person organized under the laws of the United States, any
State thereof or the District of Columbia, a first priority security interest in
all of such Capital Stock acquired by the Borrower or any Domestic Subsidiary as
part of such acquisition, and (B) in the case of a person organized under the
laws of a jurisdiction other than the United States, any State thereof or the
District of Columbia, that will be acquired directly by the Borrower or a
Domestic Subsidiary, a first priority security interest in 65% of all of the
Capital Stock of the person so acquired, and in all cases the Borrower shall,
and shall cause any applicable Subsidiary to, execute any documents (including a
Supplemental Agreement, Intercompany Note, financing statements and other
Collateral Documents) and take all action (including filing financing statements
and obtaining and providing consents, and legal opinions) that may be required
under applicable law, or that the Agent may reasonably request, in order to
grant, preserve, protect and perfect such security interest, (vi) in the case of
an acquisition of Capital Stock of a person, the Borrower acquires directly or
indirectly 100% of the Capital Stock of such person; and (vii) the aggregate
fair market value of consideration, whether payable upon consummation thereof or
in the form of earn-outs, non-competes or other deferred payment arrangements,
for all such acquisitions made during any fiscal year, including cash,
securities, other property and the assumption of Indebtedness (if permitted),
shall not exceed $5,000,000; provided, that, for the Borrower's 1998 fiscal
year, the maximum amount of fair market value consideration permitted by this
clause (vii) shall be reduced by the aggregate fair market value of
consideration for the ICAT Acquisition and the Simulation Acquisition.
"Permitted Investors" shall mean (a) the Sponsor, (b) any Affiliate of
the Sponsor, so long as such Affiliate is reasonably acceptable to the Agent;
provided, that each of the Centre Entities shall be deemed reasonably acceptable
to the Agent, (c) Affiliates of NationsBank, N.A. and (d) stockholders of the
Parent that become stockholders of the Parent in connection with acquisitions by
the Borrower, so long as the aggregate Total Voting Power of the Parent held by
such person/or persons, at any time, does not exceed 5% of the Total Voting
Power of the Parent.
A "person" shall mean any natural person, corporation, business trust,
joint venture, association, company, limited liability company, partnership,
government (or any agency or political subdivision thereof) or other entity.
"Personnel" shall have the meaning assigned to such term in Section
3.07(c).
"Plan" shall mean at a particular time, any employee benefit plan which
is covered by
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ERISA and in respect of which the Borrower or a Commonly Controlled Entity is
(or, if such plan were terminated at such time, would under Section 4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Pledge Agreement" shall mean the Pledge Agreement between the Parent
and the Agent dated as of January 1, 1997, as amended by the Parent's Consent
and as such Pledge Agreement may be further amended from time to time.
"Preferred Stock", as applied to the Capital Stock of any corporation,
shall mean Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"Prepayment Account" shall have the meaning assigned to such term in
Section 2.12(j).
"Prepayment Event" shall mean any Asset Sale, Equity Issuance or Debt
Issuance.
"Prepayment Percentage" shall mean, in connection with any mandatory
prepayment pursuant to Section 2.12(f) with respect to any fiscal year of the
Borrower, (a) 50% if, prior to such mandatory prepayment, the sum of (i) the
aggregate principal amount of the Loans outstanding, (ii) the Letter of Credit
Exposure and (iii) the Unused Revolving Credit Commitments has been reduced so
that such sum does not exceed $40,000,000 and (b) otherwise, 75%.
"Prime Rate" shall mean the rate of interest per annum adopted from
time to time by the Agent as its prime rate, as announced and in effect at its
principal office in Charlotte, North Carolina. Each change in the Prime Rate
shall be effective on the date such change is adopted, without notice to the
Borrower. The Prime Rate is a reference rate used by the Agent in determining
interest rates on certain loans and is not intended to be the lowest rate of
interest charged on any extension of credit to any debtor.
"pro forma basis" shall mean that, for purposes of calculating
compliance with the covenants set forth in Article VI in respect of any
Permitted Acquisition, such Permitted Acquisition (and any other Permitted
Acquisition which occurred during the relevant Reference Period) shall be deemed
to have occurred as of the first day of the most recent period of four
consecutive fiscal quarters of the Borrower which precedes or ends on the date
of such acquisition and with respect to which the Agent has received the
Required Financial Statements. In connection with any calculation of the
financial covenants set forth in Section 6.15, upon giving effect to a Permitted
Acquisition (and any other transaction which occurred during the relevant four
fiscal quarter period) on a pro forma basis for purposes of Section 6.04(a)(ix),
Section 6.05(b) and clause (iv) of the definition of "Permitted Acquisition" set
forth in this Section 1.01, as applicable, (A) any Indebtedness incurred by the
Borrower or any of its Subsidiaries in connection with such transaction shall be
deemed to have been incurred as of the first day of the relevant four fiscal
quarter period, (B) if such Indebtedness has a floating
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or formula rate, then the rate of interest for such Indebtedness for the
applicable period for purposes of the calculations contemplated by this
definition shall be determined by utilizing the rate which is or would be in
effect with respect to such Indebtedness as of the relevant date of such
calculations and (C) income statement items (whether positive or negative)
attributable to the person or asset acquired or to the investment comprising
such transaction, as applicable, shall be included as if such transaction had
occurred as of the first day of the relevant four fiscal quarter period.
"Properties" shall have the meaning assigned to such term in Section
5.11(a).
"Qualifying Capital Contribution" shall mean a contribution to the
capital of the Parent (and, indirectly, to the Borrower) made by the Permitted
Investors or any other person in cash; provided, that (a) 100% of the proceeds
of such capital contribution shall be immediately contributed by the Parent to
the Borrower, (b) the Parent shall receive no consideration therefor (other than
additional shares of common stock of the Borrower which are immediately pledged
to the Agent pursuant to the Pledge Agreement for the benefit of the Secured
Parties), and (c) no Default or Event of Default shall be continuing after
giving effect thereto.
"Recapitalization Agreement" shall mean the Recapitalization and Stock
Purchase and Sale Agreement dated as of June 5, 1996, among THIN, the Borrower,
the Sponsor and the Centre Entities, as amended by a letter agreement dated June
12, 1996, a letter agreement dated July 9, 1996 and a letter agreement dated
July 31, 1996, including all schedules and exhibits thereto and related
documentation.
"Reference Period" with respect to any date shall mean the period of
four consecutive fiscal quarters of the Borrower immediately preceding such date
or, if such date is the last day of a fiscal quarter, ending on such date.
"Register" shall have the meaning assigned to such term in Section
9.04(d).
"Regulation G" shall mean Regulation G of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation U" shall mean Regulation U of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation X" shall mean Regulation X of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Reinvestment Funds" shall mean, with respect to any Insurance Proceeds
from a Casualty or Condemnation Award from a Condemnation, that portion of such
proceeds as shall, according to a certificate of a Financial Officer of the
Borrower delivered to the Agent within 90 days after the occurrence of such
Casualty or Condemnation, be reinvested in the repair, restoration or
replacement of the properties and assets that were the subject of such Casualty
or Condemnation; provided that (a) the aggregate amount of such proceeds with
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respect to any such event or series of related events shall not exceed
$1,000,000, (b) pending such reinvestment, the entire amount of such proceeds
shall be deposited in an account with the Agent for the benefit of the Lenders,
over which the Agent shall have sole control and exclusive right of withdrawal
(subject to the right of the Borrower to withdraw funds for the purpose of the
reinvestment described in such certificate so long as no Default or Event of
Default has occurred and is continuing), (c) from and after the date of delivery
of such certificate, the Borrower shall diligently proceed, in a commercially
reasonable manner, to complete the repair, restoration or replacement of the
properties and assets that were the subject of such Casualty or Condemnation as
described in such certificate and (d) no Event of Default shall have occurred
and be continuing.
"Release" shall mean any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposing,
depositing, dispersing, emanating or migrating of any Hazardous Material in,
into, onto or through the environment.
"Remedial Action" shall mean (a) "remedial action" as such term is
defined in CERCLA, 42 U.S.C. Section 9601(24), and (b) all other actions
required by any Governmental Authority or voluntarily undertaken to (i) cleanup,
remove, treat, abate or in any other way address any Hazardous Material in the
environment; (ii) prevent the Release or threat of Release, or minimize the
further Release of any Hazardous Material so it does not migrate or endanger or
threaten to endanger public health, welfare or the environment; or (iii) perform
studies and investigations in connection with, or as a precondition to, the
actions described in clause (i) or (ii) above.
"Repayment Date" shall mean a Tranche A Repayment Date or a Tranche B
Repayment Date, as applicable.
"Reportable Event" shall mean any of the events set forth in Section
4043(c) of ERISA, other than those events as to which the PBGC has waived either
the 30-day notice period or the penalty for failure to give notice.
"Required Financial Statements" shall mean, with respect to any period,
the financial statements of the Borrower for such period required under Section
5.04(a) or (b) hereunder, as applicable.
"Required Lenders" shall mean, at any time, Lenders having Loans
(excluding Swingline Loans), Letter of Credit Exposure, Swingline Exposure and
unused Commitments (excluding the Swingline Commitment), representing in the
aggregate at least a majority of the sum at such time of (a) the aggregate
principal amount of the Loans outstanding (excluding Swingline Loans), (b) the
Letter of Credit Exposure, (c) Swingline Exposure and (d) the aggregate amount
of unused Commitments (excluding the Swingline Commitment).
"Responsible Officer" of any person shall mean and include the
president, chief executive officer, chief operating officer, any financial
officer, any vice president, the general counsel or any other senior officer of
such person (or, in the case of a partnership, of a general
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partner thereof).
"Revolving Credit Availability Period" shall mean the period from and
including the Effective Date to but excluding the earlier of (a) the Revolving
Credit Maturity Date and (b) the termination of the Revolving Credit Commitments
of the Lenders in accordance with the terms hereof.
"Revolving Credit Borrowing" shall mean a Borrowing comprised of
Revolving Loans.
"Revolving Credit Commitment" shall mean, with respect to each Lender,
the commitment of such Lender to make Revolving Loans hereunder as set forth in
Schedule 2.02(c) or in the Assignment and Acceptance pursuant to which such
Lender assumed its Revolving Credit Commitment, as applicable, as the same may
be (a) reduced from time to time pursuant to Section 2.10 and (b) reduced or
increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 9.04.
"Revolving Credit Exposure" shall mean, with respect to any Revolving
Credit Lender at any time, the aggregate principal amount at such time of all
outstanding Revolving Loans of such Lender, plus the aggregate amount at such
time of such Revolving Credit Lender's Letter of Credit Exposure, plus the
aggregate amount at such time of such Revolving Credit Lender's Swingline
Exposure.
"Revolving Credit Lender" shall mean a Lender with a Revolving Credit
Commitment.
"Revolving Credit Maturity Date" shall mean July 31, 2002.
"Revolving Credit Notes" shall mean the promissory notes of the
Borrower, substantially in the form of Exhibit A-3 hereto, evidencing Revolving
Loans.
"Revolving Loans" shall mean the revolving loans made by the Lenders to
the Borrower pursuant to Section 2.02(c). Each Revolving Loan shall be a
Eurodollar Revolving Loan or an ABR Revolving Loan.
"Scheduled Principal Payments" shall mean, for any period, without
duplication, (a) the aggregate principal amount of Term Loans paid during such
period pursuant to Section 2.12(a) and/or (b) and (b) the aggregate principal
amount of all scheduled principal payments on Indebtedness (other than Loans) of
the Borrower and its Consolidated Subsidiaries made during such period,
determined on a consolidated basis in accordance with GAAP, including any
discount or premium relating to such Indebtedness, whether expensed or
capitalized.
"SEC" shall mean the Securities and Exchange Commission or any
successor agency.
"Secured Parties" shall mean (a) the Lenders, (b) the Agent, in its
capacity as such under each Loan Document, (c) each Lender or Affiliate thereof
with which the Borrower enters into an Interest Rate Protection Agreement as
permitted under the Original Credit
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Agreement and this Amended Agreement, in its capacity as a party to such
agreement, (d) the beneficiaries of each indemnification obligation undertaken
by any of the Loan Parties under any Loan Document and (e) the successors and
assigns of the foregoing.
"Security Agreement" shall mean the Pledge and Security Agreement dated
as of July 31, 1996 among the Parent, the Domestic Subsidiaries and the Agent,
and assigned to and assumed by the Borrower pursuant to the Assignment and
Assumption Agreement, as amended by the Borrower's Consent and as such Security
Agreement may be further amended from time to time.
"Simulation Acquisition" shall mean the purchase by the Borrower (or a
Wholly Owned Domestic Subsidiary thereof) of the assets of Firearms Simulation
Systems, Inc., a Florida corporation for an aggregate consideration not in
excess of $400,000, plus a contingent payment in the form of common stock of the
Parent.
"Single Employer Plan" shall mean any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"Solvent" shall have the meaning assigned to such term in Section
3.19(a).
"Sponsor" shall mean Centre Partners II, LLC, a Delaware limited
liability company.
"Standby Letter of Credit" shall mean an irrevocable standby letter of
credit, whether denominated in dollars or a Foreign Currency, for the account of
the Borrower and for the benefit of any holder of obligations of the Borrower or
the Subsidiaries incurred in the ordinary course of business.
"Statutory Reserves" shall mean a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board and any other banking authority, domestic or foreign,
to which the Agent or any Lender (including any branch, Affiliate or other
fronting office making or holding a Loan) is subject for Eurocurrency
Liabilities (as defined in Regulation D of the Board). Such reserve percentages
shall include those imposed pursuant to such Regulation D. Eurodollar Loans
shall be deemed to constitute Eurocurrency Liabilities and to be subject to such
reserve requirements without benefit of or credit for proration, exemptions or
offsets which may be available from time to time to any Lender under such
Regulation D. Statutory Reserves shall be adjusted automatically on and as of
the effective date of any change in any reserve percentage.
The term "subsidiary" shall mean, with respect to any person (referred
to in this definition as the "parent"), any corporation, partnership,
association or other business entity (a) of which Capital Stock representing
more than 50% of the aggregate ordinary voting power or more than 50% of the
ownership interests or more than 50% of the general partnership interests is, at
the time any determination is being made, owned, Controlled or held or
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(b) which is, at the time any determination is made, otherwise Controlled, by
(i) the parent, (ii) one or more subsidiaries of the parent or (iii) the parent
and one or more subsidiaries of the parent.
"Subsidiary" shall mean any subsidiary of the Borrower, including FATS
UK.
"Subsidiaries' Consent" shall mean the Subsidiaries' Consent and
Agreement dated as of the Effective Date among the Domestic Subsidiaries, the
Lenders and the Agent in the form attached hereto as Exhibit B-3.
"Subsidiaries Guarantee Agreement" shall mean the Guarantee Agreement
dated as of October 15, 1997 between the Subsidiaries named therein and the
Agent, as amended from time to time.
"Supplemental Agreement" shall mean an agreement between a Subsidiary
and the Agent in the form attached hereto as Exhibit C, as amended from time to
time.
"Swingline Borrowing" shall mean a Borrowing comprised of Swingline
Loans.
"Swingline Commitment" shall mean the commitment of the Swingline
Lender to make loans pursuant to Section 2.02(d), as the same may be reduced
from time to time pursuant to Section 2.10. Such commitments are specified on
Schedule 2.01(d) to this Amended Agreement.
"Swingline Exposure" shall mean at any time the aggregate principal
amount at such time of all outstanding Swingline Loans. The Swingline Exposure
of any Revolving Credit Lender (including the Agent) at any time shall equal its
Applicable Percentage of the aggregate Swingline Exposure at such time.
"Swingline Lender" shall mean Nationsbank, N.A., in its capacity as the
maker of Swingline Loans, and its successors in such capacity.
"Swingline Loan" shall mean any loan made by the Swingline Lender
pursuant to Section 2.02(e).
"Swingline Maturity Date" shall mean July 31, 2002.
"Swingline Note" shall mean the swingline note of the Borrower,
substantially in the form of Exhibit A-4, evidencing the Swingline Loans.
"Taxes" shall have the meaning assigned to such term in Section
2.20(a).
"Term Borrowing" shall mean a Borrowing comprised of Term Loans.
"Term Loans" shall mean any or all of the Tranche A Term Loans and
Tranche B Term
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Loans.
"THIN" shall mean THIN International N.V.
"Total Debt" shall mean, as of any date, the aggregate principal amount
of (a) all Term Loans as of such date, (b) all Revolving Loans as of such date
and (c) all other Indebtedness (other than Interest Rate Protection Agreements
permitted by Section 6.01) of the Borrower and its Consolidated Subsidiaries as
of such date, determined on a consolidated basis in accordance with GAAP.
"Total Voting Power" with respect to any person on any date shall mean
the total number of votes which may be cast in the election of directors of such
person at any meeting of stockholders of such person if all securities entitled
to vote in the election of directors of such person (on a fully diluted basis,
assuming the exercise, conversion or exchange of all rights, warrants, options
and securities exercisable for, exchangeable for or convertible into, such
voting securities on such date or within 60 days thereafter) were present and
voted at such meeting (other than votes that may be cast only upon the happening
of a contingency).
"Trade Letter of Credit" shall mean a trade or commercial letter of
credit, whether denominated in dollars or a Foreign Currency, issued for the
account of the Borrower and for the benefit of any holder of obligations of the
Borrower or the Subsidiaries incurred in the ordinary course of business.
"Tranche A Maturity Date" shall mean July 31, 2002.
"Tranche A Repayment Date" shall have the meaning assigned to such term
in Section 2.12(a).
"Tranche A Term Borrowing" shall mean a Borrowing comprised of Tranche
A Term Loans.
"Tranche A Term Loan Commitment" shall mean, with respect to each
Lender, the commitment of such Lender to make Tranche A Term Loans hereunder as
set forth on Schedule 2.01(a) to the Original Credit Agreement, or in the
Assignment and Acceptance pursuant to which such Lender assumed its Term Loan
Commitment, as applicable, as the same may be (a) reduced from time to time
pursuant to Section 2.10 and (b) reduced or increased from time to time pursuant
to assignments by or to such Lender pursuant to Section 9.04.
"Tranche A Term Loans" shall mean the term loans made by the Lenders to
the Borrower pursuant to Section 2.02(a). Each Tranche A Term Loan shall be a
Eurodollar Term Loan or an ABR Term Loan.
"Tranche A Term Note" shall mean a promissory note of the Borrower,
substantially in the form of Exhibit A-1, evidencing Tranche A Term Loans.
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"Tranche B Maturity Date" shall mean July 31, 2003.
"Tranche B Repayment Date" shall have the meaning assigned to such term
in Section 2.12(b).
"Tranche B Special Election" shall have the meaning set forth in
Section 2.12(i).
"Tranche B Term Borrowing" shall mean a Borrowing comprised of Tranche
B Term Loans.
"Tranche B Term Loan Commitment" shall mean, with respect to each
Lender, the commitment of such Lender to make Tranche B Term Loans hereunder as
set forth on Schedule 2.01(b) to the Original Credit Agreement, or in the
Assignment and Acceptance pursuant to which such Lender assumed its Term Loan
Commitment, as applicable, as the same may be (a) reduced from time to time
pursuant to Section 2.10 and (b) reduced or increased from time to time pursuant
to assignments by or to such Lender pursuant to Section 9.04.
"Tranche B Term Loans" shall mean the term loans made by the Lenders to
the Borrower pursuant to Section 2.02(b). Each Tranche B Term Loan shall be a
Eurodollar Term Loan or an ABR Term Loan.
"Tranche B Term Note" shall mean a promissory note of the Borrower,
substantially in the form of Exhibit A-2, evidencing Tranche B Term Loans.
"Transferee" shall have the meaning assigned to such term in Section
2.20(a).
"Type" shall have the meaning assigned to such term in Section 1.03.
"Unused Revolving Credit Commitments" on any day shall mean the
aggregate amount of the Revolving Credit Commitments on such day, less the sum
of (a) the aggregate principal amount of outstanding Revolving Loans on such day
and (b) the Letter of Credit Exposure on such day. The Unused Revolving Credit
Commitment of any Lender on any day shall mean the amount of such Lender's
Revolving Credit Commitment on such day, less the sum of its outstanding
Revolving Loans on such day and its Letter of Credit Exposure on such day. For
the avoidance of doubt, in calculating the Unused Revolving Credit Commitments
of the Lenders or the Unused Revolving Credit Commitment of any Lender, no
deduction shall be made on account of outstanding Swingline Loans.
"Wholly Owned Subsidiary" shall mean, at any time, any Subsidiary all
the Capital Stock of which is at such time directly or indirectly owned by the
Borrower.
"Working Capital" shall mean, as of any date of determination, an
amount equal to (a) Current Assets as of such date, but excluding cash and Cash
Equivalents described under
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clauses (a) through (f) of the definition thereof, minus (b) Current Liabilities
as of such date, but excluding (i) the current portion of long-term Indebtedness
and (ii) Revolving Loans. Working Capital as of any date may be a positive or
negative number. Working Capital increases when it becomes more positive or less
negative and decreases when it becomes less positive or more negative, and all
such increases and decreases for any period shall be determined in a manner
consistent with that used in preparing the Borrower's consolidated statements of
cash flows for the same period in accordance with GAAP.
SECTION 1.02. Terms Generally. The definitions in Section 1.01 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
All references herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and Schedules to,
this Amended Agreement unless the context shall otherwise require. Unless
otherwise expressly provided herein, all terms of an accounting or financial
nature used herein shall be interpreted in accordance with GAAP, as in effect
from time to time; provided, however, that, for purposes of (a) making any
calculation contemplated by the provisions of Article II and (b) determining
compliance with any covenant set forth in Article VI, such terms shall be
construed in accordance with GAAP as in effect on the date of this Amended
Agreement applied on a basis consistent with the application used in preparing
the Borrower Financial Statements.
SECTION 1.03. Types of Borrowings. The term "Borrowing" refers to the
portion of the aggregate principal amount of Loans of any Class outstanding
hereunder which bears interest of a specific Type and for a specific Interest
Period pursuant to a notice of Borrowing pursuant to Section 2.04. Each Lender's
ratable share of each Borrowing is referred to herein as a separate "Loan".
Borrowings and Loans hereunder are distinguished by "Class" and by "Type". The
"Class" of a Loan or of a Commitment to make such a Loan or of a Borrowing
comprising such Loans refers to whether such Loan is a Tranche A Term Loan, a
Tranche B Term Loan, a Revolving Loan or a Swingline Loan, each of which
constitutes a Class. The "Type" of a Loan refers to whether such Loan is an ABR
Loan or a Eurodollar Loan. Borrowings and Loans may (but need not) be identified
both by Class and Type (e.g., a "Eurodollar Tranche A Term Loan" is a Loan which
is both a Tranche A Term Loan and a Eurodollar Loan).
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ARTICLE II
THE CREDITS
SECTION 2.01. Restructuring of Loans. When this Amended Agreement
becomes effective, without further action by any person, all outstanding Loans
under the Original Credit Agreement shall become Loans hereunder, and shall be
subject hereto, in an aggregate principal amount equal to the aggregate
principal amount of such outstanding Loans. All such Loans hereunder shall be of
the same Type, and shall have the same Interest Period, as the corresponding
Loans outstanding under the Original Credit Agreement.
SECTION 2.02. Commitment to Make Loans. (a) Each Lender made a Tranche
A Term Loan to the Borrower on the Closing Date in a principal amount equal to
the amount of its Tranche A Term Loan Commitment.
(b) Each Lender made a Tranche B Term Loan to the Borrower on the
Closing Date in a principal amount equal to the amount of its Tranche B Term
Loan Commitment.
(c) Subject to the terms and conditions and relying upon the
representations and warranties herein set forth, each Revolving Credit Lender
agrees, severally and not jointly, to make Revolving Loans in dollars to the
Borrower, at any time and from time to time during the Revolving Credit
Availability Period, in an aggregate principal amount at any one time
outstanding not to exceed the excess, if any, of (i) such Lender's Revolving
Credit Commitment, as set forth in Schedule 2.02(c), at such time over (ii) the
Dollar Amount of such Lender's Revolving Credit Exposure at such time.
(d) Subject to the terms and conditions and relying upon the
representations and warranties herein set forth, the Swingline Lender agrees to
make Swingline Loans to the Borrower at any time and from time to time during
the Revolving Credit Availability Period, in an aggregate principal amount at
any time outstanding not to exceed the lesser of (i) $2,000,000 and (ii) the
excess, if any, of (A) the Revolving Credit Commitments at such time over (B)
the Dollar Amount of the Aggregate Revolving Credit Exposure at such time.
(e) The Borrower may borrow, pay or prepay and reborrow Revolving Loans
and Swingline Loans during the Revolving Credit Availability Period, within the
limits set forth in Sections 2.02(c) and 2.02(d) and upon the other terms and
subject to the other conditions and limitations set forth herein. Amounts paid
or prepaid in respect of the Tranche A Term Loans or the Tranche B Term Loans
may not be reborrowed.
SECTION 2.03. Loans. (a) Each Loan (other than Swingline Loans) has
been or shall be made as part of a Borrowing consisting of Loans made by the
Lenders ratably in accordance with their respective Tranche A Term Loan
Commitments, Tranche B Term Loan Commitments or Revolving Credit Commitments, as
the case may be; provided, however, that the failure of any Lender to make any
Loan shall not in itself relieve any other Lender of its obligation to lend
hereunder (it being understood, however, that no Lender shall be responsible
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for the failure of any other Lender to make any Loan required to be made by such
other Lender). The ABR Loans comprising a Borrowing of any Class (other than a
Swingline Borrowing) shall be in an aggregate principal amount equal to an
integral multiple of $100,000 and not less than $500,000 (or, in the case of
Revolving Credit Borrowings, an aggregate principal amount equal to the
remaining balance of the Revolving Credit Commitments). The Eurodollar Loans
comprising a Borrowing of any Class shall be in an aggregate principal amount
equal to an integral multiple of $100,000 and not less than $500,000. Each
Swingline Loan shall be in a principal amount that is an integral multiple of
$100,000.
(b) A particular Borrowing of any Class shall consist solely of ABR
Loans or Eurodollar Loans of such Class, as the Borrower may request pursuant to
Section 2.04; provided that (i) if an Event of Default or Default shall have
occurred and be continuing (A) the Borrower shall not be entitled to request any
Eurodollar Loans and (B) no Loans of any Type shall be made unless such Event of
Default or Default shall have been waived in accordance with Section 9.08(b) and
(ii) all Swingline Borrowings shall consist solely of ABR Loans. Each Lender may
at its option fulfill its Commitment with respect to any Eurodollar Loan by
causing any domestic or foreign branch or Affiliate of such Lender to make such
Loan; provided that any exercise of such option shall not affect the obligation
of the Borrower to repay such Loan in accordance with the terms of this Amended
Agreement and the applicable Note. Borrowings of more than one Type and
Eurodollar Loans bearing interest for more than one specific Interest Period may
be outstanding at the same time; provided, however, that the Borrower shall not
be entitled to request any Borrowing or any continuation or conversion thereof
which, if made, would result in an aggregate of more than eight separate
Eurodollar Loans of any Lender being outstanding hereunder at any one time. For
purposes of the foregoing, Loans having different Interest Periods, regardless
of whether they commence on the same date, shall be considered separate Loans.
(c) Subject to Section 2.03(g), each Lender shall make a Loan in the
amount of its pro rata portion, as determined under Section 2.17, of each
Borrowing (other than a Swingline Borrowing) hereunder on the proposed date
thereof by wire transfer of immediately available funds to the Agent in
Charlotte, North Carolina, not later than 1:00 p.m., Charlotte time, and the
Agent shall by 3:00 p.m., Charlotte time, credit or wire transfer the amounts so
received to an account in the name of the Borrower, maintained with the Agent
or, if a Borrowing shall not occur on such date because any condition precedent
herein specified shall not have been met, return the amounts so received to the
respective Lenders. The Swingline Lender shall make each Swingline Loan
available to the Borrower by means of a credit to the general deposit account of
the Borrower with the Agent by 3:00 p.m. on the date such Swingline Loan is so
requested pursuant to Section 2.04.
(d) If the Agent has not received from the Borrower the payment
required by Section 2.22(h) by 12:30 p.m., Charlotte time, one Business Day
after receipt by the Borrower of notice from the Issuing Bank that payment of a
draft presented under any Letter of Credit has been or will be made, as provided
in Section 2.22(h), the Agent will promptly notify the Issuing Bank and each
Revolving Credit Lender of the Letter of Credit Disbursement and in the case of
each Revolving Credit Lender, its pro rata share (based on the percentage of the
31
<PAGE> 37
aggregate Revolving Credit Commitments represented by such Revolving Credit
Lender's Revolving Credit Commitment) of the Dollar Amount of such Letter of
Credit Disbursement. Not later than 10:00 a.m., Charlotte time, on the next
Business Day, each Revolving Credit Lender shall make available its pro rata
share of the Dollar Amount of such Letter of Credit Disbursement in Federal or
other funds immediately available in Charlotte, to the Agent at its address set
forth in Section 9.01, and the Agent will promptly make such funds available to
the Issuing Bank. The Agent will promptly remit to each Revolving Credit Lender
that shall have made such funds available its pro rata share (based on the
percentage of the aggregate Revolving Credit Commitments represented by such
Revolving Credit Lender's Revolving Credit Commitment) of any amounts
subsequently received by the Agent from the Borrower in respect of such Letter
of Credit Disbursement.
(e) Unless the Agent shall have received notice from a Lender prior to
the date of any Borrowing, or prior to the time of any required payment by any
Lender in respect of a Letter of Credit Disbursement, that such Lender will not
make available to the Agent such Lender's portion of such Borrowing or payment,
the Agent may assume that such Lender has made such portion available to the
Agent on the date of such Borrowing or payment in accordance with Section
2.03(c) or (d), as applicable, and the Agent may, in reliance upon such
assumption, make available to the Borrower or the Issuing Bank, as the case may
be, on such date a corresponding amount. If and to the extent that such Lender
shall not have made such portion available to the Agent, such Lender and the
Borrower severally agree to repay to the Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrower or the Issuing Bank (or, if the
Agent and the Issuing Bank are the same person, from the date of such payment in
respect of a Letter of Credit Disbursement), as applicable, until the date such
amount is repaid to the Agent at (i) in the case of the Borrower, the interest
rate applicable thereto pursuant to Section 2.07 or 2.22(h), as applicable, and
(ii) in the case of such Lender, the Federal Funds Effective Rate. If such
Lender shall repay to the Agent such corresponding amount in respect of a
Borrowing, such amount shall constitute such Lender's Loan as part of such
Borrowing for purposes of this Amended Agreement.
(f) Notwithstanding any other provision of this Amended Agreement, the
Borrower shall not be entitled to request any Revolving Credit Borrowing if the
Interest Period requested with respect thereto would end after the Revolving
Credit Maturity Date. Any Revolving Credit Borrowing which cannot be refinanced
as a Eurodollar Borrowing by reason of the preceding sentence shall be
automatically converted at the end of the Interest Period in effect for such
Borrowing into an ABR Revolving Credit Borrowing.
