AMSCAN HOLDINGS, INC.
Filed pursuant to Rule 424 (b) (3)
Registration No. 333-45457
Supplement No. 7 to Prospectus dated February 24, 1998, as supplemented by
Supplement No. 1 dated March 31, 1998, and
Supplement No. 2 dated April 29, 1998, and
Supplement No. 3 dated May 15, 1998, and
Supplement No. 4 dated August 7, 1998, and
Supplement No. 5 dated August 14, 1998
Supplement No. 6 dated September 18, 1998
The date of this Supplement No. 7 is September 25, 1998
On September 25, 1998, Amscan Holdings, Inc. filed the attached Current
Report on Form 8-K.
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): September 17, 1998
AMSCAN HOLDINGS, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 000-21827 13-3911462
(State or Other (Commission File Number) (IRS Employer
Jurisdiction of Identification No.)
Incorporation)
80 Grasslands Road
Elmsford, New York 10523
(Address of Principal Executive Offices)
(914) 345-2020
(Registrant's telephone number, including area code)
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<PAGE>
ITEM 5. OTHER EVENTS.
On September 17, 1998, Amscan Holdings, Inc. (the "Registrant"), a
Delaware corporation, completed the acquisition (the "Acquisition") of all the
capital stock of Anagram International, Inc. ("Anagram") and certain related
companies (collectively, the "Anagram Companies") pursuant to a Stock Purchase
Agreement (the "Stock Purchase Agreement"), dated as of August 6, 1998, by and
among the Registrant and Garry Kieves and certain related stockholders of the
Anagram Companies (the "Sellers"), all of whom were signatories to the Stock
Purchase Agreement. The Stock Purchase Agreement was previously filed as an
Exhibit to the Registrant's Current Report on Form 8-K, dated as of August 6,
1998.
In connection with and upon consummation of the Acquisition the
Registrant entered into amended and restated credit agreements, copies of which
are filed herewith as Exhibits 10.1 and 10.2 and are incorporated herein by
reference. Also, pursuant to the terms of the Indenture under which the
Registrant's 9-7/8% Senior Subordinated Notes due 2007 (the "Notes") were
issued, certain of the Anagram Companies that became subsidiaries of the
Registrant upon consummation of the Acquisition executed a supplemental
indenture and senior subordinated guarantee with respect to the Notes, copies of
which supplemental indenture and senior subordinated guarantee are filed
herewith as Exhibits 4.1 and 4.2 respectively and are incorporated herein by
reference. Copies of the organizational documents for such subsidiaries are also
filed as exhibits hereto.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
EXHIBIT
NUMBER DESCRIPTION
3.1 Amended Articles of Incorporation of Anagram
International, Inc.
3.2 By-laws of Anagram International, Inc.
3.3 Articles of Incorporation of Anagram International
Holdings, Inc.
3.4 By-laws of Anagram International Holdings, Inc.
3.5 Articles of Organization of Anagram International, LLC
3.6 Operating Agreement of Anagram International, LLC
3.7 Certificate of Formation of Anagram Eden Prairie
Property Holdings LLC
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<PAGE>
EXHIBIT
NUMBER DESCRIPTION
4.1 Supplemental Indenture, dated as of September 17, 1998, by and
among Anagram International, Inc., Anagram International
Holdings, Inc., Anagram International, LLC and Anagram Eden
Prairie Property Holdings LLC and IBJ Schroder Bank & Trust
Company, as Trustee
4.2 Senior Subordinated Guarantee, dated as of September 17, 1998,
by Anagram International, Inc., Anagram International
Holdings, Inc., Anagram International, LLC and Anagram Eden
Prairie Property Holdings LLC
10.1 Amended and Restated Revolving Loan Credit Agreement, dated as
of September 17, 1998, by and among the Registrant, the
financial institutions parties thereto, Goldman, Sachs Credit
Partners L.P., as arranger and syndication agent, and Fleet
National Bank, as administrative agent
10.2 Amended and Restated AXEL Credit Agreement, dated as of
September 17, 1998, by and among the Registrant, the financial
institutions parties thereto, Goldman, Sachs Credit Partners
L.P., as arranger and syndication agent, and Fleet National
Bank, as administrative agent
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<PAGE>
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 hereunto duly authorized.
AMSCAN HOLDINGS, INC.
By: /s/ James M. Harrison
Name: James M. Harrison
Title: President
Dated: September 25, 1998
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<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
3.1 Amended Articles of Incorporation of Anagram
International, Inc.
3.2 By-laws of Anagram International, Inc.
3.3 Articles of Incorporation of Anagram International
Holdings, Inc.
3.4 By-laws of Anagram International Holdings, Inc.
3.5 Articles of Organization of Anagram International, LLC
3.6 Operating Agreement of Anagram International, LLC
3.7 Certificate of Formation of Anagram Eden Prairie
Property Holdings LLC
4.1 Supplemental Indenture, dated as of September 17, 1998, by and
among Anagram International, Inc., Anagram International
Holdings, Inc., Anagram International, LLC and Anagram Eden
Prairie Property Holdings LLC and IBJ Schroder Bank & Trust
Company, as Trustee
4.2 Senior Subordinated Guarantee, dated as of September 17, 1998,
by Anagram International, Inc., Anagram International
Holdings, Inc., Anagram International, LLC and Anagram Eden
Prairie Property Holdings LLC
10.1 Amended and Restated Revolving Loan Credit Agreement, dated as
of September 17, 1998, by and among the Registrant, the
financial institutions parties thereto, Goldman, Sachs Credit
Partners L.P., as arranger and syndication agent, and Fleet
National Bank, as administrative agent
10.2 Amended and Restated AXEL Credit Agreement, dated as of
September 17, 1998, by and among the Registrant, the financial
institutions parties thereto, Goldman, Sachs Credit Partners
L.P., as arranger and syndication agent, and Fleet National
Bank, as administrative agent
<PAGE>
ARTICLES OF INCORPORATION
OF
ANAGRAM INC.
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The undersigned, being a natural person of full age, for the purpose
of forming a corporation under and pursuant to the provisions of the Minnesota
Business Corporation Act, being Chapter 301, Minnesota Statutes Annotated, does
hereby adopt the following Articles of Incorporation.
ARTICLE I.
The name of this corporation shall be:
Anagram Inc.
ARTICLE II.
The purposes and powers of this corporation shall be:
(a) General business purposes.
(b) Marketing products and services of all types.
(c) To acquire, hold, mortgage, pledge or dispose of the shares, bond,
securities and other evidences of indebtedness of any domestic or foreign
corporation.
(d) To take, lease, purchase or otherwise acquire, and to own, use,
hold, sell, convey, exchange, lease, mortgage, work, improve, develop, divide
and otherwise handle, deal in, and dispose of real estate, real property, and
any interest or right therein. To erect, construct, maintain, improve, rebuild,
enlarge, alter, manage and control, directly or through ownership of stock in
any corporation, any and all kinds of buildings, houses, stores, offices, shops,
warehouses, factories, mills, machinery and plants, and any and all other
structures and erections which may at any time be necessary, useful or
advantageous, for the purposes of the corporation, and which lawfully may be
done under the laws of the State of Minnesota.
(e) To make, enter into, perform and carry out contracts for
constructing, building, altering, improving, repairing, decorating, maintaining,
furnishing and fitting up buildings, tenements and structures of every
description, and to advance money to and enter into agreements of all kinds with
builders, contractors, property owners and others for said purpose.
(f) To purchase or otherwise acquire, own, mortgage, pledge, sell,
assign and transfer, or otherwise dispose of, to invest, trade, deal in and deal
with goods, wares, and merchandise and personal property of every class and
description; to acquire and pay for in cash, stocks or bonds of this
corporation, or otherwise, the good will, rights, assets and property, and to
undertake or assume the whole or any part of the obligations or liabilities of
any person,
<PAGE>
firm, association or corporation; to acquire, hold, use, sell, assign, lease,
grant licenses in respect of, mortgage or otherwise dispose of letters patent of
the United States or any foreign country, patent rights, licenses and
privileges, inventions, improvements and processes, copyrights, trademarks and
trade names, relating to or useful in connection with any business of this
corporation.
(g) To enter into, make and perform contracts of every kind and
description with any person, firm, association, corporation, municipality,
county, state, body politic or government or colony or dependency thereof, to
borrow money for any of the purposes of the corporation, from time to time, to
draw, make, accept, endorse, execute and issue promissory notes, drafts, bills
of exchange, warrants, bonds, debentures and other negotiable or non-negotiable
instruments and evidences of indebtedness, and to secure the payment of any
thereof and of the interest thereon by mortgage upon or pledge, conveyance or
assignment in trust or the whole or any part of the property of the corporation,
whether at the time owned or thereafter acquired, and to sell, pledge, or
otherwise dispose of such bonds or other obligations of the corporation, for its
corporate purposes.
(h) To purchase, hold, sell and transfer the shares of its own capital
stock.
(i) To have one or more offices, within or without the State of
Minnesota, to carry on all or any of its operations and business and, without
restriction or limit as to amount, to purchase or otherwise acquire, hold, own,
mortgage, sell, convey or otherwise dispose of real property of every class and
description in any of the states, districts, territories or colonies of the
United States, and in any and all foreign countries, subject to the laws of such
state, district, territory, colony or country; and, in general, to exercise and
to have such other powers and purposes as may be reasonably incidental to or
necessary for the exercise of any of the powers hereinabove specified.
(j) To do each and all of the things aforesaid for itself, or as
agent, nominee, broker, factor, consignee, associate, joint venturer, or partner
of or with other persons, firms, partnerships, general or limited, associations,
or corporations; and to do the same as fully and to the same extent as natural
persons might or could do, including the formation or entering into joint
ventures or general or limited partnerships or associations to do any of the
things aforesaid and becoming and acting as a joint venturer, general or limited
partners, or associate or member therein.
(k) The objects and purposes specified in the foregoing paragraphs
shall, except where otherwise expressed, be in nowise limited or restricted by
reference to, or inference from the terms of any other clause in these Articles
of Incorporation, but the objects and purposes specified in each of the
foregoing clauses of this Article shall be regarded as independent objects and
purposes and shall be in addition to any other powers of corporations having
general business purposes under the Minnesota Business Corporation Act.
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<PAGE>
ARTICLE III.
The location and post office address of its registered office within
the State of Minnesota shall be 1800 Midwest Plaza Building, Minneapolis,
Minnesota, 55402.
ARTICLE IV.
The time for the commencement of this corporation shall be the date
upon which these Articles of Incorporation are filed in the office of the
Secretary of State of Minnesota, and its duration shall be perpetual.
ARTICLE V
(a) The capital stock of this corporation shall consist of Twenty-five
Thousand (25,000) shares of common stock at One Dollar ($1.00) par value.
(b) No holder of stock of this corporation shall be entitled to any
cumulative voting rights.
(c) The capital stock of this corporation shall be issued in the
manner, at the times, in such amounts, and for such consideration in money or
property or both, as the Board of Directors may, from time to time, determine.
The Board of Directors shall have the authority to fix the terms, provisions and
conditions of, and authorize the issuance of options, warrants, or rights to
purchase or subscribe for shares of its common stock, including the price or
prices at which shares may be purchased or subscribed for.
(d) No holder of stock of this corporation shall have any
preferential, pre-emptive, or other rights of subscription to any shares of any
class of stock of this corporation allotted or sold or to be allotted or sold
and now or hereafter authorized, or to any obligations or securities convertible
into any class of stock of this corporation, nor any right of subscription to
any part thereof.
ARTICLE VI.
The corporation shall indemnify its officers, directors, employees and
agents to the full extent permitted by the laws of the State of Minnesota, as
now in effect or as the same may hereafter be amended.
ARTICLE VII.
The amount of stated capital with which this corporation shall begin
business shall be the sum of One Thousand Dollars ($1,000.00).
ARTICLE VIII.
The name and post office address of the incorporator forming this
corporation is:
Ralph Strangis
1800 Midwest Plaza
Minneapolis, Minnesota 55402
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<PAGE>
ARTICLE IX
(a) The management of the corporation shall be vested in a Board of
Directors whose number shall be determined in accordance with the Bylaws of this
corporation. The first Board of Directors of the corporation, who shall hold
office until the next annual meeting of shareholders and until their successors
are elected shall consist of:
Ralph Strangis
1800 Midwest Plaza
Minneapolis, Minnesota 55402
Michael D. Goldner
1800 Midwest Plaza
Minneapolis, Minnesota 55402
Andris A. Baltins
1800 Midwest Plaza
Minneapolis, Minnesota 55402
(b) The Board of Directors shall have the authority to make and alter
Bylaws, subject to the power of the stockholders to change or repeal such
Bylaws.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
17th day of June, 1977.
In the Presence Of:
/s/
---------------------------------------
/s/
- ------------------------------------
/s/ Marcia L. Olson
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State of Minnesota )
) ss.:
County of Hennepin )
On this 17th day of June, 1977, before me a notary public within and
for said county, personally appeared Ralph Strangis to me known to be the person
named in and who executed the foregoing Articles of Incorporation, and he
acknowledged that he executed the same as his free act and deed and for the uses
and purposes therein expressed.
/s/ Marcia L. Olson
[SEAL]
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<PAGE>
CERTIFICATE OF AMENDMENT
OF ARTICLES OF INCORPORATION OF
ANAGRAM INC.
We, the undersigned, Garry Kieves and Rick Keives, President
and Vice President and Secretary, respectively, of ANAGRAM INC., a Minnesota
corporation, do hereby certify that resolutions as hereinafter set forth were
adopted by a unanimous action in writing signed by all of the stockholders of
Anagram Inc., for the purpose of amending the Articles of Incorporation of the
corporation.
WHEREAS, the Board of Directors has deemed it advisable to
change the corporate name of the corporation and has proposed
an amendment to the Articles of Incorporation of the
corporation;
NOW THEREFORE, BE IT HEREBY RESOLVED, that Article I of the
Articles of Incorporation be and the same is hereby amended by
deleting the present Article I and inserting in lieu thereof
the following Article I:
"ARTICLE I.
The name of this corporation shall be:
Anagram International, Inc."
RESOLVED, FURTHER, that the President or any Vice President,
acting alone or with the Secretary or an Assistant Secretary,
be and they each are hereby authorized and empowered to take
any and all action necessary or required in order to file for
record with the Secretary of State of Minnesota and in any
other jurisdiction the foregoing amendment to the Articles of
Incorporation and to take all other action necessary with
respect to the change of name of the corporation.
IN WITNESS WHEREOF, we have subscribed our names hereto this
25th day of February, 1982.
In the Presence of:
/s/ /s/ Garry Kieves
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Garry Kieves, President
/s/ Marcia L. Olson /s/ R. Keives
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Rick Keives, Vice President
and Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
ARTICLES OF INCORPORATION OF
ANAGRAM INTERNATIONAL, INC.
The undersigned, the Secretary of Anagram International, Inc.,
a Minnesota corporation (the "Corporation"), does hereby certify that pursuant
to the provisions of Minnesota Statutes, Section 302A.135, the following
resolutions were adopted by the unanimous action in writing by all of the
Shareholder and all of the Directors of the Corporation on December 29, 1992.
NOW, THEREFORE BE IT RESOLVED that the following amendment to
the Articles of Incorporation is hereby adopted:
ARTICLE V
(a) The capital stock of this corporation shall consist
of Twenty-five Thousand (25,000) shares of stock at
One Dollar ($1.00) par value.
(b) No holder of stock of this corporation shall be
entitled to any cumulative voting rights.
(c) The capital stock of this corporation shall be issued
in the manner, at the times, in such amounts, and for
such consideration in money or property or both, as
the Board of Directors may, from time to time,
determine. The Board of Directors shall have the
authority to establish more than one class or series
of stock, to designate the rights and preferences
thereof and to fix the terms, provisions and
conditions of, and authorize the issuance of options,
warrants, or rights to purchase or subscribe for
shares of its common stock, including the price or
prices at which shares may be purchased or subscribed
for.
(d) No holder of stock of this corporation shall have any
preferential, pre-emptive, or other rights of
subscription to any shares of any class of stock of
this corporation allotted or sold or to be allotted
or sold and how or hereafter authorized, or to any
obligations or securities convertible into any class
of stock of this corporation, nor any right of
subscription to any part thereof.
<PAGE>
IN WITNESS HEREOF, the undersigned has hereunto set his hand
this 30th day of December, 1992.
/s/
-----------------------------------
Secretary
<PAGE>
BYLAWS OF
ANAGRAM INC.
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ARTICLE I.
CORPORATE OFFICES AND SEAL
Section 1.01. Offices. The corporation may have offices
within the State of Minnesota or at such other places as the Board of Directors
may from time to time appoint or the business of the corporation may require.
Section 1.02. Seal. The corporate seal shall have inscribed
thereon the name of the corporation and the words "Corporate Seal, Minnesota."
ARTICLE II.
MEETING OF STOCKHOLDERS
Section 2.01. Place and Time of Meetings. Meetings of the
stockholders may be held at any place, within or without the State of Minnesota,
designated by the Directors, and in the absence of such designation, it shall be
held at the office of the corporation in the State of Minnesota. The Directors
shall designate the time of day for each meeting and, in the absence of such
designation, every meeting of the stockholders shall be held at 10:00 a.m.
Section 2.02. Annual Meetings. Annual meetings of the
stockholders shall be held at such time and place as shall be specified by the
Board of Directors. At the annual meeting of stockholders, the stockholders
shall elect, by a plurality vote, a Board of Directors, and shall transact such
other business as may properly be brought before the meeting.
Section 2.03. Notice of Annual Meetings. Written notice of
the annual meeting of stockholders shall be mailed to each stockholder entitled
to vote thereat, at such address as appears on the stock book of the
corporation, at least ten (10) days prior to the meeting.
Section 2.04. Special Meetings. Special meetings of the
stockholders for any purpose or purposes, unless otherwise prescribed by
statute, may be called
<PAGE>
by the Chairman of the Board, the President, any two or more Directors, or by
one or more shareholders holding 10% or more of the shares entitled to vote on
the matters to be presented to the meeting. Business transacted at all special
meetings shall be confined to the objects stated in the call.
Section 2.05. Notice of Special Meetings. Unless otherwise
prescribed by statute, written notice of special meetings of stockholders,
stating the time, place and object thereof, shall be sent to each stockholder
entitled to vote thereat, at such address as appears on the books of the
corporation, at least five (5) days before such meeting.
Section 2.06. Quorum; Adjourned Meetings. The holders of a
majority of the stock issued and outstanding and entitled to vote thereat,
present in person or represented by proxy, shall constitute a quorum, and the
presence of such majority stockholders shall be required at all meetings of the
stockholders for the transaction of business, except as otherwise provided by
law, by the Articles of Incorporation, or by these Bylaws. If, however, such
majority shall not be present or represented at any meeting of stockholders, the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time without notice
other than announcement at the meeting, until the requisite amount of voting
stock shall be present. At such adjourned meeting at which the requisite amount
of voting stock shall be represented, any business may be transacted which might
have been transacted at the meeting as originally notified.
Section 2.07. Voting. At each meeting of the stockholders
every stockholder having the right to vote shall be entitled to vote in person
or by proxy appointed by an instrument in writing subscribed by such
stockholder. Each stockholder shall, unless the Articles of Incorporation
provide otherwise, have one vote for each share of stock having voting power,
registered in his name on the books of the corporation. All elections shall be
had and all questions decided by plurality vote.
Section 2.08. Voting Record. The officer or agent having
charge of the stock transfer books for shares of the corporation shall make a
complete record
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<PAGE>
of the stockholders entitled to vote at each meeting of stockholders or any
adjournment thereof, arranged in alphabetical order, with the address of and the
number of shares held by each. Such records shall be produced and be kept open
at the time and place of the meeting and shall be subject to the inspection of
any stockholder during the whole time of the meeting.
ARTICLE III.
DIRECTORS
Section 3.01. Powers. The property, affairs and business of
the corporation shall be managed by the Board of Directors. In addition to the
powers and authorities by these Bylaws expressly conferred upon it, the Board
may exercise all such powers of the corporation and do all such lawful acts and
things as are not by statute or by the Articles of Incorporation or by these
Bylaws directed or required to be exercised or done by the stockholders.
Section 3.02. Number; Term of Office. Until the first meeting
of stockholders, the number of directors shall be the number named in the
Articles of Incorporation. Thereafter, the number of Directors shall be
established by resolution of the stockholders, subject to the authority of the
Board of Directors to increase the number of Directors as permitted by law. In
the absence of such resolution, the number of Directors shall be the number last
fixed by the stockholders or the Board of Directors, or the Articles of
Incorporation. Directors need not be stockholders. Each of the Directors shall
bold office until the annual meeting of stockholders next held after his
election and until his successor shall have been elected and shall qualify, or
until he shall resign, or shall have been removed.
Section 3.03. Vacancies; Newly Created Directorships.
Vacancies in the Board of Directors shall be filled for the unexpired term, by a
majority of the remaining Directors of the Board. Newly created directorships
resulting from an increase in the authorized number of Directors by action of
the Board of Directors as permitted by Section 3.02 of these Bylaws may be
filled by a two-thirds vote of the Directors serving at the time of such
increase; and each person so elected shall be a Director until his successor is
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<PAGE>
elected by the stockholders, who may make such election at their next annual
meeting or at any meeting duly called for that purpose.
Section 3.04. Annual Meeting. As soon as practicable after
each annual election of Directors, the Board of Directors shall meet at the
office of the corporation, or at such other place within or without the State of
Minnesota as designated by the Board of Directors, for the purpose of electing
the officers of the corporation and for the transaction of such other business
as may come before the meeting.
Section 3.05. Regular Meetings. Regular meetings of the Board
of Directors may be held without notice at such time arid place as shall from
time to time be determined by the Board of Directors.
Section 3.06. Special Meetings. Special meetings of the Board
of Directors may be called by the Chairman of the Board, the President, or the
Secretary upon 24 hours' notice to each Director, either personally, by
telephone, or by mail or by telegram. A special meeting shall be called by the
President or Secretary in like manner and on like notice upon the written
request of a majority of the Board of Directors.
Section 3.07. Participation by Telephone. Members of the
Board of Directors or any committee designated by the Board, may participate in
a meeting of the Board or of any such committee by means of conference telephone
or similar communication equipment by means of which all persons participating
in the meeting can hear each other, and participation in such a manner shall
constitute presence in person at such meeting.
Section 3.08. Quorum. At all meetings of the Board of
Directors, one-third of the Directors, but in no event fewer than two Directors
other than where a Board of Directors consists of only one Director, shall be
necessary and sufficient to constitute a quorum for the transaction of business,
and the act of the majority of the Directors present at any meeting at which
there is a quorum shall be the act of the Board of Directors, except as may be
otherwise specifically provided by statute, by the Articles of Incorporation, or
by these Bylaws.
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<PAGE>
Section 3.09. Executive Committee. The Board of Directors
may, by unanimous affirmative action of the Board, designate two or more of
their number to constitute an Executive Committee, which, to the extent
determined by unanimous affirmative action of the Board, shall have and exercise
the authority of the Board in the management of the corporation. The Executive
Committee shall act only in the interval between meetings of the Board and shall
be subject at all times to the control and direction of the Board.
Section 3.10. Other Committees. The Board of Directors may
designate one or more committees, each committee to consist of two or more of
the Directors of the corporation, which, to the extent provided by the Board of
Directors, shall have and may exercise the powers of the Board of Directors in
the management of the business and affairs of the corporation. Such committee or
committees shall have such name or names as may be determined from time to time
by the Board of Directors.
Section 3.11. Compensation. Directors and members of
committees of the Board of Directors, as such, shall not receive any stated
salary for their services, but by resolution of the Board of Directors a fixed
sum and expenses of attendance, if any, may be allowed for attendance at each
meeting of the Board of Directors or any committee thereof. Nothing herein
contained shall be construed to preclude any Director from serving the
corporation in any other capacity and receiving compensation therefor.
ARTICLE IV.
OFFICERS
Section 4.01. Number. The officers of the corporation shall
be chosen by the Directors, and shall consist of a Chairman of the Board, (if
one is elected by the Board), a President, one or more Vice Presidents, a
Secretary, a Treasurer and such Assistant Secretaries and Assistant Treasurers
and such other officers and agents as the Board of Directors from time to time
shall elect or appoint. Any two offices, except those of President and Vice
President, may be held by one person.
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<PAGE>
Section 4.02. Election; Term of Office; and Removal. At each
annual meeting of the Board of Directors or at any special meeting of the Board
of Directors called for such purpose, the Board shall elect, from within or
without its number, a President, Vice President, Secretary, Treasurer, and such
other officers as it may deem advisable. Such officers shall hold office until
the next annual meeting of the Directors or until their successors are elected
and qualified. Any officer elected or appointed by the Board of Directors may be
removed at any time with or without cause by the Board of Directors.
Section 4.03. Chairman of the Board. The Chairman of the
Board, if one is elected, shall preside at all meetings of the stockholders and
directors and shall have such other duties as may be prescribed from time to
time, by the Board of Directors.
Section 4.04. President. The President shall be the chief
executive officer of the corporation. In the absence of the Chairman of the
Board, he shall preside at all meetings of stockholders and directors; he shall
be responsible for general and active management of the business of the
corporation; and he shall see that all orders and resolutions of the Board are
carried into effect. He may execute and deliver, in the name of the corporation,
any deeds, mortgages, bonds, contracts or other instruments pertaining to the
business of the corporation. He shall be an ex officio member of all standing
committees and shall have powers and duties of supervision and management
usually vested in the office of the President of a corporation.