(g) The Borrower may refinance all or any part of any Revolving Credit
Borrowing with a Revolving Credit Borrowing of the same or a different Type,
upon the terms and subject to the conditions and limitations set forth in this
Amended Agreement. Any Revolving Credit Borrowing or part thereof so refinanced
shall be deemed for all purposes to be simultaneously repaid or prepaid in
accordance with Section 2.05 or 2.13, as applicable, with the proceeds of a new
Revolving Credit Borrowing and the proceeds of such new Revolving Credit
Borrowing (to the extent they do not exceed the principal amount of the
Borrowing being refinanced) shall
32
<PAGE> 38
not be paid by the Lenders to the Agent or by the Agent to the Borrower pursuant
to Section 2.03(c).
(h) The Swingline Lender may by written notice given to the Agent not
later than 11:00 a.m., Charlotte time, on any Business Day require the Revolving
Credit Lenders to acquire participations on such Business Day in all or a
portion of the Swingline Loans outstanding. Such notice shall specify the
aggregate principal amount of Swingline Loans in which Revolving Credit Lenders
will participate. The Agent will, promptly upon receipt of such notice, give
notice to each Revolving Credit Lender, specifying in such notice such Revolving
Credit Lender's Applicable Percentage of such Swingline Loan or Loans. In
furtherance of the foregoing, each Revolving Credit Lender hereby absolutely and
unconditionally agrees, upon receipt of notice as provided above, to pay to the
Agent, for the account of the Swingline Lender, such Revolving Credit Lender's
Applicable Percentage of such Swingline Loan or Loans. Each Revolving Credit
Lender acknowledges and agrees that its obligation to acquire participations in
Swingline Loans pursuant to this paragraph is absolute and unconditional and
shall not be affected by any circumstance whatsoever, including the occurrence
and continuance of a Default or an Event of Default, and that each such payment
shall be made without any offset, abatement, withholding or reduction
whatsoever. Each Revolving Credit Lender shall comply with its obligation under
this paragraph by wire transfer of immediately available funds, in the same
manner as provided in Section 2.03(c) with respect to Revolving Loans made by
such Revolving Credit Lender (and Section 2.03(c) shall apply, mutatis mutandis,
to the payment obligations of the Revolving Credit Lenders) and the Agent shall
promptly pay to the Swingline Lender the amounts so received by it from the
Revolving Credit Lenders. The Agent shall notify the Borrower of any
participations in any Swingline Loan acquired pursuant to this paragraph and
thereafter payments in respect of such Swingline Loan shall be made to the Agent
and not to the Swingline Lender. Any amounts received by the Swingline Lender
from the Borrower (or other party on behalf of the Borrower) in respect of a
Swingline Loan after receipt by the Swingline Lender of the proceeds of a sale
of participations therein shall be promptly remitted to the Agent; any such
amounts received by the Agent shall be promptly remitted by the Agent to the
Revolving Credit Lenders that shall have made their payments pursuant to this
paragraph and to the Swingline Lender, as their interests may appear. The
purchase of participations in a Swingline Loan pursuant to this paragraph shall
not relieve the Borrower (or other party liable for obligations of the Borrower)
of any default in the payment thereof.
SECTION 2.04. Notice of Borrowings. The Borrower shall give the Agent
written or telecopy notice (or telephone notice promptly confirmed in writing or
by telecopy) (a) in the case of a Eurodollar Borrowing, not later than 10:00
a.m., Charlotte time, three Business Days before a proposed borrowing, (b) in
the case of an ABR Borrowing (other than a Swingline Borrowing), not later than
11:00 a.m., Charlotte time, on the Business Day of a proposed borrowing and (c)
in the case of a Swingline Borrowing, not later than 1:00 p.m. Charlotte time,
on the Business Day of a proposed Swingline Borrowing. Any such notice of
Borrowing shall be irrevocable, shall be substantially in the form of Exhibit D
hereto, and shall in each case refer to this Amended Agreement and specify (i)
whether the Borrowing then being requested is to be a Revolving Credit Borrowing
or a Swingline Borrowing, and whether such
33
<PAGE> 39
Borrowing is to be a Eurodollar Borrowing or an ABR Borrowing; (ii) the date of
such Borrowing (which shall be a Business Day) and the amount thereof; and (iii)
if such Borrowing is to be a Eurodollar Borrowing, the Interest Period with
respect thereto. If no election as to the Type of Borrowing is specified in any
such notice, then the requested Borrowing shall be an ABR Borrowing. If no
Interest Period with respect to any Eurodollar Borrowing is specified in any
such notice, then the Borrower shall be deemed to have selected an Interest
Period of one month's duration. If the Borrower shall not have given notice in
accordance with this Section 2.04 of its election to refinance a Revolving
Credit Borrowing prior to the end of the Interest Period in effect for such
Borrowing, then the Borrower shall (unless such Borrowing is repaid at the end
of such Interest Period) be deemed to have given notice of an election to
refinance such Borrowing with an ABR Borrowing. The Agent shall promptly advise
the applicable Lenders or the Swingline Lender, as the case may be, of any
notice given pursuant to this Section 2.04 and of each Lender's portion of the
requested Borrowing.
SECTION 2.05. Notes; Repayment of Loans. The Tranche A Term Loans, the
Tranche B Term Loans and the Swingline Loans made by each Lender (including the
Swingline Lender) are evidenced by Tranche A Term Notes, Tranche B Term Notes
and a Swingline Note, respectively, duly executed and delivered on behalf of the
Borrower, dated the Closing Date. The Revolving Loans made by each Lender shall
be evidenced by Revolving Credit Notes, duly executed and delivered on behalf of
the Borrower, dated the Effective Date, in substantially the form attached
hereto as Exhibit A hereto, with the blanks appropriately filled, payable to the
order of such Lender in a principal amount equal to such Lender's Revolving
Credit Commitment. The outstanding principal balance of each Loan, as evidenced
by the applicable Note, shall be payable (a) in the case of a Tranche A Term
Loan or a Tranche B Term Loan, as provided in Section 2.12, (b) in the case of a
Revolving Loan, on the last day of the Interest Period applicable to such Loan
and on the Revolving Credit Maturity Date and (c) in the case of a Swingline
Loan, on the last day of the Interest Period applicable to such Loan and on the
Swingline Maturity Date. Each Note shall bear interest from the date of the
first Borrowing hereunder on the outstanding principal balance thereof as set
forth in Section 2.07. Each Lender shall, and is hereby authorized by the
Borrower to, endorse on the schedule attached to each Note delivered to such
Lender (or on a continuation of such schedule attached to such Note and made a
part thereof), or otherwise to record in such Lender's internal records, an
appropriate notation evidencing the date and amount of each applicable Loan from
such Lender, each payment and prepayment of principal of any such Loan, each
payment of interest on any such Loan and the other information provided for on
such schedule; provided, however, that the failure of any Lender to make such a
notation or any error therein shall not affect the obligation of the Borrower to
repay the Loans made by such Lender in accordance with the terms of this Amended
Agreement and the applicable Notes.
SECTION 2.06. Fees. (a) The Borrower shall pay to the Agent for the
account of each Lender, on the last day of March, June, September and December
in each year, commencing on September 30, 1996, and on the date on which the
Revolving Credit Commitment of such Lender shall be terminated as provided
herein, a commitment fee (a "Commitment Fee"), on the average daily amount of
the Unused Revolving Credit
34
<PAGE> 40
Commitment of such Lender during the preceding quarter (or such other period
commencing with the Closing Date or ending with the date on which the Revolving
Credit Commitment of such Lender shall be terminated), equal to 0.50% per annum.
All Commitment Fees shall be computed on the basis of the actual number of days
elapsed in a year of 360 days. The Commitment Fees due to each Lender shall
commence to accrue on the Closing Date and cease to accrue on the date on which
the Revolving Credit Commitment of such Lender shall be terminated as provided
herein.
(b) The Borrower agrees to pay to the Agent, for its own account, the
fees payable by the Sponsor set forth in the Fee Letter dated June 5, 1996 among
the Agent, NationsBanc Capital Markets, Inc. and the Sponsor and in the
applicable provisions of the Commitment Letter dated June 5, 1996 among such
parties (together, the "Fee Letter"), in the amounts and on the dates provided
in the Fee Letter. Such fees shall be in addition to the reimbursement of the
Agent's reasonable out-of-pocket expenses.
(c) All Fees shall be paid on the dates due, in immediately available
funds. Once paid, none of the Fees shall be refundable under any circumstances
(absent manifest error).
SECTION 2.07. Interest on Loans. (a) Subject to the provisions of
Section 2.08, each Tranche A Term Loan, Tranche B Term Loan, Revolving Loan or
Swingline Loan comprising an ABR Borrowing shall bear interest for each day from
the date such Loan is made until it becomes due (computed on the basis of the
actual number of days elapsed over a year of 365 or 366 days, as the case may
be, when the Alternate Base Rate is determined by reference to the Prime Rate
and over a year of 360 days at all other times) at a rate per annum equal to the
Alternate Base Rate, plus the Applicable ABR Margin in effect from time to time
for such Class of Loan. So long as any ABR Borrowing is outstanding, the Agent
shall promptly notify the Borrower of any change in the Alternate Base Rate.
(b) Subject to the provisions of Section 2.08, each Tranche A Term
Loan, Tranche B Term Loan or Revolving Loan comprising a Eurodollar Borrowing
shall bear interest for each day from the date such Loan is made until it
becomes due (computed on the basis of the actual number of days elapsed over a
year of 360 days) at a rate per annum equal to the Adjusted LIBO Rate for the
Interest Period in effect for such Borrowing, plus the Applicable Eurodollar
Margin in effect from time to time for such Class of Loan.
(c) Any change in the Applicable ABR Margin and Applicable Eurodollar
Margin required hereunder shall become effective five days after the date the
Borrower delivers its financial statements required by Section 5.04(a) or (b),
as the case may be, and the certificate required by Section 5.04(d); provided
that if the Borrower fails to deliver such financial statements and certificate
on or before the date such statements and certificate are required to be
delivered pursuant to Section 5.04(a) or (b), as the case may be, and Section
5.04(d), the Applicable ABR Margin and Applicable Eurodollar Margin for the
period from such required date until the date such statements and certificate
are actually delivered shall be calculated as if a Level III Pricing Period were
in effect, and after the date such statements and certificate are actually
delivered the Applicable ABR Margin and Applicable Eurodollar Margin shall be
35
<PAGE> 41
determined as otherwise provided for herein; and provided further that any
calculation pursuant to the preceding proviso shall not excuse or limit the
remedies available for any Default or Event of Default as a result of the
failure to deliver such statements.
(d) Interest on each Loan shall be payable on the Interest Payment
Dates applicable to such Loan, except as otherwise provided in this Amended
Agreement. The applicable Alternate Base Rate or Adjusted LIBO Rate for each
Interest Period or day within an Interest Period, as the case may be, shall be
determined by the Agent in good faith, and such determination shall be
conclusive absent manifest error.
SECTION 2.08. Default Interest. If and for so long as any Event of
Default shall have occurred and be continuing, interest shall accrue, to the
extent permitted by applicable law, on the outstanding amount of all Obligations
during the period from (and including) the date of such Event of Default to (but
not including) the date of actual payment (after as well as before judgment) at,
(a) in the case of principal of or interest on any Loan, the rate per annum
(computed on the basis of the actual number of days elapsed over a year of 365
or 366 days, as the case may be, when determined by reference to the Prime Rate
and over a year of 360 days at all other times) applicable to such Loan during
such period pursuant to Section 2.07, plus 2.00% and (b) in the case of any
other amount, a rate per annum (computed on the basis of the actual number of
days elapsed over a year of 365 or 366 days, as the case may be, when determined
by reference to the Prime Rate and over a year of 360 days at all other times)
equal to the rate applicable to ABR Revolving Loans during such period pursuant
to Section 2.07, plus 2.00%. The Borrower shall pay all such accrued but unpaid
interest from time to time upon demand.
SECTION 2.09. Alternate Rate of Interest. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Borrowing the Agent shall have reasonably
determined that dollar deposits in the principal amounts of the Loans comprising
such Borrowing are not generally available in the London interbank market, or
that the rates at which such dollar deposits are being offered will not
adequately and fairly reflect the cost to the Lenders of making or maintaining
Eurodollar Loans during such Interest Period, or that reasonable means do not
exist for ascertaining the Adjusted LIBO Rate, the Agent shall, as soon as
practicable thereafter, give written or telecopy notice of such determination to
the Borrower and the Lenders. In the event of any such determination, any
request by the Borrower for a Eurodollar Borrowing pursuant to Section 2.04 or
2.11 shall, until the Agent shall have advised the Borrower and the Lenders that
the circumstances giving rise to such notice no longer exist, be deemed to be a
request for an ABR Borrowing. Each determination by the Agent hereunder shall be
conclusive absent manifest error.
SECTION 2.10. Termination and Reduction of Commitments. (a) The
Revolving Credit Commitments shall be automatically terminated at 5:00 p.m.,
Charlotte time, on the Revolving Credit Maturity Date. The Swingline Commitment
shall be automatically terminated at 5:00 p.m., Charlotte time, on the Swingline
Maturity Date.
36
<PAGE> 42
(b) Upon at least five Business Days' prior irrevocable written or
telecopy notice to the Agent, the Borrower may at any time in whole permanently
terminate, or in part permanently reduce, the Revolving Credit Commitments;
provided, however, that (i) each partial reduction of the Revolving Credit
Commitments shall be in an aggregate principal amount which is equal to
$1,000,000 or an integral multiple thereof and (ii) the Borrower shall comply
with the provisions of Section 2.12(c).
(c) The Revolving Credit Commitments shall be permanently reduced,
after all outstanding Term Loans have been paid in full, by 100% of the amount
of any mandatory prepayment of Revolving Loans, Swingline Loans and reduction of
Letter of Credit Exposure that is required pursuant to Section 2.12(e) or (f),
as provided in Sections 2.12(g) and (h) (and, in the event that the amount of
any Net Cash Proceeds referred to in Section 2.12(e) or any portion of Excess
Cash Flow referred to in Section 2.12(f) which is allocable to the Revolving
Loans, the Swingline Loans and Letter of Credit Exposure exceeds the Dollar
Amount of all outstanding Revolving Loans, Swingline Loans and Letter of Credit
Exposure, the Revolving Credit Commitments shall be further reduced by 100% of
such excess). Any such reduction shall be effective at the time the related
mandatory prepayment is (or would be) required to be made.
(d) In the event and on each occasion that the Revolving Credit
Commitments shall be permanently reduced to an amount less than $2,000,000, the
Swingline Commitment shall be reduced at the same time by an amount sufficient
to cause the Swingline Commitment not to exceed the Revolving Credit
Commitments.
(e) Each reduction in the Revolving Credit Commitments shall be made
ratably among the Revolving Credit Lenders in accordance with their respective
Revolving Credit Commitments. The Borrower shall pay to the Agent for the
account of the Revolving Credit Lenders, on the date of each termination or
reduction of the Revolving Credit Commitments, the Commitment Fee on the amount
of the Revolving Credit Commitments so terminated or reduced accrued to the date
of such termination or reduction.
SECTION 2.11. Conversion and Continuation of Term Borrowings. The
Borrower shall have the right at any time upon prior irrevocable notice to the
Agent (a) not later than 11:00 a.m., Charlotte time, one Business Day prior to
conversion, to convert all or any portion of any Eurodollar Term Borrowing into
an ABR Term Borrowing, (b) not later than 10:00 a.m., Charlotte time, three
Business Days prior to conversion or continuation, to convert all or any portion
of any ABR Term Borrowing into a Eurodollar Term Borrowing or to continue all or
any portion of any Eurodollar Term Borrowing as a Eurodollar Term Borrowing for
an additional Interest Period and (c) not later than 10:00 a.m., Charlotte time,
three Business Days prior to conversion, to convert the Interest Period with
respect to all or any portion of any Eurodollar Term Borrowing to another
permissible Interest Period, subject in each case to the following:
(i) each conversion or continuation shall be made pro
rata among the Lenders in accordance with the respective principal
amounts of the Loans comprising
37
<PAGE> 43
the converted or continued Term Borrowing;
(ii) if less than all the outstanding principal amount of
any Term Borrowing shall be converted or continued, the aggregate
principal amount of such Term Borrowing converted or continued shall be
equal to $1,000,000 or an integral multiple thereof;
(iii) each conversion or continuation shall be effected by
each Lender and the Agent by recording for the account of such Lender
the new Term Loan of such Lender resulting from such conversion or
continuation and reducing the Term Loan (or portion thereof) of such
Lender being converted or continued by an equivalent principal amount;
accrued interest on a Term Loan (or portion thereof) being converted or
continued shall be paid by the Borrower (A) with respect to any ABR
Loan being converted to a Eurodollar Loan, at the end of the Interest
Period applicable to such Term Loan prior to its conversion and (B)
otherwise, at the time of conversion or continuation;
(iv) if any Eurodollar Term Borrowing is converted at a
time other than the end of the Interest Period applicable thereto, the
Borrower shall pay, upon demand, any amounts due to the Lenders
pursuant to Section 2.16;
(v) any portion of a Term Borrowing maturing or required
to be repaid in less than one month may not be converted into or
continued as a Eurodollar Term Borrowing;
(vi) any portion of a Term Borrowing which cannot be
converted into or continued as a Eurodollar Term Borrowing by reason of
clause (v) above shall be automatically converted at the end of the
Interest Period in effect for such Borrowing into an ABR Term
Borrowing;
(vii) no Interest Period may be selected for any Eurodollar
Tranche A Term Borrowing that would end later than a Tranche A
Repayment Date occurring on or after the first day of such Interest
Period if, after giving effect to such selection, the aggregate
outstanding amount of (A) the Eurodollar Tranche A Term Borrowings with
Interest Periods ending on or prior to such Tranche A Repayment Date
and (B) the ABR Tranche A Term Borrowings would not be at least equal
to the principal amount of Tranche A Term Borrowings to be paid on such
Tranche A Repayment Date;
(viii) no Interest Period may be selected for any Eurodollar
Tranche B Term Borrowing that would end later than a Tranche B
Repayment Date occurring on or after the first day of such Interest
Period if, after giving effect to such selection, the aggregate
outstanding amount of (A) Eurodollar Tranche B Term Borrowings with
Interest Periods ending on or prior to such Tranche B Repayment Date
and (B) the ABR Tranche B Term Borrowings would not be at least equal
to the principal amount of Tranche B Term Borrowings to be paid on such
Tranche B Repayment Date;
38
<PAGE> 44
(ix) no ABR Term Borrowing may be converted into a
Eurodollar Term Borrowing, and no Eurodollar Term Borrowing may be
continued as a Eurodollar Borrowing for an additional Interest Period
or converted to another Interest Period as a Eurodollar Borrowing, if
an Event of Default or Default has occurred and is continuing; and
(x) the resulting Borrowings shall satisfy the
limitations set forth in Section 2.03(b) regarding the maximum number
of Eurodollar Loans of any Lender which may be outstanding hereunder at
any one time.
Each notice pursuant to this Section 2.11 shall be irrevocable and
shall refer to this Amended Agreement and specify (I) the principal amount, the
Class, the Type and, in the case of a Eurodollar Term Borrowing, the Interest
Period of the Term Borrowing that the Borrower requests be converted or
continued, (II) whether such Term Borrowing is to be converted to or continued
as a Eurodollar Term Borrowing or an ABR Term Borrowing, (III) if such notice
requests a conversion, the date of such conversion (which shall be a Business
Day) and (IV) if such Term Borrowing is to be converted to or continued as a
Eurodollar Term Borrowing, the Interest Period with respect thereto. If no
Interest Period is specified in any such notice with respect to any conversion
to or continuation as a Eurodollar Term Borrowing, the Borrower shall be deemed
to have selected an Interest Period of one month's duration. The Agent shall
advise the applicable Lenders of any notice given pursuant to this Section 2.11
and of each such Lender's portion of any converted or continued Term Borrowing.
If the Borrower shall not have given notice in accordance with this Section 2.11
to continue any Term Borrowing into a subsequent Interest Period (and shall not
otherwise have given notice in accordance with this Section 2.11 to convert such
Term Borrowing), such Term Borrowing shall, at the end of the Interest Period
applicable thereto (unless repaid pursuant to the terms hereof), automatically
be continued into a new Interest Period as an ABR Term Borrowing.
SECTION 2.12. Mandatory Repayments and Prepayments. (a) Subject to
adjustment as provided in Sections 2.12(g) and (h) or Section 2.13(c), (i) the
Tranche A Term Loans outstanding as of the Effective Date shall be payable as to
principal in 19 installments, consisting of 18 consecutive quarterly
installments due on the last day of March, June, September and December of each
year, commencing on December 31, 1997, and a final installment due on the
Tranche A Maturity Date (each such date, including the Tranche A Maturity Date,
being called a "Tranche A Repayment Date") and (ii) the amount of each such
installment due on any Tranche A Repayment Date is set forth in the chart below
opposite such Tranche A Repayment Date.
<TABLE>
<CAPTION>
================================================================================
TRANCHE A REPAYMENT DATE INSTALLMENT AMOUNT
- --------------------------------------------------------------------------------
<S> <C>
December 31, 1997 $ 700,000
- --------------------------------------------------------------------------------
March 31, 1998 $ 700,000
- --------------------------------------------------------------------------------
June 30, 1998 $ 700,000
</TABLE>
39
<PAGE> 45
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
September 30, 1998 $1,400,000
- --------------------------------------------------------------------------------
December 31, 1998 $1,400,000
- --------------------------------------------------------------------------------
March 31, 1999 $1,400,000
- --------------------------------------------------------------------------------
June 30, 1999 $1,400,000
- --------------------------------------------------------------------------------
September 30, 1999 $1,400,000
- --------------------------------------------------------------------------------
December 31, 1999 $1,400,000
- --------------------------------------------------------------------------------
March 31, 2000 $1,400,000
- --------------------------------------------------------------------------------
June 30, 2000 $1,400,000
- --------------------------------------------------------------------------------
September 30, 2000 $1,400,000
- --------------------------------------------------------------------------------
December 31, 2000 $1,400,000
- --------------------------------------------------------------------------------
March 31, 2001 $1,400,000
- --------------------------------------------------------------------------------
June 30, 2001 $1,400,000
- --------------------------------------------------------------------------------
September 30, 2001 $1,400,000
- --------------------------------------------------------------------------------
December 31, 2001 $1,500,000
- --------------------------------------------------------------------------------
March 31, 2002 $1,600,000
- --------------------------------------------------------------------------------
Tranche A Maturity Date $1,600,000
================================================================================
</TABLE>
(b) Subject to adjustment as provided in Sections 2.12(g) and (h) or
Section 2.13(c), (i) the Tranche B Term Loans outstanding as of the Effective
Date shall be payable as to principal in 23 installments, consisting of 22
consecutive quarterly installments due on the last day of March, June, September
and December of each year, commencing on December 31, 1997, and a final
installment due on the Tranche B Maturity Date (each such date, including the
Tranche B Maturity Date, being called a "Tranche B Repayment Date") and (ii) the
amount of each such installment due on any Tranche B Repayment Date is set forth
in the chart below opposite such Tranche B Repayment Date.
<TABLE>
<CAPTION>
================================================================================
TRANCHE B REPAYMENT DATE INSTALLMENT AMOUNT
- --------------------------------------------------------------------------------
<S> <C>
December 31, 1997 $ 100,000
- --------------------------------------------------------------------------------
March 31, 1998 $ 100,000
- --------------------------------------------------------------------------------
June 30, 1998 $ 100,000
- --------------------------------------------------------------------------------
September 30, 1998 $ 100,000
- --------------------------------------------------------------------------------
December 31, 1998 $ 100,000
</TABLE>
40
<PAGE> 46
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
March 31, 1999 $ 100,000
- --------------------------------------------------------------------------------
June 30, 1999 $ 100,000
- --------------------------------------------------------------------------------
September 30, 1999 $ 100,000
- --------------------------------------------------------------------------------
December 31, 1999 $ 100,000
- --------------------------------------------------------------------------------
March 31, 2000 $ 100,000
- --------------------------------------------------------------------------------
June 30, 2000 $ 100,000
- --------------------------------------------------------------------------------
September 30, 2000 $ 100,000
- --------------------------------------------------------------------------------
December 31, 2000 $ 100,000
- --------------------------------------------------------------------------------
March 31, 2001 $ 100,000
- --------------------------------------------------------------------------------
June 30, 2001 $ 100,000
- --------------------------------------------------------------------------------
September 30, 2001 $ 100,000
- --------------------------------------------------------------------------------
December 31, 2001 $ 100,000
- --------------------------------------------------------------------------------
March 31, 2002 $ 100,000
- --------------------------------------------------------------------------------
June 30, 2002 $ 100,000
- --------------------------------------------------------------------------------
September 30, 2002 $7,900,000
- --------------------------------------------------------------------------------
December 31, 2002 $7,900,000
- --------------------------------------------------------------------------------
March 31, 2003 $7,900,000
- --------------------------------------------------------------------------------
Tranche B Maturity Date $8,000,000
================================================================================
</TABLE>
(c) In the event and on each occasion that the Dollar Amount of
Aggregate Revolving Credit Exposure exceeds the aggregate Dollar Amount of the
Revolving Credit Commitments (for any reason other than a change in the exchange
rates for Foreign Currency), the Borrower shall immediately prepay Revolving
Loans (or, if no Revolving Loans are or would be outstanding, prepay Swingline
Loans, or, if no Revolving Loans or Swingline Loans are or would be outstanding,
provide cash collateral in respect of the Letter of Credit Exposure pursuant to
Section 2.22(l) and thereupon such cash shall be deemed to reduce the Letter of
Credit Exposure by an equivalent amount for purposes of this Section 2.12(c)) in
an amount equal to such excess. On the second Business Day after the first and
the fifteenth day of each calendar month and on each other Determination Date,
the Borrower shall cash collateralize Foreign Currency Letter of Credit Exposure
(in each instance, in dollars) to the extent, if necessary, so that (i) the
Dollar Amount (determined as of the first and fifteenth day of each calendar
month) of all Aggregate Revolving Credit Exposure is equal to or less than the
aggregate Dollar Amount of the Revolving Credit Commitments, and (ii) the Dollar
Amount (determined as of such date) of all Foreign Currency Letter of Credit
Exposure is less than
41
<PAGE> 47
$10,000,000.
(d) To the extent not previously paid, (i) all Tranche A Term
Borrowings shall be due and payable on the Tranche A Maturity Date, (ii) all
Tranche B Term Borrowings shall be due and payable on the Tranche B Maturity
Date, (iii) all Revolving Credit Borrowings shall be due and payable on the
Revolving Credit Maturity Date and (iv) all Swingline Borrowings shall be due
and payable on the Swingline Maturity Date.
(e) The Borrower shall give to the Agent and the Lenders at least three
Business Days' prior written or telecopy notice of each and every Prepayment
Event, the amount of Net Cash Proceeds expected to be received therefrom and the
expected schedule for receiving such proceeds. On the date of receipt by the
Borrower, any Subsidiary or the Parent of Net Cash Proceeds from any Prepayment
Event (subject to the provisions of paragraph (j) below), the Borrower shall
prepay outstanding Loans and/or provide cash collateral in respect of the Letter
of Credit Exposure pursuant to Section 2.22(l) in accordance with paragraphs (g)
and (h) below in an aggregate principal amount equal to 100% of such Net Cash
Proceeds received by the Borrower, any Subsidiary or the Parent (subject to the
final sentence of paragraph (g) below). Upon receipt of any such Net Cash
Proceeds by the Parent, the Parent shall immediately contribute all such funds
to the capital of the Borrower in order to enable the Borrower to comply with
the foregoing requirements (subject to the final sentence of paragraph (g)
below).
(f) As promptly as practicable, but in any event within 90 days after
the end of each fiscal year of the Borrower, commencing with the fiscal year
ending March 31, 1998, the Borrower shall deliver to the Agent a certificate,
substantially in the form of Exhibit F hereto, executed by a Financial Officer
of the Borrower setting forth a reasonably detailed calculation of the amount of
the Excess Cash Flow for such fiscal year. Upon review and acceptance of such
certificate by the Agent, the Agent shall notify the Lenders of such prepayment
and the Borrower shall, within three Business Days thereafter, prepay
outstanding Loans and/or provide cash collateral in respect of the Letter of
Credit Exposure pursuant to Section 2.22(l) in accordance with paragraph (g)
below in an aggregate principal amount equal to the Prepayment Percentage of the
difference between (i) Excess Cash Flow for such fiscal year, and (ii) the sum
of cash expenditures made by the Borrower for Permitted Acquisitions during such
fiscal year and cash dividends paid to the Parent for the sole purpose of
redeeming the Capital Stock of the Parent as permitted pursuant to Section
6.06(iii)(B).
(g) Subject to paragraph (i) below, mandatory prepayments under
paragraphs (e) and (f) above (except for mandatory prepayments under paragraph
(e) above resulting from Asset Sales) shall be applied (i) to reduce the then
outstanding Tranche A Term Loans and Tranche B Term Loans on a pro rata basis
and (ii) within the limitation of the foregoing clause (i), to reduce the
remaining scheduled installments of principal due in respect of Tranche A Term
Loans and Tranche B Term Loans under Sections 2.12(a) and (b), respectively,
after the date of such prepayment on a pro rata basis according to the amount of
each such scheduled payment. In the case of the mandatory prepayments referred
to in the immediately preceding sentence, after all outstanding Term Loans have
been paid in full, 100% of any remaining amount and all subsequent amounts
determined under paragraph (e) or (f) above, as applicable,
42
<PAGE> 48
shall be applied to prepay outstanding Revolving Loans (or, if no Revolving
Loans are or would be outstanding, to prepay Swingline Loans, or, if no
Revolving Loans or Swingline Loans are or would be outstanding, to provide cash
collateral in respect of the Letter of Credit Exposure pursuant to Section
2.22(l) and thereupon such cash shall be deemed to reduce the Letter of Credit
Exposure by an equivalent amount for purposes of this Section 2.12(g)) and,
concurrently therewith, the Borrower shall comply with Section 2.10(c). For
purposes of this Section 2.12(g), the outstanding principal amount of Loans and
the outstanding Dollar Amount of Revolving Credit Commitments, the Swingline
Commitment and Letter of Credit Exposure shall be determined as of the date of
the occurrence of the relevant Prepayment Event for prepayments under Section
2.12(e) and as of the fifth Business Day prior to the date of the relevant
payment for prepayments under Section 2.12(f).