Section 4.05. Vice President. Any Vice President may, in the
absence or disability of the President, perform the duties and exercise the
powers of the President and shall perform such other duties as the Board of
Directors shall prescribe.
Section 4.06. Secretary. The Secretary shall attend all
sessions of the Board of Directors and all meetings of stockholders and record
all votes and minutes of all proceedings in a book to be kept for that purpose,
and shall perform like duties for the standing committees when required. The
Secretary shall perform such other duties and execute such other documents as
may be prescribed by the Board of Directors
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<PAGE>
or the President under whose supervision he shall be. Any Assistant Secretary
may, in the absence or disability of the Secretary, perform the duties and
exercise the powers of the Secretary, and shall perform such other duties as the
Board of Directors shall prescribe.
Section 4.07. Treasurer. The Treasurer shall have the custody
of the corporate funds and securities, and shall keep full and accurate accounts
of receipts and disbursements in books belonging to the corporation, and shall
deposit all monies and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the Board of
Directors. He may disburse the funds of the corporation as may be ordered by the
Board, taking proper vouchers for such disbursements, and shall render to the
President and directors at the regular meetings of the Board, or whenever they
may require it, an account of all his transactions as Treasurer and of the
financial condition of the corporation. Any Assistant Treasurer, in the absence
or disability of the Treasurer, may perform the duties and exercise the powers
of the Treasurer and shall perform such other duties as the Board of Directors
shall prescribe.
Section 4.08. Vacancies. If the office of any officer or an
agent becomes vacant by reason of his death, resignation, retirement,
disqualification, removal from office or otherwise, the directors then in office
may choose a successor who shall hold office for the unexpired term in respect
of which such vacancy occurred.
Section 4.09. Delegation of Duties. In case of the absence of
any officer of the corporation, or for any other reason that the Board may deem
sufficient, the Board may delegate for the time being the powers and duties, or
any of them of such officer to any other officer or to any directors.
ARTICLE V.
CERTIFICATES OF STOCK
Section 5.01. Certificates. Certificates of stock of the
corporation shall be numbered and shall be entered into the books of the
corporation as they are
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issued. Each such certificate shall exhibit the holder's name and number of
shares, and shall be signed by the President or any Vice President and the
Treasurer or the Assistant Treasurer, or the Secretary or Assistant Secretary.
Section 5.02. Loss of Certificates. Any person claiming a
certificate of stock to be lost or destroyed shall make an affidavit in such
manner as the Board of Directors may require, and shall, if the Directors so
require, give the corporation a bond of indemnity in form and amount and with
one or more sureties satisfactory to the Board, whereupon a new certificate may
be issued of the same tenor and for the same number of shares as the one alleged
to be lost or destroyed.
ARTICLE VI.
NOTICES
Section 6.01. General. Whenever under the provisions of these
Bylaws, notice is required to be given to any director, officer, or stockholder,
it shall not be construed to mean personal notice, but such notice may be given
in writing by telegram or by mail, and if by mail by depositing the same in the
post office or letter box in a postpaid envelope, addressed to such stockholder,
officer, or director at such address as appears on the books of the corporation,
or in default of other address, to such officer, director, or stockholder at the
general post office in Minneapolis, Minnesota, and such notice shall be deemed
to be given at the time when the same shall be delivered to the telegraph
company for transmission or thus mailed, as the case may be.
Section 6.02. Waiver of Notice. Whenever any notice is
required to be given to any stockholder, director or officer of the corporation
under the provisions of these Bylaws or under the provisions of the Articles of
Incorporation or by statute, a waiver thereof in writing signed by the person or
persons entitled to such notice, shall be deemed equivalent to the giving of
such notice.
ARTICLE VII.
INDEMNIFICATION
Section 7.01. The corporation may indemnify such persons for
such expenses and liabilities in such
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manner, under such circumstances and to the extent as permitted by the laws of
the State of Minnesota as now enacted or hereafter amended.
ARTICLE VIII.
AMENDMENTS
Section 8.01. These Bylaws may be amended or altered by the
Board of Directors at any meeting provided that notice of such proposed
amendments shall have been given in the notice given to the directors of such
meeting. Such authority in the Board of Directors is subject to the power of the
stockholders to change or repeal such bylaws and the Board of Directors shall
not make or alter any bylaws fixing their qualifications, classifications, term
of office, or number, except that the Board of Directors may make or alter any
bylaw to increase their number.
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ARTICLES OF INCORPORATION
OF
ANAGRAM INTERNATIONAL HOLDINGS, INC.
-O0O-
The undersigned incorporator, being a natural person of full age, for
the purpose of forming a corporation under Minnesota Statutes, Chapter 302A,
hereby adopts the following Articles of Incorporation:
ARTICLE I
NAME
The name of the corporation is Anagram International Holdings, Inc.
ARTICLE II
REGISTERED OFFICE
The registered office of this corporation is located at 7700 Anagram
Drive, Minneapolis, Minnesota 55344-7307.
ARTICLE III
INCORPORATOR
The name and address of the incorporator are:
Name Mailing Address
---- ---------------
James Plutt 7700 Anagram Drive
Minneapolis, Minnesota 55344-7307
ARTICLE IV
CAPITAL
The aggregate number of shares of stock which this corporation shall
have the authority to issue is One Hundred Thousand (100,000) shares, par value
$.0l per share.
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ARTICLE V
CLASSES AND SERIES
In addition to, and not by way of limitation of, the powers granted to
the Board of Directors by Minnesota Statutes, Chapter 302A, the Board of
Directors of this corporation shall have the power and authority to fix by
resolution any designation, class, series, voting power, preference, right,
qualification, limitation, restriction, dividend, time and price of redemption,
and conversion right with respect to any stock of this corporation.
ARTICLE VI
WRITTEN ACTION WITHOUT MEETING
Any action required or permitted to be taken at any meeting of the
Board of Directors may be taken without a meeting by written action signed by a
majority of the Board of Directors then in office, except as to those matters
which require shareholder approval, in which case the written action shall be
signed by all members of the Board of Directors then in office.
ARTICLE VII
CUMULATIVE VOTING DENIED
No holder of stock of this corporation shall be entitled to any
cumulative voting rights.
ARTICLE VIII
PRE-EMPTIVE RIGHTS DENIED
No holder of stock of this corporation shall have any preferential,
pre-emptive, or other rights of subscription to any shares of any class or
series of stock of this corporation allotted or sold or to be allotted or sold
and now or hereafter authorized, or to any obligations or securities convertible
into any class or series of stock of this corporation, nor any right of
subscription to any part thereof.
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ARTICLE IX
LIMITATION ON LIABILITY OF DIRECTORS
No director of the corporation shall be personally liable to the
corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director, provided that this Article shall not eliminate or limit the
liability of a director to the extent provided by applicable law (i) for any
breach of the director's duty of loyalty to the corporation or its shareholders,
(ii) for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law, (iii) under Section 302A.559 or
80A.23, Minnesota Statutes, (iv) for any transaction from which the director
derived an improper personal benefit, or (v) for any act or omission occurring
prior to the effective date of this Article. No amendment to or repeal of this
Article shall apply to or have any effect on the liability or alleged liability
of any director of the corporation for or with respect to any acts or omissions
of such director occurring prior to such amendment or repeal.
IN WITNESS WHEREOF, the incorporator has executed these Articles of
Incorporation this 3rd day of March, 1993.
INCORPORATOR:
/s/ James Plutt
-----------------------------------------
James Plutt
STATE OF MINNESOTA )
) ss.
COUNTY OF SCOTT )
The foregoing instrument was acknowledged before me this 3rd
day of March, 1993.
/s/ Patricia A. Morris
------------------------------------
Notary Public
[SEAL]
<PAGE>
BYLAWS
OF
ANAGRAM INTERNATIONAL HOLDINGS, INC.
SHAREHOLDERS
Section 1.01 Place of Meetings. Each meeting of the shareholders shall
be held at the principal executive office of the Corporation or at such other
place as may be designated by the Board of Directors or the Chief Executive
Officer; provided, however, that any meeting called by or at the demand of a
shareholder or shareholders shall be held in the county where the principal
executive office of the Corporation is located.
Section 1.02 Regular Meetings.Regular meetings of the shareholders may
be held on an annual or other less frequent basis as determined by the Board of
Directors; provided, however, that if a regular meeting has not been held during
the immediately preceding 15 months, a shareholder or shareholders holding three
percent or more of the voting power of all shares entitled to vote may demand a
regular meeting of shareholders by written demand given to the Chief Executive
Officer or Chief Financial Officer of the Corporation. At each regular meeting
the shareholders shall elect qualified successors for directors who serve for an
indefinite term or whose terms have expired or are due to expire within six
months after the date of the meeting and may transact any other business,
provided, however, that no business with respect to which special notice is
required by law shall be transacted unless such notice shall have been given.
Section 1.03 Special Meetings. A special meeting of the shareholders
may be called for any purpose or purposes at any time by the Chief Executive
Officer; by the Chief Financial Officer; by the Board of Directors or any two or
more members thereof; or by one or more shareholders holding not less than ten
percent of the voting power of all shares of the Corporation entitled to vote,
who shall demand such special meeting by written notice given to the Chief
Executive Officer or the Chief Financial Officer of the Corporation specifying
the purposes of such meeting.
Section 1.04 Meetings Held Upon Shareholder Demand. Within 30 days
after receipt of a demand by the Chief Executive Officer or the Chief Financial
Officer from any shareholder or shareholders entitled to call a meeting of the
shareholders, it shall be the duty of the Board of Directors of the Corporation
to cause a special or regular meeting of shareholders, as the case may be, to be
duly called and held on notice no later than 90 days after receipt of such
demand. If the Board fails to cause such a meeting to be called and held as
required by this Section, the shareholder or shareholders making the demand may
call the meeting by giving
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notice as provided in Section 1.06 hereof at the expense of the Corporation.
Section 1.05 Adjournments. Any meeting of the shareholders may be
adjourned from time to time to another date, time and place. If any meeting of
the shareholders is so adjourned, no notice as to such adjourned meeting need be
given if the date, time and place at which the meeting will be reconvened are
announced at the time of adjournment.
Section 1.06 Notice of Meetings. Unless otherwise required by law,
written notice of each meeting of the shareholders, stating the date, time and
place and, in the case of a special meeting, the purpose or purposes, shall be
given at least ten days and not more than 60 days prior to the meeting to every
holder of shares entitled to vote at such meeting except as specified in Section
1.05 or as otherwise permitted by law. The business transacted at a special
meeting of shareholders is limited to the purposes stated in the notice of the
meeting.
Section 1.07 Waiver of Notice. A shareholder may waive notice of the
date, time, place and purpose or purposes of a meeting of shareholders. A waiver
of notice by a shareholder entitled to notice is effective whether given before,
at or after the meeting, and whether given in writing, orally or by attendance.
Attendance by a shareholder at a meeting is a waiver of notice of that meeting,
unless the shareholder objects at the beginning of the meeting to the
transaction of business because the meeting is not lawfully called or convened,
or objects before a vote on an item of business because the item may not
lawfully be considered at that meeting and does not participate in the
consideration of the item at that meeting.
Section 1.08 Voting Rights.Subdivision 1. A shareholder shall have one
vote for each share held which is entitled to vote. Except as otherwise required
by law, a holder of shares entitled to vote may vote any portion of the shares
in any way the shareholder chooses. If a shareholder votes without designating
the proportion or number of shares voted in a particular way, the shareholder is
deemed to have voted all of the shares in that way.
Subdivision 2. The Board of Directors may fix a date not more than 60
days before the date of a meeting of shareholders as the date for the
determination of the holders of shares entitled to notice of and entitled to
vote at the meeting. When a date is so fixed, only shareholders on that date are
entitled to notice of and permitted to vote at that meeting of shareholders.
Section 1.09 Proxies. A shareholder may cast or authorize the casting
of a vote by filing a written appointment of a proxy with an officer of the
Corporation at or before the meeting at which the appointment is to be
effective. The shareholder may sign
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or authorize the written appointment by telegram, cablegram or other means of
electronic transmission setting forth or submitted with information sufficient
to determine that the shareholder authorized such transmission. Any copy,
facsimile, telecommunication or other reproduction of the original of either the
writing or transmission may be used in lieu of the original, provided that it is
a complete and legible reproduction of the entire original.
Section 1.10 Quorum. The holders of a majority of the voting power of
the shares entitled to vote at a shareholders meeting are a quorum for the
transaction of business. If a quorum is present when a duly called or held
meeting is convened, the shareholders present may continue to transact business
until adjournment, even though the withdrawal of a number of the shareholders
originally present leaves less than the proportion or number otherwise required
for a quorum.
Section 1.11 Acts of Shareholders. Subdivision 1. Except as otherwise
required by law or specified in the Articles of Incorporation of the
Corporation, the shareholders shall take action by the affirmative vote of the
holders of the greater of (a) a majority of the voting power of the shares
present and entitled to vote on that item of business or (b) a majority of the
voting power of the minimum number of shares entitled to vote that would
constitute a quorum for the transaction of business at a duly held meeting of
shareholders.
Subdivision 2. A shareholder voting by proxy authorized to vote on
less than all items of business considered at the meeting shall be considered to
be present and entitled to vote only with respect to those items of business for
which the proxy has authority to vote. A proxy who is given authority by a
shareholder who abstains with respect to an item of business shall be considered
to have authority to vote on that item of business.
Section 1.12 Action Without a Meeting. Any action required or
permitted to be taken at a meeting of the shareholders of the Corporation may be
taken without a meeting by written action signed by all of the shareholders
entitled to vote on that action. The written action is effective when it has
been signed by all of those shareholders, unless a different effective time is
provided in the written action.
DIRECTORS
Section 2.01 Number; Qualifications. Except as authorized by the
shareholders pursuant to a shareholder control agreement or unanimous
affirmative vote, the business and affairs of the Corporation shall be managed
by or under the direction of a Board of one or more directors. Directors shall
be natural persons. The shareholders at each regular meeting shall determine the
number of
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directors to constitute the Board, provided that thereafter the authorized
number of directors may be increased by the shareholders or the Board and
decreased by the shareholders. Directors need not be shareholders.
Section 2.02 Term. Each director shall serve for an indefinite term
that expires at the next regular meeting of the shareholders. A director shall
hold office until a successor is elected and has qualified or until the earlier
death, resignation, removal or disqualification of the director.
Section 2.03 Vacancies. Vacancies on the Board of Directors resulting
from the death, resignation, removal or disqualification of a director may be
filled by the affirmative vote of a majority of the remaining members of the
Board, though less than a quorum. Vacancies on the Board resulting from newly
created directorships may be filled by the affirmative vote of a majority of the
directors serving at the time such directorships are created. Each person
elected to fill a vacancy shall hold office until a qualified successor is
elected by the shareholders at the next regular meeting or at any special
meeting duly called for that purpose.
Section 2.04 Place of Meetings. Each meeting of the Board of Directors
shall be held at the principal executive office of the Corporation or at such
other place as may be designated from time to time by a majority of the members
of the Board or by the Chief Executive Officer. A meeting may be held by
conference among the directors using any means of communication through which
the directors may simultaneously hear each other during the conference.
Section 2.05 Regular Meetings. Regular meetings of the Board of
Directors for the election of officers and the transaction of any other business
shall be held without notice at the place of and immediately after each regular
meeting of the shareholders.
Section 2.06 Special Meetings. A special meeting of the Board of
Directors may be called for any purpose or purposes at any time by any member of
the Board by giving not less than two days' notice to all directors of the date,
time and place of the meeting, provided that when notice is mailed, at least
four days' notice shall be given. The notice need not state the purpose of the
meeting.
Section 2.07 Waiver of Notice; Previously Scheduled Meetings.
Subdivision 1. A director of the Corporation may waive notice of the date, time
and place of a meeting of the Board. A waiver of notice by a director entitled
to notice is effective whether given before, at or after the meeting, and
whether given in writing, orally or by attendance. Attendance by a director at a
meeting is a waiver of notice of that meeting, unless the director objects at
the beginning of the meeting to the transaction
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of business because the meeting is not lawfully called or convened and
thereafter does not participate in the meeting.
Subdivision 2. If the day or date, time and place of a Board meeting
have been provided herein or announced at a previous meeting of the Board, no
notice is required. Notice of an adjourned meeting need not be given other than
by announcement at the meeting at which adjournment is taken of the date, time
and place at which the meeting will be reconvened.
Section 2.08 Quorum. The presence in person of a majority of the
directors currently holding office shall be necessary to constitute a quorum for
the transaction of business. In the absence of a quorum, a majority of the
directors present may adjourn a meeting from time to time without further notice
until a quorum is present. If a quorum is present when a duly called or held
meeting is convened, the directors present may continue to transact business
until adjournment, even though the withdrawal of a number of the directors
originally present leaves less than the proportion or number otherwise required
for a quorum.
Section 2.09 Acts of Board. Except as otherwise required by law or
specified in the Articles of Incorporation of the Corporation, the Board shall
take action by the affirmative vote of a majority of the directors present at a
duly held meeting.
Section 2.10 Participation by Electronic Communications. A director
may participate in a Board meeting by any means of communication through which
the director, other directors so participating and all directors physically
present at the meeting may simultaneously hear each other during the meeting. A
director so participating shall be deemed present in person at the meeting.
Section 2.11 Absent Directors. A director of the Corporation may give
advance written consent or opposition to a proposal to be acted on at a Board
meeting. If the director is not present at the meeting, consent or opposition to
a proposal does not constitute presence for purposes of determining the
existence of a quorum, but consent or opposition shall be counted as a vote in
favor of or against the proposal and shall be entered in the minutes or other
record of action at the meeting, if the proposal acted on at the meeting is
substantially the same or has substantially the same effect as the proposal to
which the director has consented or objected.
Section 2.12 Action Without a Meeting. An action required or permitted
to be taken at a Board meeting may be taken without a meeting by written action
signed by all of the directors. Any action, other than an action requiring
shareholder approval, if the Articles of Incorporation so provide, may be taken
by written action signed by the number of directors that would be required to
take the same action at a meeting of the Board at which all
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directors were present. The written action is effective when signed by the
required number of directors, unless a different effective time is provided in
the written action. When written action is permitted to be taken by less than
all directors, all directors shall be notified immediately of its text and
effective date.
Section 2.13 Committees. Subdivision 1. A resolution approved by the
affirmative vote of a majority of the Board may establish committees having the
authority of the Board in the management of the business of the Corporation only
to the extent provided in the resolution. Committees shall be subject at all
times to the direction and control of the Board, except as provided in Section
2.14.
Subdivision 2. A committee shall consist of one or more natural
persons, who need not be directors, appointed by affirmative vote of a majority
of the directors present at a duly held Board meeting.
Subdivision 3. Section 2.04 and Sections 2.06 and 2.12 hereof shall
apply to committees and members of committees to the same extent as those
sections apply to the Board and directors.
Subdivision 4. Minutes, if any, of committee meetings shall be made
available upon request to members of the committee and to any director.
Section 2.14 Special Litigation Committee. Pursuant to the procedure
set forth in Section 2.13, the Board may establish a committee composed of one
or more independent directors or other independent persons to determine whether
it is in the best interests of the Corporation to pursue a particular legal
right or remedy of the Corporation and whether to cause, to the extent permitted
by law, the dismissal or discontinuance of a particular proceeding that seeks to
assert a right or remedy on behalf of the Corporation. The committee, once
established, is not subject to the direction or control of, or termination by,
the Board. A vacancy on the committee may be filled by a majority vote of the
remaining committee members. The good faith determinations of the committee are
binding upon the Corporation and its directors, officers and shareholders to the
extent permitted by law. The committee terminates when it issues a written
report of its determinations to the Board.
Section 2.15 Compensation. The Board may fix the compensation, if any,
of directors.
OFFICERS
Section 3.01 Number and Designation. The Corporation shall have one or
more natural persons exercising the functions of the
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offices of Chief Executive Officer and Chief Financial Officer. The Board of
Directors may elect or appoint such other officers or agents as it deems
necessary for the operation and management of the Corporation, with such powers,
rights, duties and responsibilities as may be determined by the Board,
including, without limitation, a President, one or more Vice Presidents, a
Secretary and a Treasurer, each of whom shall have the powers, rights, duties
and responsibilities set forth in these Bylaws unless otherwise determined by
the Board. Any of the offices or functions of those offices may be held by the
same person.
Section 3.02 Chief Executive Officer. Unless provided otherwise by a
resolution adopted by the Board of Directors, the Chief Executive Officer (a)
shall have the general active management of the business of the Corporation; (b)
shall, when present, preside at all meetings of the shareholders and Board; (c)
shall see that all orders and resolutions of the Board are carried into effect;
(d) may maintain records of and certify proceedings of the Board and
shareholders; and (e) shall perform such other duties as may from time be
assigned by the Board.
Section 3.03 Chief Financial Officer. Unless provided otherwise by a
resolution adopted by the Board of Directors, the Chief Financial Officer (a)
shall keep accurate financial records for the Corporation; (b) shall deposit all
monies, drafts and checks in the name of and to the credit of the Corporation in
such banks and depositories as the Board shall designate from time to time; (c)
shall endorse for deposit all notes, checks and drafts received by the
Corporation as ordered by the Board, making proper vouchers therefor; (d) shall
disburse corporate funds and issue checks and drafts in the name of the
Corporation, as ordered by the Board; (e) shall render to the Chief Executive
Officer and the Board, whenever requested, an account of all of such officer's
transactions as Chief Financial Officer and of the financial condition of the
Corporation; and (f) shall perform such other duties as may be prescribed by the
Board or the Chief Executive Officer from time to time.
Section 3.04 President. Unless otherwise determined by the Board of
Directors, the President shall be the Chief Executive Officer of the
Corporation. If an officer other than the President is designated Chief
Executive Officer, the President shall perform such duties as may from time to
time be assigned by the Board.
Section 3.05 Vice Presidents. Any one or more Vice Presidents, if any,
may be designated by the Board of Directors as Executive Vice Presidents or
Senior Vice Presidents. During the absence or disability of the President, it
shall be the duty of the highest ranking Executive Vice President, and, in the
absence of any such Vice President, it shall be the duty of the highest ranking
Senior Vice President or other Vice President, who shall be present at the time
and able to act, to perform the duties of
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the President. The determination of who is the highest ranking of two or more
persons holding the same office shall, in the absence of specific designation of
order of rank by the Board, be made on the basis of the earliest date of
appointment or election, or in the event of simultaneous appointment or
election, on the basis of the longest continuous employment by the Corporation.
Section 3.06 Secretary. The Secretary, unless otherwise determined by
the Board of Directors, shall attend all meetings of the shareholders and all
meetings of the Board, shall record or cause to be recorded all proceedings
thereof in a book to be kept for that purpose, and may certify such proceedings.
Except as otherwise required or permitted by these Bylaws, the Secretary shall
give or cause to be given notice of all meetings of the shareholders and all
meetings of the Board.
Section 3.07 Treasurer. Unless otherwise determined by the Board of
Directors, the Treasurer shall be the Chief Financial Officer of the
Corporation. If an officer other than the Treasurer is designated Chief
Financial Officer, the Treasurer shall perform such duties as may from time to
time be assigned by the Board.
Section 3.08 Authority and Duties. In addition to the foregoing
authority and duties, all officers of the Corporation shall respectively have
such authority and perform such duties in the management of the business of the
Corporation as may be designated from time to time by the Board of Directors.
Unless prohibited by a resolution approved by the affirmative vote of a majority
of the directors present, an officer elected or appointed by the Board may,
without the approval of the Board, delegate some or all of the duties and powers
of an office to other persons.
Section 3.09 Term.Subdivision 1. All officers of the Corporation shall
hold office until their respective successors are chosen and have qualified or
until their earlier death, resignation or removal.
Subdivision 2. An officer may resign at any time by giving written
notice to the Corporation. The resignation is effective without acceptance when
the notice is given to the Corporation, unless a later effective date is
specified in the notice.
Subdivision 3. An officer may be removed at any time, with or without
cause, by a resolution approved by the affirmative vote of a majority of the
directors present at a duly held Board meeting.
Subdivision 4. A vacancy in an office because of death, resignation,
removal, disqualification or other cause may, or in the case of a vacancy in the
office of Chief Executive Officer or Chief Financial Officer shall, be filled
for the unexpired portion of the term by the Board.
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Section 3.10 Salaries. The salaries of all officers of the Corporation
shall be fixed by the Board of Directors or by the Chief Executive Officer if
authorized by the Board.
INDEMNIFICATION
Section 4.01 Indemnification. The Corporation shall indemnify its
officers and directors for such expenses and liabilities, in such manner, under
such circumstances, and to such extent, as required or permitted by Minnesota
Statutes, Section 302A.521, as amended from time to time, or as required or
permitted by other provisions of law.
Section 4.02 Insurance. The Corporation may purchase and maintain
insurance on behalf of any person in such person's official capacity against any
liability asserted against and incurred by such person in or arising from that
capacity, whether or not the Corporation would otherwise be required to
indemnify the person against the liability.
SHARES
Section 5.01 Certificated and Uncertificated Shares.Subdivision 1. The
shares of the Corporation shall be either certificated shares or uncertificated
shares. Each holder of duly issued certificated shares is entitled to a
certificate of shares.
Subdivision 2. Each certificate of shares of the Corporation shall
bear the corporate seal, if any, and shall be signed by the Chief Executive
Officer, or the President or any Vice President, and the Chief Financial
Officer, or the Secretary or any Assistant Secretary, but when a certificate is
signed by a transfer agent or a registrar, the signature of any such officer and
the corporate seal upon such certificate may be facsimiles, engraved or printed.