(h) Subject to paragraph (i) below, mandatory prepayments under
paragraph (e) above resulting from Asset Sales shall be applied (i) to reduce
the then outstanding principal amount of the Tranche A Term Loans, the Tranche B
Term Loans and the Revolving Loans (or, if no Revolving Loans are or would be
outstanding, to prepay Swingline Loans, or, if no Revolving Loans or Swingline
Loans are or would be outstanding, to provide cash collateral in respect of the
Letters of Credit pursuant to Section 2.22(l)) on a pro rata basis according to
the outstanding principal amount of Tranche A Term Loans, the outstanding
principal amount of Tranche B Term Loans and the outstanding amount of Revolving
Credit Commitments (whether used or unused); provided that any amount of Net
Cash Proceeds so allocated to the Revolving Credit Commitments in excess of the
Dollar Amount of Aggregate Revolving Credit Exposure may be retained by the
Borrower. Within the limitation of the foregoing sentence, any such mandatory
prepayments applied to the Term Loans shall reduce the remaining scheduled
installments of principal due in respect of Tranche A Term Loans and Tranche B
Term Loans under Sections 2.12(a) and (b), respectively, after the date of such
prepayment on a pro rata basis according to the amount of each such scheduled
payment. For purposes of this Section 2.12(h), the outstanding principal amount
of Loans and the outstanding Dollar Amount of Revolving Credit Commitments, the
Swingline Commitment and Letter of Credit Exposure shall be determined as of the
date of the occurrence of the relevant Prepayment Event for prepayments under
Section 2.12(e).
(i) Any Lender holding a Tranche B Term Loan may elect (a "Tranche B
Special Election"), by notice to the Agent in writing (or by telephone or
telecopy promptly confirmed in writing) at least one Business Day prior to any
scheduled prepayment of Tranche B Term Loans required to be made by the Borrower
for the account of such Lender pursuant to Section 2.12(e) or (f) to cause all
or a portion of such prepayment to be applied instead to prepay Tranche A Term
Loans and Revolving Loans, as applicable, in accordance with paragraphs (g) and
(h) above. If and to the extent, however, that the aggregate amount of the
prepayment which any holders of Tranche B Term Loans so elect to refuse exceeds
the principal amount of (i) Tranche A Term Loans remaining outstanding after any
concurrent prepayment of Tranche A Term Loans pursuant to paragraph (g) above,
or (ii) Tranche A Term Loans and Aggregate Revolving Credit Exposure remaining
outstanding after any concurrent prepayment of Tranche A Term Loans and
concurrent reduction of the Aggregate Revolving Credit Exposure pursuant to
paragraph (h) above, the portion of such prepayment that exceeds such
outstanding principal amount of the Tranche A Term Loans or such outstanding
principal
43
<PAGE> 49
amount of the Tranche A Term Loans and the Aggregate Revolving Credit Exposure,
as the case may be, shall be allocated among such electing holders of Tranche B
Term Loans pro rata according to the outstanding principal amount of the Tranche
B Term Loan of each such holder.
(j) Amounts to be applied as provided in paragraphs (g) or (h) above to
the prepayment of Loans of any Class shall be applied first to reduce
outstanding ABR Loans of such Class. Any amounts remaining after each such
application shall, at the option of the Borrower, be applied to prepay
Eurodollar Loans of such Class immediately and/or shall be deposited in a
separate Prepayment Account (as defined below) for the Loans of such Class. The
Agent shall apply any cash deposited in the Prepayment Account for any Class of
Loans to prepay Eurodollar Loans of such Class on the last day of their
respective Interest Periods (or, at the direction of the Borrower, on any
earlier date) until all outstanding Loans of such Class have been prepaid or
until all the allocable cash on deposit in the Prepayment Account for such Class
has been exhausted. For purposes of this Amended Agreement, the term "Prepayment
Account" for any Class of Loans shall mean an account established by the
Borrower with the Agent and over which the Agent shall have exclusive dominion
and control, including the exclusive right of withdrawal for application in
accordance with this paragraph. The Agent will, at the request of the Borrower,
invest amounts on deposit in the Prepayment Account for any Class of Loans in
Cash Equivalents that mature prior to the last day of the applicable Interest
Periods of the Eurodollar Loans of such Class to be prepaid; provided, however,
that (i) the Agent shall not be required to make any investment that, in its
sole judgment, would require or cause the Agent to be in, or would result in
any, violation of any law, statute, rule or regulation and (ii) if an Event of
Default shall have occurred and be continuing, the selection of such investments
shall be in the sole discretion of the Agent. The Borrower shall indemnify the
Agent for any losses relating to the investments so that the amount available to
prepay Eurodollar Loans on the last day of the applicable Interest Periods is
not less than the amount that would have been available had no investments been
made pursuant thereto. Other than any interest earned on such investments, the
Prepayment Accounts shall not bear interest. Interest or profits, if any, on
such investments shall be deposited in the applicable Prepayment Account and
reinvested and disbursed as specified above. If the maturity of the Loans has
been accelerated pursuant to Article VII, the Agent may, in its sole discretion,
apply all amounts on deposit in the Prepayment Account for any Class of Loans to
satisfy any of the Obligations related to such Class of Loans. The Borrower
hereby pledges and assigns to the Agent, for its benefit and the benefit of the
Secured Parties, each Prepayment Account established hereunder to secure the
Obligations related to such Class of Loans.
(k) Each payment of Borrowings pursuant to this Section 2.12 shall be
accompanied by accrued interest on the principal amount paid to but excluding
the date of payment (but, in the case of an ABR Borrowing of any Class, only if
such payment would repay or prepay in full all ABR Loans of such Class). The
repayments and prepayments of the Loans required by the respective subsections
of this Section 2.12 and the optional prepayments permitted by Section 2.13 are
separate and cumulative, so that any one such repayment or prepayment shall
reduce any other repayment or prepayment only as and to the extent specified in
Sections 2.12(g) and (h) and Section 2.13(c). All payments under this Section
2.12 shall be subject to
44
<PAGE> 50
Section 2.16, but otherwise shall be without premium or penalty.
SECTION 2.13. Optional Prepayment. (a) Subject to Section 2.13(c), the
Borrower shall have the right at any time and from time to time to prepay any
Borrowing, in whole or in part, upon giving prior written or telecopy notice (or
telephone notice promptly confirmed by written or telecopy notice) to the Agent,
in the case of an ABR Revolving Borrowing, by 11:00 a.m., Charlotte time, on the
date of prepayment and, in the case of any other Borrowing, by 10:00 a.m.,
Charlotte time, at least three Business Days prior to the date of prepayment;
provided, however, that (i) each partial prepayment shall be in an amount which
is an integral multiple of $100,000 and not less than $500,000 and (ii) a
partial prepayment of any Term Borrowing or any Eurodollar Borrowing under this
Section 2.13(a) shall not be made that would result in the remaining aggregate
outstanding principal amount thereof being less than $500,000. Each notice of
prepayment shall specify the prepayment date, the Class, the Type, the Interest
Period of the Borrowing to be prepaid (in the case of a Eurodollar Borrowing)
and the principal amount thereof to be prepaid, shall be irrevocable and shall
commit the Borrower to prepay such Borrowing by the amount stated therein on the
date stated therein.
(b) The Borrower shall have the right at any time and from time to time
to prepay any Swingline Loan, in whole or in part, upon giving written or
telecopy notice (or telephone notice promptly confirmed by written or telecopy
notice) to the Swingline Lender and to the Agent before 2:00 p.m., Charlotte
time on the date of prepayment at the Swingline Lender's address for notices
specified on Schedule 2.02(d) hereto.
(c) All prepayments under Section 2.13(a) shall be subject to Section
2.16 but otherwise shall be without premium or penalty. All prepayments under
Section 2.13(b) shall be without premium or penalty. All prepayments under this
Section 2.13 shall be accompanied by accrued interest on the principal amount
being prepaid to but excluding the date of payment (but, in the case of an ABR
Borrowing of any Class, only if such payment would prepay in full all ABR Loans
of such Class). All prepayments of Term Borrowings under this Section 2.13 shall
be allocated pro rata between the then outstanding Tranche A Term Loans and
Tranche B Term Loans. All such prepayments of Term Borrowings under this Section
2.13 so allocated to the Tranche A Term Loans or Tranche B Term Loans shall be
applied to reduce the scheduled payments of principal of such Loans due under
Section 2.12(a) or (b) after the date of such prepayment on a pro rata basis
(except that all or a portion of any such prepayment may be applied in direct
order of maturity so long as, at the time of any such prepayment applied in
direct order of maturity and after giving effect thereto, no more than the next
four regularly scheduled payments of principal of either the Tranche A Term
Loans or Tranche B Term Loans due under Section 2.12(a) or (b), as applicable,
have been prepaid).
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<PAGE> 51
SECTION 2.14. Reserve Requirements: Change in Circumstances. (a)
Notwithstanding any other provision of this Amended Agreement, if after the date
of this Amended Agreement any change in applicable law or regulation or in the
interpretation or administration thereof by any Governmental Authority charged
with the interpretation or administration thereof (whether or not having the
force of law) shall change the basis of taxation of payments to any Lender or
the Issuing Bank of the principal of or interest on any Eurodollar Loan made by
such Lender or any Fees or other amounts payable hereunder (other than changes
in respect of taxes imposed on the overall net income of such Lender or the
Issuing Bank by the jurisdiction in which such Lender or the Issuing Bank has
its principal office or by any political subdivision or taxing authority
therein), or shall impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of or credit extended by any Lender or the Issuing Bank (except any such
reserve requirement that is reflected in the Adjusted LIBO Rate) or shall impose
on such Lender or the Issuing Bank or the London interbank market any other
condition affecting this Amended Agreement or Eurodollar Loans made by such
Lender or any Letter of Credit or participation therein, and the result of any
of the foregoing shall be to increase the cost to such Lender or the Issuing
Bank of making or maintaining any Eurodollar Loan or increase the cost to any
Lender of issuing or maintaining any Letter of Credit or purchasing or
maintaining a participation therein or to reduce the amount of any sum received
or receivable by such Lender or the Issuing Bank hereunder (whether of
principal, interest or otherwise) by an amount deemed by such Lender or the
Issuing Bank to be material, then the Borrower will pay to such Lender or the
Issuing Bank, as the case may be, upon demand such additional amount or amounts
as will compensate such Lender or the Issuing Bank, as the case may be, for such
additional costs incurred or reduction suffered.
(b) If any Lender or the Issuing Bank shall have determined that the
adoption after the date hereof of any law, rule, regulation, agreement or
guideline regarding capital adequacy, or any change after the date hereof in any
such law, rule, regulation, agreement or guideline or in the interpretation or
administration thereof by any Governmental Authority (including the National
Association of Insurance Commissioners) charged with the interpretation or
administration thereof, or compliance by any Lender (or any lending office of
such Lender) or the Issuing Bank or any Lender's or the Issuing Bank's holding
company with any request or directive regarding capital adequacy (whether or not
having the force of law) of any Governmental Authority has or would have the
effect of reducing the rate of return on such Lender's or the Issuing Bank's
capital or on the capital of such Lender's or the Issuing Bank's holding
company, if any, as a consequence of this Amended Agreement or the Loans made or
participations in Letters of Credit purchased by such Lender pursuant hereto or
the Letters of Credit issued by the Issuing Bank pursuant hereto to a level
below that which such Lender or the Issuing Bank or such Lender's or the Issuing
Bank's holding company could have achieved but for such applicability, adoption,
change or compliance (taking into consideration such Lender's or the Issuing
Bank's policies and the policies of such Lender's or the Issuing Bank's holding
company with respect to capital adequacy) by an amount deemed by such Lender or
the Issuing Bank to be material, then, from time to time the Borrower shall pay
to such Lender or the Issuing Bank, as the case may be, such additional amount
or amounts as will compensate such Lender or the Issuing Bank or such Lender's
or the Issuing Bank's
46
<PAGE> 52
holding company for any such reduction suffered.
(c) A certificate of a Lender or the Issuing Bank setting forth the
circumstances requiring the payment of compensation, the calculations with
respect thereto, and the amount or amounts necessary to compensate such Lender
or the Issuing Bank or its holding company, as applicable, as specified in
paragraph (a) or (b) above shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower shall pay such Lender or the
Issuing Bank the amount shown as due on any such certificate delivered by it
within 10 days after its receipt of the same.
(d) Failure or delay on the part of any Lender or the Issuing Bank to
demand compensation for any increased costs or reduction in amounts received or
receivable or reduction in return on capital with respect to any period within
120 days after the end of such period shall constitute a waiver of such Lender's
or the Issuing Bank's right to demand such compensation with respect to such
period, but not with respect to any other period. The protection of this Section
2.14 shall be available to each Lender and the Issuing Bank regardless of any
possible contention of the invalidity or inapplicability of the law, rule,
regulation, agreement, guideline or other change or condition that shall have
occurred or been imposed.
SECTION 2.15. Change in Legality. (a) Notwithstanding any other
provision of this Amended Agreement, if, after the date hereof, any change in
any law or regulation or in the interpretation thereof by any Governmental
Authority charged with the administration or interpretation thereof shall make
it unlawful for any Lender to make or maintain any Eurodollar Loan or to give
effect to its obligations as contemplated hereby with respect to any Eurodollar
Loan, then, by written notice to the Borrower and to the Agent:
(i) such Lender may declare that Eurodollar Loans will
not thereafter (for the duration of such unlawfulness) be made by such
Lender hereunder (or be continued for additional Interest Periods and
ABR Loans will not thereafter (for such duration) be converted into
Eurodollar Loans), whereupon any request for a Eurodollar Borrowing (or
to convert an ABR Borrowing to a Eurodollar Borrowing or to continue a
Eurodollar Borrowing for an additional Interest Period) shall, as to
such Lender only, be deemed a request for an ABR Loan (or a request to
continue an ABR Loan as such for an additional Interest Period or to
convert a Eurodollar Loan into an ABR Loan, as the case may be), unless
such declaration shall be subsequently withdrawn; and
(ii) such Lender may require that all outstanding
Eurodollar Loans made by it be converted to ABR Loans, in which event
all such Eurodollar Loans shall be automatically converted to ABR Loans
as of the effective date of such notice as provided in paragraph (b)
below.
In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal that would otherwise have been applied to
repay the Eurodollar Loans that would have been made by such Lender or the
converted Eurodollar Loans of such
47
<PAGE> 53
Lender shall instead be applied to repay the ABR Loans made by such Lender in
lieu of, or resulting from the conversion of, such Eurodollar Loans.
(b) For purposes of this Section 2.15, a notice to the Borrower by any
Lender shall be effective as to each Eurodollar Loan made by such Lender, if
lawful, on the last day of the Interest Period currently applicable to such
Eurodollar Loan and in all other cases such notice shall be effective on the
date of receipt by the Borrower.
SECTION 2.16. Indemnity. The Borrower shall indemnify each Lender
against any loss or expense that such Lender may sustain or incur as a
consequence of (a) any event, other than a default by the Agent or such Lender
in the performance of its obligations hereunder, which results in (i) such
Lender receiving or being deemed to receive any amount on account of the
principal of any Eurodollar Loan prior to the end of the Interest Period in
effect therefor, (ii) the conversion of any Eurodollar Loan to a Loan of another
Type, or the conversion of the Interest Period with respect to any Eurodollar
Loan, in each case other than on the last day of the Interest Period in effect
therefor, (iii) any Eurodollar Loan to be made by such Lender (including any
Eurodollar Loan to be made pursuant to a conversion or continuation under
Section 2.11) not being made after notice of such Loan shall have been given by
the Borrower hereunder (any such event, a "Breakage Event") or (b) any default
by the Borrower in the making of any payment or prepayment required to be made
hereunder. In the case of any Breakage Event, such loss shall include an amount
equal to the excess, as reasonably determined by such Lender, of (i) its cost of
obtaining funds for the Eurodollar Loan that is the subject of such Breakage
Event for the period from the date of such Breakage Event to the last day of the
Interest Period in effect (or that would have been in effect) for such Loan over
(ii) the amount of interest likely to be realized by such Lender in redeploying
the funds released or not utilized by reason of such Breakage Event for such
period. A certificate of any Lender setting forth any amount or amounts which
such Lender is entitled to receive pursuant to this Section 2.16 shall be
delivered to the Borrower and shall be conclusive absent manifest error. The
Borrower shall pay each Lender the amount shown as due on any such certificate
delivered by it within 10 days after its receipt of the same.
SECTION 2.17. Pro Rata Treatment. Except as required under Sections
2.12(i) and 2.15, each Borrowing, each payment or prepayment of principal of any
Borrowing, each payment of interest on the Loans, each payment of the Commitment
Fees, each reduction of the Tranche A Term Loan Commitments, the Tranche B Term
Loan Commitments, the Revolving Credit Commitments or the Swingline Commitment
and each refinancing of any Borrowing with, conversion of any Borrowing to, or
continuation of any Borrowing as, a Borrowing of any Type shall be allocated pro
rata among the Lenders in accordance with their respective applicable
Commitments (or, if such Commitments shall have expired or been terminated, in
accordance with the sum of (a) the respective principal amounts of their
applicable outstanding Loans and (b) in the case of the Revolving Credit
Commitments, the respective amounts of their Letter of Credit Exposure). Each
Lender agrees that in computing such Lender's portion of any Borrowing to be
made hereunder, the Agent may, in its discretion, round each Lender's percentage
allocation of such Borrowing to the next higher or lower whole dollar amount.
48
<PAGE> 54
SECTION 2.18. Sharing of Setoffs. Each Lender agrees that if it shall,
through the exercise of a right of banker's lien, setoff or counterclaim against
the Borrower, or pursuant to a secured claim under Section 506 of Title 11 of
the United States Code or other security or interest arising from, or in lieu
of, such secured claim, received by such Lender under any applicable bankruptcy,
insolvency or other similar law or otherwise, or by any other means, obtain
payment (voluntary or involuntary) in respect of any Loan or Loans as a result
of which the unpaid principal portion of its Loans of any Class shall be
proportionately less than the unpaid principal portion of the Loans of such
Class of any other Lender, it shall be deemed simultaneously to have purchased
from such other Lender at face value, and shall promptly pay to such other
Lender the purchase price for, participation in such Loans of such other Lender,
so that the aggregate unpaid principal amount of the Loans and participation in
Loans of any Class held by each Lender shall be in the same proportion to the
aggregate unpaid principal amount of all Loans of such Class then outstanding as
the principal amount of its Loans of such Class prior to such exercise of
banker's lien, setoff or counterclaim or other event was to the principal amount
of all Loans of such Class outstanding prior to such exercise of banker's lien,
setoff or counterclaim or other event; provided, however, that, if any such
purchase or purchases or adjustments shall be made pursuant to this Section 2.18
and the payment giving rise thereto shall thereafter be recovered, such purchase
or purchases or adjustments shall be rescinded to the extent of such recovery
and the purchase price or prices or adjustment restored without interest. For
purposes of this Section 2.18, the Revolving Loans of any Revolving Credit
Lender shall include such Revolving Credit Lender's Letter of Credit Exposure.
To the extent permitted by law, the Borrower expressly consents to the foregoing
arrangements and agrees that any Lender holding a participation in a Loan deemed
to have been so purchased may exercise any and all rights of banker's lien,
setoff or counterclaim with respect to any and all moneys owing by the Borrower
to such Lender by reason thereof as fully as if such Lender had made a Loan
directly to the Borrower in the amount of such interest.
SECTION 2.19. Payments. (a) Unless expressly provided otherwise herein,
the Borrower shall make each payment (including principal of or interest on any
Borrowing or any Fees or other amounts) hereunder or under any other Loan
Document without setoff, defense or counterclaim and not later than 12:00
(noon), Charlotte time, on the date when due in dollars to the Agent at its
offices at NationsBank Corporate Center, 100 North Tryon Street, Charlotte,
North Carolina 28255, in immediately available funds. Any such payment received
after such time (or, in the case of payments on Swingline Loans, after 2:00
p.m., Charlotte time) on any date shall be deemed made on the next Business Day.
(b) Whenever any payment (including principal of or interest on any
Borrowing or any Fees or other amounts) hereunder or under any other Loan
Document shall become due, or otherwise would occur, on a day that is not a
Business Day, such payment may be made on the next succeeding Business Day, and
such extension of time shall in such case be included in the computation of
interest or Fees, if applicable.
SECTION 2.20. Taxes. (a) Any and all payments by or on behalf of the
Borrower or any other Loan Party hereunder and under any other Loan Document
shall be made, in
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accordance with Section 2.19, free and clear of and without deduction for any
and all current or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding (i) income
taxes or branch profit taxes imposed on the net income of the Agent, any Lender
or the Issuing Bank (or any transferee or assignee thereof, including a
participation holder (any such entity a "Transferee")) and (ii) franchise taxes
imposed on the net income of the Agent, any Lender or the Issuing Bank (or
Transferee), in each case by the jurisdiction under the laws of which the Agent,
such Lender or the Issuing Bank (or Transferee) is organized or any political
subdivision thereof or the jurisdiction in which such Lender or Transferee has
its applicable lending office (all such nonexcluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities, collectively or individually,
being called "Taxes", and all such excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being called "Excluded Taxes"). Subject to
the provisions of Section 2.20(f), if the Borrower or any other Loan Party shall
be required to deduct any Taxes from or in respect of any sum payable hereunder
or under any other Loan Document to the Agent, any Lender or the Issuing Bank
(or any Transferee), (A) the sum payable shall be increased by the amount (an
"additional amount") necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.20 but excluding Excluded Taxes) the Agent, such Lender or the Issuing Bank
(or Transferee), as the case may be, shall receive an amount equal to the sum it
would have received had no such deductions been made, (B) the Borrower or such
Loan Party shall make such deductions and (C) the Borrower or such Loan Party
shall pay the full amount deducted to the relevant Governmental Authority in
accordance with applicable law.
(b) In addition, the Borrower agrees to pay to the relevant
Governmental Authority in accordance with applicable law any current or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies (including mortgage recording taxes and similar fees) that arise
from any payment made hereunder or under any other Loan Document or from the
execution, delivery or registration of, or otherwise with respect to, this
Amended Agreement or any other Loan Document ("Other Taxes").
(c) The Borrower will indemnify the Agent, each Lender and the Issuing
Bank (or Transferee) for the full amount of Taxes and Other Taxes paid by the
Agent, such Lender or the Issuing Bank (or Transferee), as the case may be, and
any liability (excluding Excluded Taxes, but including penalties, interest and
expenses (including reasonable attorney's fees and expenses)) arising therefrom
or with respect thereto, whether or not such Taxes or Other Taxes were correctly
or legally asserted by the relevant Governmental Authority. A certificate as to
the amount of such payment or liability and the method of computation thereof
prepared by the Agent, a Lender or the Issuing Bank (or Transferee), or the
Agent on its behalf, absent manifest error, shall be final, conclusive and
binding for all purposes. Such indemnification shall be made within 30 days
after the date the Agent, any Lender or the Issuing Bank (or Transferee), as the
case may be, makes written demand therefor and provides the Borrower with the
certificate described above.
(d) As soon as practicable after the date of any payment of Taxes or
Other Taxes by the Borrower or any other Loan Party to the relevant Governmental
Authority, the Borrower
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or such other Loan Party will deliver to the Agent, at its address referred to
in Section 9.01, the original or a certified copy of a receipt issued by such
Governmental Authority evidencing payment thereof.
(e) Each Lender (or Transferee) that is organized under the laws of a
jurisdiction other than the United States, any State thereof or the District of
Columbia (a "Non-U.S. Lender") shall deliver to the Borrower and the Agent two
copies of (i) either United States Internal Revenue Service Form 1001 or Form
4224, or, in the case of a Non-U.S. Lender claiming exemption from U.S. Federal
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of "portfolio interest", a Form W-8, or any subsequent versions
thereof or successors thereto (and, if such Non-U.S. Lender delivers a Form W-8,
a certificate representing that such Non-U.S. Lender is not a bank for purposes
of Section 881(c) of the Code, is not a 10-percent shareholder (within the
meaning of Section 871(h)(3)(B) of the Code) of the Borrower and is not a
controlled foreign corporation related to the Borrower (within the meaning of
Section 864(d)(4) of the Code)), properly completed and duly executed by such
Non-U.S. Lender claiming complete exemption from, or reduced rate of, U.S.
Federal withholding tax on payments by the Borrower under this Amended Agreement
and the other Loan Documents and (ii) an Internal Revenue Service Form W-8 or
W-9 entitling such Non-U.S. Lender to receive a complete exemption from United
States backup withholding tax. Such forms shall be delivered by each Non-U.S.
Lender on or before the date it becomes a party to this Amended Agreement (or,
in the case of a Transferee that is a participation holder, on or before the
date such participation holder becomes a Transferee hereunder) and on or before
the date, if any, such Non-U.S. Lender changes its applicable lending office by
designating a different lending office (a "New Lending Office"). In addition,
each Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or
invalidity of any form previously delivered by such Non-U.S. Lender. If a
Non-U.S. Lender who has delivered the forms referred to above on the date it
becomes a party to this Amended Agreement (or, in the case of a Transferee, on
the date that it becomes a Transferee hereunder) determines that it is unable
subsequently to submit to the Borrower any such form, or that it is required to
withdraw or cancel any such form, such Non-U.S. Lender shall promptly notify the
Borrower of such fact. Notwithstanding any other provision of this Section
2.20(e), a Non-U.S. Lender shall not be required to deliver any form pursuant to
this Section 2.20(e) that such Non-U.S. Lender is not legally able to deliver.
(f) The Borrower shall not be required to indemnify any Non-U.S. Lender
or to pay any additional amounts to any Non-U.S. Lender, in respect of United
States Federal withholding tax pursuant to paragraph (a) or (c) above to the
extent that (i) the obligation to withhold amounts with respect to United States
Federal withholding tax existed on the date such Non-U.S. Lender became a party
to this Amended Agreement (or, in the case of a Transferee that is a
participation holder, on the date such participation holder became a Transferee
hereunder) or, with respect to payments to a New Lending Office, the date such
Non-U.S. Lender designated such New Lending Office with respect to a Loan;
provided, however, that this paragraph (f) shall not apply (x) to any Transferee
or New Lending Office that becomes a Transferee or New Lending Office as a
result of an assignment, participation, transfer or designation made at the
request of the Borrower and (y) to the extent the indemnity
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payment or additional amounts any Transferee, or any Lender (or Transferee),
acting through a New Lending Office, would be entitled to receive (without
regard to this paragraph (f)) do not exceed the indemnity payment or additional
amounts that the person making the assignment, participation or transfer to such
Transferee, or Lender (or Transferee) making the designation of such New Lending
Office, would have been entitled to receive in the absence of such assignment,
participation, transfer or designation or (ii) the obligation to pay such
additional amounts would not have arisen but for a failure by such Non-U.S.
Lender to comply with the provisions of paragraph (e) above.
(g) Nothing contained in this Section 2.20 shall require any Lender or
the Issuing Bank (or any Transferee) or the Agent to make available any of its
tax returns (or any other information that it deems to be confidential or
proprietary).
(h) The provisions of this Section 2.20 shall remain operative and in
full force and effect regardless of the expiration of the term of this Amended
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the invalidity or unenforceability of any term or
provision of this Amended Agreement or any other Loan Document, or any
investigation made by or on behalf of the Agent or any Lender.
SECTION 2.21. Assignment of Commitments Under Certain Circumstances;
Duty to Mitigate. (a) In the event (i) any Lender or the Issuing Bank delivers a
certificate requesting compensation pursuant to Section 2.14, (ii) any Lender or
the Issuing Bank delivers a notice described in Section 2.15 or (iii) the
Borrower is required to pay any additional amount to any Lender or the Issuing
Bank or any Governmental Authority on account of any Lender or the Issuing Bank
pursuant to Section 2.20, the Borrower may, at its sole expense and effort
(including with respect to the processing and recordation fee referred to in
Section 9.04(b)), upon notice to such Lender or the Issuing Bank and the Agent,
require such Lender or the Issuing Bank to transfer and assign, without recourse
(in accordance with and subject to the restrictions contained in Section 9.04),
all of its interests, rights and obligations under this Amended Agreement to an
assignee that shall assume such assigned obligations (which assignee may be
another Lender, if a Lender accepts such assignment), provided that (A) such
assignment shall not conflict with any law, rule or regulation or order of any
court or other Governmental Authority having jurisdiction, (B) the Borrower
shall have received the prior written consent of the Agent (and, if a Revolving
Credit Commitment is being assigned, of the Issuing Bank and the Swingline
Lender), which consent shall not unreasonably be withheld, (C) no Event of
Default shall have occurred and be continuing and (D) the Borrower or such
assignee shall have paid to the affected Lender or the Issuing Bank in
immediately available funds an amount equal to the sum of 100% of the principal
of and interest accrued to the date of such payment on the outstanding Loans or
Letter of Credit Disbursements of such Lender or the Issuing Bank, respectively,
plus all Fees and other amounts accrued for the account of such Lender or the
Issuing Bank hereunder (including any amounts under Section 2.14 and Section
2.16); provided further that if prior to any such assignment the circumstances
or event that resulted in such Lender's notice or certificate under Section 2.14
or 2.15 or demand for additional amounts under Section 2.20, as the case may be,
shall cease to exist or become inapplicable for any reason or if such Lender
shall waive its rights in respect of such
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circumstances or event under Section 2.14, 2.15 or 2.20, as the case may be,
then such Lender shall not thereafter be required to make any such assignment
hereunder.
(b) If (i) any Lender or the Issuing Bank shall request compensation
under Section 2.14, (ii) any Lender or the Issuing Bank delivers a notice
described in Section 2.15 or (iii) the Borrower is required to pay any
additional amount to any Lender or the Issuing Bank or any Governmental
Authority on account of any Lender or the Issuing Bank, pursuant to Section
2.20, then such Lender or the Issuing Bank shall use reasonable efforts (which
shall not require such Lender or the Issuing Bank to incur an unreimbursed loss
or unreimbursed cost or expense or otherwise take any action inconsistent with
its internal policies or legal or regulatory restrictions or suffer any
disadvantage or burden deemed by it to be significant) (A) to file any
certificate or document reasonably requested in writing by the Borrower or (B)
to assign its rights and delegate and transfer its obligations hereunder to
another of its offices, branches or affiliates, if such filing or assignment
would reduce its claims for compensation under Section 2.14 or enable it to
withdraw its notice pursuant to Section 2.15 or would reduce amounts payable
pursuant to Section 2.20, as the case may be, in the future. The Borrower hereby
agrees to pay all reasonable costs and expenses incurred by any Lender or the
Issuing Bank in connection with any such filing or assignment, delegation and
transfer.
SECTION 2.22. Letters of Credit. (a) The Borrower may request the
issuance of Letters of Credit in dollars, in form and substance reasonably
acceptable to the Agent and the Issuing Bank, for the account of the Borrower or
any Subsidiary, at any time and from time to time during the Letter of Credit
Availability Period; provided, that any such Letter of Credit shall be issued
only if, and each request by the Borrower for the issuance of any such Letter of
Credit shall be deemed a representation and warranty of the Borrower that,
immediately following the issuance of such Letter of Credit, (i) the Letter of
Credit Exposure for Letters of Credit denominated in dollars shall not exceed
$7,500,000 and (ii) the Dollar Amount of Aggregate Revolving Credit Exposure
shall not exceed the aggregate Revolving Credit Commitments at such time. For
purposes hereof, the "issuance" of a Letter of Credit includes the amendment,
renewal or extension of a Letter of Credit.