If a person signs or has a facsimile signature placed upon a certificate while
an officer, transfer agent or registrar of the Corporation, the certificate may
be issued by the Corporation, even if the person has ceased to serve in that
capacity before the certificate is issued, with the same effect as if the person
had that capacity at the date of its issue.
Subdivision 3. A certificate representing shares issued by the
Corporation shall, if the Corporation is authorized to issue shares of more than
one class or series, set forth upon the face or back of the certificate, or
shall state that the Corporation will furnish to any shareholder upon request
and without charge, a full statement of the designations, preferences,
limitations and relative rights of the shares of each class or series authorized
to be issued, so far as they have been determined, and the authority of the
Board to determine the relative rights and preferences of subsequent classes or
series.
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Subdivision 4. A resolution approved by the affirmative vote of a
majority of the directors present at a duly held meeting of the Board may
provide that some or all of any or all classes and series of the shares of the
Corporation will be uncertificated shares. Any such resolution shall not apply
to shares represented by a certificate until the certificate is surrendered to
the Corporation.
Section 5.02 Declaration of Dividends and Other Distributions. The
Board of Directors shall have the authority to declare dividends and other
distributions upon the shares of the Corporation to the extent permitted by law.
Section 5.03 Transfer of Shares. Shares of the Corporation may be
transferred only on the books of the Corporation by the holder thereof, in
person or by such person's attorney. In the case of certificated shares, shares
shall be transferred only upon surrender and cancellation of certificates for a
like number of shares. The Board of Directors, however, may appoint one or more
transfer agents and registrars to maintain the share records of the Corporation
and to effect transfers of shares.
Section 5.04 Record Date. The Board of Directors may fix a time, not
exceeding 60 days preceding the date fixed for the payment of any dividend or
other distribution, as a record date for the determination of the shareholders
entitled to receive payment of such dividend or other distribution, and in such
case only shareholders of record on the date so fixed shall be entitled to
receive payment of such dividend or other distribution, notwithstanding any
transfer of any shares on the books of the Corporation after any record date so
fixed.
MISCELLANEOUS
Section 6.01 Execution of Instruments. Subdivision 1. All deeds,
mortgages, bonds, checks, contracts and other instruments pertaining to the
business and affairs of the Corporation shall be signed on behalf of the
Corporation by the Chief Executive Officer, or the President, or any Vice
President, or by such other person or persons as may be designated from time to
time by the Board of Directors.
Subdivision 2. If a document must be executed by persons holding
different offices or functions and one person holds such offices or exercises
such functions, that person may execute the document in more than one capacity
if the document indicates each such capacity.
Section 6.02 Advances. The Corporation may, without a vote of the
directors, advance money to its directors, officers or employees to cover
expenses that can reasonably be anticipated to
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be incurred by them in the performance of their duties and for which they would
be entitled to reimbursement in the absence of an advance.
Section 6.03 Corporate Seal.The seal of the Corporation, if any, shall
be a circular embossed seal having inscribed thereon the following words:
"Corporate Seal Minnesota".
Section 6.04 Fiscal Year. The fiscal year of the Corporation shall be
determined by the Board of Directors.
Section 6.05 Amendments.The Board of Directors shall have the power to
adopt, amend or repeal the Bylaws of the Corporation, subject to the power of
the shareholders to change or repeal the same, provided, however, that the Board
shall not adopt, amend or repeal any Bylaw fixing a quorum for meetings of
shareholders, prescribing procedures for removing directors or filling vacancies
in the Board, or fixing the number of directors or their classifications,
qualifications or terms of office, but may adopt or amend a Bylaw that increases
the number of directors.
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ARTICLES OF ORGANIZATION
OF
ANAGRAM INTERNATIONAL, LLC
A Nevada Limited Liability Company
We, the undersigned, pursuant to the Nevada Revised Statutes governing
limited liability companies, hereby adopt the following Articles of Organization
for a limited liability company:
ARTICLE I
NAME
The name of the limited liability company is Anagram International, LLC
(the "Company").
ARTICLE II
DURATION
The period of duration of this Company shall be thirty (30) years.
ARTICLE III
PURPOSE
This Company is organized to carry on any lawful business permitted by
Nevada law and to perform all acts in furtherance thereof.
ARTICLE IV
PLACE OF BUSINESS
The address of the office where its records will be maintained as
required by NRS 86.241 is:
c/o Kummer Kaempfer Bonner & Renshaw
3800 Howard Hughes Parkway
Seventh Floor
Las Vegas, Nevada 89109
<PAGE>
ARTICLE V
RESIDENT AGENT
The name and business address of the resident agent of this Company is:
Kummer Kaempfer Bonner & Renshaw
Seventh Floor
3800 Howard Hughes Parkway
Las Vegas, Nevada 89109
ARTICLE VI
ADDITIONAL MEMBERS
Additional members may be admitted by the Members as provided in the
Operating Agreement.
ARTICLE VII
CONTINUATION
Upon the death, retirement, resignation, expulsion, bankruptcy or
dissolution of a member or the occurrence of any other event which terminates
the continued membership of a member in this Company, the remaining members may
unanimously agree to continue the business of this Company as provided in the
Operating Agreement.
ARTICLE VIII
MANAGEMENT
This Company shall be managed by a manager or managers. The following
managers shall serve until the first annual meeting of members or until their
successors are elected and qualified:
Name Address
---- -------
Jim Plutt 7700 Anagram Drive
Minneapolis, Minnesota 55344
Garry Kieves 7700 Anagram Drive
Minneapolis, Minnesota 55344
Michaela Kieves 7700 Anagram Drive
Minneapolis, Minnesota 55344
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ARTICLE IX
INDEMNITY
Section 9.01 Right to Indemnity. Every person who was or is a party, or
is threatened to be made party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that he or a person of whom he is the legal representative is or was
a manager or member of this Company, or is or was serving at the request of this
Company as a manager of another limited liability company, or as a director,
officer or representative in a corporation, partnership, joint venture, trust or
other enterprise, shall be indemnified and held harmless to the fullest extent
legally permissible under the laws of the State of Nevada from time to time
against all expenses, liability and loss (including attorneys' fees, judgments,
fines and amounts paid or to be paid in settlement) reasonably incurred or
suffered by him in connection therewith. Such right of indemnification shall be
a contract right which may be enforced in any manner desired by such person.
Such right of indemnification shall not be exclusive of any other right which
such managers, members or representatives may have or hereafter acquire, and,
without limiting the generality of such statement, they shall be entitled to
their respective rights of indemnification under any operating agreement or
other agreement, vote of members, provision of law, or otherwise, as well as
their rights under this Article.
Section 9.02 Expenses Advanced. Expenses of managers and members
incurred in defending a civil or criminal action, suit or proceeding by reason
of any act or omission of such managers or members acting as a manager or member
shall be paid by the Company as they are incurred and in advance of the final
disposition of the action, suit or proceeding, upon receipt of any undertaking
by or on behalf of the manager or member to repay the amount if it is ultimately
determined by a court of competent jurisdiction that he is not entitled to be
indemnified by the Company.
Section 9.03 Operating Agreement; Insurance. Without limiting the
application of the foregoing, the members may adopt a provision in the Operating
Agreement from time to time with respect to indemnification, to provide at all
times the fullest indemnification permitted by the laws of the State of Nevada,
and may cause this Company to purchase and maintain insurance or make other
financial arrangements on behalf of any person who is or was a manager or member
of this Company as a member or manager of another limited liability company, or
as its representative in a corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against such person and incurred
in any such capacity or arising out of such status, to the fullest extent
permitted by the laws of the State of Nevada, whether or not this Company would
have the power to indemnify such person.
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The indemnification and advancement of expenses provided in this
Article shall continue for a person who has ceased to be a member, manager,
employee or agent, and inures to the benefit of the heirs, executors and
administrators of such a person.
ARTICLE X
RETURN OF CONTRIBUTIONS
A member may only demand cash in return for his or its contribution to
capital, but the Company may require a member to accept cash, property,
promissory notes or any combination thereof in return for the member's
contribution to capital.
IN WITNESS WHEREOF, we have hereunto set our hands this 20th day of
October 1994.
Members:
ANAGRAM INTERNATIONAL, INC.
A Minnesota corporation
By: /s/Jim Plutt
----------------------------------
Jim Plutt, Secretary
ANAGRAM INTERNATIONAL HOLDINGS, INC.
A Minnesota corporation
By: /s/Jim Plutt
----------------------------------
Jim Plutt, Secretary
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<PAGE>
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
On this 20th day of October, 1994, there personally appeared before me,
a notary public, JIM PLUTT, personally known (or proved) to me to be the person
whose name is subscribed to the above instrument, who acknowledged to me that he
executed the foregoing Articles of Organization.
/s/ Patricia A. Morris
- --------------------------------------- [SEAL]
Notary Public
5
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OPERATING AGREEMENT
OF
ANAGRAM INTERNATIONAL, LLC
A Nevada Limited Liability Company
<PAGE>
OPERATING AGREEMENT
OF
ANAGRAM INTERNATIONAL, LLC
A Nevada Limited Liability Company
Table of Contents
Page
ARTICLE I OFFICES..................................................... 1
1.1 Principal Office........................................... 1
ARTICLE II PURPOSE..................................................... 1
2.1 Purpose.................................................... 1
ARTICLE III CAPITAL..................................................... 1
3.1 Initial Capital............................................ 1
3.2 Capital Accounts........................................... 2
3.3 Federal Income Tax Elections............................... 3
3.4 Invested Capital........................................... 3
3.5 Interest................................................... 3
3.6 Additional Capital Contribution............................ 3
3.7 Membership Interest........................................ 4
ARTICLE IV MEMBERS..................................................... 4
4.1 Powers..................................................... 4
4.2 Salaries to Members........................................ 4
4.3 Other Ventures............................................. 5
4.4 General Restrictions....................................... 5
4.5 Action by the Members; Meetings; Quorum; Majority.......... 5
4.6 Action By Written Consent.................................. 5
4.7 Place of Meetings of Members............................... 6
4.8 Annual Meetings............................................ 6
4.9 Annual Meetings; Notice.................................... 6
4.10 Special Meetings........................................... 6
4.11 Waiver of Notice........................................... 6
4.12 Adjourned Meetings And Notice Thereof...................... 7
4.13 Delegation of Authority To Members and Managers............ 7
4.14 Admission of New Members................................... 7
4.15 Member Loans............................................... 7
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4.16 Deadlock................................................... 7
ARTICLE V TRANSFER OF MEMBERS' INTERESTS.............................. 8
5.1 Transfer of Members' Interests............................. 8
5.2 No Transfer Permitted Under Certain Circumstances.......... 9
5.3 Right of First Refusal..................................... 9
5.4 Authority of the Company to Purchase Interest.............. 12
5.5 Representations and Warranties of the Members.............. 12
5.6 Transferee's Invested Capital.............................. 13
ARTICLE VI MANAGERS.................................................... 13
6.1 Election................................................... 13
6.2 Removal, Resignation and Vacancies......................... 13
6.3 Managers' Powers........................................... 14
6.4 Bank Accounts.............................................. 14
ARTICLE VII PROFITS AND LOSSES.......................................... 14
7.1 Net Profits and Losses..................................... 14
7.2 Allocations of Deductions.................................. 15
7.3 Special Allocations........................................ 15
7.4 Curative Allocations....................................... 16
7.5 Federal Income Tax......................................... 17
ARTICLE VIII DISTRIBUTIONS............................................... 17
8.1 Operating Distributions.................................... 17
8.2 Payment of Member Loans.................................... 17
8.3 Distribution on Dissolution and Liquidation................ 17
ARTICLE IX ACCOUNTING AND RECORDS...................................... 17
9.1 Records and Accounting..................................... 17
9.2 Access to Accounting Records............................... 18
9.3 Annual Tax Information..................................... 18
9.4 Reports to Members......................................... 18
ARTICLE X TERM........................................................ 18
ARTICLE XI DISSOLUTION OF THE COMPANY AND TERMINATION OF A
MEMBER'S INTEREST........................................... 18
11.1 Dissolution................................................ 18
11.2 Death of a Member; Continuation............................ 19
11.3 Option To Purchase Deceased Member's Interest.............. 19
11.4 Bankruptcy................................................. 19
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ARTICLE XII TRUST MEMBERS............................................... 20
12.1 Trustee Liability.......................................... 20
12.2 Status of Successor Trustees as Members.................... 20
ARTICLE XIII INDEMNIFICATION............................................. 20
13.1 Indemnity.................................................. 20
13.2 Indemnity for Actions By or In the Right of the Company.... 21
13.3 Indemnity If Successful.................................... 21
13.4 Expenses................................................... 21
13.5 Advance Payment of Expenses................................ 21
13.6 Other Arrangements Not Excluded............................ 22
ARTICLE XIV MISCELLANEOUS PROVISIONS.................................... 22
14.1 Complete Agreement......................................... 22
14.2 Amendments................................................. 22
14.3 Applicable Law............................................. 23
14.4 Headings................................................... 23
14.5 Severability............................................... 23
14.6 Expenses................................................... 23
14.7 Heirs, Successors and Assigns.............................. 23
14.8 Execution.................................................. 23
14.9 Power of Attorney.......................................... 23
iii
<PAGE>
OPERATING AGREEMENT
OF
ANAGRAM INTERNATIONAL, LLC
A Nevada Limited Liability Company
This Operating Agreement is made and entered into as of the 24th day of
October 1994 by and between the undersigned Members of Anagram International,
LLC.
ARTICLE I
OFFICES
1.1 Principal Office
The principal office of Anagram International, LLC (the "Company")
shall be 7700 Anagram Drive, Minneapolis, Minnesota 55344. The Members may
change said principal office at any time from one location to another.
ARTICLE II
PURPOSE
2.1 Purpose
The purpose of the Company shall be to serve as a holding company for
companies that distribute products. Any business beyond the business described
herein shall require the unanimous written consent of the Members.
ARTICLE III
CAPITAL
3.1 Initial Capital
The initial capital of the Company shall be the sums of cash or the
agreed fair market value of the property or services (or combination of cash,
property and services) contributed to the Company by the Members in such amounts
or value as are set out opposite the name of each of the Members on Schedule A
attached hereto and incorporated herein by this reference which shall be amended
from time to time by the Managers to reflect a current list of the names and
addresses of each current member. A transfer of any Membership Interest (as
defined herein) shall not be effective until it has been recorded in the records
of the Company.
<PAGE>
3.2 Capital Accounts
Capital Accounts shall be established on the Company's books
representing the Members' respective capital contributions to the Company. The
term "Capital Account" shall mean the capital account maintained for such Member
in accordance with the following provisions:
(a) Each Member's Capital Account shall be increased by:
(1) The amount of the Member's cash or in-kind
capital contributions to the Company pursuant to Section 3.1
above;
(2) The fair market value of any property
contributed by the Member to the Company (net of liabilities
secured by any such contributed property that the Company is
considered to assume or take subject to for purposes of
Section 752 of the Internal Revenue Code of 1986, as amended
from time to time [the "Code"]);
(3) The amount of Net Profits (or items thereof)
allocated to the Member pursuant to Article VII below; and
(4) Any other increases required by the regulations
promulgated by the U.S. Department of the Treasury under the
Code, and as may be amended from time to time ("Regulations").
If Section 704(c) of the Code applies to property contributed
by a Member to the Company, then the Members' Capital Accounts
shall be adjusted in accordance with Regulations Section
1.704-1(b)(2)(iv)(g).
(b) Each Member's Capital Account shall be decreased by:
(1) The amount of Net Losses allocated to the Member
pursuant to Article VII below;
(2) All amounts paid or distributed to the Member
pursuant to Article VIII hereof; other than amounts required
to be treated as a payment for property or services under the
Code;
(3) The fair market value of any property
distributed in kind to the Member (net of any liabilities
secured by such distributed property that such Member is
considered to assume or take subject to for purposes of
Section 752 of the Code); and
(4) Any other decreases required by the Regulations.
Before decreasing a Member's Capital Account (as
described above) with respect to the distribution of any property to
such Member, all Members' accounts shall be adjusted to reflect the
manner in which the unrealized income, gain, loss, and deduction
inherent in such property (that has not been previously reflected in
the Members' Capital Accounts) would be allocated among the Members if
there were a taxable disposition of such property by the Company on the
date of distribution, in accordance with Regulations Section
1.704-1(b)(2)(iv)(e).
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(c) In determining the amount of any liability for purposes
of Sections 3.2(a) and 3.2(b) hereof, there shall be taken into account
Code Section 752(c) and any other applicable provisions of the Code and
any Regulations promulgated thereunder.
(d) Members' Capital Accounts shall be adjusted in accordance
with, and upon the occurrence of an event described in Regulations
Section 1.704-1(b)(2)(iv)(f), including the addition of new Members
pursuant to Section 4.14 hereof or the receipt of additional capital
contributions pursuant to Section 3.6 hereof, to reflect a revaluation
of the Company's assets on the Company's books. Such adjustments to the
Members' Capital Accounts shall be made in accordance with Regulations
Section 1.704-1(b)(2)(iv)(g) for allocations of depreciation,
depletion, amortization and gain or loss with respect to such revalued
property.
(e) All provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with Regulations
Section 1.704-1(b), and shall be interpreted and applied in a manner
consistent with such Regulations. The Members shall make any
appropriate modifications in the event unanticipated events might
otherwise cause this Agreement not to comply with Regulations Section
1.704-1(b).
3.3 Federal Income Tax Elections
The Company may make all elections for federal income tax purposes,
including but not limited to an election, pursuant to Code Section 754, to
adjust the basis of the Company's assets under Code Sections 734 or 743. In the
event an election pursuant to Code Section 754 is made by the Company, upon the
adjustment to the basis of the Company's assets, the Members' Capital Accounts
shall be adjusted in accordance with the requirements of Regulation Section
1.704-1(b)(2)(iv)(m).
3.4 Invested Capital
The "Invested Capital" of a Member shall be the sum of any cash
contributed by said Member to the Company, and the fair market value of any
property contributed by said Member to the Company, less the amount of any
liabilities of such Member assumed by the Company or which are secured by
property contributed by such Member to the Company. In the event the Company's
assets are revalued pursuant to Section 3.2(d) hereof resulting in an adjustment
to the Members' Capital Accounts, the Members' "Invested Capital" shall, for
purposes of this Agreement, be deemed to be each Member's respective Capital
Account balance immediately after such revaluation.
3.5 Interest
No interest shall be paid or credited to the Members on their Capital
Accounts or upon any undistributed profits left on deposit with the Company.
3.6 Additional Capital Contribution
In no event shall any Member be required to make an additional
contribution to the Company. However, the Members authorize the Company to
receive additional capital contributions and the Company may solicit such
contributions from the Members in an amount authorized by the Members (the
"Amount Solicited"). The Company shall send a notice of solicitation to all the
Members, and
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<PAGE>
each Member wishing to make an additional capital contribution (a "Contributing
Member") shall so notify the Company in writing within three (3) days after
delivery of the notice, indicating the amount such Member offers to contribute
(the "Offer to Contribute"). Unless the Members otherwise agree, if Contributing
Members' Offers to Contribute exceed the Amount Solicited, each Contributing
Member shall be entitled to contribute the proportion of the Amount Solicited
that such Contributing Member's Invested Capital, determined immediately before
the solicitation for capital contributions, bears to the Invested Capital of all
the Contributing Members. If the Contributing Members do not make Offers to
Contribute the entire Amount Solicited, the Company may, at its option, elect to
accept the Offers to Contribute it has received or reject such Offers to
Contribute and cancel the solicitation.
3.7 Membership Interest
The "Membership Interest" of a Member shall be such Member's right in
the profits and losses of the Company and the right to receive distributions of
the Company's assets. Membership Interest is equivalent to a Member's Invested
Capital.
ARTICLE IV
MEMBERS
4.1 Powers
Subject to the provisions of the Articles of Organization, this
Operating Agreement and the provisions of the Nevada Revised Statutes ("NRS"),
all powers shall be exercised by or under the authority of, and the business and
affairs of the Company shall be controlled by, the Managers. Without prejudice
to such general powers, but subject to the same limitations, it is hereby
expressly declared that the Members shall have the following powers:
(a) To select and remove all Managers of the Company,
prescribe such powers and duties for them as may be consistent with
law, with the Articles of Organization or this Operating Agreement, fix
their compensation, and require from them security for faithful
service.
(b) To change the principal office of this Company from one
location to another; to fix and locate from time to time one or more
subsidiary offices of the Company; and to designate any place for the
holding of any Members' meeting or meetings.
4.2 Salaries to Members
The Company shall have authority to pay to any Member a reasonable
salary for said Member's services to the Company. It is understood that the
salary paid to any Member under the provisions of this Section shall be
determined without regard to the income of the Company and shall be considered
as an operating expense of the Company and shall be deducted as an expense item
in determining the net profits and losses of the Company.
4.3 Other Ventures
It is expressly agreed that the Members, or any of them, may engage in
other business ventures of every nature and description, whether or not in
competition with the Company, independently or
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<PAGE>
with others, and neither the Company nor the Members shall have any rights in
and to any independent venture or activity or the income or profits derived
therefrom.
4.4 General Restrictions
No Member or Manager, as described in Article VI hereof, shall have the
right, power or authority to do any of the following acts without the prior
written consent of all the Members:
(a) expend or use any Company money or property except upon
the account of and for the benefit of the Company;
(b) mortgage, lease, pledge, or otherwise dispose of all, or
substantially all, of the assets of the Company, other than in the
ordinary course of business;
(c) pledge any of the Company's credit or property for other
than Company purposes;
(d) compromise, settle, or release any debt due the Company
except upon full payment thereof or except in the ordinary course of
business;
(e) assign the Company's property in trust for creditors or
on the assignee's promise to pay the debts of the Company;
(f) confess a judgment against the Company, the Company's
property, or any of the Members;
(g) dispose of any of the goodwill of the Company business;
or
(h) do any other act which would make it impossible to carry
on the ordinary business of the Company.
4.5 Action by the Members; Meetings; Quorum; Majority
Management of the Company is vested in, and all actions of the Members
are taken by the Members in proportion to their Membership Interests at the time
of the action taken. Except as specifically otherwise provided herein, the
Members vote, approve a matter or take any action by the vote of Members at a
meeting, in person or by proxy, or without a meeting by written consent. For any
meeting of Members, the presence in person or by proxy of Members owning more
than 50% of the outstanding Membership Interests at the time of the action taken
(a "Majority") constitutes a quorum for the transaction of business. Members
vote in proportion to their Membership Interests and an action approved at a
meeting by Members owning more than 50% of the Membership Interests of that
quorum shall be the action of the Members.
4.6 Action By Written Consent
Except as otherwise provided herein, any action may be taken by the
Members without a meeting if authorized by the written consent of Members
holding at least a Majority. In no instance
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<PAGE>
where action is authorized by written consent need a meeting of Members be
called or noticed. However, a copy of the action taken by written consent must
be immediately sent to all Members.
4.7 Place of Meetings of Members
The first meeting of the Members shall be held at the principal office
of the Company set forth in the Articles of Organization. All annual meetings
and special meetings of the Members shall be held at any place designated by the
Members, or, if no such place is designated, then at the principal office of the
Company.
4.8 Annual Meetings
The annual meeting of the Members shall be held on such date and time
as determined by the Managers.
4.9 Annual Meetings; Notice
Written notice of each annual meeting signed by a Manager or by such
other person or persons as the Members shall designate, shall be given to each
Member entitled to vote at the meeting, either personally or by mall or other
means of written communication, charges prepaid, addressed to such Member at his
address appearing on the books of the Company or given by him to the Company for
the purpose of notice. If a Member gives no address, notice shall be deemed to
have been given him if sent by mail or other means of written communication
addressed to the place where the principal office of the Company is situated.
All such notices shall be sent to each Member entitled thereto not less than ten
(10) nor more than sixty (60) calendar days before each annual meeting, and
shall specify the place, the day and the hour of such meeting.
4.10 Special Meetings
Special meetings of the Members, for any purpose or purposes
whatsoever, may be called at any time by a Manager or by Members holding in
excess of twenty percent (20%) of the outstanding Membership Interests. Except
in special cases where other express provision is made by statute, notice of
such special meetings shall be given in the same manner as for annual meetings
of Members. Notices of any special meeting shall specify, in addition to the
place, day and hour of such meetings the purpose or purposes for which the
meeting is called.
4.11 Waiver of Notice
The transactions of any meeting of the Members, however called and
noticed or wherever held, shall be as valid as though had at a meeting duly held
after regular call and notice, if a quorum be present, and if, either before or
after the meeting, each of the Members not present signs a written waiver of
notice or a consent to holding such meeting or an approval of the minutes
thereof. All such waivers, consents or approvals shall be filed with the records
or made a part of the minutes of the meeting.
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4.12 Adjourned Meetings And Notice Thereof
Any Members' meeting, annual or special, whether or not a quorum is
present, may be adjourned from time to time by the vote of a Majority, present
in person or represented by proxy, but in the absence of a quorum no other
business may be transacted at any such meeting. Other than by announcement at
the meeting at which such adjournment is taken, it shall not be necessary to
give any notice of an adjournment or of the business to be transacted at an
adjourned meeting. However, when any Members' meeting, either annual or special,
is adjourned for thirty (30) days or more, notice of the adjourned meeting shall
be given as in the case of an original meeting.
4.13 Delegation of Authority To Members and Managers
Any one or more of the Managers or Members may at any time or times,
and for such period as the Members shall determine, be delegated the authority
to determine questions relating to specific areas of the conduct, operation, and
management of the Company. Until such direction or delegation of authority is
made, however, the Members and Managers shall have the authority set forth in
this Article IV and Article VI below and that given them by the Members.