(b) The Borrower may request the issuance of Foreign Currency Letters
of Credit, in form and substance reasonably acceptable to the Agent and the
Issuing Bank, for the account of the Borrower or any Subsidiary, at any time and
from time to time during the Letter of Credit Availability Period; provided that
any Foreign Currency Letter of Credit shall be issued only if, and each request
by the Borrower for the issuance of any Foreign Currency Letter of Credit shall
be deemed a representation and warranty of the Borrower that, immediately
following the issuance of such Foreign Currency Letter of Credit, (i) the
aggregate Dollar Amount of Foreign Currency Letter of Credit Exposure shall not
exceed $10,000,000; and (ii) the Dollar Amount of the Aggregate Revolving Credit
Exposure shall not exceed the aggregate Revolving Credit Commitments at such
time. For purposes hereof the "issuance" of a Letter of Credit includes the
amendment, renewal or extension of a Letter of Credit.
(c) Each Letter of Credit shall expire at 5:00 p.m., Charlotte time, on
the earlier of (i) the last day of the Letter of Credit Availability Period and
(ii) (A) in the case of Standby
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Letters of Credit (other than any Existing Letter of Credit), one year after the
date of issuance of such Letter of Credit, subject to extension (including
pursuant to an automatic renewal provision in customary form), and (B) in the
case of Trade Letters of Credit, 180 days after the date of issuance of such
Letter of Credit, unless, in each case, such Letter of Credit expires by its
terms on an earlier date.
(d) Each issuance of any Letter of Credit shall be made on at least
three Business Days' prior irrevocable written or telecopy notice (such notice
to be delivered by 10:00 a.m., Charlotte time) from the Borrower (or such
shorter notice as shall be acceptable to the Issuing Bank) to the Agent and the
Issuing Bank, specifying whether such Letter of Credit is to be issued in
dollars or a Foreign Currency (and if to be issued in a Foreign Currency, the
applicable Foreign Currency) and whether such Letter of Credit is a Standby
Letter of Credit or a Trade Letter of Credit, the date of issuance, the date on
which such Letter of Credit is to expire, the amount of such Letter of Credit
(which shall be not less than $5,000 or such lesser amount as is acceptable to
the Agent), the name and address of the beneficiary of such Letter of Credit and
such other information as may be necessary or desirable to complete such Letter
of Credit. The Issuing Bank will give the Agent prompt notice of the issuance
and amount of such Letter of Credit and the expiration date of such Letter of
Credit (and the Agent shall give prompt notice thereof to each Lender). During
the Letter of Credit Availability Period, the Issuing Bank also will give the
Agent (i) daily notice of the amount available to be drawn under each
outstanding Letter of Credit and (ii) a quarterly summary indicating, on a daily
basis during such quarter, the issuance of any Letter of Credit and the amount
thereof, the expiration of any Letter of Credit and the amount thereof and the
payment on any draft presented under any Letter of Credit. Each Letter of Credit
issued hereunder will be subject to the Uniform Customs and Practices for
Documentary Credits, as in effect from time to time. Each Foreign Currency
Letter of Credit issued hereunder shall be subject to and incorporate the
Uniform Customs and Practice for Documentary Credits, 1993 Revision,
International Chamber of Commerce Publication No. 500 (the "UCP") other than
Articles 41 and 43 thereof; to the extent not inconsistent with the UCP, Article
5 of the Uniform Commercial Code as adopted in New York ("Article 5"); and
Section 5-102(a)(10) of the 1995 Official Text with comments of the Uniform
Commercial Code Revised Article 5, as promulgated by the American Law Institute
and National Conference of Commissioners on Uniform State Laws ("Revised Article
5"), which section of Revised Article 5 shall govern and control over any
inconsistent provision of the UCP or Article 5.
(e) By the issuance of a Letter of Credit (including an Existing Letter
of Credit) and without any further action on the part of the Issuing Bank, the
Agent or the Lenders in respect thereof, the Issuing Bank hereby grants to each
Revolving Credit Lender, and each Revolving Credit Lender hereby acquires from
the Issuing Bank, a participation in such Letter of Credit equal to such
Revolving Credit Lender's Applicable Percentage of the aggregate amount
available to be drawn under such Letter of Credit, effective upon the issuance
of such Letter of Credit. In consideration and in furtherance of the foregoing,
each Revolving Credit Lender hereby absolutely and unconditionally agrees to pay
to the Agent, on behalf of the Issuing Bank, in accordance with Section 2.03(d),
such Revolving Credit Lender's pro rata share (based on the percentage of the
aggregate Revolving Credit Commitments represented by such
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Revolving Credit Lender's Revolving Credit Commitment) of the Dollar Amount of
each Letter of Credit Disbursement made by the Issuing Bank and not reimbursed
by the Borrower when due in accordance with Section 2.22(h).
(f) Each Revolving Credit Lender acknowledges and agrees that its
obligation to acquire participations pursuant to Section 2.22(e) in respect of
Letters of Credit (including Existing Letters of Credit) is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including the occurrence and continuance of a Default or Event of Default, and
that each such payment shall be made without any offset, abatement, withholding
or reduction whatsoever.
(g) The Borrower shall pay to the Agent, for the account of the
Revolving Credit Lenders, a nonrefundable fronting fee with respect to each
Trade Letter of Credit (including Existing Letters of Credit) issued for the
account of the Borrower or any Subsidiary in an amount equal to the Dollar
Amount of the face amount of such Trade Letter of Credit, multiplied by a
percentage per annum (based on a 360-day year and the number of days such Letter
of Credit is scheduled to be outstanding) equal to the Applicable Eurodollar
Margin for Revolving Loans in effect on the date of issuance of such Trade
Letter of Credit. Such fee shall be payable to the Revolving Credit Lenders to
be shared ratably among them in accordance with their respective Applicable
Percentages. Such fronting fee shall be payable in advance on the date of
issuance of each Trade Letter of Credit. In addition, the Borrower shall pay to
the Agent, for the account of the Revolving Credit Lenders, a nonrefundable
letter of credit commission with respect to each Standby Letter of Credit
(including Existing Letters of Credit) issued for the account of the Borrower or
any Subsidiary, computed for the preceding calendar quarter (or shorter period
commencing with the Closing Date) in an amount equal to the average daily
aggregate Dollar Amount of all Standby Letters of Credit during such period,
multiplied by a percentage per annum (based on a 360-day year for the actual
days elapsed) equal to the Applicable Eurodollar Margin for Revolving Loans in
effect during such period. Such fee shall be payable to the Revolving Credit
Lenders to be shared ratably among them in accordance with their respective
Applicable Percentages. Such commissions with respect to the Standby Letters of
Credit shall be payable quarterly in arrears on the last day of March, June,
September and December in each year, commencing September 30, 1996, and on the
date on which the Revolving Credit Commitments shall terminate as provided
herein. Such fees shall accrue from and including the Closing Date to but
excluding the last day of the Letter of Credit Availability Period. In addition
to the foregoing fees and commissions, the Borrower shall pay or reimburse the
Issuing Bank for such normal and customary costs and expenses, including,
without limitation, administrative, issuance, amendment, payment and negotiation
charges, as are incurred or charged by the Issuing Bank in issuing, effecting
payment under, amending or otherwise administering any Letter of Credit
(including any Letter of Credit issued for the account of a Subsidiary).
(h) The Borrower hereby agrees to reimburse the Issuing Bank for any
payment or disbursement made by the Issuing Bank under any Letter of Credit
(including any Letter of Credit issued for the account of a Subsidiary and
including any Existing Letter of Credit), by making payment in immediately
available funds to the Agent within one Business Day after
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receipt of notice of such payment or disbursement, in an amount equal to the
Dollar Amount of such payment or disbursement, plus interest on the amount so
paid or disbursed by the Issuing Bank at a rate per annum equal to the greater
of (i) the rate applicable to ABR Revolving Loans pursuant to Section 2.07 or
(ii) the cost on a per annum basis to the Issuing Bank of the funds so paid or
disbursed under the Letter of Credit plus the Applicable LIBOR Margin (such cost
plus such margin being referred to herein as the "Cost of Funds"); provided that
if such amount is not reimbursed prior to 12:00 noon, Charlotte time, one
Business Day after receipt by the Borrower of the notice of such payment or
disbursement, interest shall thereafter accrue on such unreimbursed amount, at a
rate per annum equal to the greater of (i) the rate applicable to ABR Revolving
Loans during such period pursuant to Section 2.07, plus 2.00% or (ii) the Cost
of Funds plus 2.00%. The Agent shall promptly pay any such amounts received by
it to the Issuing Bank. Borrower hereby agrees to indemnify and hold harmless
the Agent, the Issuing Bank, and each Lender (in any capacity hereunder) from
and against any and all loss, liability, cost, and expense arising at any time
or times from the exchange of one or more currencies for one or more other
currencies hereunder.
(i) The Borrower's obligation to reimburse Letter of Credit
Disbursements as provided in Section 2.22(h) shall be absolute, unconditional
and irrevocable and shall be performed strictly in accordance with the terms of
this Amended Agreement under any and all circumstances whatsoever, and
irrespective of:
(i) any lack of validity or enforceability of any Letter
of Credit (including any Existing Letter of Credit) or any other Loan
Document or any term or provision therein;
(ii) the existence of any claim, setoff, defense or other
right which the Borrower, any Subsidiary or any other person may at any
time have against the beneficiary under any Letter of Credit (including
any Existing Letter of Credit), the Issuing Bank, the Agent, any Lender
or any other person, whether in connection with this Amended Agreement,
any other Loan Document or any other related or unrelated agreement or
transaction;
(iii) any draft or other document presented under a Letter
of Credit (including any Existing Letter of Credit) proving to be
forged, fraudulent, invalid or insufficient in any respect or failing
to comply with the Uniform Customs and Practices for Documentary
Credits, as in effect from time to time, or any statement therein being
untrue or inaccurate in any respect;
(iv) payment by the Issuing Bank under a Letter of Credit
(including any Existing Letter of Credit) against presentation of a
draft or other document which does not comply with the terms of such
Letter of Credit, subject to the provisions of Section 2.22(j);
(v) any amendment, waiver or consent in respect of this
Amended Agreement or any other Loan Document; and
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(vi) any other act or omission or delay of any kind or any
other circumstance or event whatsoever, whether or not similar to any
of the foregoing and whether or not foreseeable, that might, but for
the provisions of this Section 2.22(i), constitute a legal or equitable
discharge of the Borrower's obligations hereunder.
(j) Without limiting the generality of the provisions of the foregoing
paragraph (i), it is expressly understood and agreed that the absolute and
unconditional obligation of the Borrower hereunder to reimburse Letter of Credit
Disbursements will not be excused by the gross negligence or willful misconduct
of the Issuing Bank. However, the preceding sentence and the provisions of
Section 2.22(i) shall not be construed to excuse the Issuing Bank from liability
to the Borrower to the extent of any direct damages (as opposed to consequential
damages, claims in respect of which are hereby waived by the Borrower to the
extent permitted by applicable law) suffered by the Borrower that are caused by
the Issuing Bank's bad faith, gross negligence or willful misconduct in
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof; it is understood that the Issuing Bank may
accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary and, in making any payment under any Letter of
Credit (including any Existing Letter of Credit) (i) the Issuing Bank's
exclusive reliance in good faith on the documents presented to it under such
Letter of Credit as to any and all matters set forth therein, including reliance
on the amount of any draft presented under such Letter of Credit, if such
document on its face appears to be in order, and whether or not any other
statement or any other document presented pursuant to such Letter of Credit
proves to be forged or invalid or any statement therein proves to be inaccurate
or untrue in any respect whatsoever and (ii) any noncompliance in any immaterial
respect of the documents presented under such Letter of Credit with the terms
thereof shall, in each case, be deemed not to constitute bad faith, gross
negligence or willful misconduct of the Issuing Bank.
(k) The Issuing Bank shall, promptly following its receipt thereof,
examine all documents purporting to represent a demand for payment under a
Letter of Credit. The Issuing Bank shall as promptly as possible give telephonic
notification, confirmed by telex or telecopy, to the Agent and the Borrower of
such demand for payment and whether the Issuing Bank has made or will make a
Letter of Credit Disbursement thereunder; provided that the failure to give such
notice shall not relieve the Borrower of its obligation to reimburse any such
Letter of Credit Disbursement in accordance with this Section 2.22. The Agent
shall promptly give each Revolving Credit Lender notice thereof.
(l) In the event that the Borrower is required pursuant to the terms of
this Amended Agreement (including any such requirement as a result of an Event
of Default) or any other Loan Document to provide cash collateral in respect of
the Letter of Credit Exposure, the Borrower shall deposit in an account with the
Agent, for the benefit of each Revolving Credit Lender, an amount in cash equal
to the Dollar Amount of such Letter of Credit Exposure (or such lesser Dollar
Amount as shall be required hereunder or thereunder). Such deposit shall be held
by the Agent as collateral for the payment and performance of the Obligations to
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Revolving Credit Lenders. The Agent shall have exclusive dominion and control,
including the exclusive right of withdrawal, over such account. Other than any
interest earned on the investment of such deposits in Cash Equivalents, which
investments shall be made as directed by the Borrower (unless such investments
shall be contrary to applicable law or regulation or a Default or Event of
Default shall have occurred and be continuing, in which case the Agent shall
determine in its sole discretion the Cash Equivalents to be selected), such
deposits shall not bear interest. Interest or profits, if any, on such
investments shall accumulate in such account. Moneys in such account shall
automatically be applied by the Agent to reimburse the Issuing Bank for Letter
of Credit Disbursements and, if the maturity of the Loans has been accelerated,
to satisfy the Obligations to Revolving Credit Lenders. If the Borrower is
required to provide an amount of cash collateral hereunder as a result of an
Event of Default, such amount (to the extent not applied as aforesaid) shall be
returned to the Borrower within three Business Days after all Events of Default
have been cured or waived. If the Borrower is required to provide an amount of
cash collateral hereunder pursuant to Section 2.12(c), such amount (to the
extent not applied as aforesaid) shall be returned to the Borrower upon demand;
provided that, after giving effect to such return, (i) the sum of the Dollar
Amount of all Letter of Credit Exposure plus the aggregate outstanding principal
amount of Revolving Loans and Swingline Loans would not exceed the aggregate
Revolving Credit Commitments and (ii) no Default or Event of Default shall have
occurred and be continuing.
(m) "Existing Letters of Credit" shall mean the letters of credit
issued by the Existing Issuing Bank under the Original Credit Agreement and that
remain outstanding as of the Effective Date. The parties hereto agree that each
Existing Letter of Credit will be treated as if it had been originally issued
under this Amended Agreement. Specifically, and without limitation of the
foregoing or the other provisions of this Section 2.22, (i) the amount of each
Existing Letter of Credit shall count towards the limits set forth in the
proviso to Section 2.22(a) and in Sections 2.02(c) and (d), (ii) each Revolving
Credit Lender hereby retains a participation in each Existing Letter of Credit
equal to such Lender's pro rata portion, as determined under Section 2.17, of
the aggregate amount available to be drawn under such Existing Letter of Credit,
(iii) each Revolving Credit Lender hereby absolutely and unconditionally agrees
to pay to the Agent, on behalf of the Issuing Bank, in accordance with Section
2.03(d), such Lender's pro rata portion, as determined under Section 2.17, of
each Letter of Credit Disbursement made by the Issuing Bank and not reimbursed
by the Borrower when due in accordance with Section 2.22(h) and (iv) the Issuing
Bank shall have the benefit of all agreements, covenants and indemnities set
forth herein which are for the benefit of the "Issuing Bank," insofar as such
term is used in relation to the Existing Letters of Credit, and shall comply
with all agreements and obligations set forth herein which bind the "Issuing
Bank", insofar as such term is used in relation to the Existing Letters of
Credit.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Borrower and the Parent, as applicable, represent and warrant to
each of the Lenders that:
SECTION 3.01. Organization; Powers. Each of the Borrower and the other
Loan Parties (a) is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, (b) has all requisite power
and authority to own its property and assets and to carry on its business as now
conducted and as proposed to be conducted, (c) is qualified to do business in
every jurisdiction where such qualification is required, except where the
failure so to qualify would not result in a Material Adverse Effect, and (d) has
the requisite power and authority to execute, deliver and perform its
obligations under each of the Loan Documents and each other agreement or
instrument contemplated thereby to which it is or will be a party, and, in the
case of the Borrower, to obtain extensions of credit hereunder. The Borrower is
a corporation organized under the laws of the State of Delaware.
SECTION 3.02. Authorization. The execution, delivery and performance by
each of the Borrower and the other Loan Parties of each of the Loan Documents to
which it is or will be a party (including the exercise of remedies thereunder)
and, in the case of the Borrower, the extensions of credit hereunder (a) have
been duly authorized by all requisite corporate or partnership and, if required,
stockholder action and (b) will not (i) violate, (A) any provision of law,
statute, rule or regulation, (B) any provision of the certificate of
incorporation, partnership agreement, operating agreement or other constitutive
documents or by-laws of the Borrower and the other Loan Parties, (C) any order
of any Governmental Authority or (D) except as set forth in Schedule 3.17(a),
any provision of any indenture, agreement or other instrument to which the
Borrower or any of the Loan Parties is a party or by which any of them or any of
their property is or may be bound, (ii) be in conflict with, result in a breach
of or constitute (alone or with notice or lapse of time or both) a default or
give rise to increased, additional, accelerated or guaranteed rights of any
person under any such indenture, agreement or other instrument or (iii) except
for the Lien of the Collateral Documents, result in the creation or imposition
of any Lien upon or with respect to any property or assets now owned or
hereafter acquired by the Borrower or any of the other Loan Parties.
SECTION 3.03. Enforceability. This Amended Agreement has been duly
executed and delivered by the Borrower and constitutes, and each other Loan
Document when executed and delivered by the Borrower or any of the other Loan
Parties will constitute, a legal, valid and binding obligation of such party
enforceable against such party in accordance with its terms, subject to the
effect of bankruptcy, insolvency, reorganization, arrangement, moratorium,
fraudulent conveyance, voidable preference or similar laws and the application
of equitable principles generally.
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SECTION 3.04. Consents and Governmental Approvals. No action, consent
or approval of, registration or filing with or any other action by (a) any
Governmental Authority, (b) any creditor or shareholder of the Borrower or any
creditor, shareholder, partner or member of the other Loan Parties or (c) except
where failure to take or obtain such action, consent or approval of,
registration or filing with or such other action could not reasonably be
expected to have a Material Adverse Effect, any other person is or will be
required in connection with the Facilities or the performance by the Borrower or
any of the other Loan Parties of the Loan Documents to which it is or will be a
party, in each case except such as have been made or obtained and are in full
force and effect.
SECTION 3.05. Financial Statements; Undisclosed Liabilities. (a) The
Borrower has heretofore furnished to the Lenders the audited consolidated
balance sheets of the Parent and the Borrower (the "Balance Sheet", whether one
or more), as of March 31, 1997 and the related consolidated statements of income
and cash flows of the Parent and the Borrower (together with the Balance Sheet,
the "Financial Statements"), for the year ended March 31, 1997. The Financial
Statements have been prepared in conformity with generally accepted accounting
principles consistently applied and on that basis fairly present the
consolidated financial condition, results of operations and cash flows of the
Parent and the Borrower, as of the respective dates thereof and for the
respective periods indicated.
(b) As of the Effective Date, none of the Parent, the Borrower or the
Subsidiaries have (i) any liability, contingent or otherwise, in excess of
$500,000 or (ii) any material liabilities, contingent or otherwise, or material
obligations required by GAAP to be set forth on a consolidated balance sheet of
the Borrower, except for items set forth in Schedule 3.05(b).
SECTION 3.06. No Material Adverse Change. Since the date of the Balance
Sheet, there has not been any Material Adverse Change. Except as set forth in
Schedule 3.06, since the date of the Balance Sheet and prior to the Effective
Date, the business of the Borrower and the Subsidiaries has been conducted in
the ordinary course and in substantially the same manner as previously
conducted.
SECTION 3.07. Title to Properties; Possession Under Leases;
Intellectual Property. (a) Each of the Borrower, the Subsidiaries and the Parent
has good and marketable title to, or valid leasehold interests in, all its
material properties and assets (including all Intellectual Property of the
Borrower and the Subsidiaries), except for defects in title that do not
interfere with its ability to conduct its business as currently conducted or to
utilize such properties and assets for their intended purposes and do not
materially detract from the value of such properties and assets. All such
material properties and assets are free and clear of Liens, other than Liens
permitted by Section 6.02.
(b) Schedule 3.07(b) sets forth, as of the Effective Date, a true,
complete and correct list of (i) all real property owned by the Borrower and the
Subsidiaries; (ii) all real property leased by the Borrower or any Subsidiary;
and (iii) the location of each such real property.
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(c) Except as set forth in Schedule 3.07(b) and except for agreements
relating to shrink-wrapped computer software licensed to the Borrower in the
ordinary course of business, the Borrower or one of the Subsidiaries owns, and
the Borrower and the Subsidiaries have the perpetual, royalty-free right, free
and clear of any consensual Liens, to use, execute, reproduce, display, perform,
modify, enhance, distribute, prepare derivative works of and sublicense, without
payment to any other person, all the material Intellectual Property necessary or
desirable to the conduct of the business of the Borrower and the Subsidiaries
(the "Material Intellectual Property"). Except for non-exclusive rights as
customarily provided to its customers in the ordinary course of business and
except for the U.S. Government Department of Defense's "limited rights" in
technical data and "restricted rights" in computer software, neither the
Borrower nor any of the Subsidiaries has granted any options, licenses or
agreements of any kind relating to Material Intellectual Property. No claims are
pending, and to the knowledge of the Borrower, none have been asserted, as of
the date of this Amended Agreement against the Borrower or any Subsidiary by any
person with respect to the ownership, validity, enforceability, effectiveness or
use of any Material Intellectual Property. Except as described in Schedule
3.07(b), to the Borrower's knowledge, no claims of infringement of any
copyright, trademark, service mark, trade name, patent, patent right, trade
secret or other property right of any other person are pending, and none have
been asserted, as of the date of this Amended Agreement as against any Material
Intellectual Property. Except as disclosed on Schedule 3.07(b), (i) neither the
Borrower nor any of the Subsidiaries is in breach of any material provision of
any license, sublicense, or other agreement which relates to any of the Material
Intellectual Property, and (ii) neither the Borrower nor any of the Subsidiaries
has taken any action which would impair or otherwise adversely affect its rights
in any of the Material Intellectual Property. All such Intellectual Property is
valid and enforceable, except that, with respect to the applications to register
any unregistered Intellectual Property (but not with respect to the underlying
Intellectual Property rights that are the subject of such applications), the
Borrower only represents and warrants that such applications are pending and in
good standing all without challenge of any kind. The Material Intellectual
Property has been maintained in confidence in accordance with protection
procedures customarily used to protect rights of like importance. To the
knowledge of the Borrower, all former and current members of management and key
personnel of the Parent, the Borrower or any of the Subsidiaries, including all
former and current employees, agents, consultants and independent contractors
who have contributed to or participated in the conception and development of
software or other Material Intellectual Property for the FATS II, FX, III, L.E.
and IV (collectively, "Personnel"), have executed and delivered to the Borrower
or such Subsidiary a proprietary information agreement restricting such person's
right to disclose proprietary information of the Borrower, the Subsidiaries and
their respective clients. No such representation is made with respect to FATS I.
All former and current Personnel, as referenced above, either (A) have been
party to a "work-for-hire" arrangement or agreement with the Borrower, in
accordance with applicable Federal and state law, that has accorded the Borrower
or a Subsidiary full, effective, exclusive and original ownership of all
tangible and intangible property thereby arising or (B) have executed
appropriate instruments of assignment in favor of the Borrower or a Subsidiary
as assignee that have conveyed to the Borrower or a Subsidiary full, effective
and exclusive ownership of all tangible and intangible property thereby arising.
No former or current Personnel have any claim against the Borrower
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or any of the Subsidiaries in connection with such person's involvement in the
conception and development of any Material Intellectual Property and no such
claim has been asserted or is threatened. None of the current officers and
employees of the Borrower or any of the Subsidiaries have any patents issued or
applications pending for any device, process, design or invention of any kind
now used or needed by the Borrower or any of the Subsidiaries in the furtherance
of its business operations, which patents or applications have not been assigned
to the Borrower or a Subsidiary, with such assignment duly recorded in the
United States Patent Office.
SECTION 3.08. Subsidiaries. Schedule 3.08 sets forth as of the
Effective Date a list of all the Subsidiaries, the respective jurisdictions of
organization thereof and the percentage ownership interest, direct or indirect,
of the Borrower therein.
SECTION 3.09. Litigation; Compliance with Laws. (a) Schedule 3.09(a)
sets forth a list as of the Effective Date of all pending or, to the knowledge
of the Borrower, threatened litigation, arbitrations or other proceedings
against the Borrower or any Subsidiary that involves a claim for more than
$50,000. Except as set forth in Schedule 3.09(a), none of such lawsuits, claims,
arbitrations or other proceedings as to which there is a reasonable possibility
of adverse determination would have, if so determined, a Material Adverse
Effect. To the knowledge of the Borrower, except as set forth in Schedule
3.09(a), as of the Effective Date, neither the Borrower nor any Subsidiary is a
party or subject to or in default under any material judgment, order, injunction
or decree of any Governmental Authority or arbitration tribunal. Except as set
forth in Schedule 3.09(a), there are no actions, suits, investigations or
proceedings at law or in equity or by or before any arbitrator or Governmental
Authority now pending or, to the knowledge of the Borrower, threatened against
or affecting the Parent, the Borrower, any of the Subsidiaries or any business,
property or rights of the Parent, the Borrower or any of the Subsidiaries (i)
which involve any Loan Document or (ii) as to which there is a reasonable
possibility of an adverse determination and which, if adversely determined,
could, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(b) Except as set forth in Schedule 3.09(a), the Parent, the Borrower
and the Subsidiaries are in compliance with all applicable statutes, laws,
ordinances, rules, orders and regulations of any Governmental Authority
("Applicable Laws") including those relating to occupational health and safety,
except for instances of noncompliance that, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect. Except as set forth in
Schedule 3.09(a), as of the Effective Date neither the Borrower nor a Subsidiary
has received any written communication during the past three years from a
Governmental Authority that alleges that the Borrower or such Subsidiary is not
in compliance in any material respect with any Applicable Laws. Except as set
forth in Schedule 3.09(a), to the knowledge of the Borrower, as of the Effective
Date, there is no pending or threatened investigation of the Borrower or a
Subsidiary by any Governmental Authority. This Section 3.09(b) does not relate
to matters with respect to taxes, which are the subject of Section 3.14, or to
environmental matters, which are the subject of Section 3.09(c).
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(c) Except as set forth in Schedule 3.09(a): (i) as of the Effective
Date, neither the Borrower nor any of the Subsidiaries has received any written
communication during the past five years from a Governmental Authority that
alleges that the Borrower or such Subsidiary is not in compliance with any
Environmental Laws which has not been resolved to the satisfaction of the
Governmental Authority; (ii) each of the Borrower and the Subsidiaries holds and
is in compliance with, all material permits, licenses and governmental
authorizations required for each of the Borrower and the Subsidiaries to conduct
its business in compliance with the Environmental Laws, and is in compliance
with all Environmental Laws, except for any instances of noncompliance which,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect; (iii) as of the Effective Date, neither the Borrower
nor any of the Subsidiaries has received any written communication alleging that
the Borrower or any of the Subsidiaries is liable to any party (including, but
not limited to, a Governmental Authority) as a result of the Release of a
Hazardous Substance; (iv) to the knowledge of the Borrower, none of the
properties owned or leased by the Borrower or any of the Subsidiaries contains
underground storage tanks, asbestos-containing materials, or PCB-containing
materials; and (v) to the knowledge of the Borrower, there have been no Releases
of Hazardous Substances on any of the properties owned or leased by the Borrower
or any of the Subsidiaries that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect. For purposes of this
Section 3.09(c) only: the term "Environmental Laws" means any and all applicable
foreign, Federal, state or local laws, regulations, binding determinations,
orders, decrees or permits issued, promulgated or entered into by any
Governmental Authority, relating to the Release of Hazardous Substances; the
term "Hazardous Substances" means all materials defined as hazardous substances
pursuant to Section 101(14) of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986, 42 U.S.C. Sections 9601 et seq. ("CERCLA") and
petroleum; and the term "Release" shall have the meaning set forth in Section
101(22) of CERCLA.
SECTION 3.10. Agreements. (a) Each indenture or other agreement or
instrument evidencing Indebtedness and each other material agreement, contract,
lease, license, commitment or other instrument to which the Borrower or any of
the Subsidiaries is a party or by which it or any of its properties or assets
are or may be bound as of the Effective Date, after giving effect to the
application of proceeds thereof on the Effective Date, is listed on Schedule
3.10(a) hereto (collectively with any agreements listed on Schedule 3.20, the
"Material Contracts").
(b) Except as set forth in Schedule 3.10(a), as of the Effective Date,
all the Material Contracts are valid, binding and in full force and effect in
all material respects. Except as set forth in Schedule 3.10(a), as of the
Effective Date, the Borrower and the Subsidiaries have performed all material
obligations required to be performed by them to date under the Material
Contracts and they are not in breach or default in any material respect
thereunder and, to the knowledge of the Borrower, no other party to any of the
Material Contracts is in breach or default in any material respect thereunder.
All contracts between the Borrower, any Subsidiary or the Parent and the U.S.
Department of Defense (and any modifications to such contracts) with a face
value in excess of $100,000 have been negotiated, fixed priced
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agreements, as defined in the Federal Acquisition Regulation, as amended.
SECTION 3.11. Federal Reserve Regulations. (a) None of the Borrower,
the Subsidiaries and the Parent is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying Margin Stock.
(b) No part of the proceeds of any Loan and no Letter of Credit will be
used, whether directly or indirectly, and whether immediately, incidentally or
ultimately, for any purpose which entails a violation of, or which is
inconsistent with, the provisions of the regulations of the Board, including
Regulations G, U and X.
SECTION 3.12. Investment Company Act; Public Utility Holding Company
Act. None of the Parent, the Borrower and the Subsidiaries is (a) an "investment
company" as defined in, or subject to regulation under, the Investment Company
Act of 1940 or (b) a "holding company" as defined in, or subject to regulation
under, the Public Utility Holding Company Act of 1935 or (c) subject to
regulation as a "public utility" or a "public service corporation" or the
equivalent under any federal or state law.
SECTION 3.13. Use of Proceeds. The proceeds of all Revolving Loans will
be used solely to provide for the ongoing working capital and general corporate
purposes of the Borrower and the Subsidiaries (including Permitted
Acquisitions). The Letters of Credit will be issued solely to support various
financial and other performance obligations of the Borrower and the Subsidiaries
incurred in the ordinary course of business. The proceeds of the Term Loans were
used to consummate the transactions contemplated by the Recapitalization
Agreement.
SECTION 3.14. Tax Returns. Each of the Parent, the Borrower and the
Subsidiaries has filed or caused to be filed all Federal, state, local and
foreign tax returns required to be filed by it and has paid or caused to be paid
all taxes shown to be due and payable on such returns or on any assessments
received by it, except taxes that are being contested in good faith by
appropriate proceedings diligently pursued and for which adequate reserves in
accordance with GAAP have been set aside on its financial statements.
SECTION 3.15. No Material Misstatements. To the knowledge of the
Borrower as of the Effective Date, the reports, financial statements, exhibits,
schedules and other information (except for forecasts and projections) furnished
by or on behalf of the Borrower to the Lenders in connection with the
negotiation of any Loan Document or included therein or delivered pursuant
thereto, when taken as a whole and evaluated in the context presented, do not
contain any material misstatement of fact or omit to state any material fact
necessary to make the statements therein not misleading in light of the
circumstances under which such information was provided. Any such report,
financial statement, exhibit, schedule or other information which constitutes a
forecast or a projection was prepared in good faith, was based on assumptions
that the Borrower believes to be reasonable and based on the best information
available to the Borrower. As of the Effective Date, except for the uncertainty
inherent in any similar financial forecast or projection, the Borrower has no
reason to believe that any such
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forecasts or projections are misleading in any material respect in light of the
circumstances existing at the time of preparation thereof.
SECTION 3.16. Employee Benefit Plans. (a) Each of the Borrower and the
Commonly Controlled Entities is in compliance in all material respects with the
applicable provisions of ERISA and the regulations and published interpretations
thereunder. Neither a Reportable Event nor an "accumulated funding deficiency"
(within the meaning of Section 412 of the Code or Section 302 of ERISA) has
occurred within the five years prior to the Effective Date with respect to any
Plan, and each Plan has complied in all material respects with the applicable
provisions of ERISA and the Code. No termination of a Single Employer Plan has
occurred and no Lien in favor of the PBGC or a Plan has arisen during the five
years prior to the Effective Date.
(b) The present value of all accrued benefits under each Single
Employer Plan in which the Borrower or any Commonly Controlled Entity is a
participant (based on those assumptions used to fund the Plans) did not, as of
the last annual valuation date prior to the Effective Date, exceed the value of
the assets of such Plan allocable to such accrued benefits.
(c) Neither the Borrower nor any Commonly Controlled Entity has had a
complete or partial withdrawal from any Multiemployer Plan, and neither the
Borrower nor any Commonly Controlled Entity would become subject to any
liability under ERISA if the Borrower or any such Commonly Controlled Entity
were to withdraw completely from all Multiemployer Plans as of the last
valuation date prior to the Effective Date.
(d) No such Multiemployer Plan is in "reorganization" or "insolvent,"
within the meaning of such terms as used in ERISA.
(e) Neither the Borrower nor any Commonly Controlled Entity has any
liability for post retirement benefits to be provided to its current and former
employees.
(f) No prohibited transaction under ERISA or the Code has occurred with
respect to any Multiemployer Plan or Single Employer Plan which could have a
Material Adverse Effect.
SECTION 3.17. Government Contracting Matters. (a) Except as set forth
in Schedule 3.17(a), each of the Parent, the Borrower and the Subsidiaries has
complied with all material terms and conditions of each Government Contract that
provides for aggregate payments to the Parent, the Borrower and the Subsidiaries
of $500,000 or more, including all clauses, provisions and requirements
incorporated by reference or by operation of law therein, and there are no
claims that could reasonably be expected to have a Material Adverse Effect nor
any potential liability for defective pricing, false statements or false claims
on Government Contracts. For the purposes hereof, "Government Contract" means
any bid, quotation, proposal, contract, agreement, work authorization, lease,
commitment or sale or purchase order of the Parent, the Borrower or any of the
Subsidiaries with any foreign or domestic, Federal, state, local or other
governmental authority, agency or instrumentality, including all contracts and
work authorizations to supply goods and services to such governmental authority,
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agency or instrumentality and including contracts that are first-tier
subcontracts on prime contracts.
(b) Except as set forth in Schedule 3.17(a), there is no action, suit,
proceeding or, to the Borrower's knowledge, investigation relating to any
proposed suspension or debarment of the Parent, the Borrower or any of the
Subsidiaries or any of their respective directors, officers, employees or agents
from doing business with any foreign or domestic, Federal, state, or local
government (or any agency or instrumentality thereof). None of the Parent, the
Borrower and the Subsidiaries, nor any of their respective directors, officers,
or employees is (or, to the Borrower's knowledge, during the last five years has
been) suspended, proposed for debarment, or debarred from doing business with
any foreign or domestic, Federal, state, or local government (or any agency or
instrumentality thereof) or is (or during such period was) the subject of a
finding of nonresponsibility or ineligibility for contracting with any foreign
or domestic, Federal, state, or local government (or any agency or
instrumentality thereof).
(c) Except as set forth in Schedule 3.17(a), to the Borrower's
knowledge, none of the Parent's, the Borrower's and the Subsidiaries' respective
directors, officers, employees or agents is (or during the last five years has
been) under administrative, civil, or criminal investigation, indictment or
information by any Governmental Authority with respect to any material alleged
irregularity, misstatement or omission arising under or relating to any
Government Contract. None of the Parent, the Borrower and the Subsidiaries has
any knowledge of any material irregularity, misstatement or omission arising
under or relating to any Government Contract that has led or could reasonably
lead, either before or after the Effective Date, to any of the consequences set
forth in Section 3.17(b) or to any other material damage, penalty, assessment,
recoupment of payment or disallowance of cost.
(d) Except as set forth in Schedule 3.17(a), there exist (i) no
outstanding material claims against the Parent, the Borrower or any of the
Subsidiaries, by any foreign or domestic, Federal, state, or local government
(or any agency or instrumentality thereof) or by any prime contractor,
subcontractor, vendor or other third party, arising under or relating to any
Government Contract; and (ii) no material disputes between the Parent, the
Borrower or the Subsidiaries and any foreign or domestic, Federal, state, or
local government (or any agency or instrumentality thereof), or any prime
contractor, subcontractor, vendor or other third party, arising under or
relating to any Government Contract.
(e) None of the Parent, the Borrower and the Subsidiaries has, nor are
any of them in the conduct of their respective businesses required to have, any
facility security clearance or personnel security clearance or other security
clearance from any foreign or domestic, Federal, state, or local government (or
any agency or instrumentality thereof), and none of them have any access to
classified information in connection with any Government Contract or otherwise.
SECTION 3.18. Security Documents. (a) The Pledge Agreement is effective
to create in favor of the Agent, for the ratable benefit of the Secured Parties,
a legal, valid and enforceable security interest in the Collateral (as defined
in the Pledge Agreement) and, the Pledge Agreement, together with the Collateral
delivered to the Agent pursuant thereto,
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constitutes a fully perfected first priority Lien on, and security interest in,
all right, title and interest of the pledgors thereunder in such Collateral, in
case prior and superior in right to any other person.
(b) The Security Agreement is effective to create in favor of the
Agent, for the ratable benefit of the Secured Parties, a legal, valid and
enforceable first priority security interest in the Collateral and, the Security
Agreement, together with financing statements filed in connection with the
Original Credit Agreement and the Pledged Securities (as defined in the Security
Agreement) delivered pursuant to the Security Agreement, constitute a fully
perfected Lien on, and security interest in, all right, title and interest of
the grantors thereunder in such Collateral in which a security interest can be
perfected by (i) filing a financing statement under Article 9 of the Uniform
Commercial Code or (ii) delivering possession of a security under Article 8 of
the Uniform Commercial Code, in each case prior and superior in right to any
other person, other than with respect to Liens expressly permitted by Section
6.02.
(c) The Security Agreement, together with the filings made in the
United States Patent and Trademark Office and the United States Copyright Office
in connection with the Security Agreement constitute a fully perfected Lien on,
and security interest in, all right, title and interest of the grantors
thereunder in the Intellectual Property of the Parent, the Borrower and the
Subsidiaries to the extent that security interests in such Intellectual Property
can be perfected by filing in such offices, in each case prior and superior in
right to any other person (it being understood that subsequent filings in the
United States Patent and Trademark Office and the United States Copyright Office
may be necessary to perfect a lien on Intellectual Property acquired by the
grantors after the date hereof).
(d) Each Mortgage is effective to create in favor of the Agent, for the
ratable benefit of the Secured Parties, a legal, valid and enforceable Lien on
all of the Loan Parties' right, title and interest in and to the Mortgaged
Property thereunder and the proceeds thereof, and when such Mortgage is filed in
the offices specified on Schedule 3.18(d), such Mortgage shall constitute a
fully perfected Lien on, and security interest in, all right, title and interest
of the Loan Parties in such Mortgaged Property and the proceeds thereof, in each
case prior and superior in right to any other person, other than with respect to
the rights of persons pursuant to Liens expressly permitted by Section 6.02.
(e) The Agent for the benefit of the Secured Parties will at all times
have the Liens provided for in the Collateral Documents and, subject to the
filing by the Agent of continuation statements to the extent required by the
Uniform Commercial Code, the Collateral Documents will at all times constitute a
valid and continuing lien of record and first priority perfected security
interest in all the Collateral referred to therein, except as priority may be
affected by Liens expressly permitted by Section 6.02 and except for Collateral
released in accordance with all applicable provisions of this Amended Agreement
and the Collateral Documents. No filings or recordings are required in order to
perfect the security interests created under the Collateral Documents, except
for filings or recordings listed on Schedule 3.18(e).
(f) By complying with Sections 4.01(e) and 4.02(x) of the Security
Agreement and
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upon receipt by the Agent of acknowledgement copies of each Notice of
Assignment, substantially in the form of Exhibit D 2 to the Security Agreement,
as required under the Assignment of Claims Act of 1940, as amended (31 U.S.C.
Section 3727, 41 U.S.C. Section 15(1988)), each Grantor (as defined in the
Security Agreement) shall have assigned to the Agent all moneys due or to become
due under each Government Contract (other than (i) those Government Contracts
identified as completed on Schedule 13 to the Security Agreement and (ii)
Government Contract 65-02F-0414D with the General Services Administration) with
a total current or potential value exceeding $500,000 and entered into by such
Grantor with any U.S. Federal Governmental Authority.
SECTION 3.19. Solvency. (a) On and as of the Effective Date each of the
Borrower and the Subsidiaries are Solvent. "Solvent" means, with respect to any
person, that (i) the fair value of the assets of such person, at a fair
valuation, will exceed the debts and liabilities, subordinated, contingent or
otherwise, of such person; (ii) the present fair saleable value of the property
of such person will be greater than the amount that will be required to pay the
liabilities of such person on its debts and other liabilities, subordinated,
contingent or otherwise, as such debts and other liabilities become absolute and
matured; (iii) such person will be able to pay its debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured; and (iv) such person will not have an unreasonably small
amount of capital with which to conduct the businesses in which its is engaged
as such businesses are now conducted and are proposed to be conducted. With
respect to any contingent liabilities, such liabilities shall be computed at the
amount which, in light of all the facts and circumstances existing at the time,
represents the amount which can reasonably be expected to become an actual or
matured liability.
(b) The Borrower does not intend to, or to permit any of the
Subsidiaries to, and does not believe that the Borrower or any of the
Subsidiaries will, incur debts beyond its ability to pay such debts as they
mature taking into account the timing of and amounts of cash to be received by
the Borrower or any such Subsidiary and the timing of and amounts of cash to be
payable on or in respect of indebtedness of the Borrower or any such Subsidiary.
SECTION 3.20. Transactions with Affiliates. Except as set forth in
Schedule 3.20, as of the Effective Date, neither the Borrower nor any of the
Subsidiaries is a party to or engaged in any transaction with, and none of the
properties and assets of the Borrower or any of the Subsidiaries is subject to
or bound by any agreement or arrangement with an Affiliate of the Borrower or
any of the Subsidiaries.
SECTION 3.21. Ownership. (a) As of the Effective Date, the authorized
Capital Stock of the Borrower consists of 1,000 shares of common stock, par
value $1.00 per share, all of which are issued and outstanding. As of the
Effective Date, the Parent has good, valid and marketable title to all of the
outstanding Capital Stock of the Borrower, free and clear of Liens of every
kind, whether absolute, matured, contingent or otherwise, other than the Liens
of the Pledge Agreement. As of the Effective Date there are no existing options
(including employee stock options), warrants, calls or commitments relating to,
or any securities or rights convertible into, exercisable for or exchangeable
for, any Capital Stock of the Borrower.
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(b) As of the Effective Date, the authorized Capital Stock of the
Parent consists of (i) 68,060,000 shares of Class A common stock, par value
$0.000006 per share (the "Class A Common Stock"), of which 20,404,630 are issued
and outstanding, (ii) 2,200,000 shares of Class B non-voting common stock, par
value $0.000006 per share, no shares of which are issued and outstanding, and
(iii) 200,000 shares of preferred stock, par value $0.10 per share, no shares of
which are issued and outstanding. As of the Effective Date, all of the shares of
the Class A Common Stock of the Parent that are issued and outstanding have been
duly and validly authorized and issued, are fully paid and nonassessable, and
were not issued in violation of the preemptive rights of any shareholder. To the
Borrower's knowledge, as of the Effective Date, the Sponsor and the Centre
Entities, collectively, have good, valid and marketable title to 10,594,060
shares or 52% of the outstanding shares of Class A Common Stock.
(c) All of the shares of common stock of each Subsidiary have been duly
and validly authorized and issued, are fully paid and nonassessable, and were
not issued in violation of the preemptive rights of any stockholder. The
Borrower owns, directly or indirectly, good, valid and marketable title to all
the common stock of each Subsidiary, free and clear of all Liens, other than the
Liens of the Collateral Documents, of every kind, whether absolute, matured,
contingent or otherwise. There are no existing options, warrants, calls or
commitments relating to, or any securities or rights convertible into,
exercisable for or exchangeable for, any Capital Stock of the Subsidiaries.
SECTION 3.22. Insurance. The Borrower and the Subsidiaries maintain, as
of the Effective Date, policies of fire and casualty, liability, business
interruption and other forms of insurance in such amounts, with such deductibles
and against such risks and losses as are necessary to insure fully the business
and assets of the Borrower and the Subsidiaries. All such policies are in full
force and effect as of the Effective Date, all premiums due and payable thereon
as of the Effective Date have been paid in accordance with their terms (other
than retroactive or retrospective premium adjustments that are not yet, but may
be, required to be paid with respect to any period ending prior to the Effective
Date under comprehensive general liability and workmen's compensation insurance
policies), and no notice of cancellation or termination has been received as of
the Effective Date with respect to any such policy which has not been replaced
on substantially similar terms prior to the date of such cancellation. The
activities and operations of the Borrower and the Subsidiaries have been
conducted in a manner so as to conform in all material respects to all
applicable provisions of such insurance policies.
SECTION 3.23. Labor Matters. (a) Except as set forth in Schedule
3.23(a), as of the Effective Date, (i) there is no labor strike, dispute, work
stoppage or lockout pending, or, to the knowledge of the Borrower, threatened,
against the Borrower or a Subsidiary; (ii) to the knowledge of the Borrower, no
union organizational campaign is in progress with respect to the employees of
the Borrower or a Subsidiary; (iii) there is no unfair labor practice charge or
complaint against the Borrower or a Subsidiary pending, or, to the knowledge of
the Borrower, threatened, before the National Labor Relations Board; (iv) there
are no pending, or, to the knowledge of Borrower, threatened, union grievances
against the Borrower or a
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Subsidiary as to which there is a reasonable possibility of adverse
determination and that, if so determined, would have a Material Adverse Effect;
(v) there are no pending, or, to the knowledge of the Borrower, threatened,
charges against the Borrower, a Subsidiary or any current or former employee of
the Borrower before the Equal Employment Opportunity Commission or any state or
local agency responsible for the prevention of unlawful employment practices;
and (vi) neither the Borrower nor any of the Subsidiaries has received written
notice during the past three years of the intent of any Governmental Authority
responsible for the enforcement of labor or employment laws to conduct an
investigation of the Borrower or a Subsidiary and, to the knowledge of the
Borrower, no such investigation is in progress.
(b) No employee or agent of the Parent, the Borrower or any Subsidiary
that has not signed a confidentiality and non-compete agreement is privy to any
information that, if disseminated to an unrelated third party, could have a
Material Adverse Effect.
SECTION 3.24. Licenses; Permits. Schedule 3.24 sets forth a true and
complete list as of the Effective Date of all material licenses, permits and
authorizations issued or granted to the Borrower and the Subsidiaries by
Governmental Authorities which are necessary or desirable for the conduct of the
business of the Borrower and the Subsidiaries as currently conducted. Except as
set forth in Schedule 3.24, as of the Effective Date, all such licenses, permits
and authorizations are validly held by the Borrower or the relevant Subsidiary,
and the Borrower and the Subsidiaries have complied in all material respects
with all terms and conditions thereof.
ARTICLE IV
CONDITIONS OF LENDING
SECTION 4.01. Conditions Precedent to the Effective Date. This Amended
Agreement shall become effective on the first date (the "Effective Date") when
all of the following conditions precedent set forth in this Section 4.01, and
the additional conditions precedent set forth in Section 4.02, have been
satisfied:
(a) The Agent shall have received (i) counterparts hereof
signed by each of the parties hereto (or, in the case of any Lender as
to which an executed counterpart shall not have been received,
telegraphic, telex, telecopy or other written confirmation from such
party in form satisfactory to the Agent of the execution of a
counterpart hereof by such Lender), (ii) counterparts to the Parent's
Consent, signed by each of the parties thereto, (iii) counterparts to
the Borrower's Consent signed by each of the parties thereto (or, in
the case of any Lender as to which an executed counterpart shall not
have been received, telegraphic, telex, telecopy or other written
confirmation from such party in form satisfactory to the Agent of the
execution of a counterpart hereof by such Lender) and (iv) counterparts
to the Subsidiaries' Consent signed by each of the parties thereto (or,
in the case of any Lender as to which an executed counterpart shall
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not have been received, telegraphic, telex, telecopy or other written
confirmation from such party in form satisfactory to the Agent of the
execution of a counterpart hereof by such Lender).
(b) The Agent shall have received, (i) for the account of each
Lender, a duly executed Note or Notes (other than the Swingline Note),
dated the Effective Date, complying with the provisions of Section 2.05
and (ii) for the account of the Swingline Lender, a duly executed
Swingline Note, dated the Effective Date, complying with the provisions
of Section 2.05. On the Effective Date, the Lenders under the Original
Credit Agreement will return the Notes dated as of the Closing Date to
the Borrower for cancellation, and such Notes will be replaced by the
Notes dated the Effective Date and issued to the Lenders hereunder.
(c) The Agent on behalf of the Secured Parties shall have a
security interest in the Collateral of the type and priority described
in each Collateral Document, perfected to the extent contemplated by
Section 3.18 and the Agent shall have received:
(i) confirmation by the Borrower that the Agent has
previously received certificates representing all Pledged
Securities (as defined in the Security Agreement and Pledge
Agreement), accompanied by stock powers endorsed in blank;
(ii) confirmation by the Borrower that no additional
filing, registration or recordation of any document (including
any Uniform Commercial Code financing statement) is required
to be filed, registered or recorded in order to create in
favor of the Agent for the benefit of the Secured Parties a
valid, legal and perfected security interest in or Lien on the
Collateral; and
(iii) searches of Uniform Commercial Code filings in
the jurisdiction of the chief executive office of the Parent,
the Borrower and each Subsidiary and each jurisdiction where
any Collateral is located and where a filing was made in
connection with the Original Credit Agreement and the
Collateral Documents, confirming the perfected security
interest in the Collateral in favor of the Agent for the
benefit of the Secured Parties.
(d) The Agent shall have received an opinion of (i) each of
the appropriate counsel to the Loan Parties necessary to give those
opinions set forth in Exhibit M-1 hereto and (ii) Georgia counsel to
the Borrower in the form of Exhibit M-2 hereto, dated the Effective
Date and addressed to the Agent and the Lenders.
(e) The Agent shall have received:
(i) a certificate, dated the Effective Date and
signed by a Financial Officer of each of the Borrower and the
Domestic Subsidiaries confirming compliance with the
conditions precedent set forth in paragraphs (h), (j) and (k)
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of this Section 4.01 and in paragraphs (b), (c) and (d) of
Section 4.02;
(ii) a copy of the long form certificate of
incorporation or other constitutive documents, including all
amendments thereto, of the Parent, the Borrower and the
Domestic Subsidiaries, certified as of a recent date by the
Secretary of State (or comparable authority) of the
jurisdiction of its organization, and a certificate as to the
good standing of each such party as of a recent date, from
such Secretary of State (or other authority);
(iii) a certificate of the Secretary or Assistant
Secretary of the Parent, the Borrower and the Domestic
Subsidiaries dated the Effective Date and certifying (A) that
attached thereto is a true and complete copy of the by-laws or
comparable governing instruments of such party as in effect on
the Effective Date and at all times since a date prior to the
date of the resolutions described in clause (B) below, (B)
that attached thereto is a true and complete copy of
resolutions duly adopted by the Board of Directors or
comparable governing body of such party (or, in the case of
any partnership, of the general partner of such party)
authorizing the execution, delivery and performance of this
Amended Agreement, the Loan Documents to which such party is
or will be a party, including without limitation, the Parent's
Consent, the Subsidiaries' Consent and the Borrower's Consent,
and in the case of the Borrower, the extensions of credit
hereunder, and that such resolutions have not been modified,
rescinded or amended and are in full force and effect, (C)
that the certificate of incorporation or other constitutive
documents of such party have not been amended since the date
of the last amendment thereto shown on the certificate of good
standing furnished pursuant to clause (ii) above, and (D) as
to the incumbency and specimen signature of each officer
executing any Loan Document or any other document delivered in
connection herewith on behalf of such party; and
(iv) such other documents, opinions, certificates and
agreements in connection with the Facilities, in form and
substance satisfactory to the Agent, as it shall reasonably
request.
(f) The Borrower shall have paid all Fees and other amounts
due and payable to the Agent or any Lender on or prior to the Effective
Date.
(g) [intentionally omitted.]
(h) No Material Adverse Change shall have occurred since March
31, 1997.
(i) [Intentionally omitted.]
(j) The Agent shall have received satisfactory evidence that
the Borrower has obtained all governmental, shareholder and third party
consents and approvals and expiration of all applicable waiting or
appeal periods necessary or, in the opinion of the
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Agent, appropriate in connection with this Amended Agreement.
(k) There shall not exist any action, suit, investigation or
proceeding pending or threatened in any court or before any arbitrator
or other Governmental Authority that purports to adversely affect the
Facilities or that could have a material adverse effect on the ability
of the Borrower and the Subsidiaries to perform their obligations under
the documents to be executed in connection with the Facilities, except
as disclosed to and approved by the Agent prior to the date hereof.
SECTION 4.02. All Credit Events. The obligations of the Lenders to make
Loans hereunder (including the obligation of the Swingline Lender to make
Swingline Loans hereunder), and the obligation of the Issuing Bank to issue
Letters of Credit hereunder, are subject to the satisfaction of the conditions
that on the date of each Borrowing (including each Swingline Borrowing) and on
the date of issuance of each Letter of Credit:
(a) The Agent shall have received a notice of such Borrowing
as required by Section 2.04 or a notice requesting the issuance of such
Letter of Credit as required by Section 2.22(d), as applicable.
(b) The representations and warranties set forth in Article
III and the representations and warranties of the Borrower and the
other Loan Parties set forth in the other Loan Documents (except, in
the case of a refinancing of Revolving Loans or Swingline Loans that
does not increase the aggregate principal amount of outstanding
Revolving Loans or Swingline Loans, as applicable, the representations
set forth in Sections 3.06 and 3.09) shall be true and correct in all
material respects on and as of the date of such Borrowing or the date
of the issuance of such Letter of Credit with the same effect as though
made on and as of such date, except to the extent such representations
and warranties expressly relate to an earlier date (in which case such
representations and warranties shall be true and correct in all
material respects on and as of such earlier date).
(c) At the time of and immediately after such Borrowing or the
issuance of such Letter of Credit, the aggregate outstanding principal
amount of the Loans of each Class and the Dollar Amount of all Letter
of Credit Exposure shall not exceed the limitations set forth in
Sections 2.02 and 2.22(a) and (b).
(d) At the time of and immediately after such Borrowing or the
issuance of such Letter of Credit, no Default or Event of Default shall
have occurred and be continuing.
Each Borrowing hereunder and each issuance of a Letter of Credit hereunder shall
be deemed to constitute a representation and warranty by the Borrower on the
date of such Borrowing or issuance of such Letter of Credit as to the matters
specified in paragraphs (b), (c) and (d) of this Section 4.02. For purposes of
this Section 4.02, a "Borrowing" does not include a conversion or continuation
of a previously outstanding Term Borrowing pursuant to
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Section 2.11.
ARTICLE V
AFFIRMATIVE COVENANTS
The Borrower and the Parent, as applicable, covenant and agree with
each Lender that so long as this Amended Agreement shall remain in effect or any
Obligations shall be unpaid, and until the Commitments have been terminated and
the Loans, together with interest, Fees and all other Obligations have been paid
in full, all Letters of Credit have been cancelled or have expired and all
amounts drawn thereunder have been reimbursed in full, unless the Required
Lenders shall otherwise consent in writing:
SECTION 5.01. Existence; Businesses and Properties. (a) The Borrower
will, and will cause each of the Subsidiaries to, and the Parent will, do or
cause to be done all things necessary to preserve, renew and keep in full force
and effect its legal existence, except as otherwise expressly permitted under
Section 6.05(a).
(b) The Borrower will, and will cause each of the Subsidiaries to, and
the Parent will, do or cause to be done all things necessary to obtain,
preserve, renew, extend and keep in full force and effect the rights, leases,
privileges, licenses, permits, franchises, authorizations, patents, copyrights,
trademarks, trade names and all other Intellectual Property material to the
conduct of its business; maintain and operate such business in substantially the
manner in which it is presently conducted and operated; comply in all material
respects with all applicable laws, rules, regulations (including any zoning,
building, ordinance, code or approval or any building permits or any
restrictions of record or agreements affecting the Mortgaged Properties and
excluding Environmental Laws, which are subject to the provisions of Section
5.11) and judgments, writs, injunctions, decrees and orders of any Governmental
Authority, whether now in effect or hereafter enacted; and at all times maintain
and preserve all property material to the conduct of such business and keep such
property in good repair, working order and condition (subject to ordinary wear
and tear) and from time to time make, or cause to be made, all needful and
proper repairs, renewals, additions, improvements and replacements thereto
necessary in order that the business carried on in connection therewith may be
properly conducted at all times.
SECTION 5.02. Insurance. (a) The Borrower will, and will cause each of
the Subsidiaries to, keep its insurable properties fully insured at all times by
financially sound and reputable insurers; such insurance to include fire and
other risks insured against by extended coverage, public liability insurance
against claims for personal injury or death or property damage occurring upon,
in, about or in connection with the use of any properties owned, occupied or
controlled by it and business interruption insurance, and maintain such other
insurance as may be required by law.
(b) The Borrower will, and will cause each of the Subsidiaries to,
cause all such
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policies (other than workers' compensation and employee health policies) to be
endorsed or otherwise amended to include a "standard" or "New York" lender's
loss payable endorsement, in form and substance reasonably satisfactory to the
Agent, which endorsement shall provide that, from and after the Effective Date,
if the insurance carrier shall have received written notice from the Agent of
the occurrence of an Event of Default, the insurance carrier shall pay all
proceeds otherwise payable to the Borrower or the Loan Parties under such
policies directly to the Agent; cause all such policies to provide that neither
the Borrower, the Agent nor any other party shall be a coinsurer thereunder and
to contain a "Replacement Cost Endorsement", without any deduction for
depreciation, and such other provisions as the Agent may reasonably require from
time to time to protect the interests of the Agent and the Lenders; deliver
original or certified copies of all such policies to the Agent; cause each such
policy to provide that it shall not be cancelled, modified or not renewed (i) by
reason of nonpayment of premium upon not less than 30 days' prior written notice
thereof by the insurer to the Agent (giving the Agent the right to cure defaults
in the payment of premiums) or (ii) for any other reason upon not less than 30
days' prior written notice thereof by the insurer to the Agent; deliver to the
Agent, prior to the cancellation, modification or nonrenewal of any such policy
of insurance, a copy of a renewal or replacement policy (or other evidence of
renewal of a policy previously delivered to the Agent) together with evidence
satisfactory to the Agent of payment of the premium therefor.
(c) If at any time the area in which the Premises (as defined in the
Mortgages) are located is designated (i) a "flood hazard area" in any Flood
Insurance Rate Map published by the Federal Emergency Management Agency (or any
successor agency), the Borrower will, and will cause each of the Subsidiaries
to, obtain flood insurance in such total amount as the Agent or the Required
Lenders may from time to time require, and otherwise comply with the National
Flood Insurance Program as set forth in the Flood Disaster Protection Act of
1973, as it may be amended from time to time, or (ii) a "Zone 1" area, to the
extent available at commercially reasonable rates, obtain earthquake insurance
in such total amount as the Agent or the Required Lenders may from time to time
require.
(d) With respect to any Mortgaged Property, the Borrower will, and will
cause each of the Subsidiaries to, carry and maintain comprehensive general
liability insurance including coverage on an occurrence basis against claims
made for personal injury (including bodily injury, death and property damage)
and umbrella liability insurance against any and all claims, in no event for a
combined single limit with respect to such Mortgaged Property of less than
$10,000,000, naming the Agent as an additional insured, on forms satisfactory to
the Agent.
(e) The Borrower will, and will cause each of the Subsidiaries to,
notify the Agent immediately whenever any separate insurance concurrent in form
or contributing in the event of loss with that required to be maintained under
this Section 5.02 is taken out by the Borrower; and promptly deliver to the
Agent a duplicate original copy of such policy or policies.
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(f) In connection with the covenants set forth in this Section 5.02, it
is understood and agreed that:
(i) none of the Agent, the Lenders, the Issuing Bank or
their respective agents or employees shall be liable for any loss or
damage insured by the insurance policies required to be maintained
under this Section 5.02, it being understood that (A) the Borrower and
the other Loan Parties shall look solely to their insurance companies
or any other parties other than the aforesaid parties for the recovery
of such loss or damage and (B) such insurance companies shall have no
rights of subrogation against the Agent, the Lenders, the Issuing Bank
or their agents or employees. If, however, the insurance policies do
not provide waiver of subrogation rights against such parties, as
required above, then the Borrower hereby agrees, to the extent
permitted by law, to waive its right of recovery, if any, against the
Agent, the Lenders, the Issuing Bank and their agents and employees;
(ii) the Borrower will permit an insurance consultant
retained by the Agent, at the expense of the Borrower, to review the
insurance policies maintained by the Borrower and the Subsidiaries, but
no more frequently than annually; and
(iii) the designation of any form, type or amount of
insurance coverage by the Agent or the Required Lenders under this
Section 5.02 shall in no event be deemed a representation, warranty or
advice by the Agent or the Lenders that such insurance is adequate for
the purposes of the business of the Borrower and the Subsidiaries or
the protection of their properties and the Agent and the Required
Lenders shall have the right from time to time to require the Borrower,
the Subsidiaries and the Parent to keep other insurance in such form
and amount as the Agent or the Required Lenders may reasonably request,
provided that such insurance shall be obtainable on commercially
reasonable terms.