4.14 Admission of New Members
New Members may be admitted to membership in the Company with the
consent of a Majority (as defined in Section 4.5) of the existing Members. A new
Member must agree to be bound by the terms and provisions of the Articles of
Organization and this Operating Agreement, as amended, and upon admission the
new Member shall have all rights and duties of a Member of this Company.
4.15 Member Loans
The Members may from time to time approve of a loan by a Member to the
Company. Such loans ("Member Loans") shall be repaid to the lending Member in
accordance with the terms of the instrument or agreement executed in connection
with such Member Loan. Unless by its terms such Member Loan is expressly
subordinated, the Member Loan shall be equal in priority to, and rank pari passu
with, all other secured or unsecured liabilities of the Company, as appropriate.
4.16 Deadlock
(a) For purposes of this Agreement, the term "Major Decision"
shall mean any action (or election not to act) by or on behalf of the
Company which may have, or which may be anticipated to have, a material
effect on the business and operation of the Company, including, without
limitation, any matters materially affecting the ownership, operation,
development, construction, financing, marketing and sale of any real
property owned by the Company. Major Decisions shall include, without
limitation, any contract or related series of contracts having a value
in excess of Twenty Thousand Dollars ($20,000) and any Member Loans or
other loans to be obtained by or on behalf of the Company, whether
secured or unsecured.
(b) All Major Decisions shall be subject to the prior
approval of a majority of the Managers. In the event the Managers are
evenly divided with respect to a Major Decision and a majority of the
Managers are unable to agree with respect to a proposed
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course of action concerning such Major Decision, the Managers shall
immediately call a special meeting ("Election Meeting") pursuant to
Section 4.10 hereof at which the Managers shall resign and new
Managers shall be elected.
(c) In the event the Members, pursuant to a Majority thereof,
are unable to elect Managers at the Election Meeting, or any other
meeting, or elect Managers who continue to be evenly divided with
respect to a Major Decision, a deadlock (the "Deadlock") shall be
deemed to exist.
(d) For a period of thirty (30) days after a Deadlock occurs,
a Majority of the Members (the "Offering Members") may, upon written
notice to the remaining Members (the "Offering Notice"), propose a
price per each one percent (1%) of outstanding Membership Interests
(the "Offering Price") at which the Offering Members are willing to
either (i) sell to the other Members all of the Offering Members'
Membership Interests or (ii) purchase from the other Members all of
their Membership Interests, subject to the terms of this Operating
Agreement. The other Members shall have a period of three (3) days
after delivery of the Offering Notice in which to elect, by written
notice to the Offering Members (the "Response Notice") to either (i)
purchase all of the Membership Interests of the Offering Members at the
Offering Price or (ii) sell all of their Membership Interests to the
Offering Members at the Offering Price. Such transaction shall be
consummated within five (5) days after delivery of the Response Notice
and the purchase price for the Membership Interests sold or purchased
shall be payable pursuant to the terms set forth in Section 5.3(c)(ii)
below.
(e) Should a transaction not be consummated pursuant to a
Response Notice as set forth in Section 4.16(d) above within thirty
(30) days after a Deadlock occurs, the Deadlock shall then become an
event of dissolution under Section 11.1 below and the Company shall be
dissolved pursuant to Article XI of this Operating Agreement.
ARTICLE V
TRANSFER OF MEMBERS' INTERESTS
5.1 Transfer of Members' Interests
The Membership Interest of each Member of this Company is personal
property. Except as otherwise provided in this Operating Agreement, the transfer
of a Member's Membership Interest is restricted. The transfer of a Member's
Membership Interest shall include a gift, sale, transfer, assignment,
hypothecation, pledge, encumbrance or any other disposition, whether voluntary
or involuntary, by operation of law or otherwise, including, without limitation,
any transfer occurring upon or by virtue of the bankruptcy or insolvency of a
Member; the appointment of a receiver, trustee or conservator or guardian for a
Member or his property; or pursuant to the will of a Member or the laws of
descent and distribution in the event of a Member's death; pursuant to court
order in the event of divorce, marital dissolution, legal separation or similar
proceedings; or pursuant to any loan or security agreement under which any of
the Member's Membership Interests are pledged or otherwise serve as collateral,
as well as the transfer of any such Membership Interest in the event recourse is
made to such collateral.
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If a Majority of the other Members, other than the Member proposing to
dispose of his Membership Interest ("Transferring Member") and without
considering the Transferring Member's Membership Interest as outstanding in
determining such a Majority, do not approve of a proposed transfer or assignment
by written consent, the transferee of the Member's Membership Interest has no
right to participate in the management of the business and affairs of the
Company or to become a Member. The transferee is only entitled to receive the
share of profits or other compensation by way of income and the return of
contributions, to which the Transferring Member would otherwise be entitled. If
the transfer is approved by a Majority of the other Members of the Company by
written consent, the transferee has all the rights and powers and is subject to
all the restrictions and liabilities of his assignor, has the right to
participate in the management of the business and affairs of the Company and
becomes a substituted Member.
5.2 No Transfer Permitted Under Certain Circumstances
Notwithstanding any other provision of this Agreement, a Member shall
not transfer all or any part of his Membership Interest if such transfer would
cause the termination of the Company for federal income tax purposes or would
violate any applicable federal or state securities laws.
5.3 Right of First Refusal
Except as otherwise provided in this Operating Agreement or the laws of
the State of Nevada, no Member shall during the term of this Operating Agreement
transfer all or any portion of his Membership Interest, or any interest therein,
whether now owned or hereafter acquired without first complying with the
requirements of this Operating Agreement, unless such Member shall first give
the Company and, if appropriate hereunder, the other Member(s) the opportunity
to purchase or acquire all or a portion of such Member's interest proposed to be
disposed of in accordance with the following provisions:
(a) In the event that any Member shall receive a bona fide
offer for the transfer of all or part of his Membership Interest (the
"Proposed Transfer") (the Transferring Member shall have the obligation
to prove that an offer is bona fide) and desires to accept such offer,
or in the event that any Member shall otherwise desire to transfer all
or part of such Member's Membership Interest, the Member shall, prior
to accepting such offer, give the Managers of the Company written
notice of intention to make a transfer. Such notice shall set forth the
name of the proposed transferee(s), the interest proposed to be
disposed of (the "Offered Interest"), the price, the terms of payment,
all other material terms of the proposed transaction and shall specify
a mailing address for purposes of any return notice hereunder. The
Company shall have the option for a period of ten (10) days from the
actual receipt of such notice to agree to purchase or acquire all or
any portion of the Offered Interest, on the same terms as those offered
to the proposed transferee, subject to Section 5.3(c) hereof. The
Company may exercise this option to purchase only by giving written
notice to the Transferring Member.
(b) If the Company declines or fails to exercise its option
to purchase or acquire all or any portion of the Offered Interest
pursuant to Section 5.3(a) above, or is legally unable to do so, the
Transferring Member shall give written notice to the other Members
containing the same information as set forth in the notice given
pursuant to Section 5.3(a)
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above and further setting forth the Offered Interest that the Company
has not agreed to purchase or acquire. The Members receiving the notice
shall in turn have ten (10) days from the actual receipt of such notice
to agree to purchase or acquire all or any portion of the Offered
Interest that the Company has not agreed to purchase or acquire, on the
same terms and conditions as those offered to the proposed transferee,
subject to Section 5.3(c) hereof. The other Members may exercise this
option to purchase only by giving written notice to the Transferring
Member. In the event that more than one person has an option to
purchase hereunder, such persons may exercise such option pro rata in
accordance with their respective Membership Interests, and if any such
person declines or fails to purchase his pro rata portion of the
Offered Interest, or any portion thereof, the other persons having such
option shall have the right to purchase that portion pro rata in
accordance with their respective Membership Interests (or otherwise by
agreement).
(c) The terms of any acquisition pursuant to Section 5.3
hereof shall be as follows:
(1) In the event that a proposed transferee of any
Offered Interest has offered to acquire such Offered Interest
for a consideration consisting in whole or in part of assets
other than cash, cash equivalents or unsecured (other than by
the Offered Interest) promissory notes, any persons having
options to purchase or acquire such Offered Interest pursuant
to Sections 5.3(a) and 5.3(b) above shall be deemed to have
agreed to purchase or acquire such Offered Interest "on the
same terms as those offered to the proposed transferee" if
such persons agree to pay in a lump sum (or in cash
installments as permitted by Section 5.3(c)(ii)) an amount
equal to the fair market value of such other form of
consideration. The fair market value of such other
consideration shall be as follows:
(A) If such other consideration is a
security publicly traded in the United States in the
over-the-counter market and not on the Nasdaq
National Market nor on any national securities
exchange, the closing per share bid price for such
security on the trading day immediately preceding the
day of the closing on the purchase or acquisition of
the Offered Interests, as reported by Nasdaq or an
equivalent generally accepted reporting service;
(B) If such other consideration is a
security publicly traded in the United States on the
Nasdaq National Market or on a national securities
exchange, the per share closing price for such
security on the Nasdaq National Market or on the
principal stock exchange on which it is listed on the
trading day immediately preceding the day of the
closing on the purchase or acquisition of the Offered
Interests; such closing price being the last reported
sale price, or in the case no such reported sale
takes place on such day, the average of the reported
closing bid and asked prices, in either case in the
Nasdaq National Market or on the principal national
securities exchange on which the security is then
listed;
(C) If such other consideration is an asset
(other than a security specified in clause (A) or (B)
above) having a readily determinable value by
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reference to a generally accepted published reporting
source or service, the last sale price for such asset
reported by such source or service during the trading
day immediately preceding the day of the closing on
the purchase or acquisition of the Offered Interests;
or
(D) In all other cases, the appraised value
of such other consideration will be determined by a
qualified independent appraiser selected by the
mutual agreement of the Transferring Member on the
one hand and a Majority of the other Member(s) on the
other hand. In such event, a copy of the notice of
intent to make a disposition shall be sent to each
other Member at the same time as such notice is sent
to the Company. In the event that the Members cannot
mutually agree on an appraiser within fifteen (15)
days after the notice of intent to make a disposition
is actually received by the Company, a qualified
appraiser shall be appointed by the American
Arbitration Association in Las Vegas, Nevada. The
appraised value of such other consideration shall be
final and binding on all parties hereto. All costs
associated with such an appraisal, including without
limitation appraisal fees and the fees of the
American Arbitration Association, if any, shall be
paid by the Transferring Member. The time period set
forth herein shall be tolled until the Company
actually receives a copy of the appraiser's report,
in accordance with the notice provisions hereof, a
copy of which report shall accompany all notices
given by the Transferring Member.
(2) The Company and each of the other Members shall
be permitted, at its or their option, to purchase all or any
portion of the Offered Interest in exchange for a promissory
note in the principal amount of the purchase price payable in
not more than sixty (60) equal monthly installments of
principal and interest with interest at the prime rate of
interest charged by Bank of America Nevada on the closing of
the acquisition or purchase plus two percent (2%) per annum
(or any lower rate offered by the proposed transferee) but in
any event not in excess of the maximum rate of interest then
permitted by applicable law. Any such note or notes shall be
secured by the Offered Interest purchased in exchange therefor
and shall be prepayable without penalty in whole or in part at
any time. Prior to the payment in full of any such note or
notes, no distributions or other payments shall be made
directly or indirectly by the Company to the remaining Members
or any person or entities relating to the remaining Members
(other than payments incurred in the ordinary course of the
Company's business) unless and to the extent such
distributions or other payments are applied toward prepayment
of such note or notes.
(d) The purchase of the Offered Interest shall be closed at
the time specified in the notice from the Transferring Member as the
time set for the closing of the proposed transfer, but in no event
earlier than thirty (30) days following the exercise or expiration, as
the case may be, of the last available option to purchase.
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(e) If all of the Offered Interests are not purchased by the
Company or the Members, or both, pursuant to the options provided for
above, then such unpurchased portion of the Offered Interest may,
subject to this Operating Agreement and applicable laws, be transferred
within ten (10) days from the date on which the last available option
to purchase above expires to the person and on the terms specified in
the notice of intention to make a disposition. Such transferee shall
receive and hold such Membership Interest subject to all provisions and
restrictions of this Operating Agreement, except that neither the
Company nor any other Member shall be required to purchase any of such
Membership Interest from such transferee or any subsequent transferee
pursuant to Section 5.3 hereof, and except that no such transferee or
subsequent transferee shall have any rights to purchase any Offered
Interest pursuant to this Operating Agreement. Any transfer of the
Offered Interest after the end of such ten (10) day period or any
material change in the terms of the Proposed Transfer from the terms
set forth in the original notice shall require a new notice of
intention to make a transfer. Any transfer in violation of any
provision of this Agreement shall be void and ineffectual and shall not
operate to transfer any interest or title to the purported transferee.
(f) Notwithstanding any other provision hereof to the
contrary, neither the Company nor any Member will be required to close
on the purchase or acquisition of any Membership Interest in accordance
therewith unless the representations and warranties of the Transferring
Member shall be true and correct in all material respects as of the
date of such closing, and the Transferring Member shall deliver a
certificate to such effect to the purchasing parties dated as of the
closing date. Any such Membership Interest not purchased or acquired as
a result of such a breach may not be disposed of to the otherwise
proposed transferee(s).
(g) Any notice required to be given in accordance with this
section shall be hand delivered to the Manager of the Company by hand
or via overnight courier at the principal office of the Company.
5.4 Authority of the Company to Purchase Interest
All rights and obligations of the Company to purchase any Membership
Interest of a Member are subject to the restrictions set forth in the statutes
of the State of Nevada, if any, and to such other applicable restrictions as are
now or may hereafter become effective. Any redemption of such Membership
Interest by the Company shall be made only out of funds legally available
therefor.
5.5 Representations and Warranties of the Members
Each of the Members represents and warrants to the Company and the
other Members with respect to himself as follows:
(a) Such Member is the lawful owner of and has the full
right, power and authority to sell, transfer and deliver the Membership
Interest of the Company set forth next to his name on Schedule A hereto
and the sale, transfer and delivery of such Membership Interests of the
Company in accordance therewith will transfer good and marketable title
thereto free and clear of all liens, encumbrances, claims or rights of
third
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parties of every kind and nature whatsoever, subject only to the
provisions of this Operating Agreement.
(b) The Membership Interests of the Company owned by such
Member as set forth on Schedule A hereto have been duly authorized and
are fully paid and non assessable. There are no existing options,
warrants, calls or commitments on the part of any Member relating to
such Membership Interests of the Company which will not be terminated
concurrently with the execution of this Operating Agreement. No voting
agreements or restrictions of any kind other than those set forth in
this Operating Agreement affect the rights of any such Membership
Interests of the Company or such Member.
(c) Such Member has the right and power to enter into this
Operating Agreement, and this Operating Agreement has been fully
executed and delivered and constitutes the valid and binding obligation
of such Member. No consent of any person not a party to this Operating
Agreement and no consent of any governmental authority is required to
be obtained on the part of such Member in connection with or resulting
from the execution or performance of this Operating Agreement.
5.6 Transferee's Invested Capital
In the event a transferee acquires all or part of the Membership
Interest of an existing Member or Members, the transferee's Invested Capital and
Capital Account, for purposes of this Operating Agreement, shall be the Invested
Capital and Capital Account of the transferring Member or Members, with respect
to the Membership Interest acquired by the transferee.
ARTICLE VI
MANAGERS
6.1 Election
The Members agree that the business of the Company shall be managed by
three (3) Managers. Each Manager of this Company shall be chosen annually by the
Members and each shall hold office until such Manager shall resign or shall be
removed or otherwise disqualified to serve, or the Manager's successor shall be
elected and qualified.
6.2 Removal, Resignation and Vacancies
The Members may remove any Manager, either with or without cause in
accordance with the terms of this Operating Agreement. Any Manager may resign at
any time by giving written notice to the Members. Any such resignation shall
take effect at the date of the receipt of such notice or at any later time
specified therein; and, unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective. The Members may
replace any vacancy in the office of any Manager.
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6.3 Managers' Powers
The Managers shall be the chief executives of the Company and each,
individually, shall have the following powers:
(a) Select and remove all employees, agents and
representatives of the Company, prescribe such powers and duties for
them as may be consistent with law, with the Articles of Organization
or this Operating Agreement, fix their compensation, and require from
them security for faithful service.
(b) Conduct, manage and control the affairs and business of
the Company, and to make such rules and regulations therefor consistent
with the law, with the Articles of Organization or this Operating
Agreement.
(c) Change the principal office of this Company from one
location to another; to fix and locate from time to time one or more
subsidiary offices of the Company; and to designate any place for the
holding of any Members' meeting or meetings.
(d) Borrow money and incur indebtedness for the purpose of
the Company, and to cause to be executed and delivered therefor, in the
Company name, promissory notes, bonds, and debentures.
(e) Appoint an executive committee and other committees, and
delegate to the executive committee any of the powers and authority of
the Manager in the management of the business and affairs of the
Company. The Manager, in his discretion, may or may not be a member of
an executive committee.
6.4 Bank Accounts
From time to time, the Manager may designate a person or persons,
whether such persons be the Manager or not, to open and maintain one or more
bank accounts; rent safety deposit boxes or vaults; sign checks, written
directions, or other instruments to withdraw all or any part of the funds
belonging to the Company and on deposit in any savings account or checking
account; negotiate and purchase certificates of deposit, obtain access to the
Company's safety deposit box or boxes, and, generally, sign such forms on behalf
of the Company as may be required to conduct the banking activities of the
Company.
ARTICLE VII
PROFITS AND LOSSES
7.1 Net Profits and Losses
Subject to the provisions of Section 7.4 hereof the "Net Profits and
Losses" of the Company for any Company taxable year shall be allocated and
credited to the Members' Capital Accounts in proportion to the Invested Capital
of each respective Member as defined in Section 3.4 hereof. The term "Net
Profits and Losses" of the Company shall mean the net income or loss of the
Company, as determined by auditors or accountants employed by the Company, in
accordance with Section 703 of the Code, applied consistently with prior
periods.
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7.2 Allocations of Deductions
(a) Company Nonrecourse Deductions. Except as otherwise
required by Sections 7.3 and 7.4 below, all Nonrecourse Deductions of
the Company for any taxable year shall be shared by the Members in
proportion to their Invested Capital on the last day of such taxable
year. The amount of Nonrecourse Deductions of the Company shall be
determined in accordance with Regulations Section 1.704-2(c).
(b) Member Nonrecourse Deductions. Except as otherwise
required by Sections 7.3 and 7.4 below, all Member Nonrecourse
Deductions of the Company for any taxable year shall be allocated in
accordance with Regulations Section 1.704-2(i)(1). The amount of Member
Nonrecourse Deductions shall be determined in accordance with
Regulations Section 1.704-2(i)(2).
7.3 Special Allocations
(a) Qualified Income Offset. Except as provided in Section
7.3(b) below, in the event any Member unexpectedly receives any
adjustments, allocations or distributions described in Section
1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Regulations, items of
Company income and gain shall be specially allocated to each such
Member in an amount and manner sufficient to eliminate, to the extent
required by the Regulations, the adjusted capital account deficit of
such Member as quickly as possible.
(b) Minimum Gain Chargeback. Notwithstanding any other
provision of this Section 7.3, if there is a net decrease in Company
Minimum Gain during any Company fiscal year, each Member who would
otherwise have an adjusted capital account deficit at the end of such
year shall be specially allocated items of Company income and gain for
such year (and, if necessary, subsequent years) in an amount and manner
sufficient to eliminate such Member's adjusted capital account deficits
as quickly as possible. The items to be so allocated shall be
determined in accordance with Section 1.704-1(b)(4)(iv)(e) of the
Regulations. Notwithstanding any other provision of this Section
7.3(b), if there is a net decrease in Minimum Gain attributable to
Member Nonrecourse Debt during a Company Taxable Year, each Member with
a share of the Minimum Gain attributable to such member Nonrecourse
Debt shall be allocated items of income and gain for such year (and, if
necessary, subsequent years) in accordance with Regulations Section
1.704-(i)(4). The items to be so allocated shall be determined in
accordance with Regulations Section 1.704-2(i). This Section 7.3(b) is
intended to comply with the minimum gain chargeback requirement in such
sections of the Regulations and shall be interpreted consistently
therewith.
(c) Allocation of Remaining Income and Gains on Sale or Other
Disposition. Except as otherwise required by this Section 7.3., income
and gains arising from the sale, exchange, transfer or disposition or
condemnation of all or substantially all of the Company's property
shall be allocated, for federal income tax purposes, among those who
shall be Members on the date of such transaction or transactions as
follows:
(1) If one or more Members has a negative Capital
Account after such Member's Capital Account is adjusted to
reflect any allocation of gains under
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Section 7.2(b) above, but before such Member's Capital Account
is adjusted to reflect any distribution under Section 8.3
below, with respect to the disposition to which this Section
7.3 is being applied, such income and gains shall be allocated
to such Members in proportion to their negative Capital
Accounts until each such Member's Capital Account equals zero.
(2) To the extent one or more Member's Capital
Account balance is less than (i) the total of all Members'
Capital Account balances times (ii) such Member's Invested
Capital in the Company (a "Capital Disparity"), such income
and gains shall be allocated among such Members in proportion
to Capital Disparities until all of the Members' Capital
Accounts are, as nearly as possible, in proportion to their
Invested Capital.
(3) The balance of such income and gains shall be
allocated to the Members in proportion to their Invested
Capital.
(d) Assignments. In the event of an assignment of a
Membership Interest (other than an assignment by reason of the death of
a Member), the assignor's distributive share of Company income, gains,
loss, deductions and credits and expenditures not deductible in
computing its taxable income (in respect of the interest so assigned)
shall be the share of such items attributable to such Membership
Interest accruing prior to such assignment (based on an interim closing
of the books of the Company), and the assignee's share shall be the
share of such items attributable to such Membership Interest after such
assignment (based on such interim closing).
(e) Mandatory Section 704(c) Allocations. Notwithstanding the
foregoing, to the extent that Code Section 704(c), Regulations Sections
1.704-3 or 1.704-1(b)(2)(iv), or any other regulations which may be
proposed or promulgated under Code Section 704(c); require allocations
of Company income, gains, losses or deductions in a manner which is
different than that set forth above, the provisions of Section 704(c)
and the regulations thereunder shall control such allocations among the
Members. In the absence of a contrary agreement among the Members, such
items shall be allocated in accordance with the "Traditional method
with curative allocations" set forth in Regulations Section 1.704-3(c)
or any successor regulation.
7.4 Curative Allocations
The allocations set forth in Section 7.3(a) and 7.3(b) (the "Regulatory
Allocations") are intended to comply with certain requirements of Regulations
Sections 1.704-l(b), 1.704-2 and 1.704-3, and shall be interpreted and applied
in a manner consistent therewith. Notwithstanding any other provisions of this
Article VII (other than the Regulatory Allocations), the Regulatory Allocations
shall be taken into account in allocating other profits, losses and items of
income, gain, loss and deduction among the Members so that, to the extent
possible, the net amount of such allocations of other profits, losses and other
items in the Regulatory Allocations to each Member shall be equal to the net
amount that would have been allocated to each such Member if the Regulatory
Allocations had not occurred.
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7.5 Federal Income Tax
It is the intent of this Company and its Members that this Company will
be governed by the applicable provisions of Subchapter K, of Chapter 1, of the
Code.
ARTICLE VIII
DISTRIBUTIONS
8.1 Operating Distributions
The Company's Cash Available For Distribution shall, at such times as
the Managers of the Company deem advisable, be distributed among the Members in
proportion to their respective Membership Interests, as of the date of any such
distribution. The term "Cash Available For Distribution" shall mean the total
cash revenues generated by the Company's operations (including proceeds from the
sale or refinancing of Company assets), less all cash expenditures of the
Company for debt service and operating expenses, and less a reasonable amount
determined by the Company to be set aside for reserves.
8.2 Payment of Member Loans
Under all circumstances, Member Loans shall be repaid first out of any
Cash Available for Distribution. If a difference exists between the Members in
the amount of Member Loans made to the Company, any Member with more Member
Loans outstanding (in value) than another Member shall receive the first
distributions of any available cash until that Member's Loan is in parity with
the other Member Loans, if any. Thereafter, the Member Loans will be repaid
ratably to the Members with Loans. It is the intention of the Members that
Member Loans will be repaid as cash is available for distribution and may result
in revolving payments to the Members as additional Member Loans are advanced to
the Company.
8.3 Distribution on Dissolution and Liquidation
In the event of the dissolution and liquidation of the Company for any
reason, after the payment of or provision for creditors pursuant to NRS Section
86.521 and other applicable law, the Company's assets shall be distributed among
the Members in accordance with their respective positive Capital Account
balances, in accordance with Regulations Section 1.704-1(b)(2)(ii)(b)(2).
ARTICLE IX
ACCOUNTING AND RECORDS
9.1 Records and Accounting
The books and records of the Company shall be kept, and the financial
position and the results of its operations recorded, in accordance with the
accounting methods elected to be followed by the Company for federal income tax
purposes. The books and records of the Company shall reflect all Company
transactions and shall be appropriate and adequate for the Company's business.
The fiscal year of the Company for financial reporting and for federal income
tax purposes shall be the calendar year.
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9.2 Access to Accounting Records
All books and records of the Company shall be maintained at any office
of the Company or at the Company's principal place of business, or as determined
from time to time by the Company, and each Member, and his duly authorized
representative, shall have access to them at such office of the Company and the
right to inspect and copy them at reasonable times. The Company shall keep all
records required to be kept at the registered office of the Company by Chapter
86 of the NRS at such registered office of the Company.