SECTION 5.03. Obligations and Taxes. The Borrower will, and will cause
each of the Subsidiaries to, and the Parent will, pay all of its obligations
(other than Indebtedness) promptly and in accordance with their terms and pay
and discharge promptly when due all taxes, assessments and governmental charges
or levies imposed upon it or upon its income or profits or in respect of its
property, before the same shall become delinquent or in default, as well as all
lawful claims for labor, materials and supplies or otherwise which, if unpaid,
might give rise to a Lien upon such properties or any part thereof; provided,
however, that such payment and discharge shall not be required with respect to
any such tax, assessment, charge, levy or claim so long as the validity or
amount thereof shall be contested in good faith by appropriate proceedings
diligently pursued and the Borrower shall have set aside on its books adequate
reserves in accordance with GAAP with respect thereto and such contest operates
to suspend collection of the contested obligation, tax, assessment or charge and
enforcement of a Lien and, in the case of a Mortgaged Property, there is no risk
of forfeiture of such property.
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SECTION 5.04. Financial Statements, Reports, etc. The Borrower will
furnish to the Agent and each Lender:
(a) as soon as available, and in any event within 90 days
after the end of each fiscal year, its consolidated balance sheet and
related consolidated statements of operations and cash flows, showing
the consolidated financial position of the Borrower and its
Consolidated Subsidiaries as of the close of such fiscal year and the
consolidated results of their operations and cash flows during such
year, in each case setting forth in comparative form the figures for
the preceding fiscal year, all audited by Arthur Andersen LLP or
another nationally recognized "Big Six" independent public accounting
firm and accompanied by an opinion of such accountants (which shall not
be qualified in any material respect) to the effect that such financial
statements fairly present the consolidated financial position and
consolidated results of operations and cash flows of the Borrower and
its Consolidated Subsidiaries in accordance with GAAP consistently
applied;
(b) as soon as available, and in any event within 45 days
after the end of each of the first three fiscal quarters of each fiscal
year, its consolidated balance sheet and related consolidated
statements of operations and cash flows, showing the consolidated
financial position of the Borrower and its Consolidated Subsidiaries as
of the close of such fiscal quarter, the consolidated results of their
operations during such fiscal quarter and the then elapsed portion of
the fiscal year and the consolidated cash flows for the then elapsed
portion of the fiscal year, all certified by one of its Financial
Officers as fairly presenting the consolidated financial position and
consolidated results of operations and cash flows of the Borrower and
its Consolidated Subsidiaries in accordance with GAAP consistently
applied, subject to normal year-end audit adjustments;
(c) concurrently with any delivery of financial statements
under paragraph (a) or (b) above, a certificate of a Financial Officer
of the Borrower certifying that no Default or Event of Default has
occurred or, if such a Default or Event of Default has occurred,
specifying the nature and extent thereof and any corrective action
taken or proposed to be taken with respect thereto;
(d) concurrently with any delivery of financial statements
under paragraph (a) or (b) above, a certificate of a Financial Officer
of the Borrower, substantially in the form of Exhibit F hereto, (i)
setting forth computations in reasonable detail satisfactory to the
Agent demonstrating compliance with the covenants contained in Sections
6.14 and 6.15, (ii) stating whether, since the date of the most recent
Required Financial Statements previously delivered, there has been any
material change in the generally accepted accounting principles applied
in the preparation of the Borrower's financial statements and, if so,
describing such change, (iii) containing summaries of accounts payable
agings, accounts receivable agings, and inventory of the Borrower on a
stand-alone basis, (iv) in the case of a certificate delivered
concurrently with a certificate under paragraph (a) above, setting
forth the Excess Cash Flow for the preceding fiscal
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year (or, in the case of the fiscal year ending March 31, 1997, for the
period from the Closing Date through March 31, 1997) and a reasonably
detailed calculation thereof, (v) a comparison of the actual results
during the period covered by such financial statements to those
originally budgeted by the Borrower prior to the beginning of the
applicable fiscal year, along with management's discussion and analysis
of variances between such actual and budgeted results, as well as
variances between actual results for such period and actual results for
the same period in the previous fiscal year and (vi) a list of any
significant sales contracts awarded or terminated since the date of the
most recent Required Financial Statements previously delivered,
including a description thereof in reasonable detail (provided that the
Borrower may disclose orally, rather than in writing, any such sales
information that the Borrower deems highly sensitive from a competitive
standpoint);
(e) [intentionally omitted.]
(f) promptly upon completion, but in any event not later than
30 days after the commencement of each fiscal year, a copy of
projections by the Borrower of its consolidated balance sheet and
related consolidated statements of operations and cash flows for such
fiscal year (including all material assumptions to such projections)
and a budget for such fiscal year, all in form customarily prepared by
the Borrower's management, such projected financial statements to be
accompanied by a certificate of a Financial Officer to the effect that
such projected financial statements have been prepared in good faith,
based on assumptions that the Borrower believes to be reasonable and
based on the best information available to the Borrower and that such
Financial Officer has no reason to believe they are misleading in any
material respect in light of the circumstances existing at the time of
preparation thereof;
(g) at least five (5) but not more than thirty (30) days prior
to any Permitted Acquisition which occurs after the Effective Date, (i)
financial statements of the target and its subsidiaries, if any, on a
consolidated basis for the most recently fiscal year of the target
(unless the target, by its nature, is an asset that does not
customarily prepare financial statements), (ii) copies of all other
consolidated and consolidating balance sheets (to the extent available)
and related statements of operations and statements of cash flows of
the target and its subsidiaries if any, acquired in such acquisition,
that are to be delivered to the Borrower or any of its subsidiaries in
connection with such acquisition, (iii) to the extent then available,
copies of all purchase agreements, agreements of merger, letters of
intent or other operative agreements entered into by the Borrower or
any of its subsidiaries in connection with such acquisition (it being
understood and agreed that, to the extent such agreements or letters of
intent have not been entered into at such time, copies of such
agreements and letter of intent shall be delivered reasonably promptly
after the execution thereof, and (iv) financial projections covering
the period from the date of such Permitted Acquisition through the
first anniversary of the acquisition, giving effect to such Permitted
Acquisition and demonstrating compliance by the Borrower on a pro forma
basis with the covenants in Article VI from and after the date of, and
after giving effect to such Permitted
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Acquisition (such projections to be certified by a Financial Officer of
the Borrower as having been prepared in good faith on the basis of
assumptions believed by the Borrower to be reasonable);
(h) as soon as available, (i) a copy of each financial
statement, report, notice or proxy statement sent by the Parent, the
Borrower or any of the Subsidiaries to their respective stockholders in
their capacity as stockholders, (ii) a copy of each regular, periodic
or special report, registration statement, or prospectus filed by the
Parent, the Borrower or any of the Subsidiaries with any securities
exchange or the SEC, (iii) any material order issued by any court,
governmental authority, or arbitrator in any material proceeding to
which the Parent, the Borrower or any of the Subsidiaries is a party
and (iv) copies of all press releases and other statements made
available generally by the Parent, the Borrower or any of the
Subsidiaries to the public generally concerning material developments
in the Parent's, the Borrower's or such Subsidiary's business;
(i) as soon as available, and in any event within 15 days of
receipt, any final management letter issued or provided by the auditors
of the Borrower or any Subsidiary; and
(j) promptly, from time to time, such other information
regarding the operations, business affairs and financial condition of
the Parent, the Borrower or any Subsidiary, or compliance with the
terms of any Loan Document, as the Agent or any Lender may reasonably
request.
SECTION 5.05. Other Information. (a) The Borrower will furnish to the
Agent prompt written notice of the following:
(i) any Default or Event of Default, specifying the
nature and extent thereof and the corrective action (if any) proposed
to be taken with respect thereto;
(ii) the filing or commencement of, or any threat or
notice of intention of any person to file or commence, any action, suit
or proceeding, whether at law or in equity or by or before any
Governmental Authority, against or affecting the Parent, the Borrower
or any of the Subsidiaries (A) which, if adversely determined, could,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect or (B) which involves a claim or series of
related claims against the Parent, the Borrower or any Subsidiary in
excess of $250,000;
(iii) all matters materially affecting the value,
enforceability or collectibility of any material portion of its assets,
including changes to significant contracts, schedules of equipment,
changes of significant equipment or real property, the reclamation or
repossession of, or the return to the Borrower or any of the
Subsidiaries of, a material amount of goods and material claims or
disputes asserted by any customer or other obligor, which matters could
have a Material Adverse Effect;
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(iv) any material adverse change in the relationship
between any of the Borrower and the Subsidiaries, on the one hand, and
any of its respective suppliers, licensors or customers, on the other
hand, which could reasonably be expected to have a Material Adverse
Effect.
(v) all proposed amendments to any material agreement
relating to Indebtedness to which the Borrower or any Subsidiary is a
party; and
(vi) any development that, individually or in the
aggregate, has resulted in, or could reasonably be expected to have, a
Material Adverse Effect.
(b) Immediately upon receipt by the Borrower, the Borrower shall
provide the Agent and the Lenders with copies of all notices (including notices
of default), statements and financial information received from any Subordinated
Lender or any other creditor or lessor with respect to any item of Indebtedness
which, if not paid, could give rise to an Event of Default or the repossession
of material property from the Borrower or any of the Subsidiaries.
(c) Any notification required by this Section 5.05 shall be accompanied
by a certificate of a Financial Officer of the Borrower setting forth the
details of the specified events and the action which the Borrower proposes to
take with respect thereto.
SECTION 5.06. ERISA. (a) The Borrower will, and will cause each of the
Subsidiaries to, and the Parent will, comply in all material respects with the
applicable provisions of ERISA and the Code.
(b) The Borrower will promptly give notice to the Agent and each Lender
of the following events, as soon as possible and in any event within 30 days
after the Borrower knows or has reason to know thereof: (i) the occurrence or
expected occurrence of any Reportable Event with respect to any Plan, a failure
to make any required contribution to a Plan, any filing by the Borrower with the
PBGC of a notice of intent to terminate a Plan, any receipt by the Borrower of
notice from the PBGC of the intention of the PBGC to terminate a Plan or appoint
a trustee to administer a Plan, any Lien in favor of the PBGC or a Plan, or any
withdrawal from, or the termination, reorganization or insolvency (within the
meaning of such terms as used in ERISA) of, any Multiemployer Plan; or (ii) the
institution of proceedings or the taking of any other action by the PBGC or the
Borrower or any Commonly Controlled Entity or any Multiemployer Plan with
respect to the withdrawal from, or the termination, reorganization or insolvency
(within the meaning of such terms as used in ERISA) of, any Single Employer Plan
or Multiemployer Plan.
SECTION 5.07. Maintaining Records; Access to Properties and
Inspections. The Borrower will, and will cause each of the Subsidiaries to, keep
proper books of record and account in which full, true and correct entries in
conformity with GAAP and all requirements of law are made of all dealings and
transactions in relation to its business and activities. The Borrower will, and
will cause each of the Subsidiaries to, permit any representatives
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designated by the Agent or the Required Lenders to visit and inspect the
financial records and the properties of the Borrower or any Subsidiary at
reasonable times and as often as reasonably requested, and to make extracts from
and copies of such financial records, and permit any representatives designated
by the Agent or the Required Lenders to discuss the affairs, finances and
condition of the Borrower or any Subsidiary with the officers thereof and
independent accountants therefor (with representatives of the Borrower present
unless an Event of Default or Default has occurred and is continuing).
SECTION 5.08. Use of Proceeds. The Borrower will use the proceeds of
the Loans and request the issuance of Letters of Credit only for the purposes
set forth in Section 3.13.
SECTION 5.09. Interest Rate Protection Agreements. The Borrower shall
maintain in full force and effect Interest Rate Protection Agreements at rates
and on terms reasonably satisfactory to the Agent, the effect of which shall be
to fix or limit the interest that would be payable in connection with Loans
(whether or not such Loans are then outstanding) in the principal amount of not
less than $20,000,000 for a period expiring no earlier than March 5, 1999.
SECTION 5.10. Fiscal Year. The Borrower will, and will cause each
Subsidiary to, cause its fiscal year to end on March 31 in each year.
SECTION 5.11. Compliance with Environmental Laws; Preparation of
Environmental Reports. (a) The Borrower will, and will cause each Subsidiary to,
and the Parent will, comply, and use its best efforts to cause all lessees and
other persons occupying the properties owned or leased by the Borrower and the
Subsidiaries (the "Properties") to comply, in all material respects with all
Environmental Laws and Environmental Permits applicable to its operations and
Properties except to the extent that the failure to comply therewith could not
reasonably be expected to result in liability in excess of $250,000; obtain and
renew all material Environmental Permits necessary for its operations and
Properties; and conduct any Remedial Action required under, and in accordance
with, Environmental Laws, except to the extent that: (i) the cost of such
Remedial Action could not reasonably be expected to exceed $250,000; or (ii) the
necessity of any such Remedial Action is being contested in good faith by
appropriate proceedings timely instituted and diligently pursued and in the
manner provided by applicable law.
(b) If a Default or Event of Default caused by reason of a breach of
Section 3.17 or 5.11(a) shall have occurred and be continuing, or if the laws of
the United States or any state in which the Borrower or any of the Subsidiaries
leases or owns property provide that a Lien upon the property of the Borrower or
any of the Subsidiaries may be obtained for the removal of Hazardous Materials
which have been released, at the request of the Required Lenders through the
Agent, the Borrower will provide to the Lenders within 45 days after such
request, at the expense of the Borrower, an environmental site assessment report
for the Properties which are the subject of such Default or Event of Default
prepared by an environmental consulting firm acceptable to the Agent and
indicating the presence or absence of Hazardous Materials and the estimated cost
of any compliance or Remedial Action in connection with such
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Properties. To the extent any such Hazardous Materials are located therein or
thereunder that either (i) subjects the property to Lien or (ii) requires
removal to safeguard the health of any person, the Borrower shall, and shall
cause each of the Subsidiaries to, remove, or cause to be removed, such Lien and
such Hazardous Materials at the Borrower's expense. The Borrower acknowledges
and agrees that if the Borrower fails to perform its obligations under this
Section 5.11(b), the Agent shall have the right to do so for the Borrower and
the Subsidiaries. The Borrower further acknowledges and agrees that if the
Borrower or any Subsidiary fails to cooperate (e.g., by allowing access to any
premises or permitting the drilling of core samples, etc.), the Agent and the
Lenders will not have an adequate remedy at law.
SECTION 5.12. Further Assurances. The Borrower will, and will cause
each Subsidiary to, and the Parent will, execute any and all further documents,
financing statements, agreements and instruments, and take all further action
(including filing Uniform Commercial Code and other financing statements,
mortgages and deeds of trust) that may be required under applicable law, or that
the Required Lenders or the Agent may reasonably request, in order to effectuate
the transactions contemplated by the Loan Documents and in order to grant,
maintain, preserve, protect and perfect the validity and first priority (except
as such priority may be affected by the Liens permitted under Section 6.02) of
the security interests created or intended to be created by the Collateral
Documents. The Borrower will cause any subsequently acquired or organized
Domestic Subsidiary to become a party to the Subsidiaries Guarantee Agreement,
Indemnity Subrogation and Contribution Agreement, Intercompany Note and each
applicable Collateral Document in favor of the Agent; provided that the
foregoing shall not be deemed to imply that any such acquisition or organization
of a Subsidiary is permitted under this Amended Agreement. In addition, from
time to time, the Borrower will, and will cause each Domestic Subsidiary to, at
its cost and expense, promptly secure the Obligations by pledging or creating,
or causing to be pledged or created, perfected security interests with respect
to such of its assets and properties as the Agent or the Required Lenders shall
designate (it being understood that it is the intent of the parties that the
Obligations shall be secured by, among other things, substantially all the
assets of the Borrower and the Domestic Subsidiaries (including real and other
properties owned or leased on the Effective Date or acquired subsequent to the
Effective Date and including 100% of the capital stock of each Subsidiary,
except that in the case of the pledge of the capital stock of any Foreign
Subsidiary, such pledge shall be limited to 65% of the capital stock of such
Foreign Subsidiary to the extent, and for so long as, the pledge of any greater
percentage would have adverse tax consequences for the Borrower). Such security
interests and Liens will be created under the Collateral Documents and other
security agreements, mortgages, deeds of trust and other instruments and
documents in form and substance satisfactory to the Agent, and the Borrower
shall deliver or cause to be delivered to the Lenders all such instruments and
documents (including legal opinions, title insurance policies, surveys and lien
searches) as the Agent shall reasonably request to evidence compliance with this
Section 5.12. The Borrower agrees to provide such evidence as the Agent shall
reasonably request as to the perfection and priority status of each such
security interest and Lien.
SECTION 5.13. Certain Post-Closing Matters. The Borrower shall deliver
the Landlord Waivers within 30 days of the Effective Date.
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ARTICLE VI
NEGATIVE COVENANTS
The Borrower covenants and agrees with each Lender that so long as this
Amended Agreement shall remain in effect or any Obligations shall be unpaid, and
until the Commitments have been terminated and the Loans, together with
interest, Fees and all other Obligations have been paid in full, all Letters of
Credit have been cancelled or have expired and all amounts drawn thereunder have
been reimbursed in full, unless the Required Lenders shall otherwise consent in
writing:
SECTION 6.01. Indebtedness. The Borrower will not, and will not cause
or permit any of the Subsidiaries to, incur, create, issue, assume or permit to
exist any Indebtedness or Preferred Stock, except:
(a) Indebtedness existing on the Effective Date, to the extent
set forth on Schedule 6.01(a) (but not any extension, renewal or
refinancing thereof);
(b) Indebtedness represented by the Loan Documents (other than
the Intercompany Notes);
(c) (i) Interest Rate Protection Agreements required pursuant
to, and entered into in accordance with, Section 5.09 and (ii) foreign
currency exchange agreements reasonably satisfactory to the Agent
entered into in order to hedge currency exchange rate risk and not for
speculation;
(d) Capital Lease Obligations for office equipment in an
aggregate amount up to $5,000,000 outstanding at any time; provided
that none of the agreements relating thereto shall contain any change
of control or similar provision;
(e) Indebtedness represented by the Intercompany Notes, to the
extent permitted by Section 6.04(a)(ii);
(f) other unsecured Indebtedness (excluding Capital Lease
Obligations permitted pursuant to Section 6.01(d) above) in an
aggregate principal amount of up to $5,000,000 outstanding at any time;
and
(g) Indebtedness consisting of the obligation to reimburse the
issuer of any bid bond, performance bond or other instrument of a like
nature and purpose incurred in the ordinary course of business up to
$500,000 in the aggregate outstanding at any time.
SECTION 6.02. Negative Pledge. The Borrower will not, and will not
cause or
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permit any of the Subsidiaries to, create, incur, assume or permit to exist any
Lien on any property or assets (including stock or other securities of any
Subsidiary or other person) now owned or hereafter acquired by it or on any
income or revenues or rights in respect of any thereof, except:
(a) Liens existing on the Effective Date, to the extent set
forth on Schedule 6.02(a), provided that such Liens secure only those
obligations which they secure on the Effective Date;
(b) Liens in favor of the Agent on behalf of the Secured
Parties created by the Collateral Documents;
(c) Liens for taxes not yet due or which are being contested
in compliance with Section 5.03;
(d) carriers', warehousemen's, mechanic's, materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business and securing obligations that are not due or which are being
contested in compliance with Section 5.03;
(e) pledges and deposits made in the ordinary course of
business in compliance with workmen's compensation, unemployment
insurance and other social security laws or regulations;
(f) trade contracts (other than for Indebtedness), leases
(other than Capital Lease Obligations), and other obligations of a like
nature incurred in the ordinary course of business;
(g) zoning restrictions, easements, rights-of-way,
restrictions on use of real property and other similar encumbrances
incurred in the ordinary course of business which, in the aggregate,
are not substantial in amount and do not materially detract from the
value of the property subject thereto or interfere with the ordinary
conduct of the business of the Borrower or any of the Subsidiaries;
(h) deposits of up to $500,000 in the aggregate outstanding at
any time to secure any obligations permitted by Section 6.01(g);
(i) Liens constituting the interest of any lessor of property
subject to Capital Lease Obligations permitted by Section 6.01(d);
provided that such Liens do not extend to any other property; and
(j) Liens arising by operation of law held by any Wholly Owned
Subsidiary which is a Foreign Subsidiary securing accounts payable by
the Borrower to such Foreign Subsidiary for finished products acquired
by the Borrower from such Foreign Subsidiary in transactions
contemplated by, and subject to the limitations set forth in, clause
(iv) of Section 6.04(a); provided that (i) such Liens securing accounts
payable
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for finished products do not extend to any property other than such
finished products, (ii) all such Foreign Subsidiaries shall have
executed and delivered to the Agent an Acknowledgement of Subordination
substantially in the form of Exhibit L hereto, (iii) the payment of all
accounts payable by the Borrower to any such Foreign Subsidiary shall
be subordinate to the payment in full of all the Obligations and (iv)
any such Liens shall have a second priority lien status to the liens
and other claims created under the Collateral Documents for the benefit
of the Agent and the other Secured Parties.
SECTION 6.03. Sale and Lease-Back Transactions. The Borrower will not,
and will not cause or permit any of the Subsidiaries to, enter into any
arrangement, directly or indirectly, with any person whereby it shall sell or
transfer any property, real or personal, used or useful in its business, whether
now owned or hereafter acquired, and thereafter rent or lease such property or
other property which it intends to use for substantially the same purpose or
purposes as the property being sold or transferred.
SECTION 6.04. Investments, Loans and Advances. (a) The Borrower will
not, and will not cause or permit any of the Subsidiaries to, purchase, hold or
acquire any Capital Stock, evidences of indebtedness or other securities of,
make or permit to exist any loans, extensions of credit or advances to, maintain
any Deposit Account or make or permit to exist any other investment, capital
contribution or other interest in, any other person, except:
(i) investments existing on the Effective Date, to the
extent set forth on Schedule 6.04(a)(i), by the Borrower in Wholly
Owned Subsidiaries;
(ii) loans and advances made after the Effective Date by
the Borrower to Wholly Owned Subsidiaries; provided that (A) any such
loan or advance is evidenced by an Intercompany Note pledged and
delivered to the Agent on behalf of the Secured Parties pursuant to the
Security Agreement, (B) any such loan or advance to any Wholly Owned
Subsidiary shall be permitted only so long as such person remains a
Wholly Owned Subsidiary and (C) the aggregate principal amount
outstanding at any time of loans and advances (excluding investments
under clauses (iii) and (iv) of this Section 6.04(a)) made by the
Borrower after the Effective Date to Foreign Subsidiaries shall not
exceed $1,000,000;
(iii) investments by the Borrower in Wholly Owned
Subsidiaries which are Foreign Subsidiaries; provided that (A) such
investments consist of receivables for inventory transferred to such
Foreign Subsidiaries in the ordinary course of business for resale to
customers of such Foreign Subsidiaries, (B) the aggregate principal
amount of such receivables outstanding at any time shall not exceed
$5,000,000, (C) any such receivable shall be discharged, released or
cancelled only to the extent that the Borrower has received payment of
the amount due from the applicable Foreign Subsidiary, (D) the Borrower
shall receive payment of a corresponding portion of any such receivable
for any goods transferred to any Foreign Subsidiary within 10 Business
Days after receipt by such Foreign Subsidiary of payment from its
customer for such
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goods and (E) the original amount of any such receivable is based on
the Borrower's reasonable, good faith estimate of the amount that would
be paid in an arms-length transaction with an independent, unrelated
third party;
(iv) investments by the Borrower in Wholly Owned
Subsidiaries which are Foreign Subsidiaries; provided that (A) such
investments consist of receivables for parts transferred to such
Foreign Subsidiaries in the ordinary course of business for use in
manufacturing and assembly by such Foreign Subsidiaries, (B) the
aggregate principal amount of such receivables to any Foreign
Subsidiary outstanding at any time is less than the aggregate principal
amount of accounts payable by the Borrower to such Foreign Subsidiary
for finished products acquired by the Borrower in the ordinary course
of business, (C) the amount of any such receivable or payable is based
on the Borrower's reasonable, good faith estimate of the amount that
would be paid in an arms'-length transaction with an independent,
unrelated third party and (D) all such Foreign Subsidiaries shall have
executed and delivered to the Agent an Acknowledgement of Subordination
substantially in the form of Exhibit L hereto;
(v) Cash Equivalents, so long as no Event of Default has
occurred and is continuing;
(vi) (A) trade accounts receivable (and related notes and
instruments) arising in the ordinary course of business consistent with
past practices and (B) notes receivable in the aggregate principal
amount of up to $250,000 outstanding at any time constituting seller
financing for sales made by the Borrower and the Subsidiaries in the
ordinary course of business consistent with past practices, provided
that any such notes shall be pledged to the Agent on behalf of the
Secured Parties pursuant to the Security Agreement;
(vii) advances to employees for moving and travel expenses
in the ordinary course of business consistent with past practices;
(viii) investments in Domestic Subsidiaries organized or
acquired after the Effective Date; provided that (A) more than 50% of
the aggregate ordinary voting power and more than 50% of the ownership
interests of any such Subsidiary are owned, directly or indirectly, by
the Borrower, (B) all Capital Stock of any such Subsidiary owned,
directly or indirectly, by the Borrower shall be pledged to the Agent
on behalf of the Secured Parties pursuant to the Security Agreement and
(C) such investments shall be made solely with the proceeds of
Qualifying Capital Contributions; and
(ix) Permitted Acquisitions; provided, that, the sum of
expenditures made for Permitted Acquisitions (including, without
limitation, the ICAT Acquisition and the Simulation Acquisition) plus
the sum of repurchases (or dividends, as the case may be) made pursuant
to Section 6.06(iii)(B), shall not exceed $10,000,000 in any fiscal
year of the Borrower during the term of this Agreement.
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(b) The Borrower shall not issue, sell, transfer, lease or otherwise
dispose of any of its common stock to, or accept any capital contribution from,
any person, other than the Parent or permit to exist any rights, warrants or
options exercisable for, or any securities exchangeable for or convertible into,
any shares of common stock of the Borrower; provided, that any such issuance to,
or contribution by, the Parent shall be permitted only if (i) the Parent shall
receive no consideration therefor (other than additional shares of common stock
of the Borrower which are immediately pledged to the Agent pursuant to the
Pledge Agreement for the benefit of the Secured Parties), (ii) the Net Cash
Proceeds of such capital contribution (other than a Qualifying Capital
Contribution) are applied as required by Section 2.12(e) and (iii) the Net Cash
Proceeds of any Qualifying Capital Contribution shall not be used, directly or
indirectly, to repay any Indebtedness (other than Obligations) or to redeem or
repurchase any Preferred Stock.
SECTION 6.05. Mergers, Acquisitions and Other Transactions. (a) The
Borrower will not, and will not cause or permit any of the Subsidiaries to, (i)
merge into or consolidate with any other person, (ii) permit any other person to
merge into or consolidate with it, (iii) sell, transfer, lease or otherwise
dispose of (in one transaction or in a series of transactions) all or any part
of its assets (whether now owned or hereafter acquired) or (iv) issue, sell,
transfer, lease or otherwise dispose of any Capital Stock of any Subsidiary to,
or permit any Subsidiary to accept any capital contribution from, any person,
except that:
(A) the Borrower and any of the Subsidiaries may sell
inventory in the ordinary course of business for fair value and on an
arms-length basis;
(B) the Borrower and any of the Subsidiaries may sell damaged,
worn out or obsolete tangible assets in the ordinary course of business
and in a commercially reasonable manner, so long as the Net Cash
Proceeds of any such disposition are applied as required by Section
2.12(e);
(C) the foregoing shall not be deemed violated by any Casualty
or Condemnation affecting assets of the Borrower or any Subsidiary, so
long as the Net Cash Proceeds thereof are applied as required by
Section 2.12(e);
(D) the Borrower or any Subsidiary may liquidate Cash
Equivalents for its account;
(E) the Borrower and any of the Subsidiaries may sell assets
to any other person to the extent that the aggregate Net Cash Proceeds
from such sale to such person do not exceed $150,000, so long as (I)
the fair market value of all property disposed of pursuant to this
clause (E) does not exceed $500,000 in the aggregate in any fiscal
year, (II) such sale is made for cash at no less than fair market value
and (III) the Net Cash Proceeds of any such disposition are applied as
required by Section 2.12(e);
(F) the Borrower or any of the Subsidiaries may transfer
assets consisting of plant, property and equipment (in accordance with
GAAP) to the Borrower or any
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Wholly Owned Subsidiary which is a Domestic Subsidiary, provided that
(I) the Borrower and such Domestic Subsidiary have complied with all
applicable provisions of Section 5.12 and (II) the fair market value of
all property disposed of by the Borrower pursuant to this clause (F)
does not exceed $500,000 in the aggregate in any fiscal year;
(G) the Borrower or any of the Subsidiaries may (I) transfer
inventory to Foreign Subsidiaries in the ordinary course of business
for resale to customers of such Foreign Subsidiaries as contemplated
by, and subject to the limitations set forth in, clause (iii) of
Section 6.04(a) and (II) transfer parts to Foreign Subsidiaries in the
ordinary course of business for use in manufacturing and assembly by
such Foreign Subsidiaries as contemplated by, and subject to the
limitations set forth in, clause (iv) of Section 6.04(a); and
(H) the Borrower and any of the Subsidiaries may sell
equipment leases entered into with municipalities and other
governmental entities to the extent that the fair market value of such
leases sold pursuant to this clause (H) does not exceed $1,000,000 in
the aggregate during any fiscal year of the Borrower during the term of
this Amended Agreement.
(b) The Borrower will not, and will not cause or permit any of the
Subsidiaries to, purchase, lease or otherwise acquire (in one transaction or a
series of transactions) all or any substantial part of the assets of any other
person, except that (i) the Borrower and any of the Subsidiaries may purchase
inventory in the ordinary course of business and (ii) the Borrower may
consummate Permitted Acquisitions subject to the limitations set forth in the
proviso to Section 6.04(a)(ix).
SECTION 6.06. Dividends, Distributions and Other Restricted Payments.