9.3 Annual Tax Information
The Managers shall use their best efforts to cause the Company to
deliver to each Member within ninety (90) days after the end of each fiscal year
all information necessary for the preparation of such Member's federal income
tax return.
9.4 Reports to Members
The Managers shall prepare and deliver to the Members monthly financial
statements. The Company's independent certified public accountant shall prepare
and deliver to the Members, within sixty (60) days after the end of the
applicable period, quarterly and annual financial statements.
ARTICLE X
TERM
10.1 Term
The term of this Company shall begin on the date the Articles of
Organization are filed with the Nevada Secretary of State and shall continue
until October 23, 2024, unless terminated prior thereto in accordance with the
provisions hereof, by unanimous agreement of the Members or pursuant to Chapter
86 of the NRS.
ARTICLE XI
DISSOLUTION OF THE COMPANY AND
TERMINATION OF A MEMBER'S INTEREST
11.1 Dissolution
The Company must be dissolved on the death, insanity, retirement,
resignation, expulsion, bankruptcy or dissolution of a Member or occurrence of
any other event which terminates a Member's continued membership in the Company,
unless the business of the Company is continued by the consent of a Majority of
the remaining Members of the Company. In determining a Majority for purposes of
this Article XI, only Membership Interests of remaining Members shall be
considered to be outstanding.
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11.2 Death of a Member; Continuation
After the death of a Member, if a Majority of the remaining Members
consent to the continuation of the business of the Company, the personal
representative ("Representative") of the deceased Member and, after the
distribution of the deceased Member's estate, the deceased Member's heirs or
legatees, shall immediately succeed to the Membership Interest of the deceased
Member in the Company, subject to the provisions of this Operating Agreement.
During administration of the estate of the deceased Member, such Representative
(and after distribution of the deceased Member's estate, such heirs or legatees)
shall have the same rights and obligations in the Company for the remainder of
the Company's term as the deceased Member would have had, if the deceased Member
had survived. Such rights and obligations shall include, but shall not be
limited to, the conduct of the Company's business and the share in the profits
and losses of the Company.
11.3 Option To Purchase Deceased Member's Interest
Upon the death of a Member, the Company shall have the option, within
120 days of the Member's date of death, to purchase the deceased Member's
Membership Interest in the Company for an agreed upon price, or if no price can
be agreed upon, the fair market value of such Membership Interest as determined
by an independent qualified appraiser appointed by the Members and the deceased
Member's Representative. If they cannot agree on an appraiser, the Members and
such Representative shall agree on three (3) possible appraisers, place their
names on pieces of paper placed into a hat, and one person chosen by the Members
and such Representative shall, without looking, reach into a hat and pick out
one name who shall be the appraiser. If the Company elects to purchase the
Membership Interest of the deceased Member, it shall pay the agreed price or the
fair market value of such Membership Interest to the deceased Member's
Representative, in cash, within such 120 day period. If the Company does not
purchase the Membership Interest of the deceased Member within such 120 day
period, then all rights to purchase the deceased Member's Membership Interest
pursuant to this Section shall terminate.
11.4 Bankruptcy
Upon the bankruptcy of a Member (the "Bankrupt Member"), if a Majority
of the remaining Members consent to the continuation of the business of the
Company, the remaining Members shall have the right to purchase the entire
Membership Interest of the Bankrupt Member at a price equal to the fair market
value of such Membership Interest at the time of such bankruptcy, as determined
by an independent qualified appraiser appointed by the Members, including the
Bankrupt Member. If they cannot agree on an appraiser, the Members, including
the Bankrupt Member, shall agree on three (3) possible appraisers, place their
names on pieces of paper placed into a hat, and one person chosen by the Members
shall, without looking, reach into the hat and pick out one name who shall be
the appraiser. A purchase of a Bankrupt Member's Membership Interest shall be an
all cash transaction completed within 120 days after the date the bankruptcy
petition is filed by or against the Bankrupt Member. The Company shall send a
notice of the bankruptcy to all the Members and each Member wishing to purchase
all or part of the Bankrupt Members Membership Interest (a "Purchasing Member")
must so notify all the other Members in writing within twenty (20) days after
delivery of the notice. Unless they agree otherwise, if there is more than one
Purchasing Member, each Purchasing Member may purchase the same proportion of
the Bankrupt Member's Membership Interest as the Membership Interest of that
Purchasing Member bears to the total Membership Interests of all the
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Purchasing Members. If no remaining Member wishes to purchase the Bankrupt
Member's Membership Interest, or the Purchasing Members do not actually purchase
the Bankrupt Member's Membership Interest within the time set forth in this
Section 11.4, then all rights to purchase the Bankrupt Member's Membership
Interest pursuant to this Section shall terminate.
ARTICLE XII
TRUST MEMBERS
12.1 Trustee Liability
When any trustee becomes a Member of this Company, he shall be a Member
not individually but solely as a trustee, in the exercise and under the power
and authority conferred upon and vested in such trustee. Nothing contained in
this Operating Agreement shall be construed as creating any liability on any
such trustee personally to pay any amounts required to be paid hereunder, or to
perform any covenant, either express or implied, contained herein; all such
liability, if any, is hereby expressly waived by the other Members of this
Company. Any liability of any Member which is a trust (whether to the Company or
to any third person) shall be a liability to the full extent of the trust estate
and shall not be a personal liability of any Trustee, grantor or beneficiary of
any trust.
12.2 Status of Successor Trustees as Members
Any successor trustee or co-trustee of any trust which is a Member
shall be entitled to exercise the same rights and privileges and be subject to
the same duties and obligations as the predecessor trustee. As used in this
Article XII, the term "trustee" shall include any and all such successor
trustees.
ARTICLE XIII
INDEMNIFICATION
13.1 Indemnity
This Company does hereby indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
except an action by or in the right of the Company, by reason of the fact that
he is or was a Manager, Member, employee or agent of this Company, or is or was
serving at the request of this Company as manager, director, officer, employee
or agent of another limited liability company or corporation, against expenses,
subject to the provisions of Section 13.4 below, including attorneys' fees,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with the action, suit or proceeding if he acted in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of this Company, and, with respect to a criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, does not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best interest
of this Company, and that, with respect to any criminal action or proceeding, he
had reasonable cause to believe that his conduct was unlawful.
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13.2 Indemnity for Actions By or In the Right of the Company
This Company does hereby indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of this Company to procure a judgment in its favor by
reason of the fact that he is or was a Member, Manager, employee or agent of
this Company, or is or was serving at the request of this Company as a Member,
Manager, director, officer, employee or agent of another limited liability
company, corporation, partnership, joint venture, trust or other enterprise
against expenses, subject to the provisions of Section 13.4 hereof, including
amounts paid in settlement and attorneys' fees actually and reasonably incurred
by him in connection with the defense or settlement of the actions or suit if he
acted in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of this Company. Indemnification may not be made
for any claim, issue or matter as to which such a person has been adjudged by a
court of competent jurisdiction, after exhaustion of all appeals therefrom, to
be liable to this Company or for amounts paid in settlement to this Company,
unless and only to the extent that the court in which the action or suit was
brought or other court of competent jurisdiction determines upon application
that in view of all the circumstances of the case, the person is fairly and
reasonably entitled to indemnity for such expenses as the court deems proper.
13.3 Indemnity If Successful
To the extent that a Member, Manager, employee or agent of this Company
has been .successful on the merits or otherwise in defense of any action, suit
or proceeding referred to in Sections 13.1 and 13.2, or in defense of any claim,
issue or matter therein, this Company does hereby indemnify such person or
entity against expenses, subject to the provisions of Section 13.4 hereof,
including attorneys' fees, actually and reasonably incurred by him in connection
with the defense.
13.4 Expenses
Any indemnification under Sections 13.1 and 13.2, unless ordered by a
court or advanced pursuant to Section 13.5 below, must be made by this Company
only as authorized in the specific case upon a determination that
indemnification of the Member, Manager, employee or agent is proper in the
circumstances. The determination must be made:
(a) By a majority vote of Managers who were not parties to
the act, suit or proceeding;
(b) If, pursuant to majority vote, Managers who were not
parties to the act, suit or proceeding so order, by independent legal
counsel in a written opinion; or
(c) If a vote of Managers who were not parties to the act,
suit or proceeding cannot be obtained, by independent legal counsel in
a written opinion.
For purposes of this Section 13.4, each Manager shall have one vote.
13.5 Advance Payment of Expenses
The expenses of Members and Managers incurred in defending a civil or
criminal action, suit or proceeding shall be paid by this Company as they are
incurred and in advance of the final disposition of
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the action, suit or proceeding, upon receipt of an undertaking by or on behalf
of the Member or Manager to repay the amount if it is ultimately determined by a
court of competent jurisdiction that he is not entitled to be indemnified by
this Company. The provisions of this subsection do not affect any rights to
advancement of expenses to which personnel other than Members or Managers may be
entitled under any contract or otherwise by law.
13.6 Other Arrangements Not Excluded
The indemnification and advancement of expenses authorized in or
ordered by a court pursuant to this Article XIII:
(a) Does not exclude any other rights to which a person
seeking indemnification or advancement of expenses may be entitled
under the Articles of Organization or any agreement, vote of Members or
otherwise, for either an action in his official capacity or an action
in another capacity while holding his office, except that
indemnification, unless ordered by a court pursuant to Section 13.2
above or for the advancement of expenses made pursuant to Section 13.5
above, may not be made to or on behalf of any Member or Manager if a
final adjudication establishes that his acts or omissions involved
intentional misconduct, fraud or a knowing violation of the law and was
material to the cause of action.
(b) Continues for a person who has ceased to be a Member,
Manager, employee or agent and inures to the benefit of the heirs,
executors and administrators of such a person.
ARTICLE XIV
MISCELLANEOUS PROVISIONS
14.1 Complete Agreement
This Operating Agreement, and the Articles of Organization, constitute
the complete and exclusive statement of the agreement among the Members with
respect to the subject matter contained therein. This Operating Agreement and
the Articles of Organization replace and supersede all prior agreements by and
among the Members or any of them. This Operating Agreement and the Articles of
Organization supersede all prior written and oral statements and no
representation, statement, or condition or warranty not contained in this
Operating Agreement or the Articles of Organization will be binding on the
Members or be of any force and effect whatsoever.
14.2 Amendments
This Operating Agreement may be amended by the Members but only at a
special or annual meeting of the Members, not by written consent, and only if
the notice of the intention to amend the Operating Agreement was contained in
the notice of the meeting, or such notice of a meeting is waived by all Members.
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14.3 Applicable Law
This Operating Agreement, and its application, shall be governed
exclusively by its terms and by the laws of the State of Nevada.
14.4 Headings
The headings in this Operating Agreement are inserted for convenience
only and are in no way intended to describe, interpret, define, or limit the
scope, extent or intent of this Operating Agreement or any provisions contained
herein.
14.5 Severability
If any provision of this Operating Agreement or the application thereof
to any person or circumstance shall be deemed invalid, illegal or unenforceable
to any extent, the remainder of this Operating Agreement and the application
thereof shall not be affected and shall be enforceable to the fullest extent
permitted by law.
14.6 Expenses
If any litigation or other proceeding is commenced in connection with
or related to this Operating Agreement, the prevailing party shall be entitled
to recover from the losing party all of the incidental costs and reasonable
attorneys' fees, whether or not a final judgment is rendered.
14.7 Heirs, Successors and Assigns
Each and all of the covenants, terms, provisions and agreements
contained in this Operating Agreement shall be binding upon and inure to the
benefit of the existing Members all new and substituted Members, and their
respective assignees (whether permitted by this Agreement or not), heirs, legal
representatives, successors and assigns.
14.8 Execution
This Operating Agreement may be executed in counterparts, and when so
executed each counterpart shall be deemed to be an original, and said
counterparts together shall constitute one and the same instrument.
14.9 Power of Attorney
Each Member, in accepting this Operating Agreement, makes, constitutes
and appoints the Managers and each of them, with full power of substitution, as
his, her, or its attorney-in-fact and personal representative to sign, execute,
certify, acknowledge, file and record the Articles of Organization, and to sign,
execute, certify, acknowledge, file and record all appropriate instruments
amending the Articles of Organization and this Operating Agreement on behalf of
each such Member. In particular, the Manager as attorney-in-fact may sign,
acknowledge, certify, file and record on behalf of each Member such instruments,
agreements and documents which: (1) reflect any amendments to the Articles of
Organization or Operating Agreement; (2) reflect the admission or withdrawal of
a Member; and (3) may otherwise be required of the Company, a Member or by law.
The Power of
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Attorney herein given by each Member is a durable power and will survive the
disability or incapacity of the principal.
IN WITNESS WHEREOF, this Operating Agreement was adopted by a unanimous
action of the Members of this Company pursuant to a Written Consent dated
October 24, 1994.
MEMBERS:
ANAGRAM INTERNATIONAL, INC.
A Minnesota corporation
By/s/ Jim Plutt
------------------------------------
Jim Plutt, Secretary
ANAGRAM INTERNATIONAL HOLDINGS, INC.
a Minnesota corporation
By/s/ Jim Plutt
------------------------------------
Jim Plutt, Secretary
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CERTIFICATE OF FORMATION
OF
ANAGRAM EDEN PRAIRIE PROPERTY HOLDINGS LLC
(UNDER THE DELAWARE LIMITED LIABILITY COMPANY ACT)
This Certificate of Formation of Anagram Eden Prairie Property
Holdings LLC (the "Company"), dated as of September 9, 1998, is being duly
executed and filed by the undersigned as an authorized person and the sole
initial member, to form a limited liability company under the Delaware Limited
Liability Company Act (6 Del.C. [Section] 18-101, et seq.) (the "Act").
FIRST: The name of the limited liability company formed hereby
is Anagram Eden Prairie Property Holdings LLC.
SECOND: The address of the registered office of the Company in
the State of Delaware is c/o The Corporation Trust Company, The Corporation
Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801.
THIRD: The name and address of the registered agent for
service of process on the Company in the State of Delaware is The Corporation
Trust Company, The Corporation Trust Center, 1209 Orange Street, Wilmington, New
Castle County, Delaware 19801.
FOURTH: The overall management and control of the business and
affairs of the Company shall be vested in the member, or if more than one
member, the members. If the Company shall have more than one member at any time
or from time to time, all decisions with respect to the business and affairs of
the Company shall require the unanimous consent of the members. The sole initial
member of the Company shall be Amscan Holdings, Inc., a Delaware corporation
("Amscan"). Members of the Company shall also be any one or more persons who
become a successor or additional member by the unanimous consent of the then
existing members.
FIFTH: The business purposes for which the Company is formed
(collectively, the "Purposes") are as follows:
(a) To own, occupy, manage, improve, lease, restructure and
operate the parcels of land and the improvements thereon known as 7700 Anagram
Drive, Eden Prairie, Minnesota and the easements appurtenant thereto
(collectively, the "Property") and to conduct activities incidental thereto;
(b) To guarantee (any such guarantee, a "Permitted
Guarantee") the indebtedness of Amscan (the "Indebtedness") to be evidenced by a
certain Amended and Restated Revolving Loan Credit Agreement and a certain
Amended and Restated Axel Credit
<PAGE>
Agreement, each to be entered into among Amscan, as Borrower, Goldman Sachs
Credit Partners, L.P., as Arranger and Syndication Agent (together with its
successors, the "Collateral Agent"), Fleet National Bank, as Administrative
Agent, and the Lenders to be listed therein (collectively and as may be amended,
modified or supplemented from time to time, the "Credit Agreements"); and
(c) Subject to any limitations expressly set forth herein, to
do all things necessary, suitable or proper under the Act for the accomplishment
of, or in furtherance of, any of the Purposes set forth herein and to do every
other act or acts incidental to, or arising from, or connected with, any of such
Purposes;
PROVIDED, HOWEVER, that except as may be permitted by the Credit Agreements and
the other documents and instruments evidencing or securing the Indebtedness, the
Company shall be prohibited from (i) incurring indebtedness for borrowed money,
(ii) guaranteeing or otherwise obligating itself with respect to the
indebtedness of any other person, (iii) holding out its credit as being
available to satisfy the obligations of any other person, or (iv) otherwise
entering into any loan or credit agreement, pledge or security agreement,
mortgage or deed of trust, or other written agreement or instrument which
evidences or secures indebtedness for borrowed money, except for a Permitted
Guarantee, and neither the foregoing enumeration of the Purposes for which the
Company is formed nor any other provision in this Certificate of Formation shall
be construed to authorize the Company to do any such prohibited act or thing or
enter into any such prohibited agreement.
SIXTH: The personal liability of the members of the Company is
eliminated or limited to the fullest extent permitted by the provisions of
Section 18-108 of the Act, as the same may hereafter be amended and
supplemented, and none of such members are to be liable in their capacity as
members for any of the debts, obligations or liabilities of the Company.
SEVENTH: (a) For as long as a Permitted Guarantee remains
outstanding and upon the written request of the Collateral Agent, the members
shall appoint an Independent Manager designated by the Collateral Agent (the
"Independent Manager"). To the fullest extent permitted by Section 18-1101(c) of
the Act, the Independent Manager shall have no duty (fiduciary or otherwise) to
consent or vote in favor of the institution of any proceedings, the filing of
any petition, or the taking of any action, in each case concerning the matters
more fully described in Paragraphs Eighth, Ninth and Tenth of this Certificate
of Formation, or to take or omit to take any other action under this Certificate
of Formation or to take any action that would result in an event of default
under the Credit Agreements.
(b) No resignation or removal of the Independent Manager, and
no appointment of a successor Independent Manager, shall be effective until the
successor Independent Manager shall have accepted his, her or its appointment by
a written instrument. All rights, power and authority of the Independent Manager
shall be limited to the extent necessary to exercise those rights and perform
those duties specifically set forth in this Certificate of Formation.
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(c) The Independent Manager may resign and be discharged of
this Certificate of Formation effective upon the appointment of a successor
Independent Manager, upon not less than thirty (30) days' prior written notice
to the members, and, if a Permitted Guarantee remains outstanding, the
Collateral Agent. Upon receiving such notice of resignation, the members shall
promptly appoint a successor Independent Manager acceptable to the Collateral
Agent by written instrument or instruments delivered to such resigning
Independent Manager and the successor Independent Manager. If no successor
Independent Manager shall have been appointed within thirty (30) days after
notice of such resignation has been delivered, the Independent Manager may apply
to a court of competent jurisdiction for the appointment of a successor
Independent Manager. Such court may thereupon, after such notice, if any, as it
may deem proper, prescribe and appoint a successor Independent Manager.
(d) Any person into which the Independent Manager may be
merged or with which it may be consolidated, or any person resulting from any
merger or consolidation to which the Independent Manager shall be a party, or
any person which succeeds to all or substantially all of the corporate trust
business of the Independent Manager, shall be the successor Independent Manager
under this Certificate of Formation without the execution, delivery or filing of
any paper or instrument or further act to be done on the part of the parties
hereto, notwithstanding anything to the contrary herein.
EIGHTH: (a) The Company shall be dissolved, and its affairs
shall be wound up upon the first to occur of the following: (i) the written
consent of each member, and for as long as a Permitted Guarantee remains
outstanding, the written consent of the Independent Manager; or (ii) the entry
of a decree of judicial dissolution under Section 18-802 of the Act.
(b) The bankruptcy (as defined in Section 18-101(l) of the
Act) of a member shall not cause such member to cease to be a member of the
Company, and upon the occurrence of such an event, the business of the Company
shall continue without dissolution.
(c) With the exception of any event set forth in this
Paragraph Eighth, the Company shall not be dissolved by any other event or vote
set forth in Section 18-801 of the Act.
(d) In the event of dissolution, the Company shall conduct
only such activities as are necessary to wind up its affairs (including the sale
of the assets of the Company in an orderly manner), and the assets of the
Company shall be applied in the manner, and in the order of priority, set forth
in Section 18-804 of the Act.
NINTH: The unanimous vote of the members shall be required,
and for so long as a Permitted Guarantee remains outstanding, the consent of the
Independent Manager shall be required, in order to take any of the following
actions:
(a) cause the Company to become insolvent;
(b) commence any case, proceeding or other action on behalf
of the Company under any existing or future law of any jurisdiction relating to
bankruptcy, insolvency, reorganization or relief of debtors;
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(c) institute proceedings to have the Company adjudicated as
bankrupt or insolvent;
(d) consent to the institution of bankruptcy or insolvency
proceedings against the Company;
(e) file a petition or consent to a petition seeking
reorganization, arrangement, adjustment, winding-up, dissolution, composition,
liquidation or other relief on behalf of the Company of its debts under any
federal or state law relating to bankruptcy;
(f) seek or consent to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator, custodian or any similar official
for the Company or a substantial portion of the properties of the Company;
(g) make any assignment for the benefit of the Company's
creditors; or
(h) take any action or cause the Company to take any action in
furtherance of any of the foregoing.
TENTH: For so long as a Permitted Guarantee remains
outstanding, the Company shall not be authorized to:
(a) amend this Certificate of Formation, except with the prior
written consent of the Independent Manager;
(b) engage in any business activity not contemplated by the
Purposes;
(c) dissolve, liquidate, consolidate, merge, or sell all or
substantially all of its assets; or
(d) transfer its interest in the Property, or any portion
thereof.
ELEVENTH: The Company shall:
(a) not commingle its assets with those of any other entity
and shall hold its assets in its own name;
(b) conduct its own business in its own name;
(c) maintain bank accounts, books, records, accounts and
financial statements separate from any other entity;
(d) maintain its books, records, resolutions and agreements as
official records and separate from any other entity;
(e) pay its own liabilities out of its own funds;
(f) maintain adequate capital in light of contemplated
business operations;
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(g) observe all formalities of a limited liability company
organized under the Act;
(h) maintain an arm's length relationship with its affiliates;
(i) pay the salaries of its own employees, if any;
(j) not acquire obligations or securities of its partners,
members or shareholders;
(k) allocate fairly and reasonably any overhead for shared
office space;
(l) use separate stationary, invoices, and checks;
(m) hold itself out as a separate entity and correct any known
misunderstanding regarding its separate identity; and
(n) not identify itself or any of its affiliates as a division
or part of the other.
TWELFTH: (a) Except as limited by Subparagraph (a) of the
Tenth Paragraph of this Certificate of Formation, the Company reserves the right
to amend, alter, change or repeal any provision contained in this Certificate of
Formation, in the manner now or hereafter prescribed by statute, and all rights
conferred upon members herein are granted subject to this reservation.
(b) If any of the provisions of this Certificate of Formation,
or the application thereof to any person, party or circumstances, shall, to any
extent, be invalid, the remainder of this Certificate of Formation, or the
application of such provision or provisions to persons, parties or circumstances
other than those as to whom or which it is held invalid, shall not be affected
thereby, and every provision of this Certificate of Formation, shall be valid to
the fullest extent permitted by law.
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<PAGE>
THIRTEENTH: This Certificate of Formation contains the entire
understanding between and among the members of the Company respecting the
subject matter hereof, and shall further constitute the limited liability
company agreement as contemplated by the provisions of Section 18-201 of the
Delaware Limited Liability Company Act.
Signed on September 9, 1998, and
affirmed, under penalties of perjury.
AMSCAN HOLDINGS, INC.,
in its capacity as sole initial member of
the Company
By: /s/James M. Harrison
Name: James M. Harrison
Title: President
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SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE dated as of September 17, 1998 between Anagram
International, Inc., a Minnesota corporation, Anagram International Holdings,
Inc., a Minnesota corporation, Anagram International, LLC, a Nevada limited
liability company and Anagram Eden Prairie Holdings LLC, a Delaware limited
liability company (each a "New Guarantor" and, together with the Persons
identified on Exhibit C to the Indenture referred to below and any other
Guarantors that execute this form of Supplemental Indenture, the "Guarantors"),
each a Subsidiary of Amscan Holdings, Inc., a Delaware corporation, or its
successors and assigns (the "Company"), and IBJ Schroder Bank & Trust Company,
as trustee under the indenture referred to below (the "Trustee").
WITNESSETH
WHEREAS, the Company has heretofore executed and delivered to the Trustee
an indenture dated as of December 19, 1997, as amended by a supplemental
indenture dated as of September 17, 1998, (the "Indenture"), providing for the
issuance of an aggregate principal amount of $200.0 million of 9.875% Senior
Subordinated Notes Due 2007 (the "Senior Subordinated Notes");
WHEREAS, the Indenture provides that under certain circumstances each New
Guarantor shall execute and deliver to the Trustee a supplemental indenture
pursuant to which each New Guarantor shall unconditionally guarantee all of the
Company's Obligations under the Senior Subordinated Notes on the terms and
conditions set forth herein (the "Senior Subordinated Guarantee"); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, each New
Guarantor and the Trustee mutually covenant and agree for the equal and ratable
benefit of the Holders of the Senior Subordinated Notes as follows:
1. Capitalized Terms. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
2. Counterpart to the Indenture. This Supplemental Indenture specifically
incorporates, restates and reaffirms all of the warranties, representations,
covenants and other provisions of the Indenture, notwithstanding the fact that
such provisions are not restated herein. By executing this Supplemental
Indenture, each New Guarantor subscribes to all of the covenants and other
provisions in the Indenture as applicable to the Guarantors, and each New
Guarantor hereby agrees that it shall be bound by all of the provisions of the
Indenture. Upon execution, this Supplemental Indenture shall become part of the
Indenture and the rights and obligations of each New Guarantor hereunder shall
be construed to be identical to the rights and obligations of the Guarantors
under the Indenture. Reference is hereby made to the Indenture for the precise
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terms of this Supplemental Indenture. In the event of any conflict between the
provisions herein and the provisions of the Indenture, the Indenture shall
control.