The Borrower will not, and will not cause or permit any of the Subsidiaries to,
(a) declare or pay, directly or indirectly, any dividend or make any other
distribution (by reduction of capital or otherwise and including any tax sharing
or indemnification payments), whether in cash, property, securities or a
combination thereof, with respect to any Capital Stock of the Borrower or any of
the Subsidiaries, (b) directly or indirectly redeem, purchase, retire or
otherwise acquire for value, any Capital Stock of the Borrower or any of the
Subsidiaries whether such acquisition is made at the option of the Borrower or
such Subsidiary or at the option of the holder of such Capital Stock and whether
or not such acquisition is required under the terms and conditions applicable to
such Capital Stock or set aside any amount for any such purpose, (c) release,
cancel, compromise or forgive in whole or in part the Indebtedness evidenced by
the Intercompany Notes or (d) directly or indirectly redeem, purchase, prepay,
retire, defease or otherwise acquire for value any Indebtedness (other than
Obligations), whether such acquisition is made at the option of the Borrower or
such Subsidiary or at the option of the holder of such Indebtedness and whether
or not such acquisition is required under the terms and conditions applicable to
such Indebtedness, or set aside any amount for any such purpose; provided,
however, that:
(i) any Subsidiary may declare and pay dividends or make
other
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distributions directly or indirectly to the Borrower;
(ii) the Borrower and the Subsidiaries may repay the
principal of any Indebtedness in accordance with the scheduled
amortization thereof; and
(iii) so long as no Default or Event of Default shall have
occurred and be continuing or would occur after giving effect thereto,
the Borrower may make repurchases of (or pay dividends to the Parent
solely to fund repurchases of) (A) Capital Stock of the Parent from any
employee of the Borrower upon the termination of the employment of such
employee; provided that the aggregate amount paid directly or
indirectly by the Borrower for all such repurchases from employees (net
of all payments received or accrued by the Borrower from employees upon
the exercise of employee stock options) shall not exceed $100,000 and
(B) Capital Stock of the Parent that is traded publicly on the NASDAQ
National Market or any nationally recognized exchange; provided, that,
the aggregate amount paid directly or indirectly by the Borrower for
all such repurchases (or dividends) shall not exceed $7,000,000 during
the term of this Amended Agreement and provided, further, that, the sum
of any expenditures made for Permitted Acquisitions plus the sum of
repurchases (or dividends) made pursuant to this Section 6.06(iii)(B)
shall not exceed $10,000,000 in any fiscal year of the Borrower during
the term of this Agreement.
SECTION 6.07. Impairment of Security Interests. The Borrower will not,
and will not permit any of the Subsidiaries to, take or omit to take any action,
which action or omission might or would have the result of materially impairing
the security interests in favor of the Agent on behalf of the Secured Parties
with respect to the Collateral, and the Borrower will not, and will not permit
any of the Subsidiaries to, grant to any person (other than the Agent on behalf
of the Secured Parties pursuant to the Loan Documents) any interest whatsoever
in the Collateral, except for Liens permitted under Section 6.02.
SECTION 6.08. Limitation on Restrictions on Subsidiary Dividends, etc.
The Borrower will not, and will not cause or permit any of the Subsidiaries to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction or any restriction in its
articles of incorporation, bylaws or comparable governing instruments on the
ability of any Subsidiary to (a) pay dividends or make any other distributions
on or in respect of its Capital Stock, or pay any indebtedness owed to the
Borrower or any Subsidiary, (b) make loans or advances to the Borrower or any
Subsidiary or (c) transfer any of its properties or assets to the Borrower or
any Subsidiary, except for such encumbrances or restrictions existing under or
by reason of (i) customary non- assignment provisions in any lease governing a
leasehold interest, (ii) this Amended Agreement and the Collateral Documents and
(iii) transfer restrictions imposed by Capital Lease Obligations permitted under
Section 6.01(a) or (h) relating solely to the assets leased under such Capital
Lease Obligations.
SECTION 6.09. No Other Negative Pledges. The Borrower will not, and
will not cause or permit any of the Subsidiaries to, directly or indirectly,
enter into any agreement
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prohibiting the creation or assumption of any Lien upon the properties or assets
of the Borrower or any Subsidiary, whether now owned or hereafter acquired, or
requiring an obligation to be secured if some other obligation is secured,
except for this Amended Agreement.
SECTION 6.10. Transactions with Affiliates. (a) The Borrower will not,
and will not cause or permit any of the Subsidiaries to, sell or transfer any
property or assets to, or purchase or acquire any property or assets from, or
otherwise enter into or maintain any other transactions with, (i) the Sponsor,
THIN, the Parent or (ii) any Affiliate of the Borrower, THIN, the Parent or the
Sponsor, except that so long as no Default or Event of Default shall have
occurred and be continuing, the Borrower or any Subsidiary may enter into any of
the foregoing transactions (other than any management, employment, consulting or
similar agreement or arrangement with such persons or any members of their
families) in the ordinary course of business at prices and on terms and
conditions that are (x) set forth in writing and (y) as favorable to the
Borrower or such Subsidiary as would be obtainable at the time in a comparable
transaction on an arm's-length basis from an independent, unrelated third party.
The provisions of this Section 6.10(a) shall not prohibit (A) any payment
expressly permitted under Section 6.04 or 6.06, (B) any transaction entered into
and maintained among the Borrower and any Wholly Owned Subsidiaries or among
Wholly Owned Subsidiaries, (C) payment of compensation to employees in the
ordinary course of business and grants of stock options to employees and
directors in the ordinary course of business, (D) the payment of fees to the
members of the board of directors of the Parent of up to $20,000 per director
per year, (E) reimbursement of reasonable out-of-pocket expenses of Centre
Partners Management LLC, and (F) the Agency Agreement and transactions pursuant
to the Agency Agreement.
(b) The Borrower will not, and will not cause or permit any of the
Subsidiaries to, enter into any management, employment, consulting, advisory or
similar agreement or arrangement with, or otherwise pay any professional,
consulting, management or similar fees to or for the benefit of any of (i) the
Sponsor, (ii) THIN, (iii) the Parent, (iv) any Affiliate of the Borrower, THIN,
the Parent or the Sponsor, (v) any director or other member of the current or
former senior management of (A) the Borrower, THIN, the Parent or the Sponsor or
(B) any Affiliate of the Borrower, THIN, the Parent or the Sponsor or (vi) any
member of the family of any such individual, except for payments permitted under
clause (D), (E) or (F) of Section 6.10(a).
SECTION 6.11. Nature of Business. (a) The Borrower will not, and will
not cause or permit any of the Subsidiaries to, engage at any time in any
business or business activity other than the business conducted by it on the
Effective Date and business activities reasonably incidental thereto.
(b) The Parent will not engage in any activity (including any merger,
consolidation or sale of assets), issue any securities, incur any Indebtedness,
incur any other material liability or create or permit to exist any Lien on its
assets, other than the ownership of the common stock of the Borrower and related
de minimis activities incidental thereto. Notwithstanding the foregoing
sentence, the Parent may, so long as any such action is not prohibited by any
other
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applicable provision of this Amended Agreement, (i) engage in any activity
incidental to the maintenance of the corporate existence of the Parent and
compliance with applicable law, (ii) enter into and perform the obligations of
the Parent under the Parent Guarantee Agreement, and the Pledge Agreement (iii)
enter into (or issue, as applicable), perform the obligations of the Parent
under and exercise the rights of the Parent under stock options exercisable for
Capital Stock of the Parent granted to employees of the Borrower and directors
of the Borrower or the Parent and other customary participants or an employee
stock option plan, an employee stock compensation plan or an employee stock
purchase plan established for the benefit of employees of the Borrower and
directors of the Borrower or the Parent and other customary participants, (iv)
issue additional shares of Capital Stock of the Parent or receive any capital
contribution, so long as 100% of the net cash proceeds, if any, of any such
issuance or contribution are contributed by the Parent to the capital of the
Borrower, and (v) administer on behalf of the Borrower, pursuant to the Agency
Agreement (which shall be assigned to the Agent on behalf of the Secured
Parties), any nontransferable assets which remain owned by the Parent.
SECTION 6.12. Sales of Receivables. The Borrower will not, and will not
cause or permit any of the Subsidiaries to, sell with recourse, discount or
otherwise sell or dispose of its notes or accounts receivable.
SECTION 6.13. Certain Amendments. The Parent will not, and will not
cause or permit any of its subsidiaries to, enter into any amendment,
modification or waiver that is adverse in any respect to the Lenders to the
Certificate of Incorporation, By-laws or comparable governing instruments of the
Parent or any of its subsidiaries. The Borrower will promptly provide the
Lenders with copies of all proposed amendments to the foregoing documents and
instruments.
SECTION 6.14. Capital Expenditures. The Borrower will not permit
Capital Expenditures for any fiscal year of the Borrower to be more than the sum
of (a) $5,000,000 and (b) commencing with fiscal 1998, the excess, if any, of
$5,000,000 over the actual amount of Capital Expenditures for the immediately
preceding fiscal year of the Borrower.
SECTION 6.15. Financial Covenants. (a) Interest Coverage. The Borrower
will not permit the ratio, for any four-fiscal-quarter period (any such period,
a "measurement period") ending on a date falling in any period set forth below
(the "applicable period"), of (i) EBITDA for such measurement period to (ii)
Cash Interest Expense for such measurement period to be less than the ratio set
forth below for such applicable period:
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<TABLE>
<CAPTION>
From and including To and including Ratio
------------------ ---------------- -----
<S> <C> <C>
The Effective Date December 31, 1997 1.75 to 1.00
January 1, 1998 December 31, 1998 2.10 to 1.00
January 1, 1999 December 31, 1999 2.30 to 1.00
January 1, 2000 December 31, 2000 2.60 to 1.00
January 1, 2001 December 31, 2001 2.95 to 1.00
January 1, 2002 December 31, 2002 3.40 to 1.00
January 1, 2003 June 30, 2003 4.00 to 1.00
</TABLE>
(b) Fixed Charge Coverage. The Borrower will not permit the ratio, for
any four-fiscal-quarter period (any such period, a "measurement period") ending
on a date falling in any period set forth below (the "applicable period"), of
(i) (A) EBITDA for such measurement period, less (B) Cash Capital Expenditures
for such measurement period to (ii) the sum of (A) Cash Interest Expense for
such measurement period, (B) Scheduled Principal Payments for such measurement
period and (C) Cash Dividends for such measurement period to be less than the
ratio set forth below for such applicable period:
<TABLE>
<CAPTION>
From and including To and including Ratio
------------------ ---------------- -----
<S> <C> <C>
The Effective Date December 31, 1997 1.30 to 1.00
January 1, 1998 December 31, 1999 1.35 to 1.00
January 1, 2000 December 31, 2000 1.40 to 1.00
January 1, 2001 June 30, 2003 1.50 to 1.00
</TABLE>
(c) Leverage Ratio. The Borrower will not permit the ratio, for any
four-fiscal-quarter period (any such period, a "measurement period") ending on a
date falling in any period set forth below (the "applicable period"), of (i)
Total Debt as of the end of such measurement period to (ii) EBITDA for such
measurement period to be greater than the ratio set forth below for such
applicable period:
<TABLE>
<CAPTION>
From and including To and including Ratio
------------------ ---------------- -----
<S> <C> <C>
The Effective Date December 31, 1997 4.80 to 1.00
January 1, 1998 December 31, 1998 4.00 to 1.00
January 1, 1999 December 31, 1999 3.60 to 1.00
January 1, 2000 December 31, 2000 3.10 to 1.00
January 1, 2001 December 31, 2001 2.75 to 1.00
January 1, 2002 June 30, 2003 2.25 to 1.00
</TABLE>
(d) Minimum Net Worth. The Borrower will not permit Net Worth as of the
last day of any fiscal quarter of the Borrower ending on a date falling between
the Effective Date through and including June 30, 2003 to be less than
- -$38,000,000 (excluding from the
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calculation of Net Worth any repurchases of Capital Stock permitted pursuant to
Section 6.06(iii)).
ARTICLE VII
EVENTS OF DEFAULT
In case of the happening of any of the following events ("Events of
Default"):
(a) default shall be made in the payment of any principal of
any Loan or any reimbursement obligation in respect of a Letter of
Credit when and as the same shall become due and payable, whether at
the due date thereof or at a date fixed for prepayment thereof or by
acceleration thereof or otherwise;
(b) default shall be made in the payment of any interest on
any Loan or any Fee or any other amount (other than an amount referred
to in paragraph (a) above) due under any Loan Document, when and as the
same shall become due and payable, and such default shall continue
unremedied for a period of three Business Days;
(c) default shall be made in the due observance or performance
by the Borrower or any other Loan Party of any covenant, condition or
agreement contained in Section 5.04, 5.05, 5.08, 5.09 or 5.11 or in
Article VI;
(d) default shall be made in the due observance or performance
by the Borrower or any other Loan Party of (i) any covenant, condition
or agreement contained in Section 5.01, 5.02 or 5.10 and such default
shall continue unremedied for a period of five days after such default
becomes known to a Responsible Officer of the Borrower or such other
Loan Party or (ii) any covenant, condition or agreement contained
herein and in any other Loan Document (other than those specified in
paragraphs (a), (b) and (c) above and in the foregoing clause (d)(i))
and such default shall continue unremedied for a period of 30 days
after such default becomes known to a Responsible Officer of the
Borrower or such other Loan Party;
(e) any representation or warranty made or deemed made in or
in connection with any Loan Document or the extensions of credit
hereunder, or any representation, warranty, statement or information
contained in any report, certificate, financial statement or other
instrument furnished in connection with or pursuant to any Loan
Document, shall prove to have been false or misleading in any material
respect when so made, deemed made or furnished;
(f) the Borrower, any Subsidiary or the Parent shall (i) fail
to pay any principal or interest, regardless of amount, due in respect
of any Indebtedness in a principal amount in excess of $500,000, when
and as the same shall become due and payable or (ii) (A) fail to
observe or perform any other term, covenant, condition or
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agreement contained in any agreement or instrument evidencing or
governing any such Indebtedness (other than Capital Lease Obligations
permitted under Section 6.01(a) or (h) as in effect on the Effective
Date) if the effect of any failure referred to in this clause (A) is to
cause, or to permit the holder or holders of such Indebtedness or a
trustee on its or their behalf to cause, with or without the giving of
notice or the lapse of time or both, such Indebtedness to become due
prior to its stated maturity or (B) fail to observe or perform (after
expiration of all applicable notice and cure or grace periods) any
other term, covenant, condition or agreement contained in any agreement
or instrument evidencing or governing any Capital Lease Obligations
permitted by Section 6.01(a) or (h) as in effect on the Effective Date
if the effect of any failure referred to in this clause (B) is to
cause, or to permit the holder or holders of such Capital Lease
Obligations or a trustee on its or their behalf to cause, such Capital
Lease Obligations to become due prior to its stated maturity;
(g) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent
jurisdiction seeking (i) relief in respect of the Borrower, any
Subsidiary or the Parent, or of a substantial part of its property or
assets, under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other Federal, state or foreign bankruptcy,
insolvency, receivership or similar law, (ii) the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar
official for the Borrower, any Subsidiary or the Parent, or for a
substantial part of its property or assets, or (iii) the winding-up or
liquidation of the Borrower, any Subsidiary or the Parent; and such
proceeding or petition shall continue undismissed for 60 days or an
order or decree approving or ordering any of the foregoing shall be
entered;
(h) the Borrower, any Subsidiary or the Parent shall (i)
voluntarily commence any proceeding or file any petition seeking relief
under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other Federal, state or foreign bankruptcy,
insolvency, receivership or similar law, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner,
any proceeding or the filing of any petition described in paragraph (g)
above, (iii) apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for
such party or for a substantial part of its property or assets, (iv)
file an answer admitting the material allegations of a petition filed
against it in any such proceeding, (v) make a general assignment for
the benefit of creditors, (vi) become unable, admit in writing its
inability or fail generally to pay its debts as they become due or
(vii) take any action for the purpose of effecting any of the
foregoing;
(i) one or more judgments or orders for the payment of money
in an aggregate amount in excess of $1,000,000 shall be rendered
against the Borrower, any Subsidiary or the Parent or any combination
thereof and the same shall remain undischarged for a period of 45 days
during which execution shall not be effectively stayed, or any action
shall be legally taken by a judgment creditor to levy upon assets or
properties of the Borrower, any Subsidiary or the Parent to enforce any
such
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judgment;
(j) (i) any person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the
Code) involving any Plan, (ii) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, shall exist
with respect to any Plan, or any Lien shall arise on the assets of the
Borrower or any Commonly Controlled Entity in favor of the PBGC or a
Plan, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate, any Single Employer
Plan, which Reportable Event or commencement of proceedings or
appointment of a trustee is, in the reasonable opinion of the Required
Lenders, likely to result in the termination of such Plan for purposes
of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for
purposes of Title IV of ERISA (other than in a standard termination
within the meaning of Section 4041(b) of ERISA), (v) the Borrower or
any Commonly Controlled Entity shall, or in the reasonable opinion of
the Required Lenders is likely to, incur any liability in connection
with a withdrawal from, or the termination, reorganization or
insolvency of (within the meaning of such terms as used in ERISA), a
Multiemployer Plan or (vi) any other event or condition shall occur or
exist with respect to a Plan; and, in each case in clauses (i) through
(vi) above, such event or condition, together with all other such
events or conditions, if any, could reasonably be expected to result in
liability of the Borrower, the Subsidiaries and the Parent in an
aggregate amount exceeding $2,000,000 or require payments by the
Borrower, the Subsidiaries and the Parent exceeding $1,000,000 in any
year;
(k) any Lien purported to be created by any Collateral
Document shall cease to be, or shall for any reason be asserted by the
Borrower or any other Loan Party not to be, a valid, perfected, first
priority Lien on the securities, properties or assets covered thereby,
except as priority may be affected by Liens permitted under Section
6.02 and except for releases of Collateral in accordance with all
applicable provisions of this Amended Agreement and the Collateral
Documents;
(l) any Loan Document or any material provision of any Loan
Document shall be declared by any Governmental Authority to be invalid
or unenforceable in whole or in part or shall for any reason not be, or
shall be asserted by the Borrower or any other Loan Party not to be, in
full force and effect and enforceable in accordance with its terms;
(m) any adverse change in the material agreements or
relationships of the Parent, the Borrower and the Subsidiaries shall
occur and such event or condition, together with all other such events
or conditions, if any, could, in light of all the then existing
circumstances, reasonably be expected to have a Material Adverse
Effect;
(n) any Material Intellectual Property or any material license
relating thereto shall be invalid or unenforceable in whole or in part
or shall for any reason not be in full force and effect and enforceable
by the Borrower, the Subsidiaries and the Parent
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or shall infringe the rights of any other person or any other adverse
change in the Material Intellectual Property rights of the Borrower,
the Subsidiaries and the Parent shall occur and such event or
condition, together with all other such events or conditions, if any,
could reasonably be expected to have a Material Adverse Effect;
(o) either (i) the Borrower, any Subsidiary or the Parent
shall be liable, whether directly, indirectly through required
indemnification of any person or otherwise, for the costs of
investigation and/or remediation of any Hazardous Material originating
from or affecting property or properties, whether or not owned, leased
or operated by the Borrower, any Subsidiary or the Parent, which
liability, together with all other such liabilities, could reasonably
be expected to exceed $2,000,000 or require payments exceeding
$1,000,000 in any year or (ii) any Federal, state, regional, local or
other environmental regulatory agency or authority shall commence an
investigation or take any other action that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse
Effect;
(p) the shares of common stock of the Borrower pledged to the
Agent on behalf of the Lenders pursuant to the Collateral Documents
shall cease to constitute 100% of the shares of the Capital Stock of
the Borrower (on a fully diluted basis) or shall cease to constitute
100% of the Total Voting Power of the Borrower; or
(q) there shall occur any Change in Control;
then, and in every such event, and at any time thereafter during the continuance
of such event, the Agent may, and at the request of the Required Lenders shall,
take one or more of the following actions, at the same or different times: (i)
by notice to the Borrower terminate the Commitments and they shall immediately
terminate; (ii) by notice to the Borrower declare the Loans then outstanding to
be forthwith due and payable (in whole or, in the sole discretion of the
Required Lenders, from time to time in part, provided that any such partial
acceleration shall be made pro rata based on the outstanding principal amount of
Loans of each Class), whereupon the principal of the Loans so declared to be due
and payable, together with accrued interest thereon and any unpaid accrued Fees
and all other liabilities of the Borrower accrued hereunder or under any other
Loan Document, shall thereupon become immediately due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived by the Borrower, anything contained herein or in any
other Loan Document to the contrary notwithstanding; (iii) require cash
collateral as contemplated by Section 2.22(l) in an amount not exceeding the
Letter of Credit Exposure; (iv) exercise any remedies available under the
Guarantee Agreements, the Collateral Documents or otherwise; or (v) any
combination of the foregoing; provided that in the case of (A) any of the Events
of Default with respect to the Borrower described in paragraph (g) or (h) above
or (B) the Event of Default specified in paragraph (r) above, the Commitments
shall automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and any unpaid accrued Fees and all other
liabilities of the Borrower accrued hereunder or under any other Loan Document,
shall automatically become due and payable, without presentment, demand, protest
or any other notice of any kind, all of which are hereby expressly waived by
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the Borrower, anything contained herein or in any other Loan Document to the
contrary notwithstanding.
ARTICLE VIII
THE AGENT, SWINGLINE LENDER AND ISSUING BANK
SECTION 8.01. Appointment and Authorization. (a) In order to expedite
the transactions contemplated by this Amended Agreement, NationsBank, N.A. is
hereby appointed to act as Agent, Swingline Lender and Issuing Bank on behalf of
the Lenders. Each of the Lenders, and each subsequent holder of any Note by its
acceptance thereof, hereby irrevocably appoints and authorizes the Agent,
Swingline Lender and the Issuing Bank to take such actions as agent on behalf of
such Lender or holder and to exercise such powers as are specifically delegated
to the Agent, Swingline Lender or the Issuing Bank, as the case may be, by the
terms and provisions hereof and of the other Loan Documents, together with such
actions and powers as are reasonably incidental thereto.
(b) Without hereby limiting any implied authority, the Agent is hereby
expressly authorized by the Lenders to, and hereby agrees that at the direction
of the Required Lenders it shall: (i) receive on behalf of the Lenders all
payments of principal of and interest on the Loans and all other amounts due to
the Lenders hereunder, and promptly distribute to each Lender its proper share
of each payment so received; (ii) give notice on behalf of each of the Lenders
to the Borrower of any Event of Default specified in this Amended Agreement of
which the Agent has actual knowledge acquired in connection with its agency
hereunder; (iii) give notice to the Lenders of any Event of Default specified in
this Amended Agreement of which the Agent has actual knowledge acquired in
connection with its agency hereunder; and (iv) distribute to each Lender copies
of all notices, financial statements and other materials delivered by the
Borrower pursuant to this Amended Agreement promptly as received by the Agent.
Without limiting the generality of the foregoing, the Agent is hereby expressly
authorized to execute any and all documents (including releases) with respect to
the Collateral and the rights of the Secured Parties with respect thereto, as
contemplated by and in accordance with the provisions of this Amended Agreement
and the Collateral Documents.
SECTION 8.02. Liability of Agent. Neither the Agent, the Swingline
Lender, the Issuing Bank, nor any of their respective directors, officers,
employees or agents, shall be liable as such for any action taken or omitted to
be taken by any of them, except for such party's own gross negligence or willful
misconduct, or be responsible for any statement, warranty or representation
herein or the contents of any document delivered in connection herewith, or be
required to ascertain or to make any inquiry concerning the performance or
observance by the Borrower or any other Loan Party of any of the terms,
conditions, covenants or agreements contained in any Loan Document. None of the
Agent, the Swingline Lender and the Issuing Bank shall be responsible to the
Lenders or the holders of the Notes for the due execution, genuineness,
validity, enforceability or effectiveness of this Amended Agreement, the Notes
or any other Loan Documents or other instruments or agreements. Each
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of the Agent, the Swingline Lender and the Issuing Bank may deem and treat the
payee of any Note as the owner thereof for all purposes hereof until it shall
have received from the payee of such Note notice, given as provided herein, of
the transfer thereof in compliance with Section 9.04. Each of the Agent, the
Swingline Lender and the Issuing Bank shall in all cases be fully protected in
acting, or refraining from acting, in accordance with written instructions
signed by the Required Lenders and, except as otherwise specifically provided
herein, such instructions and any action or inaction pursuant thereto shall be
binding on all the Lenders and each subsequent holder of any Note. The Agent,
the Swingline Lender, the Issuing Bank and the Required Lenders shall, in the
absence of knowledge to the contrary, be entitled to rely on any instrument or
document believed by it in good faith to be genuine and correct and to have been
signed or sent by the proper person or persons. Neither the Agent, the Swingline
Lender, the Issuing Bank nor any of their respective directors, officers,
employees or agents, shall have any responsibility to the Borrower or any other
Loan Party on account of the failure of or delay in performance or breach by any
Lender of any of its obligations hereunder or to any Lender on account of the
failure of or delay in performance or breach by any other Lender or the Borrower
or any other Loan Party of any of their respective obligations hereunder or
under any other Loan Document or in connection herewith or therewith. The Agent,
the Swingline Lender and the Issuing Bank may execute any and all duties
hereunder by or through agents or employees, shall be entitled to consult with
legal counsel, independent public accountants and other experts selected by it
with respect to all matters arising hereunder and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts.
SECTION 8.03. Action by Agent. The Lenders hereby acknowledge that none
of the Agent, the Swingline Lender and the Issuing Bank shall be under any duty
to take any discretionary action permitted to be taken by it pursuant to the
provisions of this Amended Agreement unless it shall be requested in writing to
do so by the Required Lenders. The obligations of the Agent, the Swingline
Lender and the Issuing Bank under the Loan Documents are only those expressly
set forth herein and therein. Without limiting the generality of the foregoing,
the Agent shall not be required to take any action with respect to any Default
or Event of Default, except as expressly provided in Article VII.
SECTION 8.04. Successor Agents. Subject to the appointment and
acceptance of a successor, the Agent, the Swingline Lender and the Issuing Bank
(except, in the case of the Issuing Bank, in respect of Letters of Credit issued
by it) may resign at any time by notifying the Lenders and the Borrower. Upon
any such resignation, the Required Lenders shall have the right to appoint a
successor, subject to approval by the Borrower (which shall not be unreasonably
withheld). If no successor shall have been so appointed by the Required Lenders
and shall have accepted such appointment within 30 days after the retiring
Agent, Swingline Lender or Issuing Bank, as the case may be, gives notice of its
resignation, then the retiring Agent, Swingline Lender or Issuing Bank, as the
case may be, on behalf of the Lenders, shall appoint a successor Agent,
Swingline Lender or Issuing Bank, as applicable, which shall be a commercial
bank organized or licensed under the laws of the United States of America or of
any State thereof and having a combined capital and surplus of at least
$500,000,000 or an Affiliate of any such bank. Upon the acceptance of any
appointment as an Agent, Swingline
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Lender or Issuing Bank, as the case may be, hereunder by a successor bank, such
successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, Swingline Lender or Issuing Bank
and the retiring Agent, Swingline Lender or Issuing Bank shall be discharged
from its duties and obligations hereunder. After the resignation of the Agent,
Swingline Lender or the Issuing Bank, as the case may be, hereunder, the
provisions of this Article and Section 9.05 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as the Agent, Swingline Lender or Issuing Bank.
SECTION 8.05. Agent and Affiliate. With respect to the Loans made by it
hereunder, the Letters of Credit issued by it hereunder and the Notes issued to
it, each of the Agent, the Swingline Lender and the Issuing Bank, each in its
individual capacity and not as the Agent, Swingline Lender or the Issuing Bank,
as the case may be, shall have the same rights and powers as any other Lender
and may exercise the same as though it were not the Agent, Swingline Lender or
the Issuing Bank. Each of the Agent, the Swingline Lender and the Issuing Bank
(and its Affiliates) may accept deposits from, lend money to and generally
engage in any kind of business and transactions with the Borrower or any
Subsidiary or other Affiliate thereof as if it were not the Agent, Swingline
Lender or the Issuing Bank (or such Affiliate thereof).
SECTION 8.06. Indemnification. (a) Each Lender agrees to reimburse the
Agent and each Revolving Credit Lender agrees to reimburse the Swingline Lender
and the Issuing Bank, in each case, on demand, in the amount of its pro rata
share (as determined under Section 2.17) of any expenses incurred for the
benefit of the applicable Lenders by the Agent or the Issuing Bank, as the case
may be, including counsel fees and compensation of agents and employees paid for
services rendered on behalf of such Lenders, which shall not have been
reimbursed by the Borrower and (b) each Lender agrees to indemnify and hold
harmless the Agent and any of its respective directors, officers, employees or
agents and each Revolving Credit Lender agrees to indemnify and hold harmless
each of the Issuing Bank and the Swingline Lender and any of its respective
directors, officers, employees or agents, in each case, on demand, in the amount
of such pro rata share, from and against any and all liabilities, taxes,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against it in its capacity as the Agent, Swingline
Lender or the Issuing Bank, as the case may be, or any of them in any way
relating to or arising out of this Amended Agreement or any other Loan Document
or any action taken or omitted by it or any of them under this Amended Agreement
or any other such Loan Document, to the extent the same shall not have been
reimbursed by the Borrower; provided that no Lender shall be liable to the
Agent, Swingline Lender or the Issuing Bank for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the gross negligence or willful
misconduct of the Agent, the Swingline Lender, the Issuing Bank or any of their
respective directors, officers, employees or agents.
SECTION 8.07. Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent, the Swingline Lender, the
Issuing Bank or
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any other Lender and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Amended Agreement. Each Lender also acknowledges that it will, independently and
without reliance upon the Agent, the Swingline Lender, the Issuing Bank or any
other Lender and based on such documents and information as it shall from time
to time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon this Amended Agreement or any other Loan
Document, any related agreement or any document furnished hereunder or
thereunder.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. Notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by telecopy as follows:
(a) if to the Parent or the Borrower, to it at 7340 McGinnis
Ferry Road, Suwanee, Georgia 30174-1247, Attention of David A. Apseloff
(Telecopy No. (770) 813-0741), with copies to (i) Centre Partners
Management LLC, 30 Rockefeller Plaza, New York, NY 10020, Attention of
Scott Perekslis (Telecopy No. (212) 332-5801) and (ii) Sidley & Austin,
One First National Plaza, Chicago, IL 60603, Attention of James Clark
(Telecopy No. (312) 853-7036);
(b) if to the Agent or the Issuing Bank, to it at 600
Peachtree Street, N.E., 21st Floor, Mail Stop GA1-006-21-11, Atlanta,
Georgia 30308-2213, Attention of Derrick Bell (Telecopy No. (404)
607-6484), with a copy to Fennebresque, Clark, Swindell & Hay, at
NationsBank Corporate Center, 100 North Tryon Street, Suite 2900,
Charlotte, NC 28202-4011, Attention of Marvin L. Rogers (Telecopy No.
(704) 347-3838); and
(c) if to a Lender, to it at its address (or telecopy number)
set forth on the signature pages hereto, or in the Assignment and
Acceptance pursuant to which such Lender shall have become a party
hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Amended Agreement shall be deemed to have been given
on the date of receipt if delivered by hand or overnight courier service or sent
by telecopy or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 9.01 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 9.01.
SECTION 9.02. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Borrower or the Parent herein and in
the certificates or other
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instruments prepared or delivered in connection with or pursuant to this Amended
Agreement or any other Loan Document shall be considered to have been relied
upon by the Lenders, the Agent and the Issuing Bank and shall survive the making
by the Lenders of the Loans, the execution and delivery to the Lenders of the
Notes evidencing such Loans, and the issuance of the Letters of Credit,
regardless of any investigation made by the Lenders, the Agent or the Issuing
Bank or on their behalf, and shall continue in full force and effect as long as
the principal of or any accrued interest on any Loan, any Fee, any Letter of
Credit Disbursement or any other amount payable under this Amended Agreement or
any other Loan Document is outstanding and unpaid or any Letter of Credit is
outstanding and so long as the Commitments have not been terminated. The
provisions of Section 2.14, 2.16, 2.20 and 9.05 shall remain operative and in
full force and effect regardless of the expiration of the term of this Amended
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the expiration of the Commitments, the expiration
of any Letter of Credit, the invalidity or unenforceability of any term or
provision of this Amended Agreement or any other Loan Document or any
investigation made by or on behalf of the Agent, the Issuing Bank or any Lender.