3. Agreement to Guarantee. Each New Guarantor hereby agrees as follows:
(a) Subject to Article 11 of the Indenture, each New Guarantor, jointly and
severally with the other Guarantors, hereby unconditionally guarantees to each
Holder of a Senior Subordinated Note authenticated and delivered by the Trustee
and to the Trustee and its successors and assigns, irrespective of the validity
and enforceability of the Indenture, the Senior Subordinated Notes or the
Obligations of the Company under the Indenture or the Senior Subordinated Notes,
that: (a) the principal of, premium, if any, and interest, including Liquidated
Damages, if any, on the Senior Subordinated Notes shall be promptly paid in full
when due, whether at maturity, by acceleration, redemption or otherwise, and (to
the extent permitted by law) interest on the overdue principal of, premium and
interest, including Liquidated Damages, on the Senior Subordinated Notes, if
any, and all other obligations of the Company to the Holders or the Trustee
under the Indenture or the Senior Subordinated Notes shall be promptly paid in
full or performed, all in accordance with the terms of the Indenture and the
Senior Subordinated Notes; and (b) in case of any extension of time for payment
or renewal of any Senior Subordinated Notes or any of such other obligations,
that the same shall be promptly paid in full when due or performed in accordance
with the terms of the extension or renewal, whether at stated maturity, by
acceleration or otherwise. Failing payment when due of any amount so guaranteed
for whatever reason, the Guarantors shall be obligated to pay the same
immediately whether or not such failure to pay has become an Event of Default
which could cause acceleration pursuant to Section 6.02 of the Indenture. Each
New Guarantor agrees that this is a guarantee of payment and not a guarantee of
collection.
(b) Each New Guarantor hereby agrees that its obligations hereunder shall
be unconditional, irrespective of the validity, regularity or enforceability of
the Senior Subordinated Notes or the Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Senior Subordinated
Notes with respect to any provisions thereof, the recovery of any judgment
against the Company, any action to enforce the same or any other circumstance
which might otherwise constitute a legal or equitable discharge or defense of a
guarantor. Each New Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Company, any right to require a proceeding first against the Company,
protest, notice and all demands whatsoever and covenants that, subject to
Article 11 of the Indenture, this Senior Subordinated Guarantee shall not be
discharged except by complete performance of the obligations contained in the
Senior Subordinated Notes and the Indenture.
(c) If any Holder of Senior Subordinated Notes or the Trustee is required
by any court or otherwise to return to the Company or the Guarantors, or any
Custodian, Trustee, liquidator or other similar official acting in relation to
either the Company or the Guarantors, any amount paid by either to the Trustee
or such Holder, this Senior Subordinated Guarantee, to the extent theretofore
discharged, shall be reinstated in full force and effect.
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(d) Each New Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders of Senior Subordinated Notes in respect
of any Obligations guaranteed hereby until payment in full of all Obligations
guaranteed hereby. Each New Guarantor further agrees that, as between the
Guarantors, on the one hand, and the Holders and the Trustee, on the other hand,
(x) the maturity of the Obligations guaranteed hereby may be accelerated as
provided in Article 6 of the Indenture for the purposes of this Senior
Subordinated Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the Obligations
guaranteed thereby and (y) in the event of any declaration of acceleration of
such Obligations as provided in Section 6.02 of the Indenture, such Obligations
(whether or not due and payable) shall forthwith become due and payable by the
Guarantors for the purpose of this Senior Subordinated Guarantee. The Guarantors
shall have the right to seek contribution from any non-paying New Guarantor so
long as the exercise of such right does not impair the rights of the Holders
under the Senior Subordinated Guarantees.
4. Subordination of Senior Subordinated Guarantee. The Obligations of each
New Guarantor under its Senior Subordinated Guarantee pursuant to Article 11 of
the Indenture shall be junior and subordinated to the Senior Guarantee of such
New Guarantor on the same basis as the Senior Subordinated Notes are junior and
subordinated to Senior Debt of the Company. For the purposes of the foregoing
sentence, the Trustee and the Holders shall have the right to receive and/or
retain payments by any of the Guarantors only at such times as they may receive
and/or retain payments in respect of the Senior Subordinated Notes pursuant to
the Indenture, including Article 10 thereof.
5. Limitation on Guarantor Liability. Each New Guarantor, and by its
acceptance of Senior Subordinated Notes, each Holder, hereby confirms that it is
the intention of all such parties that the Senior Subordinated Guarantee of the
New Guarantor not constitute a fraudulent transfer or conveyance for purposes of
Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state law to the extent applicable to any
Senior Subordinated Guarantee. To effectuate the foregoing intention, the
Trustee, the Holders and each New Guarantor hereby irrevocably agree that the
obligations of each New Guarantor under its Senior Subordinated Guarantee and
Article 11 of the Indenture shall be limited to the maximum amount as will,
after giving effect to such maximum amount and all other contingent and fixed
liabilities of the New Guarantor that are relevant under such laws, and after
giving effect to any collections from, rights to receive contribution from or
payments made by or on behalf of any other New Guarantor in respect of the
obligations of such other New Guarantor under Article 11 of the Indenture,
result in the obligations of the New Guarantor under its Senior Subordinated
Guarantee not constituting a fraudulent transfer or conveyance.
6. Execution and Delivery of Senior Subordinated Guarantees. (a) To
evidence its Senior Subordinated Guarantee set forth in this Supplemental
Indenture and in Section 11.01 of the Indenture, each New Guarantor hereby
agrees that a notation of such Senior Subordinated Guarantee substantially in
the form of Exhibit D to the Indenture shall be endorsed by an Officer of the
New Guarantor on each Senior Subordinated Note authenticated and delivered by
the Trustee and that this Supplemental Indenture, as a counterpart to the
Indenture, shall be executed
3
<PAGE>
on behalf of the New Guarantor by its President or one of its Vice Presidents
and attested to by an Officer of the New Guarantor.
(b) Each New Guarantor hereby agrees that its Senior Subordinated Guarantee
set forth in this Supplemental Indenture and in Section 11.01 of the Indenture
shall remain in full force and effect notwithstanding any failure to endorse on
each Senior Subordinated Note a notation of such Senior Subordinated Guarantee.
(c) If an Officer whose signature is on this Supplemental Indenture or on
the Senior Subordinated Guarantee no longer holds that office at the time the
Trustee authenticates the Senior Subordinated Note on which a Senior
Subordinated Guarantee is endorsed, the Senior Subordinated Guarantee shall be
valid nevertheless.
(d) The delivery of any Senior Subordinated Note by the Trustee, after the
authentication thereof under the Indenture, shall constitute due delivery of the
Senior Subordinated Guarantee set forth in the Indenture on behalf of the New
Guarantor.
7. Guarantor May Consolidate, Etc., on Certain Terms. No New Guarantor may
consolidate with or merge with or into (whether or not such New Guarantor is the
surviving Person) another Person whether or not affiliated with such Guarantor
unless:
(a) subject to Section 11.06 of the Indenture, the Person formed by or
surviving any such consolidation or merger (if other than such New Guarantor)
unconditionally assumes all the obligations of such New Guarantor under the
Senior Subordinated Guarantee and the Indenture on the terms set forth in the
Indenture pursuant to a supplemental indenture in form and substance reasonably
satisfactory to the Trustee;
(b) immediately after giving effect to such transaction, no Default or
Event of Default exists; and
(c) the Company would be permitted by virtue of the Company's pro forma
Fixed Charge Coverage Ratio to incur, immediately after giving effect to such
transaction, at least $1.00 of additional Indebtedness pursuant to the Fixed
Charge Coverage Ratio test set forth in the first paragraph of Section 4.09 of
the Indenture.
In case of any such consolidation or merger and upon the assumption by the
successor Person by supplemental indenture, executed and delivered to the
Trustee and satisfactory in form to the Trustee, of the Senior Subordinated
Guarantee endorsed upon the Senior Subordinated Notes and of the due and
punctual performance of all of the covenants and conditions of the Indenture and
this Supplemental Indenture to be performed by the New Guarantor, such successor
Person shall succeed to and be substituted for the New Guarantor with the same
effect as if it had been named in the Indenture as a New Guarantor. Such
successor Person thereupon may cause to be signed any or all of the Senior
Subordinated Guarantees to be endorsed upon all of the Senior Subordinated Notes
issuable under the Indenture which theretofore shall not have been signed by the
Company and delivered to the Trustee. All the Senior Subordinated Guarantees so
issued shall in all respects have the same legal rank and benefit under the
Indenture as the Senior Subordi-
4
<PAGE>
nated Guarantees theretofore and thereafter issued in accordance with the terms
of the Indenture as though all of such Senior Subordinated Guarantees had been
issued at the date of the execution of the Indenture.
Except as set forth in Articles 4 and 5 of the Indenture, and
notwithstanding clauses (a) through (c) above, nothing contained in the
Indenture, this Supplemental Indenture or in any of the Senior Subordinated
Notes shall prevent any consolidation or merger of any New Guarantor with or
into the Company or another New Guarantor, or shall prevent any sale or
conveyance of the property of any Guarantor as an entirety or substantially as
an entirety to the Company or another New Guarantor.
8. Releases of Senior Subordinated Guarantees. In the event of a sale or
other disposition of all or substantially all of the assets of any New
Guarantor, by way of merger, consolidation or otherwise, or a sale or other
disposition (including, without limitation, by foreclosure) of all of the
Capital Stock of the New Guarantor, then the New Guarantor (in the event of a
sale or other disposition, by way of such a merger, consolidation or otherwise
(including, without limitation, by foreclosure), of all of the Capital Stock of
the New Guarantor) or the Person acquiring the property (in the event of a sale
or other disposition of all or substantially all of the assets of the New
Guarantor) shall be automatically released and relieved of any obligations under
its Senior Subordinated Guarantee; provided that the Net Proceeds of such sale
or other disposition are applied, as and if required, in accordance with Section
4.10 of the Indenture. In addition, if any New Guarantor is released and
relieved of all obligations it may have as a guarantor under the Bank Credit
Agreement, then such New Guarantor will also be automatically released and
relieved of any obligations under its Senior Subordinated Guarantee. Upon
delivery by the Company to the Trustee of an Officers' Certificate and an
Opinion of Counsel to the effect that such sale or other disposition was made by
the Company in accordance with the provisions of the Indenture, including
without limitation Sections 4.10 and 5.01 thereof, the Trustee shall execute any
documents reasonably required in order to evidence the release of the New
Guarantor from its obligations under its Senior Subordinated Guarantee.
Any New Guarantor not released from its obligations under its Senior
Subordinated Guarantee shall remain liable for the full amount of principal of
and interest on the Senior Subordinated Notes and for the other obligations of
any New Guarantor under the Indenture as provided in Article 11 thereof.
9. `Trustee" to Include Paying Agent. In case at any time any Paying Agent
other than the Trustee shall have been appointed by the Company and be then
acting under the Indenture, the term "Trustee" as used in Article 11 thereto
shall in such case (unless the context shall otherwise require) be construed as
extending to and including such Paying Agent within its meaning as fully and for
all intents and purposes as if such Paying Agent were named in Article 11 of the
Indenture in place of the Trustee.
10. No Recourse Against Others. No past, present or future director,
officer, employee, incorporator or stockholder of any New Guarantor, as such,
shall have any liability for any obligations of the Company or any New Guarantor
under the Senior Subordinated Notes, any
5
<PAGE>
Senior Subordinated Guarantees, the Indenture or this Supplemental Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder of Senior Subordinated Notes by accepting a Senior
Subordinated Note waives and releases all such liability. The waiver and release
are part of the consideration for issuance of the Senior Subordinated Notes.
11. GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN
AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE AND THE SENIOR SUBORDINATED
GUARANTEE.
12. Counterpart Originals. The parties may sign any number of copies of
this Supplemental Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement.
13. Effect of Headings. The Section headings herein are for convenience
only and shall not affect the construction hereof.
14. The Trustee. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the recitals contained herein, all of which
recitals are made solely by the New Guarantors and the Company.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
Dated: September 17, 1998 Anagram International, Inc.
By:/s/ James M. Harrison
---------------------------------
Attest: Name: James M. Harrison
Title: Senior Vice President,
Michael A. Correale Treasurer and Chief Financial
- ----------------------------------- Officer
Dated: September 17, 1998 Anagram International Holdings, Inc.
By:/s/ James M. Harrison
---------------------------------
Attest: Name: James M. Harrison
Title: Senior Vice President,
Michael A. Correale Treasurer and Chief Financial
- ----------------------------------- Officer
Dated: September 17, 1998 Anagram International, LLC
By:/s/ James M. Harrison
---------------------------------
Attest: Name: James M. Harrison
Title: Manager
Michael A. Correale
- -----------------------------------
Dated: September 17, 1998 Anagram Eden Prairie Holdings LLC
By:/s/ James M. Harrison
---------------------------------
Attest: Name: James M. Harrison
Title: Senior Vice President,
Michael A. Correale Treasurer and Chief Financial
- ----------------------------------- Officer
Dated: September 17, 1998 IBJ Schroder Bank & Trust Company
as Trustee
By:/s/ Stephen J. Giurlando
Attest: ---------------------------------
Name: Stephen J. Giurlando
Title: Aisstant Vice President
Michael C. Daly
- ----------------------------------
Michael C. Daly
Assistant Secretary
7
<PAGE>
SENIOR SUBORDINATED GUARANTEE
The obligations of Anagram International, Inc., Anagram International
Holdings, Inc., Anagram International, LLC and Anagram Eden Prairie Holdings LLC
(collectively, the "New Guarantors") to the Holders of Senior Subordinated Notes
and to the Trustee pursuant to this Senior Subordinated Guarantee and the
Indenture dated as of December 19, 1997, as amended by the Supplemental
Indenture dated as of September 17, 1998 (the "Indenture") among Amscan
Holdings, Inc., the Guarantors (as defined therein) and IBJ Schroder Bank &
Trust Company, as trustee, are expressly set forth in Article 11 of the
Indenture, and reference is hereby made to such Indenture for the precise terms
of this Senior Subordinated Guarantee. The terms of Article 11 of the Indenture
are incorporated herein by reference.
Each of the New Guarantors, jointly and severally, hereby unconditionally
guarantees to each Holder of a Senior Subordinated Note authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of the Indenture, the Senior
Subordinated Notes or the obligations of the Company under the Indenture or the
Senior Subordinated Notes, that: (a) the principal of, premium, if any, and
interest, including Liquidated Damages, if any, on the Senior Subordinated Notes
shall be promptly paid in full when due, whether at maturity, by acceleration,
redemption or otherwise, and (to the extent permitted by law) interest on the
overdue principal of, premium, if any, and interest, including Liquidated
Damages, if any, on the Senior Subordinated Notes, if any, and all other
obligations of the Company to the Holders or the Trustee under the Indenture or
the Senior Subordinated Notes shall be promptly paid in full or performed, all
in accordance with the terms of the Indenture and the Senior Subordinated Notes;
and (b) in case of any extension of time of payment or renewal of any Senior
Subordinated Notes or any of such other obligations, that same shall be promptly
paid in full when due or performed in accordance with the terms of the extension
or renewal, whether at stated maturity, by acceleration or otherwise. Failing
payment when due of any amount so guaranteed for whatever reason, the New
Guarantors shall be obligated to pay the same immediately whether or not such
failure to pay has become an Event of Default which could cause acceleration
pursuant to Section 6.02 of the Indenture. Each New Guarantor agrees that this
is a guarantee of payment and not a guarantee of collection.
Each New Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Senior Subordinated Notes or the Indenture, the absence of any action to enforce
the same, any waiver or consent by any Holder of the Senior Subordinated Notes
with respect to any provisions thereof, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a guarantor.
Each New Guarantor hereby waives diligence, presentment, demand of payment,
filing of claims with a court in the event of insolvency or bankruptcy of the
Company, any right to require a proceeding first against the Company, protest,
notice and all demands whatsoever and covenants that, subject to Article 11 of
the Indenture, this Senior Subordinated Guarantee shall not be discharged except
by complete performance of the obligations contained in the Senior Subordinated
Notes and the Indenture.
<PAGE>
If any Holder of Senior Subordinated Notes or the Trustee is required by
any court or otherwise to return to the Company or the New Guarantors, or any
Custodian, Trustee, liquidator or other similar official acting in relation to
either the Company or the New Guarantors, any amount paid by either to the
Trustee or such Holder, this Senior Subordinated Guarantee, to the extent
theretofore discharged, shall be reinstated in full force and effect.
Each New Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders of Senior Subordinated Notes in respect
of any Obligations guaranteed hereby until payment in full of all Obligations
guaranteed hereby. Each New Guarantor further agrees that, as between the New
Guarantors, on the one hand, and the Holders and the Trustee, on the other hand,
(x) the maturity of the Obligations guaranteed hereby may be accelerated as
provided in Article 6 of the Indenture for the purposes of this Senior
Subordinated Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the Obligations
guaranteed hereby and (y) in the event of any declaration of acceleration of
such Obligations as provided in Section 6.02 of the Indenture, such Obligations
(whether or not due and payable) shall forthwith become due and payable by the
New Guarantors for the purpose of this Senior Subordinated Guarantee. The New
Guarantors shall have the right to seek contribution from any non-paying New
Guarantor so long as the exercise of such right does not impair the rights of
the Holders under the Senior Subordinated Guarantees.
The Obligations of each New Guarantor under this Senior Subordinated
Guarantee are junior and subordinated to the Senior Guarantee of such New
Guarantor on the same basis as the Senior Subordinated Notes are junior and
subordinated to Senior Debt of the Company. For the purposes of the foregoing
sentence, the Trustee and the Holders shall have the right to receive and/or
retain payments by any of the New Guarantors only at such times as they may
receive and/or retain payments in respect of the Senior Subordinated Notes
pursuant to the Indenture, including Article 10 thereof.
Each New Guarantor, and by its acceptance of Senior Subordinated Notes,
each Holder, hereby confirms that it is the intention of all such parties that
this Senior Subordinated Guarantee not constitute a fraudulent transfer or
conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to
the extent applicable. To effectuate the foregoing intention, the Trustee, the
Holders and the New Guarantors hereby irrevocably agree that the obligations of
each New Guarantor under this Senior Subordinated Guarantee shall be limited to
the maximum amount as will, after giving effect to such maximum amount and all
other contingent and fixed liabilities of such New Guarantor that are relevant
under such laws, and after giving effect to any collections from, rights to
receive contribution from or payments made by or on behalf of any other New
Guarantor in respect of the obligations of such other New Guarantor under
Article 11 of the Indenture, result in the obligations of such New Guarantor
under this Senior Subordinated Guarantee not constituting a fraudulent transfer
or conveyance.
This is a continuing Senior Subordinated Guarantee and shall remain in full
force and effect and shall be binding upon each New Guarantor and its respective
successors and assigns to the extent set forth in the Indenture until full and
final payment of all of the
2
<PAGE>
Company's Obligations under the Senior Subordinated Notes and the Indenture and
shall inure to the benefit of the successors and assigns of the Trustee and the
Holders of Senior Subordinated Notes and, in the event of any transfer or
assignment of rights by any Holder of Senior Subordinated Notes or the Trustee,
the rights and privileges herein conferred upon that party shall automatically
extend to and be vested in such transferee or assignee, all subject to the terms
and conditions hereof and of Article 11 of the Indenture.
This Senior Subordinated Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Senior Subordinated Note
upon which this Senior Subordinated Guarantee is noted shall have been executed
by the Trustee under the Indenture by the manual signature of one of its
authorized officers. Notwithstanding the foregoing, in the event that this
Senior Subordinated Guarantee is executed subsequent to such manual signature of
one of the Trustee's authorized officers on such certificate of authentication,
then immediately upon the execution of this Senior Subordinated Guarantee all
obligations hereunder and under the Indenture shall be valid and obligatory with
respect to such Senior Subordinated Note(s) as if this Senior Subordinated
Guarantee were noted thereon.
3
<PAGE>
Capitalized terms used herein have the same meanings given in the Indenture
unless otherwise indicated.
Anagram International, Inc.
Attest:
By:/s/ James M. Harrison
---------------------------------
/s/ Michael A. Correale Name: James M. Harrison
- -------------------------------- Title Senior Vice President,
Name: Michael A. Correale Treasurer and Chief Financial
Title Vice President, Assistant Officer
Treasurer and Secretary
Anagram International Holdings, Inc.
Attest:
By:/s/ James M. Harrison
---------------------------------
/s/ Michael A. Correale Name: James M. Harrison
- -------------------------------- Title Senior Vice President,
Name: Michael A. Correale Treasurer and Chief Financial
Title Vice President, Assistant Officer
Treasurer and Secretary
Anagram International, LLC
Attest:
By:/s/ James M. Harrison
------------------------------------
/s/ Michael A. Correale Name: James M. Harrison
- ------------------------------ Title Manager
Name: Michael A. Correale
Title Manager
Anagram Eden Prairie Holdings LLC
Attest:
By:/s/ James M. Harrison
------------------------------------
/s/ Michael A. Correale Name: James M. Harrison
- -------------------------------- Title Senior Vice President,
Name: Michael A. Correale Treasurer and Chief Financial
Title Vice President, Assistant Officer
Treasurer and Secretary
4
<PAGE>
================================================================================
AMENDED AND RESTATED REVOLVING LOAN CREDIT AGREEMENT
DATED AS OF SEPTEMBER 17, 1998
AMONG
AMSCAN HOLDINGS, INC.,
AS BORROWER
THE LENDERS LISTED HEREIN,
AS LENDERS,
GOLDMAN SACHS CREDIT PARTNERS L.P.,
AS ARRANGER AND SYNDICATION AGENT,
AND
FLEET NATIONAL BANK,
AS ADMINISTRATIVE AGENT
================================================================================
<PAGE>
AMSCAN HOLDINGS, INC.
AMENDED AND RESTATED REVOLVING LOAN CREDIT AGREEMENT
TABLE OF CONTENTS
PAGE
SECTION 1.
DEFINITIONS................................ 3
1.1 Certain Defined Terms...................................... 3
1.2 Accounting Terms; Utilization of GAAP for Purposes
of Calculations Under Agreement............................ 45
1.3 Other Definitional Provisions and Rules of Construction.... 45
SECTION 2.
AMOUNTS AND TERMS OF COMMITMENTS AND LOANS............. 46
2.1 Commitments; Making of Loans; the Register; Notes.......... 46
2.2 Interest on the Revolving Loans............................ 50
2.3 Fees....................................................... 54
2.4 Prepayments and Reductions in Revolving Loan Commitments;
General Provisions Regarding Payments; Application of
Proceeds of Collateral and Payments Under Subsidiary
Guaranty................................................... 54
2.5 Use of Proceeds............................................ 59
2.6 Special Provisions Governing Eurodollar Rate Loans......... 60
2.7 Increased Costs; Taxes; Capital Adequacy................... 62
2.8 Obligation of Lenders and Issuing Lenders to Mitigate...... 67
2.9 Defaulting Lenders......................................... 67
2.10 Removal or Replacement of a Lender......................... 69
SECTION 3.
LETTERS OF CREDIT............................ 71
3.1 Issuance of Letters of Credit and Lenders' Purchase
of Participations Therein.................................. 71
3.2 Letter of Credit Fees...................................... 74
3.3 Drawings and Reimbursement of Amounts Paid Under Letters
of Credit.................................................. 75
3.4 Obligations Absolute....................................... 77
3.5 Indemnification; Nature of Issuing Lenders' Duties......... 78
3.6 Increased Costs and Taxes Relating to Letters of Credit.... 80
SECTION 4.
CONDITIONS TO EFFECTIVENESS; CONDITIONS TO LOANS AND LETTERS OF CREDIT... 81
(i)
<PAGE>
Page
4.1 Conditions to Effectiveness................................ 81
4.2 Conditions to All Revolving Loans.......................... 90
4.3 Conditions to Letters of Credit............................ 91
SECTION 5.
COMPANY'S REPRESENTATIONS AND WARRANTIES................ 92
5.1 Organization, Powers, Qualification, Good Standing,
Business and Subsidiaries.................................. 92
5.2 Authorization of Borrowing, etc............................ 93
5.3 Financial Condition........................................ 94
5.4 No Material Adverse Change................................. 95
5.5 Title to Properties; Liens; Real Property.................. 95
5.6 Litigation; Adverse Facts.................................. 96
5.7 Payment of Taxes........................................... 96
5.8 Performance of Agreements; Materially Adverse
Agreements; Material Contracts............................. 97
5.9 Governmental Regulation.................................... 97
5.10 Securities Activities...................................... 97
5.11 Employee Benefit Plans..................................... 97
5.12 Certain Fees............................................... 98
5.13 Environmental Protection................................... 98
5.14 Employee Matters........................................... 99
5.15 Solvency................................................... 99
5.16 Matters Relating to Collateral............................. 99
5.17 Related Agreements.........................................100
5.18 Disclosure.................................................101
5.19 AXEL Credit Agreement......................................102
SECTION 6.
COMPANY'S AFFIRMATIVE COVENANTS....................102
6.1 Financial Statements and Other Reports.....................102
6.2 Corporate Existence, etc...................................108
6.3 Payment of Taxes and Claims; Tax Consolidation.............108
6.4 Maintenance of Properties; Insurance; Application
of Net Insurance/Condemnation Proceeds...................109
6.5 Inspection Rights; Audits of Inventory and Accounts
Receivable; Lender Meeting.................................111
6.6 Compliance with Laws, etc..................................111
6.7 Environmental Review and Investigation, Disclosure, Etc.;
Company's Actions Regarding Hazardous Materials Activities,
Environmental Claims and Violations of Environmental
Laws.......................................................111
(ii)
<PAGE>
6.8 Execution of Subsidiary Guaranty and Personal Property
Collateral Documents by Certain Subsidiaries and
Future Subsidiaries........................................114
6.9 Conforming Leasehold Interests; Matters Relating to
Real Property Collateral...................................116
6.10 Interest Rate Protection...................................118
6.11 Cash Management Systems....................................119
6.12 TRADEMARKS AND PATENTS.............................................120
SECTION 7.
COMPANY'S NEGATIVE COVENANTS......................120
7.1 Indebtedness...............................................120
7.2 Liens and Related Matters..................................122
7.3 Investments; Joint Ventures................................124
7.4 Contingent Obligations.....................................124
7.5 Restricted Junior Payments.................................126
7.6 Financial Covenants........................................126
7.7 Restriction on Fundamental Changes; Asset Sales and
Acquisitions...............................................132
7.8 Consolidated Capital Expenditures..........................133
7.9 Sales and Lease-Backs......................................134
7.10 Transactions with Shareholders and Affiliates..............134
7.11 Disposal of Subsidiary Stock...............................135
7.12 Conduct of Business........................................135
7.13 Amendments or Waivers of Certain Related Agreements
and the Anagram Acquisition Agreement; Amendments of
Documents Relating to Subordinated Indebtedness............135
7.14 Fiscal Year................................................136
SECTION 8.
EVENTS OF DEFAULT............................136
8.1 Failure to Make Payments When Due..........................136
8.2 Default in Other Agreements................................136
8.3 Breach of Certain Covenants................................137
8.4 Breach of Warranty.........................................137
8.5 Other Defaults Under Revolving Loan Documents..............137
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc.......137
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc.........138
8.8 Judgments and Attachments..................................138
8.9 Dissolution................................................138
8.10 Employee Benefit Plans.....................................138
8.11 Change in Control..........................................139
(iii)
<PAGE>
Page
8.12 Invalidity of Subsidiary Guaranty; Failure of Security;
Repudiation of Obligations.................................139
8.13 Failure to Consummate Anagram Acquisition..................139
8.14 Amendment of Certain Documents of Company..................139
SECTION 9.
AGENTS..................................141
9.1 Appointment................................................141
9.2 Powers and Duties; General Immunity........................142
9.3 Representations and Warranties; No Responsibility For
Appraisal of Creditworthiness..............................144
9.4 Right to Indemnity.........................................144
9.5 Successor Agent............................................144
9.6 Collateral Documents and Guaranties........................145
SECTION 10.
MISCELLANEOUS..............................146
10.1 Assignments and Participations in Loans and Letters
of Credit..................................................146
10.2 Expenses...................................................149
10.3 Indemnity..................................................150
10.4 Set-Off; Security Interest in Deposit Accounts.............151
10.5 Ratable Sharing............................................152
10.6 Amendments and Waivers.....................................152
10.7 Independence of Covenants..................................153
10.8 Notices....................................................154
10.9 Survival of Representations, Warranties and Agreements.....154
10.10 Failure or Indulgence Not Waiver; Remedies Cumulative......154
10.11 Marshalling; Payments Set Aside............................155
10.12 Severability...............................................155
10.13 Obligations Several; Independent Nature of Lenders'
Rights.....................................................155
10.14 Headings...................................................155
10.15 Applicable Law.............................................156
10.16 Successors and Assigns.....................................156
10.17 Consent to Jurisdiction and Service of Process.............156
10.18 Waiver of Jury Trial.......................................157
10.19 Confidentiality............................................157
10.20 Counterparts; Effectiveness................................158
Signature pages S-1
(iv)
<PAGE>
EXHIBITS
I FORM OF NOTICE OF BORROWING
II FORM OF NOTICE OF CONVERSION/CONTINUATION
III FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT
IV [INTENTIONALLY OMITTED]
V FORM OF REVOLVING NOTE
VI FORM OF COMPLIANCE CERTIFICATE
VII-A FORM OF OPINION OF WACHTELL, LIPTON, ROSEN & KATZ
VII-B FORM OF OPINION OF KURZMAN & EISENBERG
VIII FORM OF OPINION OF O'MELVENY & MYERS
IX FORM OF ASSIGNMENT AGREEMENT
X FORM OF CERTIFICATE RE NON-BANK STATUS
XI FORM OF FINANCIAL CONDITION CERTIFICATE
XII FORM OF COMPANY PLEDGE AGREEMENT
XIII FORM OF COMPANY SECURITY AGREEMENT
XIV FORM OF SUBSIDIARY GUARANTY
XV FORM OF SUBSIDIARY PLEDGE AGREEMENT
XVI FORM OF SUBSIDIARY SECURITY AGREEMENT
XVII FORM OF MORTGAGE
XVIII FORM OF COLLATERAL ACCESS AGREEMENT
XIX FORM OF BORROWING BASE CERTIFICATE
XX FORM OF SUBSIDIARY PATENT AND TRADEMARK SECURITY AGREEMENT
(v)
<PAGE>
SCHEDULES
2.1 LENDERS' COMMITMENTS AND PRO RATA SHARES
4.1C CORPORATE AND CAPITAL STRUCTURE; OWNERSHIP;
MANAGEMENT
4.1E-I INDEBTEDNESS TO BE REPAID UNDER AMSCAN CREDIT AGREEMENTS
4.1E-II INDEBTEDNESS TO BE REPAID UNDER ANAGRAM CREDIT AGREEMENTS
5.1 SUBSIDIARIES OF COMPANY
5.5 REAL PROPERTY
5.6 LITIGATION
5.8 MATERIAL CONTRACTS
5.13 ENVIRONMENTAL MATTERS
6.11 CASH MANAGEMENT SYSTEM
7.1 CERTAIN EXISTING INDEBTEDNESS
7.2 CERTAIN EXISTING LIENS
7.3 CERTAIN EXISTING INVESTMENTS
7.4 CERTAIN EXISTING CONTINGENT OBLIGATIONS
7.10 CERTAIN TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES
(vi)
<PAGE>
AMSCAN HOLDINGS, INC.
AMENDED AND RESTATED REVOLVING LOAN CREDIT AGREEMENT
This AMENDED AND RESTATED REVOLVING LOAN CREDIT AGREEMENT is dated as
of September 17, 1998 and entered into by and among AMSCAN HOLDINGS, INC., a
Delaware corporation ("COMPANY"), GOLDMAN SACHS CREDIT PARTNERS L.P., ("GSCP")
as arranger (in such capacity, "ARRANGER"), and as syndication agent (in such
capacity, "SYNDICATION AGENT"), THE FINANCIAL INSTITUTIONS LISTED ON THE
SIGNATURE PAGES HEREOF (each, including GSCP and Fleet (as hereinafter defined),
individually referred to herein as a "LENDER" and collectively as "LENDERS"),
and FLEET NATIONAL BANK ("FLEET"), as administrative agent for Lenders (in such
capacity, "ADMINISTRATIVE AGENT").
R E C I T A L S
- - - - - - - -
WHEREAS, Company, Arranger, Syndication Agent, Administrative Agent and
certain financial institutions ("EXISTING LENDERS") are parties to that certain
Revolving Loan Credit Agreement dated as of December 19, 1997 (as heretofore
amended, supplemented or otherwise modified, the "EXISTING REVOLVING LOAN CREDIT
AGREEMENT") pursuant to which Existing Lenders have extended certain credit
facilities to Company, a portion of the proceeds of which were applied on the
Closing Date (this and other capitalized terms used in these recitals without
definition being used as defined in subsection 1.1) to fund a portion of the
Recapitalization Financing Requirements;
WHEREAS, Company is party to a separate AXEL Credit Agreement dated as
of December 19, 1997 (as heretofore amended, supplemented, refinanced, renewed,
extended, or otherwise modified from time to time, the "AXEL CREDIT AGREEMENT")
with Fleet National Bank, as administrative agent ("AXEL FACILITY AGENT"),
Goldman Sachs Credit Partners L.P., as arranger and syndication agent, and the
financial institutions party thereto as lenders ("AXEL LENDERS") pursuant to
which AXEL Lenders extended certain credit facilities to Company on the Closing
Date to fund a portion of the Recapitalization Financing Requirements.
WHEREAS, on the Closing Date, Administrative Agent and AXEL Facility
Agent entered into the Intercreditor Agreement pursuant to which Administrative
Agent and AXEL Facility Agent appointed Fleet to serve as collateral agent and
representative (in such capacity, "COLLATERAL AGENT") for Existing Lenders, AXEL
Lenders, Administrative Agent, AXEL Facility Agent and the other agents under
the Existing Revolving Loan Credit Agreement and the AXEL Credit Agreement
(collectively, the "SECURED PARTIES") and
<PAGE>
agreed to the terms on which the Collateral, the benefits of guarantees and the
proceeds thereof are to be shared between the credit facilities;
WHEREAS, Company has secured all of the Obligations under the Existing
Revolving Loan Credit Agreement and under the other Loan Documents by granting
to Collateral Agent, on behalf of Secured Parties, a first priority Lien on
substantially all of its real, personal and mixed property, including a pledge
of all of the capital stock of each of its Domestic Subsidiaries and 66% of the
capital stock of each of its Foreign Subsidiaries;
WHEREAS, all of the Domestic Subsidiaries of Company have guarantied
the Obligations under the Existing Revolving Loan Credit Agreement and under the
other Loan Documents and secured their guaranties by granting to Collateral
Agent, on behalf of Secured Parties, a first priority Lien on substantially all
of their respective personal and mixed property, including a pledge of all of
the capital stock of each of their respective Domestic Subsidiaries and 66% of
the capital stock of each of their respective Foreign Subsidiaries;
WHEREAS, on the Restatement Effective Date, Company intends to acquire
(the "ANAGRAM ACQUISITION") all of the outstanding Capital Stock (the "ANAGRAM
SHARES") of Anagram International, Inc. and certain related companies
(collectively, "ANAGRAM") from Garry Kieves, certain members of his family and
certain trusts (collectively, the "ANAGRAM SELLERS") pursuant to the Anagram
Acquisition Agreement in exchange for aggregate consideration consisting of
$74,500,000 in cash plus 120 shares of newly-issued Company Common Stock (the
"NEW COMPANY SHARES") plus warrants to purchase 10 shares of Company Common
Stock.
WHEREAS, Company desires that Existing Lenders amend and restate the
Existing Revolving Loan Credit Agreement in its entirety to permit Company to
consummate the Anagram Acquisition and to borrow Additional AXELs under the AXEL
Credit Agreement in an aggregate principal amount of $40,000,000 to be added to
the Existing AXELs, the proceeds of which will be used, together with (i) cash
on hand at the Company and (ii) proceeds of incremental borrowings under this
Agreement in an amount up to $23,500,000 plus the excess, if any, of $15,000,000
over the amount of cash on hand at the Company on the Restatement Effective Date
(1) to fund the cash portion of the consideration for the Anagram Acquisition,
(2) to refinance certain existing indebtedness of Anagram and its Subsidiaries,
and (iii) to pay Anagram Transaction Costs;
WHEREAS, concurrently with the amendment and restatement of the
Existing Revolving Loan Credit Agreement, Company and AXEL Lenders will amend
and restate the AXEL Credit Agreement in its entirety in order to permit the
Additional AXELs and the Anagram Acquisition and to make certain other changes
in connection therewith.
WHEREAS, it is the intent of the parties hereto that this Agreement not
constitute a novation of the obligations and liabilities of the parties under
the Existing Revolving Loan
<PAGE>
Credit Agreement or be deemed to evidence or constitute repayment of all or any
portion of such obligations and liabilities and that this Agreement amend and
restate in its entirety the Existing Revolving Loan Credit Agreement and
re-evidence the Obligations of Company outstanding thereunder; and
WHEREAS, it is the intent of Loan Parties to confirm that all
Obligations of Loan Parties under the other Loan Documents shall continue in
full force and effect and that from and after the Restatement Effective Date all
references to the "REVOLVING CREDIT AGREEMENT" contained therein shall be deemed
to refer to this Agreement.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Company, Lenders and Agents agree
that on the Restatement Effective Date the Existing Revolving Loan Credit
Agreement shall be amended and restated in its entirety as follows:
SECTION 1.
DEFINITIONS
1.1 CERTAIN DEFINED TERMS.
The following terms used in this Agreement shall have the following
meanings:
"ACCOUNT" means, with respect to any Person, all present and
future rights of such Person to payment for goods sold or leased or for
services rendered (except those evidenced by instruments or chattel
paper), whether now existing or hereafter arising and wherever arising,
and whether or not they have been earned by performance.
"ADDITIONAL AXEL[Trademark]" or "ADDITIONAL AXELS[Trademark]"
means a loan made by an AXEL Lender to Company as an amortization
extended loan pursuant to subsection 2.1A(ii) of the AXEL Credit
Agreement. The term AXEL is a registered trademark of Goldman, Sachs &
Co.
"ADDITIONAL AXEL COMMITMENT" means a commitment of an AXEL
Lender to make an Additional AXEL under the AXEL Credit Agreement, and
"ADDITIONAL AXEL COMMITMENTS" means such commitments of all AXEL
Lenders in the aggregate.
"ADDITIONAL AXEL NOTES" means the promissory notes of Company
issued pursuant to subsection 2.1E of the AXEL Credit Agreement on the
Restatement Effective Date, substantially in the form of Exhibit III
annexed thereto, as they may be amended, supplemented or otherwise
modified from time to time.
3
<PAGE>
"ADJUSTED EURODOLLAR RATE" means, for any Interest Rate
Determination Date with respect to an Interest Period for a Eurodollar
Rate Loan, the interest rate per annum (rounded upward, if necessary,
to the nearest 1/32 of one percent) as determined on the basis of the
offered rates for deposits in U.S. dollars, for a period of time
comparable to such Interest Period which appears on the Telerate Page
3750 as of 11:00 a.m. (New York time) two Business Days before the
first day of such Interest Period; provided, however, that if the rate
described above does not appear on the Telerate System on any
applicable interest determination date, the Adjusted Eurodollar Rates
shall be the rate (rounded upward as described above, if necessary) for
deposits in U.S. dollars for a period substantially equal to the
interest period on the Reuters Page "LIBO" (or such other page as may
replace the LIBO page on that service for the purpose of displaying
such rates), as of 11:00 a.m. (London time) two Business Days before
the first day of such Interest Period.
If both the Telerate and Reuters system are unavailable, then
the rate for that date will be determined on the basis of the offered
rates for deposits in U.S. dollars for a period of time comparable to
such Interest Period which are offered by four major banks in the
London interbank market at approximately 11:00 a.m. (New York time) two
Business Days before the first day of such Interest Period as selected
by the Administrative Agent. The principal London office of each of the
four major London banks will be requested to provide a quotation of its
U.S. dollar deposit offered rate. If at least two such quotations are
provided, the rate for that date will be the arithmetic mean of the
quotations. If fewer than two quotations are provided as requested, the
rate for that date will be determined on the basis of the rates quoted
for loans in U.S. dollars to leading European banks for a period of
time comparable to such Interest Period offered by major banks in New
York City at approximately 11:00 a.m. (New York time) two Business Days
before the first day of such Interest Period. In the event that the
Administrative Agent is unable to obtain any such quotation as provided
above, it will be deemed that the Adjusted Eurodollar Rate for such
Interest Rate cannot be determined.
In the event that the Board of Governors of the Federal
Reserve System shall impose a Eurodollar Rate Reserve Percentage with
respect to Eurocurrency Liabilities, the Adjusted Eurodollar Rate for
an Interest Period shall be equal to the amount determined above for
such Interest Period divided by a percentage equal to 100% minus the
Eurodollar Rate Reserve Percentage for such Interest Period.
"ADMINISTRATIVE AGENT" has the meaning assigned to that term
in the introduction to this Agreement and also means and includes any
successor Administrative Agent appointed pursuant to subsection 9.5A.
"AFFECTED LENDER" has the meaning assigned to that term in
subsection 2.6C.
4
<PAGE>
"AFFILIATE", as applied to any Person, means any other Person
directly or indirectly controlling, controlled by, or under common
control with, that Person. For the purposes of this definition,
"control" (including, with correlative meanings, the terms
"controlling", "controlled by" and "under common control with"), as
applied to any Person, means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting
securities or by contract or otherwise.
"AGENT" means, individually, each of Arranger, Syndication
Agent, Collateral Agent and Administrative Agent and "AGENTS" means
Arranger, Syndication Agent, Collateral Agent and Administrative Agent,
collectively.
"AGREEMENT" means this Amended and Restated Revolving Loan
Credit Agreement dated as of September 17, 1998, as it may be amended,
supplemented or otherwise modified from time to time.
"ANAGRAM" has the meaning assigned to such term in the
recitals to this Agreement.
"ANAGRAM ACQUISITION" has the meaning assigned to such term in
the recitals to this Agreement.
"ANAGRAM ACQUISITION AGREEMENT" means the Stock Purchase
Agreement dated as of August 6, 1998 by and among Company and the
Anagram Sellers and all exhibits and schedules thereto.
"ANAGRAM HEADQUARTERS FACILITY" means, as of the Restatement
Effective Date, the real property in Minnesota owned in fee simple by
Eden Prairie Holdings where Anagram's headquarters and manufacturing
site are located.
"ANAGRAM INTERNATIONAL" means Anagram International, Inc., a
Minnesota corporation.
"ANAGRAM SELLERS" has the meaning assigned to such term in the
recitals to this Agreement.
"ANAGRAM SHARES" has the meaning assigned to such term in the
recitals to this Agreement.
"ANAGRAM TRANSACTION COSTS" means the fees, costs and expenses
payable by Company in connection with the transactions contemplated by
the Anagram Acquisition Agreement, including without limitation any
fees payable to Agents and Lenders on or before the Restatement
Effective Date in connection therewith.
5
<PAGE>
"APPLICABLE LEVERAGE RATIO" means, with respect to any date of
determination, the Consolidated Leverage Ratio set forth in the most
recent Compliance Certificate delivered pursuant to subsection 6.1(iv)
hereof, provided that (i) the Applicable Leverage Ratio for the period
from the Closing Date to but excluding the fifth Business Day following
delivery of the first Compliance Certificate pursuant to subsection
6.1(iv) hereof, shall be deemed to be no less than 5.25:1, (ii) no
change in the Applicable Leverage Ratio shall be effective until five
Business Days after the date on which Administrative Agent receives a
Compliance Certificate pursuant to subsection 6.1(iv) calculating the
Consolidated Leverage Ratio and (iii) in the event the Company fails to
deliver to the Administrative Agent a Compliance Certificate
calculating the Consolidated Leverage Ratio in accordance with
subsection 6.1(iv) when required thereunder, then the Applicable
Leverage Ratio shall be deemed to be not less than 5.25:1 from the date
such Compliance Certificate was due until the date the Company shall
deliver such Compliance Certificate.
"APPLICABLE REVOLVING BASE RATE MARGIN" means, as at any date
of determination, a rate per annum equal to the percentage set forth
below opposite the Applicable Leverage Ratio in effect as of such date
of determination with any change in the Applicable Revolving Base Rate
Margin to be effective on the date of any corresponding change in the
Applicable Leverage Ratio.
<TABLE>
<CAPTION>
================================================== ==============================================================
APPLICABLE LEVERAGE RATIO APPLICABLE REVOLVING BASE RATE MARGIN
-------------------------------------------------- --------------------------------------------------------------
<S> <C>
5.25:1.00 or greater 1.25%
-------------------------------------------------- --------------------------------------------------------------
4.75:1.00 or greater, but less than 5.25:1.00 1.00%
-------------------------------------------------- --------------------------------------------------------------
4.25:1.00 or greater, but less than 4.75:1.00 0.75%
-------------------------------------------------- --------------------------------------------------------------
3.75:1.00 or greater, but less than 4.25:1.00 0.50%
-------------------------------------------------- --------------------------------------------------------------
3.25:1.00 or greater, but less than 3.75:1.00 0.25%
-------------------------------------------------- --------------------------------------------------------------
less than 3.25:1.00 0.00%
================================================== ==============================================================
</TABLE>
"APPLICABLE REVOLVING COMMITMENT FEE PERCENTAGE" means, as at
any date of determination, a rate per annum equal to the percentage set
forth below opposite the Applicable Leverage Ratio in effect as of such
date of determination, any change
6
<PAGE>
in the Applicable Revolving Commitment Fee Percentage to be effective
on the date of any corresponding change in the Applicable Leverage
Ratio:
<TABLE>
<CAPTION>
================================================== ==============================================================
APPLICABLE LEVERAGE RATIO APPLICABLE REVOLVING COMMITMENT FEE PERCENTAGE
-------------------------------------------------- --------------------------------------------------------------
<S> <C>
4.75:1.00 or greater 0.50%
-------------------------------------------------- --------------------------------------------------------------
3.75:1.00 or greater, but less than 4.75: 1.00 0.375%
-------------------------------------------------- --------------------------------------------------------------
less than 3.75:1.00 0.25%
================================================== ==============================================================
</TABLE>
"APPLICABLE REVOLVING EURODOLLAR RATE MARGIN" means, as at any
date of determination, with respect to any Eurodollar Rate Loans a rate
per annum equal to the percentage set forth below opposite the
Applicable Leverage Ratio in effect as of the first day of the Interest
Period for such Eurodollar Rate Loans:
<TABLE>
<CAPTION>
================================================== ==============================================================
APPLICABLE LEVERAGE RATIO APPLICABLE REVOLVING EURODOLLAR RATE MARGIN
-------------------------------------------------- --------------------------------------------------------------
<S> <C>
5.25:1.00 or greater 2.25%
-------------------------------------------------- --------------------------------------------------------------
4.75:1.00 or greater, but less than 5.25: 1.00 2.00%
-------------------------------------------------- --------------------------------------------------------------
4.25:1.00 or greater, but less than 4.75:1.00 1.750%
-------------------------------------------------- --------------------------------------------------------------
3.75:1.00 or greater, but less than 4.25:1.00 1.50%
-------------------------------------------------- --------------------------------------------------------------
3.25:1.00 or greater, but less than 3.75:1.00 1.25%
-------------------------------------------------- --------------------------------------------------------------
2.75:1.00 or greater, but less than 3.25:1.00 0.875%
-------------------------------------------------- --------------------------------------------------------------
less than 2.75:1.00 0.625%
================================================== ==============================================================
</TABLE>
"ARRANGER" has the meaning assigned to that term in the
introduction to this Agreement.
"ASSET SALE" means the sale by Company or any of its
Subsidiaries to any Person other than Company or any of its
wholly-owned Subsidiaries of (i) any of the stock of any of Company's
Subsidiaries, (ii) substantially all of the assets of any division or
line of business of Company or any of its Subsidiaries, or (iii) any
other
7
<PAGE>
assets (whether tangible or intangible) of Company or any of its
Subsidiaries (other than (a) inventory sold in the ordinary course of
business (b) sales of Cash Equivalents for the fair market value
thereof, and (c) any such other assets to the extent that the aggregate
value of such assets sold in any single transaction or related series
of transactions is equal to $500,000 or less).
"ASSIGNMENT AGREEMENT" means (i) with respect to the period
ending on the Restatement Effective Date, an Assignment Agreement in
substantially the form of Exhibit VII annexed to the Existing Revolving
Loan Credit Agreement, and (ii) thereafter, an Assignment Agreement in
substantially the form of Exhibit IX annexed hereto.
"AUXILIARY PLEDGE AGREEMENT" means each pledge agreement or
similar instrument governed by the laws of a country other than the
United States, executed on the Closing Date pursuant to subsection
4.1I(v) of the Existing Revolving Loan Credit Agreement or on the
Restatement Effective Date pursuant to subsection 4.1H(v) or from time
to time thereafter in accordance with subsection 6.8 by Company or any
Domestic Subsidiary that owns capital stock of one or more Foreign
Subsidiaries organized in such country, in form and substance
satisfactory to Collateral Agent, as such Auxiliary Pledge Agreement
may hereafter be amended, supplemented or otherwise modified from time
to time, and "AUXILIARY PLEDGE AGREEMENTS" means all such pledge
agreements or instruments, collectively.
"AXEL" or "AXELS" means the Existing AXELs and the Additional
AXELs, collectively.
"AXEL CREDIT AGREEMENT" has the meaning assigned to that term
in the recitals to this Agreement.
"AXEL FACILITY AGENT" has the meaning assigned to that term in
the recitals to this Agreement.
"AXEL LENDER" means a lender under the AXEL Credit Agreement
holding an outstanding AXEL or having an Additional AXEL Commitment,
and "AXEL LENDERS" means any such lender or lenders under the AXEL
Credit Agreement, collectively.
"AXEL LOAN DOCUMENTS" means the AXEL Credit Agreement, the
AXEL Notes, the Subsidiary Guaranty, the Collateral Documents and the
Intercreditor Agreement.
"AXEL NOTES" means (i) the Existing AXEL Notes, (ii) the
Additional AXEL Notes, and (iii) any promissory notes of Company issued
pursuant to the last sentence of subsection 9.1B(i) of the AXEL Credit
Agreement in connection with
8
<PAGE>
assignments of the AXELs of any AXEL Lender, in each case substantially
in the form of Exhibit III annexed to the AXEL Credit Agreement, as
they may be amended, supplemented or otherwise modified from time to
time.
"BANKRUPTCY CODE" means Title 11 of the United States Code
entitled "Bankruptcy", as now and hereafter in effect, or any successor
statute.