SECTION 9.03. Binding Effect. This Amended Agreement shall become
effective on the Effective Date.
SECTION 9.04. Successors and Assigns. (a) All covenants, promises and
agreements by or on behalf of the Borrower, the Parent, the Agent, the Issuing
Bank or the Lenders that are contained in this Amended Agreement shall be
binding upon and inure to the benefit of their respective permitted successors
and assigns.
(b) Each Lender may assign to one or more assignees all or a portion of
its interests, rights and obligations under this Amended Agreement (including
all or a portion of its Commitment, the Loans at the time owing to it, the Notes
held by it and the participations in Letters of Credit held by it); provided,
however, that (i) except in the case of an assignment to a Lender or an
Affiliate of a Lender, the Borrower (unless an Event of Default shall have
occurred and be continuing), the Agent and, in the case of an assignment of a
Revolving Credit Commitment, the Issuing Bank and the Swingline Lender must give
their prior written consent to such assignment (which consent shall not be
unreasonably withheld), (ii) except in the case of an assignment to a Lender or
an Affiliate of a Lender, the sum of (A) the principal amount of the outstanding
Loans subject to each such assignment and (B) the unused amount of the
Commitments of the assigning Lender subject to such assignment (in each case
determined as of the date the Assignment and Acceptance with respect to such
assignment is delivered to the Agent) shall not be less than the lesser of (I)
$5,000,000 and (II) the entire remaining amount of the outstanding Loans and
unused Commitments of such Lender, (iii) the parties to each such assignment
(including, but not limited to, an assignment by a Lender to another Lender)
shall execute and deliver to the Agent an Assignment and Acceptance, together
with the Note or Notes subject to such assignment and a processing and
recordation fee of $3,500 and (iv) the assignee, if it shall not be a Lender or
an Affiliate thereof, shall deliver to the Agent an Administrative
Questionnaire. Upon acceptance and recording pursuant to Section 9.04(e), from
and after the effective date specified in each Assignment and Acceptance, which
effective
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date shall be at least five Business Days after the execution thereof (unless
the Agent shall otherwise agree), (A) the assignee thereunder shall be a party
hereto and, to the extent of the interest assigned by such Assignment and
Acceptance, have the rights and obligations of a Lender under this Amended
Agreement and (B) the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Acceptance, be released from its
obligations under this Amended Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Amended Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of Sections 2.14,
2.16, 2.20 and 9.05, as well as to any Fees accrued for its account to the
effective date of the Assignment and not yet paid).
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim arising
in respect of any action by the assigning Lender; (ii) except as set forth in
clause (i) above, such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Amended Agreement, any other
Loan Document or any other instrument or document furnished pursuant hereto or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Amended Agreement, any other Loan Document or any other instrument
or document furnished pursuant hereto, or the financial condition of the
Borrower or any other Loan Party or the performance or observance by the
Borrower or any other Loan Party of any of its obligations under this Amended
Agreement, any other Loan Document or any other instrument or document furnished
pursuant hereto; (iii) such assignee represents and warrants that it is legally
authorized to enter into such Assignment and Acceptance; (iv) such assignee
confirms that it has received a copy of this Amended Agreement and the other
Loan Documents, together with copies of the most recent Required Financial
Statements and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into such Assignment and
Acceptance; (v) such assignee will independently, and without reliance upon the
Agent, the Issuing Bank, such assigning Lender or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Amended Agreement; (vi) such assignee appoints and authorizes the Agent and
the Issuing Bank to exercise such powers under this Amended Agreement as are
delegated to such party by the terms hereof, together with such powers as are
reasonably incidental hereto; and (vii) such assignee agrees that it will
perform in accordance with their terms all the obligations which by the terms of
this Amended Agreement are required to be performed by it as a Lender.
(d) The Agent shall maintain at one of its offices in Charlotte, North
Carolina, a copy of each Assignment and Acceptance delivered to it and a
register for the recordation of the names and addresses of the Lenders, and the
Commitments of, and principal amount of the Loans owing to, each Lender pursuant
to the terms hereof from time to time (the "Register"). The entries in the
Register shall be conclusive in the absence of manifest error and the
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Borrower, the Agent and the Lenders may treat each person whose name is recorded
in the Register pursuant to the terms hereof as a Lender hereunder for all
purposes of this Amended Agreement. The Register shall be available for
inspection by the Borrower, the Issuing Bank and any Lender, at any reasonable
time and from time to time upon reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee together with the Note or Notes
subject to such assignment, an Administrative Questionnaire completed in respect
of the assignee (unless the assignee shall already be a Lender hereunder or
shall be an Affiliate of a Lender), the processing and recordation fee referred
to in Section 9.04(b) and, if required, the written consent of the Borrower, the
Agent, the Issuing Bank and the Swingline Lender to such assignment, the Agent
shall (i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to the
Issuing Bank, the Swingline Lender, the Lenders and the Borrower. Within five
Business Days after receipt of notice, the Borrower, at its own expense, shall
execute and deliver to the Agent, in exchange for the surrendered Note or Notes,
a new Note or Notes payable to the order of such assignee in a principal amount
equal to the applicable portion thereof (and the corresponding Commitment, if
any) assumed by it pursuant to such Assignment and Acceptance and, if the
assigning Lender has retained any portion of such Note or Notes (and such
Commitment, if any), a new Note or Notes payable to the order of such assigning
Lender in a principal amount equal to the applicable portion of such Note or
Notes (and such Commitment, if any) retained by it. Such new Note or Notes shall
be in an aggregate principal amount equal to the aggregate principal amount of
such surrendered Note; such new Note or Notes shall be dated the date of the
surrendered Notes which they replace and shall otherwise be in substantially the
form of Exhibits A-1 through A-4 hereto, as applicable. Cancelled Notes shall be
returned to the Borrower.
(f) Each Lender may, without the consent of the Borrower, the Agent,
the Issuing Bank or the Swingline Lender, sell participations in all or a
portion of its rights and obligations under this Amended Agreement (including
all or a portion of its Commitment, the Loans owing to it, the Notes held by it
and the participations in Letters of Credit held by it) to one or more
participants; provided, however, that (i) such Lender's obligations under this
Amended Agreement shall remain unchanged, (ii) the sum of (A) the principal
amount of the outstanding Loans subject to such participation and (B) the unused
amount of the Commitments of the Lender subject to such participation shall be
not less than the lesser of (I) $5,000,000 and (II) the entire remaining amount
of the outstanding Loans and unused Commitments of such Lender, (iii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iv) the participating banks or other entities
shall be entitled to the benefit of the cost protection and indemnity provisions
contained in Sections 2.14, 2.16 and 2.20 to the same extent as if they were
Lenders (except that no participant shall be entitled to claim any amount
greater than its pro rata share of the amount that could have been claimed by
the Lender from which it acquired its participation) and (v) the Borrower, the
Agent, the Issuing Bank and the other Lenders shall continue to deal solely and
directly with the Lender from which the participant acquired its interest in
connection with such Lender's rights and obligations under this Amended
Agreement, and such Lender shall retain the sole right to
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enforce the obligations of the Borrower relating to the Loans and to approve any
amendment, modification or waiver of any provision of this Amended Agreement
(other than amendments, modifications or waivers decreasing any fees payable
hereunder or the amount of principal of or the rate at which interest is payable
on the Loans, extending any scheduled principal payment date or date fixed for
the payment of interest on the Loans or increasing or extending the
Commitments).
(g) Any Lender or participant may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.04, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrower or any of the other Loan
Parties furnished to such Lender by or on behalf of the Borrower or any of the
other Loan Parties.
(h) Assignments and participations pursuant to this Section 9.04 need
not be pro rata among the Facilities.
(i) Any Lender may at any time assign all or any portion of its rights
under this Amended Agreement and the Notes issued to it to a Federal Reserve
Bank to secure extensions of credit by such Federal Reserve Bank to such Lender;
provided that no such assignment shall release a Lender from any of its
obligations hereunder or substitute any such Bank for such Lender as a party
hereto.
(j) Neither the Borrower nor the Parent shall assign or delegate any of
its rights or duties hereunder or any interest herein (whether voluntarily, by
operation of law or otherwise). Any purported assignment or delegation in
violation of the foregoing shall be void.
SECTION 9.05. Expenses; Indemnity. (a) The Borrower agrees to pay all
reasonable out-of-pocket expenses incurred by the Agent, the Issuing Bank or the
Swingline Lender in connection with the preparation, execution and
administration of this Amended Agreement and the other Loan Documents, the
administration of the Facilities or in connection with any amendment,
modification or waiver of the provisions hereof or thereof and the Borrower
agrees to pay all reasonable out-of-pocket expenses incurred by the Agent, the
Issuing Bank or any Lender in connection with the enforcement or protection of
the rights of the Agent, the Issuing Bank and the Lenders under this Amended
Agreement and the other Loan Documents or in connection with the Loans made, the
Notes issued hereunder or the Letters of Credit issued hereunder, including the
reasonable fees, charges and disbursements of (i) Fennebresque, Clark, Swindell
& Hay, counsel for the Agent, and (ii) in connection with any such enforcement
or protection (including any workout or restructuring or any negotiations
relating thereto), the other counsel for the Agent, the Issuing Bank or any
Lender (including the reasonable allocated internal fees and expenses of any
in-house staff counsel).
(b) The Borrower agrees to indemnify the Agent, the Issuing Bank, the
Affiliates of the Agent or Issuing Bank, the Lenders, and their respective
directors, officers, employees, agents and Controlling persons (each, an
"Indemnified Party") from and against any and all losses, claims (whether valid
or not), damages and liabilities, joint or several, to which such
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Indemnified Party may become subject, related to or arising out of (i) the
transactions contemplated by the Recapitalization Agreement and the Facilities,
(ii) the execution or delivery of the Original Credit Agreement and this Amended
Agreement or any other Loan Document or any agreement or instrument contemplated
hereby or thereby, the performance by the parties hereto or thereto of their
respective obligations hereunder or thereunder and the other transactions
contemplated hereby and thereby, (iii) the use of the Letters of Credit or the
proceeds of the Loans or (iv) any claim, litigation, investigation or proceeding
relating to any of the foregoing, whether or not any Indemnified Party is a
party thereto. The Borrower further agrees to reimburse each Indemnified Party
for all expenses (including reasonable attorneys' fees and expenses) as they are
incurred in connection with the investigation of, preparation for or defense of
any pending or threatened claim or any action or proceeding arising therefrom.
Notwithstanding the foregoing, the obligation to indemnify any Indemnified Party
under this Section 9.05(b) shall not apply in respect of any loss, claim, damage
or liability to the extent that a court of competent jurisdiction shall have
determined by final and nonappealable judgment that such loss, claim, damage or
liability resulted from such Indemnified Party's gross negligence or willful
misconduct.
(c) The Borrower agrees to indemnify each of the Agent, the Issuing
Bank, the Lenders and the other Indemnified Parties from and against any and all
losses, claims (whether valid or not), damages and liabilities, joint or
several, to which such Indemnified Party may become subject, related to or
arising out of (i) any Federal, state, local or other statute, ordinance, order,
judgment, ruling or regulation relating to environmental pollution, regulation
or control affecting the Borrower, any Subsidiary, the Parent or its properties
or assets, (ii) any Hazardous Materials managed by the Borrower, any Subsidiary,
the Parent, (iii) any event, condition or circumstance involving environmental
protection, pollution, regulation or control affecting the Borrower, any
Subsidiary, the Parent or its properties or assets or (iv) any claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether or not any Indemnified Party is a party thereto. The Borrower further
agrees to reimburse each Indemnified Party for all expenses (including
reasonable consultants' and attorneys' fees and expenses) as they are incurred
in connection with the investigation of, preparation for or defense of any
pending or threatened claim or any action or proceeding arising therefrom.
Notwithstanding the foregoing, the obligation to indemnify any Indemnified Party
under this Section 9.05(c) shall not apply in respect of any loss, claim, damage
or liability to the extent that a court of competent jurisdiction shall have
determined by final and nonappealable judgment that such loss, claim, damage or
liability resulted from such Indemnified Party's gross negligence or willful
misconduct.
(d) In the event that the foregoing indemnity is unavailable or
insufficient to hold an Indemnified Party harmless, then the Borrower will
contribute to amounts paid or payable by such Indemnified Party in respect of
such Indemnified Party's losses, claims, damages or liabilities in such
proportions as appropriately reflect the relative benefits received by and fault
of the Borrower and such Indemnified Party in connection with the matters as to
which such losses, claims, damages or liabilities relate and other equitable
considerations.
(e) If any action, proceeding or investigation is commenced, as to
which any
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Indemnified Party proposes to demand such indemnification, it shall notify the
Borrower with reasonable promptness; provided, however, that any failure by such
Indemnified Party to notify the Borrower shall not relieve the Borrower from its
obligations hereunder except to the extent the Borrower is prejudiced thereby.
The Borrower shall be entitled to assume the defense of any such action,
proceeding or investigation, including the employment of counsel and the payment
of all fees and expenses. Each Indemnified Party shall have the right to employ
separate counsel in connection with any such action, proceeding or investigation
and to participate in the defense thereof, but the fees and expenses of such
counsel shall be paid by such Indemnified Party, unless (i) the Borrower has
failed to assume the defense and employ counsel as provided herein, (ii) the
Borrower has agreed in writing to pay such fees and expenses of separate counsel
or (iii) an action, proceeding or investigation has been commenced against such
Indemnified Party and the Borrower and representation of both the Borrower and
such Indemnified Party by the same counsel would be inappropriate because of
actual or potential conflicts of interest between the parties (in the case of
any Agent or Lender, the existence of any such actual or potential conflict of
interest to be determined by such party, taking into account, among other
things, any relevant regulatory concerns). In the case of any circumstance
described in clause (i), (ii), or (iii) of the immediately preceding sentence,
the Borrower shall be responsible for the reasonable fees and expenses of such
separate counsel; provided, however, that the Borrower shall not in any event be
required to pay the fees and expenses of more than one separate counsel (plus
appropriate local counsel under the direction of such separate counsel) for all
Indemnified Parties, unless representation of all Indemnified Parties by the
same counsel would be inappropriate due to actual or potential conflicting
interests between such Indemnified Parties, in which case, the Borrower shall be
required to pay the fees and expenses of such additional counsel as are
necessary to prevent such conflicting interests. The Borrower shall be liable
only for settlement of any claim against an Indemnified Party made with the
Borrower's written consent.
(f) The provisions of this Section 9.05 shall remain operative and in
full force and effect regardless of the expiration of the term of this Amended
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the invalidity or unenforceability of any term or
provision of this Amended Agreement or any other Loan Document, or any
investigation made by or on behalf of any Agent or Lender. All amounts due under
this Section 9.05 shall be payable on written demand therefor.
SECTION 9.06. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final,
except deposits for the payment of payroll taxes) at any time held and other
indebtedness at any time owing by such Lender to or for the credit or the
account of the Borrower against any and all of the obligations of the Borrower
now or hereafter existing under this Amended Agreement and the other Loan
Documents held by such Lender, irrespective of whether or not such Lender shall
have made any demand under this Amended Agreement or such other Loan Document
and although such obligations may be unmatured. The rights of each Lender under
this Section 9.06 are in addition to other rights and remedies (including other
rights of setoff) which such Lender may have.
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SECTION 9.07. Applicable Law. THIS AMENDED AGREEMENT AND THE OTHER LOAN
DOCUMENTS (OTHER THAN LETTERS OF CREDIT AND AS EXPRESSLY SET FORTH IN OTHER LOAN
DOCUMENTS) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK. EACH LETTER OF CREDIT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED IN ACCORDANCE WITH, THE LAWS OR RULES DESIGNATED IN SUCH LETTER OF
CREDIT, OR IF NO SUCH LAWS OR RULES ARE DESIGNATED, THE UNIFORM CUSTOMS AND
PRACTICE FOR DOCUMENTARY CREDITS (1993 REVISION), INTERNATIONAL CHAMBER OF
COMMERCE, PUBLICATION NO. 500 (THE "UNIFORM CUSTOMS") AND, AS TO MATTERS NOT
GOVERNED BY THE UNIFORM CUSTOMS, THE LAWS OF THE STATE OF NEW YORK.
SECTION 9.08. Waivers; Amendment. (a) No failure or delay of the Agent,
the Issuing Bank or any Lender in exercising any power or right hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the Agent, the
Issuing Bank and the Lenders hereunder and under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies which they would
otherwise have. No waiver of any provision of this Amended Agreement or any
other Loan Document or consent to any departure by the Borrower or any other
Loan Party therefrom shall in any event be effective unless the same shall be
permitted by Section 9.08(b), and then such waiver or consent shall be effective
only in the specific instance and for the purpose for which given. No notice or
demand on the Borrower in any case shall entitle the Borrower to any other or
further notice or demand in similar or other circumstances.
(b) None of this Amended Agreement, the other Loan Documents or any
provision hereof or thereof may be waived, amended or modified (and no consent
to the departure by the Borrower or any other Loan Party therefrom may be
effective), except pursuant to an agreement or agreements in writing entered
into by the Required Lenders and the Borrower; provided, however, that no such
agreement shall (i) decrease the principal amount of, or extend the maturity of
or any Repayment Date or date for the payment of any interest on any Loan or any
date for reimbursement of a Letter of Credit Disbursement, or waive or excuse
any such payment or any part thereof, or decrease the rate of interest on any
Loan or a Letter of Credit Disbursement, without the prior written consent of
each Lender affected thereby, (ii) change or extend the Commitment or decrease
the Fees of any Lender without the prior written consent of such Lender, (iii)
effect any waiver, amendment or modification that by its terms changes the
amount of, or allocation between the Tranche A Term Loans and the Tranche B Term
Loans of, any prepayment of Term Loans (or the application of any such
prepayment to the remaining scheduled principal payments of the Term Loans),
without the prior written consent of Lenders holding Term Loans representing at
least a majority of the aggregate principal amount of the Term Loans of any
Class affected thereby, (iv) effect any waiver, amendment or modification that
by its terms adversely affects the rights in respect of payments, the Collateral
or the Guarantees pursuant to the Guarantee Agreements of the
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Lenders participating in the Tranche A Term Loans differently from those of the
Lenders participating in the Tranche B Term Loans, without the prior written
consent of Lenders holding Term Loans representing at least a majority of the
aggregate principal amount of the Term Loans then outstanding of any Class
affected thereby, (v) effect any waiver of the conditions to funding any
Revolving Loan or issuance of a Letter of Credit without the prior written
consent of the Lenders holding Revolving Loans, Letter of Credit Exposure and
Unused Revolving Credit Commitments representing at least a majority of the
aggregate principal amount of the Revolving Loans, Letter of Credit Exposure and
Unused Revolving Credit Commitments then outstanding or (vi) amend or modify the
provisions of Section 2.17 or 9.04(j), the provisions of this Section, the
definition of the term "Required Lenders", release at one time or serially in
the aggregate all or substantially all the Guarantors or all or substantially
all the Collateral or increase the aggregate Commitments of the Lenders, without
the prior written consent of each Lender; provided further that no such
agreement shall amend, modify or otherwise affect the rights or duties of the
Agent, the Issuing Bank or the Swingline Lender hereunder or under any other
Loan Document without the prior written consent of the Agent, the Issuing Bank
or the Swingline Lender, respectively (it being understood that the requirements
of this paragraph are cumulative). Furthermore, no Tranche B Special Election by
any Lender shall require the consent of any other person. Each Lender and each
holder of a Note shall be bound by a waiver, amendment or modification
authorized by this Section 9.08 regardless of whether its Note shall have been
marked to make reference thereto, and any consent by any Lender or holder of a
Note pursuant to this Section 9.08 shall bind any person subsequently acquiring
a Note from it, whether or not such Note shall have been so marked.
SECTION 9.09. Interest Rate Limitation. Notwithstanding anything herein
or in the Notes to the contrary, if at any time the applicable interest rate,
together with all fees and charges which are treated as interest under
applicable law (collectively the "Charges"), as provided for herein or in any
other document executed in connection herewith, or otherwise contracted for,
charged, received, taken or reserved by any Lender, shall exceed the maximum
rate permitted by applicable law (the "Maximum Rate") which may be contracted
for, charged, taken, received or reserved by such Lender in accordance with
applicable law, the rate of interest payable under the affected Note held by
such Lender, together with all Charges payable to such Lender, shall be limited
to the Maximum Rate.
SECTION 9.10. Entire Agreement. (a) This Amended Agreement, the other
Loan Documents and the Fee Letter constitute the entire contract among the
parties relative to the subject matter hereof and thereof. Any previous
agreement among the parties with respect to the subject matter hereof and
thereof is superseded by this Amended Agreement, the other Loan Documents and
the Fee Letter. Nothing in this Amended Agreement, the other Loan Documents or
the Fee Letter, expressed or implied, is intended to confer upon any party
(other than the parties hereto and thereto and the other Secured Parties) any
rights, remedies, obligations or liabilities under or by reason of this Amended
Agreement, the other Loan Documents or the Fee Letter.
(b) THIS WRITTEN AGREEMENT, THE NOTES, THE OTHER LOAN DOCUMENTS, THE
FEE LETTER AND THE DOCUMENTS EXECUTED IN
108
<PAGE> 114
CONNECTION HEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
SECTION 9.11. Severability. In the event any one or more of the
provisions contained in this Amended Agreement or in any other Loan Document
should be held invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein and
therein shall not in any way be affected or impaired thereby. The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 9.12. Counterparts. This Amended Agreement may be executed by
the parties hereto in several counterparts and each such counterpart shall be
deemed to be an original, admissible into evidence, but all such counterparts
shall together constitute but one and the same Agreement, and shall become
effective as provided in Section 9.03. Delivery of an executed counterpart of
this Amended Agreement by telefacsimile shall be equally as effective as
delivery of a manually executed counterpart of this Amended Agreement. Any party
delivering an executed counterpart of this Amended Agreement by telefacsimile
shall also deliver a manually executed counterpart of this Amended Agreement,
but the failure to deliver a manually executed counterpart shall not affect the
validity, enforceability, and binding effect of this Amended Agreement.
SECTION 9.13. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Amended Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Amended Agreement.
SECTION 9.14. Remedies. In case any one or more of the covenants and/or
agreements set forth in this Amended Agreement shall have been breached by the
Borrower or the Parent, then the Agent may, on behalf of the Lenders, proceed to
protect and enforce the Lenders' rights either by suit in equity and/or by
action at law, including, but not limited to, an action for damages as a result
of any such breach and/or an action for specific performance of any such
covenant or agreement contained in this Amended Agreement. Without limitation of
the foregoing, each of the Borrower and the Parent agrees that failure to comply
with any of the covenants contained herein will cause irreparable harm and that
specific performance shall be available in the event of any breach thereof. The
Agent acting pursuant to this Section 9.14, shall be indemnified against all
liability, loss or damage, together with all reasonable costs and expenses
related thereto (including reasonable legal and accounting fees and expenses) in
accordance with Section 9.05.
SECTION 9.15. Jurisdiction; Consent to Service of Process; Waiver of
Jury Trial. (a) The Borrower hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of any New York State
court or Federal court of the United
109
<PAGE> 115
States of America sitting in New York, New York, and any appellate court from
any thereof, in any action or proceeding arising out of or relating to this
Amended Agreement or the other Loan Documents, or for recognition or enforcement
of any judgment, and hereby irrevocably and unconditionally agrees that all
claims in respect of any such action or proceeding may be heard and determined
in such New York State court or, to the extent permitted by law, in such Federal
court. Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Amended Agreement shall affect any right that any Agent, the
Issuing Bank or any Lender may otherwise have to bring any action or proceeding
relating to this Amended Agreement or the other Loan Documents against the
Borrower or its properties in the courts of any jurisdiction.
(b) The Borrower hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Amended Agreement or the other Loan Documents
in any New York State court or Federal court of the United States of America
sitting in New York, New York. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(c) Each party to this Amended Agreement irrevocably consents to
service of process in the manner provided for notices in Section 9.01. Nothing
in this Amended Agreement will affect the right of any party to this Amended
Agreement to serve process in any other manner permitted by law.
(d) TO THE FULLEST EXTENT PERMITTED BY LAW, THE BORROWER WAIVES ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AMENDED AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY.
[Signature Pages to Follow.]
110
<PAGE> 116
IN WITNESS WHEREOF, the parties hereto have caused this Amended Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
FATS, INC.
By: /s/
--------------------------------------------------
Name: David A. Apseloff
Title: Vice President
FIREARMS TRAINING SYSTEMS, INC.
By: /s/
--------------------------------------------------
Name: David A. Apseloff
Title: Vice President
NATIONSBANK, N.A., as Agent, as Issuing Bank,
Swingline Lender and individually as a Lender
By: /s/
--------------------------------------------------
Name: Derrick C. Bell
Title: Vice President
FIRST BANK NATIONAL ASSOCIATION
By: /s/
--------------------------------------------------
Name: Mark R. Olmon
Title: Vice President
Address: 601 Second Ave. South
Minneapolis, MN 55402
Telecopy: (612) 973-0825
FIRST SOURCE FINANCIAL LLP, by
First Source Financial, Inc., as Agent/Manager
By: /s/
--------------------------------------------------
Name: Gary L. Francis
Title: Senior Vice President
Address: 2850 W. Golf Rd., Fifth Floor
Rolling Meadows, IL 60008
Telecopy: (847) 734-7910
111
<PAGE> 117
BHF-BANK AKTIENGESELLSCHAFT
By: /s/
--------------------------------------------------
Name: Thomas J. Leissl
Title: Vice President
Address: 590 Madison Ave. New York, NY
Telecopy: (212) 756-5536
CREDITANSTALT CORPORATE FINANCE, INC.
By: /s/
--------------------------------------------------
Name: Carl G. Drake
Title: Senior Associate
Address: Two Ravinia Drive, Atlanta, GA 30346
Telecopy: (770) 390-1851
By: /s/
--------------------------------------------------
Name: Robert M. Biringer
Title: Executive Vice President
Address: Two Ravinia Drive, Atlanta, GA 30346
Telecopy: (770) 390-1851
<PAGE> 1
EXHIBIT 11.01
FIREARMS TRAINING SYSTEMS, INC.
STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE
(In thousands, except per share data)
<TABLE>
<CAPTION>
Primary Earnings Fully Diluted Earnings
Per Share (1) Per Share (1)
Three Months Ended Three Months Ended
September 30, September 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted average number of common
shares outstanding 20,406 49,800 (2) 20,406 49,800 (2)
Shares repurchased in conjunction with
the Recapitalization 0 (46,832)(3) 0 (46,832)(3)
Shares issued in conjunction with the
Recapitalization 0 11,165 (4) 0 11,165 (4)
Shares granted to management 0 37 (5) 0 37 (5)
Shares purchased by management 0 232 (5) 0 232 (5)
Shares issued upon assumed exercise of
outstanding warrants 0 288 (6) 0 288 (6)
Shares issued upon assumed exercise of
outstanding options 1,058 1,339 (7) 1,058 1,339 (7)
------- -------- ------- --------
Weighted average common and common
equivalent shares outstanding 21,464 16,029 21,464 16,029
======= ======== ======= ========
Net income $ 2,089 $ 3,123 $ 2,089 $ 3,123
======= ======== ======= ========
Earnings per share $ 0.10 $ 0.19 $ 0.10 $ 0.19
======= ======== ======= ========
<CAPTION>
Primary Earnings Fully Diluted Earnings
Per Share (1) Per Share (1)
Six Months Ended Six Months Ended
September 30, September 30,
1997 1996 1997 1996
---- ---- ---- ----
<C> <C>
<S> <C> <C>
Weighted average number of common
shares outstanding 20,405 49,800 (2) 20,405 49,800 (2)
Shares repurchased in conjunction with
the Recapitalization 0 (46,832)(3) 0 (46,832)(3)
Shares issued in conjunction with the
Recapitalization 0 11,165 (4) 0 11,165 (4)
Shares granted to management 0 37 (5) 0 37 (5)
Shares purchased by management 0 232 (5) 0 232 (5)
Shares issued upon assumed exercise of
outstanding warrants 0 288 (6) 0 288 (6)
Shares issued upon assumed exercise of
outstanding options 1,173 1,339 (7) 1,190 1,339 (7)
------- -------- ------- --------
Weighted average common and common
equivalent shares outstanding 21,578 16,029 21,595 16,029
======= ======== ======= ========
Net income $ 4,275 $ 5,338 $ 4,275 $ 5,338
======= ======== ======= ========
Earnings per share $ 0.20 $ 0.33 $ 0.20 $ 0.33
======= ======== ======= ========
</TABLE>
- ----------
(1) Shares reflect a 100,000-for-one stock split in July 1996 in connection
with the recapitalization and a split of 1.66-for-one in October 1996.
(2) Shares reflect the weighted average shares prior to the
recapitalization of 49,800,000 shares and the weighted average shares
from the initial public offering in November 1996 of 6,000,000 shares.
(3) Shares were repurchased from THIN International for $171.2 million in
connection with the recapitalization and are assumed to be outstanding
for all periods presented.
(4) Shares were issued for $36 million in connection with the
recapitalization and are assumed to be outstanding for all periods
presented.
(5) Shares purchased by or granted to management for approximately $3.25
per share which are assumed to be outstanding for all periods
presented.
(6) Represents warrants attached to the bridge notes, at approximately
$0.000006 per warrant, which are assumed to be outstanding for all
periods presented through the date of the offering, using the treasury
stock method at the initial offering price of $14 per share. These
warrants were repurchased and retired by the Company with proceeds from
the offering.
(7) Represents 1,742,834 stock options exercisable at approximately $3.25
per option, which are assumed to be outstanding for all periods
presented, using the treasury stock method.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 3,601
<SECURITIES> 0
<RECEIVABLES> 18,937
<ALLOWANCES> 100
<INVENTORY> 13,452
<CURRENT-ASSETS> 37,603
<PP&E> 5,881
<DEPRECIATION> 2,699
<TOTAL-ASSETS> 45,507
<CURRENT-LIABILITIES> 15,488
<BONDS> 0
0
0
<COMMON> 112,346
<OTHER-SE> (139,490)
<TOTAL-LIABILITY-AND-EQUITY> 45,507
<SALES> 38,024
<TOTAL-REVENUES> 38,024
<CGS> 17,346
<TOTAL-COSTS> 17,346
<OTHER-EXPENSES> 11,078
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,920
<INCOME-PRETAX> 6,680
<INCOME-TAX> 2,405
<INCOME-CONTINUING> 4,275
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,275
<EPS-PRIMARY> .20
<EPS-DILUTED> .20
</TABLE>