"BASE RATE" means, at any time, the higher of (x) the Prime
Rate or (y) the rate which is 1/2 of 1% in excess of the Federal Funds
Effective Rate.
"BASE RATE LOANS" means Revolving Loans bearing interest at
rates determined by reference to the Base Rate as provided in
subsection 2.2A.
"BORROWING BASE" means, as at any date of determination, an
aggregate amount (determined with reference to the most recent
Borrowing Base Certificate delivered pursuant to subsection 6.1(xviii))
equal to:
(i) eighty-five percent (85%) of Eligible Accounts Receivable
of Company and Subsidiary Guarantors plus
(ii) fifty-five percent (55%) of Eligible Inventory of Company
and Subsidiary Guarantors minus
(iii) the aggregate amount of any reserves established by
Administrative Agent, in the exercise of its commercially
reasonable judgment, against Eligible Accounts Receivable and
Eligible Inventory of Company and Subsidiary Guarantors;
provided that Administrative Agent, in the exercise of its commercially
reasonable judgment, may (a) increase or decrease reserves against
Eligible Accounts Receivable and Eligible Inventory of any Loan Party
and (b) reduce the advance rates provided in this definition, or (c)
restore such advance rates to any level equal to or below the advance
rates in effect as of the Closing Date and provided further that if any
Inventory is held on or in any leased property, leased trailer or
warehouse and the applicable lessor or warehouseman has not entered
into a Collateral Access Agreement in favor of Administrative Agent,
Administrative Agent may take a reserve against the value of such
Inventory equal to the lesser of (a) the value of such Inventory
included in the Borrowing Base and (b) two months lease payments or
warehouse storage payments payable to the applicable lessor or
warehouseman.
"BORROWING BASE CERTIFICATE" means a completed certificate
substantially in the form of Exhibit XIX annexed hereto.
9
<PAGE>
"BUSINESS DAY" means any day excluding Saturday, Sunday and
any day which is a legal holiday under the laws of the State of New
York or is a day on which banking institutions located in such state
are authorized or required by law or other governmental action to
close.
"CAPITAL LEASE", as applied to any Person, means any lease of
any property (whether real, personal or mixed) by that Person as lessee
that, in conformity with GAAP, is accounted for as a capital lease on
the balance sheet of that Person.
"CASH" means money, currency or a credit balance in a Deposit
Account.
"CASH EQUIVALENTS" means, as at any date of determination, (i)
marketable securities (a) issued or directly and unconditionally
guaranteed as to interest and principal by the United States Government
or (b) issued by any agency of the United States the obligations of
which are backed by the full faith and credit of the United States, in
each case maturing within one year after such date; (ii) marketable
direct obligations issued by any state of the United States of America
or any political subdivision of any such state or any public
instrumentality thereof, in each case maturing within one year after
such date and having, at the time of the acquisition thereof, the
highest rating obtainable from either Standard & Poor's Ratings Group
("S&P") or Moody's Investors Service, Inc. ("MOODY'S"); (iii)
commercial paper maturing no more than one year from the date of
creation thereof and having, at the time of the acquisition thereof, a
rating of at least A-1 from S&P or at least P-1 from Moody's; (iv)
certificates of deposit or bankers' acceptances maturing within one
year after such date and issued or accepted by any Lender or by any
commercial bank organized under the laws of the United States of
America or any state thereof or the District of Columbia that (a) is at
least "adequately capitalized" (as defined in the regulations of its
primary Federal banking regulator) and (b) has Tier 1 capital (as
defined in such regulations) of not less than $100,000,000 (each Lender
and each commercial bank being referred to herein as a "CASH EQUIVALENT
BANK"); (v) shares of any money market mutual fund that (a) has at
least 95% of its assets invested continuously in the types of
investments referred to in clauses (i) and (ii) above, (b) has net
assets of not less than $500,000,000, and (c) has the highest rating
obtainable from either S&P or Moody's; and (vi) with respect to Foreign
Subsidiaries, investments of the types described in clause (iv) above
issued by a Cash Equivalent Bank or any commercial bank of recognized
international standing chartered in the country where such Foreign
Subsidiary is domiciled having unimpaired capital and surplus of at
least $500,000,000.
"CERTIFICATE OF MERGER" means the Certificate of Merger dated
as of December 19, 1997 for the Merger of Newco with and into Company,
as in effect on the Closing Date.
10
<PAGE>
"CERTIFICATE RE NON-BANK STATUS" means a certificate
substantially in the form of Exhibit X annexed hereto delivered by a
Lender to Administrative Agent pursuant to subsection 2.7B(iii).
"CLOSING DATE" means December 19, 1997, the date on which the
initial Revolving Loans were made under the Existing Revolving Loan
Credit Agreement.
"COLLATERAL" means, collectively, all of the real, personal
and mixed property (including capital stock) in which Liens are
purported to be granted pursuant to the Collateral Documents as
security for the Obligations.
"COLLATERAL ACCESS AGREEMENT" means any landlord waiver,
mortgagee waiver, bailee letter or any similar acknowledgement or
agreement of any landlord in respect of any Leased Property or
mortgagee in respect of any real property in which Company or any of
its Subsidiaries owns or holds a fee interest and which is subject to a
mortgage, held by such mortgagee, in either case where any Collateral
is located or any warehouseman or processor in possession of any
Inventory of any Loan Party, substantially in the form of Exhibit XVIII
annexed hereto with such changes thereto as may be agreed to by
Collateral Agent in the reasonable exercise of its discretion.
"COLLATERAL ACCOUNTS" has the meaning assigned to that term in
the Intercreditor Agreement.
"COLLATERAL AGENT" has the meaning assigned to that term in
the introduction to this Agreement.
"COLLATERAL DOCUMENTS" means the Company Pledge Agreement, the
Company Security Agreement, the Subsidiary Pledge Agreements, the
Subsidiary Security Agreements, the Subsidiary Patent and Trademark
Security Agreements, the Mortgages, the Auxiliary Pledge Agreements and
all other instruments or documents delivered by any Loan Party pursuant
to this Agreement or any of the other Loan Documents in order to grant
to Collateral Agent, on behalf of Secured Parties, a Lien on any real,
personal or mixed property of that Loan Party as security for the
Obligations.
"COMMERCIAL LETTER OF CREDIT" means any letter of credit or
similar instrument issued for the purpose of providing the primary
payment mechanism in connection with the purchase of any materials,
goods or services by Company or any of its Subsidiaries in the ordinary
course of business of Company or such Subsidiary.
"COMPANY" means Company as the surviving corporation in the
Merger.
"COMPANY COMMON STOCK" means the shares of common stock of
Company par value $0.10 per share.
11
<PAGE>
"COMPANY PLEDGE AGREEMENT" means the Company Pledge Agreement
executed and delivered by Company on the Closing Date, substantially in
the form of Exhibit XII annexed hereto, as such Company Pledge
Agreement may hereafter be amended, supplemented or otherwise modified
from time to time.
"COMPANY SECURITY AGREEMENT" means the Company Security
Agreement executed and delivered by Company on the Closing Date,
substantially in the form of Exhibit XIII annexed hereto, as such
Company Security Agreement may hereafter be amended, supplemented or
otherwise modified from time to time.
"COMPLIANCE CERTIFICATE" means a certificate substantially in
the form of Exhibit VI annexed hereto delivered to Administrative Agent
and Lenders by Company pursuant to subsection 6.1(iv).
"CONFIDENTIAL INFORMATION MEMORANDUM" means that certain
Confidential Information Memorandum prepared by GSCP relating to the
AXELs and Existing Revolving Loans dated November 1997.
"CONFORMING LEASEHOLD INTEREST" means any Recorded Leasehold
Interest as to which the lessor has agreed in writing for the benefit
of Administrative Agent (which writing has been delivered to Collateral
Agent), whether under the terms of the applicable lease, under the
terms of a Landlord Consent and Estoppel, or otherwise, to the matters
described in the definition of "Landlord Consent and Estoppel," which
interest, if a subleasehold or sub-subleasehold interest, is not
subject to any contrary restrictions contained in a superior lease or
sublease.
"CONSOLIDATED ADJUSTED EBITDA" means, for any period, the sum
of the amounts for such period of (i) Consolidated Net Income, (ii)
Consolidated Interest Expense, (iii) provisions for taxes based on
income, (iv) total depreciation expense, (v) total amortization
expense, (vi) to the extent otherwise deducted in determining
Consolidated Net Income, (a) non-recurring expenses and fees relating
to Company's initial public offering in December 1996 in an amount not
to exceed $16,000,000 and (b) certain special bonuses paid by Company
in 1996, in an aggregate amount not to exceed $4,200,000 pursuant to
certain profit-sharing arrangements that were terminated by Company in
connection with such initial public offering, (vii) to the extent
otherwise deducted in determining Consolidated Net Income,
non-recurring expenses and charges relating to the transactions
contemplated by the Related Agreements, the Loan Documents and the
Anagram Acquisition Agreement including any special bonuses payable in
connection therewith and (viii) other non-cash items reducing
Consolidated Net Income including provisions for minority interests but
only to the extent such items have been deducted from operating income
for such period in determining Consolidated Net Income less other
non-cash items increasing Consolidated Net Income, all of the foregoing
as determined on a consolidated basis for Company and its Subsidiaries
in conformity with GAAP.
12
<PAGE>
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, the
sum, without duplication, of (i) the aggregate of all expenditures
(whether paid in cash or other consideration or accrued as a liability)
by Company and its Subsidiaries during that period that, in conformity
with GAAP, are included in "additions to property, plant or equipment"
or comparable items reflected in the consolidated statement of cash
flows of Company and its Subsidiaries, but excluding any such
expenditures relating to future acquisitions and (ii) the aggregate
amount of all additions to assets on the consolidated balance sheet of
Company and its Subsidiaries during that period in conformity with GAAP
in connection with Capital Leases consummated by Company and its
Subsidiaries. Notwithstanding the foregoing, Consolidated Capital
Expenditures shall not include any amounts reinvested from Net Asset
Sale Proceeds, Net Insurance/Condemnation Proceeds or any amounts spent
on Permitted Business Acquisitions or the Anagram Acquisition.
"CONSOLIDATED CASH INTEREST EXPENSE" means, for any period,
amounts included in Consolidated Interest Expense for such period paid
or payable in Cash (excluding amortization of original issue discount
and amortization of debt issuance costs).
"CONSOLIDATED CURRENT ASSETS" means, as at any date of
determination, the total assets of Company and its Subsidiaries on a
consolidated basis which may properly be classified as current assets
in conformity with GAAP, excluding any Cash and Cash Equivalents.
"CONSOLIDATED CURRENT LIABILITIES" means, as at any date of
determination, the total liabilities of Company and its Subsidiaries on
a consolidated basis which may properly be classified as current
liabilities in conformity with GAAP excluding all Revolving Loans and
the current portion of any long-term Indebtedness.
"CONSOLIDATED EXCESS CASH FLOW" means, for any period, an
amount (if positive) equal to (i) the sum, without duplication, of the
amounts for such period of (a) Consolidated Adjusted EBITDA and (b) the
Consolidated Working Capital Adjustment minus (ii) the sum, without
duplication, of the amounts for such period of (a) voluntary and
scheduled repayments of Consolidated Total Debt (excluding repayments
of Revolving Loans except to the extent the Revolving Loan Commitments
are permanently reduced in connection with such repayments), (b) the
sum of Consolidated Capital Expenditures and any expenditures during
such period relating to acquisitions to the extent excluded from
Consolidated Capital Expenditures (in each case net of any proceeds of
any related financings with respect to such expenditures), (c)
Consolidated Cash Interest Expense, (d) the provision for current taxes
based on income of Company and its Subsidiaries and payable in cash
with respect to such period and (e) any non-recurring restructuring
charges and charges related to cost savings paid in cash during such
period.
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"CONSOLIDATED FIXED CHARGES" means, for any period, the sum
(without duplication) of the amounts for such period of (i)
Consolidated Cash Interest Expense, (ii) provisions for taxes based on
income, (iii) scheduled repayments of principal on the Loans and other
Indebtedness, and (iv) Consolidated Capital Expenditures to the extent
paid for in cash, all of the foregoing as determined on a consolidated
basis for Company and its Subsidiaries in conformity with GAAP.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, total
interest expense (without reduction for interest income) (including
that portion attributable to Capital Leases in accordance with GAAP and
capitalized interest) of Company and its Subsidiaries on a consolidated
basis with respect to all outstanding Indebtedness of Company and its
Subsidiaries, including (i) all commissions, discounts and other fees
and charges owed with respect to letters of credit and bankers'
acceptance financing and net costs under Interest Rate Agreements, in
each case, attributable to such period and (ii) commitment fees on the
unused portion of the Revolving Loan Commitment as set forth in
subsection 2.3A, but excluding, however, (a) any amounts referred to in
subsection 2.3B of the Existing Revolving Loan Credit Agreement that
were payable to Agents and Existing Lenders on or before the Closing
Date and any amounts referred to in subsection 2.3 of the AXEL Credit
Agreement as in effect on the Closing Date that were payable to the
AXEL Facility Agent, any other agents under the AXEL Credit Agreement
and the AXEL Lenders on or before the Closing Date, and (b) any amounts
referred to in subsection 2.3B payable to Agents and Lenders on or
before the Restatement Effective Date and any amounts referred to in
subsection 2.3 of the AXEL Credit Agreement payable to the AXEL
Facility Agent, any other agents under the AXEL Credit Agreement and
the AXEL Lenders on or before the Restatement Effective Date.
"CONSOLIDATED LEVERAGE RATIO" means, as at any date of
determination, the ratio of (i) Consolidated Total Debt as of such date
of determination to (ii) Consolidated Adjusted EBITDA for the
four-Fiscal Quarter period ending (a) on such date of determination or
(b) if such date of determination is not the last day of a Fiscal
Quarter, on the last day of the Fiscal Quarter immediately preceding
such date of determination.
"CONSOLIDATED NET INCOME" means, for any period, the net
income (or loss) of Company and its Subsidiaries on a consolidated
basis for such period taken as a single accounting period determined in
conformity with GAAP; provided that there shall be excluded (i) the
income (or loss) of any Person (other than a Subsidiary of Company) in
which any other Person (other than Company or any of its Subsidiaries)
has a joint interest, except to the extent of the amount of dividends
or other distributions actually paid to Company or any of its
Subsidiaries by such Person during such period, (ii) the income (or
loss) of any Person accrued prior to the date it becomes a Subsidiary
of Company or is merged into or consolidated with Company or any of its
Subsidiaries or that Person's assets are acquired by Company or any of
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its Subsidiaries, (iii) the income of any Subsidiary of Company to the
extent that the declaration or payment of dividends or similar
distributions by that Subsidiary of that income is not at the time
permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary, (iv) any after-tax gains or
losses attributable to Asset Sales or returned surplus assets of any
Pension Plan, and (v) (to the extent not included in clauses (i)
through (iv) above) any net extraordinary gains or net non-cash
extraordinary losses; and provided, further that, notwithstanding GAAP
and the provisions of clause (ii) above, Consolidated Net Income shall
include, for all purposes of this Agreement other than the calculation
of Consolidated Excess Cash Flow, the income (or loss) of Anagram and
its Subsidiaries or any Person that is acquired by Company or any of
its Subsidiaries in a Permitted Business Acquisition for any portion of
such period prior to the consummation of the Anagram Acquisition or the
applicable Permitted Business Acquisition, as the case may be.
"CONSOLIDATED SENIOR LEVERAGE RATIO" means, as at any date of
determination, the ratio of (i) Consolidated Total Senior Debt as of
such date of determination to (ii) Consolidated Adjusted EBITDA for the
four-Fiscal Quarter period ending (a) on such date of determination or
(b) if such date of determination is not the last day of a Fiscal
Quarter, on the last day of the Fiscal Quarter immediately preceding
such date of determination.
"CONSOLIDATED TOTAL DEBT" means, as at any date of
determination, the aggregate stated balance sheet amount of all
Indebtedness of Company and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP.
"CONSOLIDATED TOTAL SENIOR DEBT" means, as at any date of
determination, the aggregate stated balance sheet amount of all
Indebtedness of Company and its Subsidiaries (other than Subordinated
Debt), determined on a consolidated basis in accordance with GAAP.
"CONSOLIDATED WORKING CAPITAL" means, as at any date of
determination, Consolidated Current Assets minus Consolidated Current
Liabilities.
"CONSOLIDATED WORKING CAPITAL ADJUSTMENT" means, for any
period on a consolidated basis, the amount (which may be a negative
number) equal to Consolidated Working Capital as of the beginning of
such period minus Consolidated Working Capital as of the end of such
period.
"CONTINGENT OBLIGATION", as applied to any Person, means any
direct or indirect liability, contingent or otherwise, of that Person
(i) with respect to any Indebtedness, lease, dividend or other
obligation of another if the primary purpose or intent thereof by the
Person incurring the Contingent Obligation is to provide
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assurance to the obligee of such obligation of another that such
obligation of another will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders
of such obligation will be protected (in whole or in part) against loss
in respect thereof, (ii) with respect to any letter of credit issued
for the account of that Person or as to which that Person is otherwise
liable for reimbursement of drawings, or (iii) under Hedge Agreements.
Contingent Obligations shall include (a) the direct or indirect
guaranty, endorsement (otherwise than for collection or deposit in the
ordinary course of business), co-making, discounting with recourse or
sale with recourse by such Person of the obligation of another, (b) the
obligation to make take-or-pay or similar payments if required
regardless of non-performance by any other party or parties to an
agreement, and (c) any liability of such Person for the obligation of
another through any agreement (contingent or otherwise) (X) to
purchase, repurchase or otherwise acquire such obligation or any
security therefor, or to provide funds for the payment or discharge of
such obligation (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise) or (Y) to maintain the
solvency or any balance sheet item, level of income or financial
condition of another if, in the case of any agreement described under
subclauses (X) or (Y) of this sentence, the primary purpose or intent
thereof is as described in the preceding sentence. The amount of any
Contingent Obligation shall be equal to the amount of the obligation so
guaranteed or otherwise supported or, if less, the amount to which such
Contingent Obligation is specifically limited.
"CONTRACTUAL OBLIGATION", as applied to any Person, means any
provision of any Security issued by that Person or of any material
indenture, mortgage, deed of trust, contract, undertaking, agreement or
other instrument to which that Person is a party or by which it or any
of its properties is bound or to which it or any of its properties is
subject.
"CURRENCY AGREEMENT" means any foreign exchange contract,
currency swap agreement, futures contract, option contract, synthetic
cap or other similar agreement or arrangement to which Company or any
of its Subsidiaries is a party.
"DEFAULT EXCESS" has the meaning assigned to that term in
subsection 2.9.
"DEFAULT PERIOD" has the meaning assigned to that term in
subsection 2.9.
"DEFAULTED REVOLVING LOAN" has the meaning assigned to that
term in subsection 2.9.
"DEFAULTING LENDER" has the meaning assigned to that term in
subsection 2.9.
"DEPOSIT ACCOUNT" means a demand, time, savings, passbook or
like account with a bank, savings and loan association, credit union or
like organization, other than an account evidenced by a negotiable
certificate of deposit.
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"DOLLARS" and the sign "$" mean the lawful money of the United
States of America.
"DOMESTIC SUBSIDIARY" means a Subsidiary of Company that is
organized under the laws of a state of the United States or the
District of Columbia.
"EDEN PRAIRIE HOLDINGS" means Anagram Eden Prairie Property
Holdings LLC, a Delaware limited liability company.
"ELIGIBLE ACCOUNTS RECEIVABLE" means, with respect to Company
or any Subsidiary Guarantor, the aggregate amount of Accounts of such
Loan Party deemed by Administrative Agent, in the exercise of its
commercially reasonable judgment, to be eligible for inclusion in the
calculation of the Borrowing Base. In determining the amount to be so
included, the face amount of such Accounts shall be reduced by the
amount of all returns, discounts, deductions, claims, credits, charges,
or other allowances. Unless otherwise approved in writing by
Administrative Agent, an Account shall not be included in Eligible
Account Receivable if:
(i) it arises out of a sale made by such Loan Party to another
Loan Party; or
(ii) it is unpaid for (a) more than 60 days after its due date
or (b) either more than 120 days after the date of invoice if
such Account is not a Seasonal/Promotional Account or 180 days
after the date of the invoice if such Account is a
Seasonal/Promotional Account; or
(iii) it is from the same account debtor or its Affiliate and
fifty percent (50%) or more of all Accounts from that account
debtor (and its Affiliates) are ineligible under clause (ii)
above; or
(iv) when aggregated with all other Accounts of an account
debtor, such Account exceeds 15% in face value of all Accounts
of all Loan Parties then outstanding, but only to the extent
of such excess, unless such excess is supported by an
irrevocable letter of credit or other form of assurance
satisfactory to Administrative Agent (as to form, substance
and issuer) and assigned to and directly drawable by
Administrative Agent provided that this clause (iv) shall not
apply to Accounts of Party City Corporation; or
(v) the account debtor for such Account is a creditor of such
Loan Party, has or has asserted a right of setoff against such
Loan Party, or has disputed its liability or otherwise has
made any claim with respect to such Account or any other
Account which has not been resolved, in each case to the
extent of the amount owed by such Loan Party to such account
debtor, the amount of
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such actual or asserted right of setoff, or the amount of such
dispute or claim, as the case may be; or
(vi) the account debtor is (or its assets are) the subject of
an Insolvency Event; or
(vii) such Account is not payable in Dollars or the account
debtor for such Account is located outside the continental
United States, unless such Account is supported by an
irrevocable letter of credit satisfactory to Administrative
Agent (as to form, substance and issuer) and assigned to and
directly drawable by Administrative Agent; or
(viii) the sale to the account debtor is on a bill-and-hold,
guaranteed sale, sale-and-return, sale on approval or
consignment basis or was made pursuant to any other written
agreement providing for repurchase or return; or
(ix) Administrative Agent determines by its own credit
analysis that collection of such Account is uncertain or that
such Account is not likely to be paid; or
(x) the account debtor is the United States of America or any
department, agency or instrumentality thereof, unless such
Loan Party duly assigns its rights to payment of such Account
to Administrative Agent pursuant to the Assignment of Claims
Act of 1940, as amended (31 U.S.C. [Section] 3727 et seq.); or
(xi) unless such Account relates to permitted dated
receivables, the goods giving rise to such Account have not
been shipped and delivered to and accepted by the account
debtor, the services giving rise to such Account have not been
performed and accepted, or such Account otherwise does not
represent a final sale; or
(xii) such Account does not comply with all Requirements of
Law, including the Federal Consumer Credit Protection Act, the
Federal Truth in Lending Act and Regulation Z of the Board of
Governors of the Federal Reserve System; or
(xiii) such Account is subject to any adverse security
deposit, progress payment or other similar advance made by or
for the benefit of the applicable account debtor; or
(xiv) such Account is not subject to a valid and perfected
first priority Lien in favor of Administrative Agent for the
benefit of Lenders or does not otherwise conform to the
representations and warranties contained in the Revolving Loan
Documents.
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provided that Administrative Agent, in the exercise of its commercially
reasonable judgment, may impose additional restrictions (or eliminate
the same) to the standards of eligibility set forth in this definition.
"ELIGIBLE ASSIGNEE" means (A) (i) a commercial bank organized
under the laws of the United States or any state thereof; (ii) a
savings and loan association or savings bank organized under the laws
of the United States or any state thereof; (iii) a commercial bank
organized under the laws of any other country or a political
subdivision thereof; provided that (x) such bank is acting through a
branch or agency located in the United States or (y) such bank is
organized under the laws of a country that is a member of the
Organization for Economic Cooperation and Development or a political
subdivision of such country; and (iv) any other entity which is an
"accredited investor" (as defined in Regulation D under the Securities
Act) which extends credit or buys loans as one of its businesses
including insurance companies, mutual funds and lease financing
companies; and (B) any Lender, and any Related Fund or any Affiliate of
any Lender; provided that no Loan Party or any Subsidiary of any Loan
Party shall be an Eligible Assignee.
"ELIGIBLE INVENTORY" means, with respect to Company or any
Subsidiary Guarantor, the aggregate amount of Inventory of such Loan
Party deemed by Administrative Agent, in the exercise of its
commercially reasonable judgment, to be eligible for inclusion in the
calculation of the Borrowing Base. In determining the amount to be so
included, Inventory shall be valued at the lower of cost or market on a
basis consistent with such Loan Party's current and historical
accounting practices. Unless otherwise approved in writing by
Administrative Agent, an item of Inventory shall not be included in
Eligible Inventory if:
(i) it is not owned solely by such Loan Party or such Loan
Party does not have good, valid and marketable title thereto;
or
(ii) it is not located in the United States; or
(iii) it is not located on property (including trailers) owned
or leased by such Loan Party or in a contract warehouse, in
each case subject to a Collateral Access Agreement executed by
any applicable mortgagee, lessor or contract warehouseman, as
the case may be, (or, if not subject to a Collateral Access
Agreement, subject to such reserves against such Inventory as
the Administrative Agent may deem appropriate as set forth in
the second proviso of the definition of "Borrowing Base") and
segregated or otherwise separately identifiable from goods of
others, if any, stored on the premises; provided that any
goods in transit to property owned or leased by a Loan Party
or to a contract warehouse, in each case subject to a
Collateral Access Agreement executed by any applicable
mortgagee, lessor or contract warehouseman, shall not be
excluded under this clause (iii) so long as title to such
goods has
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passed to a Loan Party, and delivery to the property or
warehouse of the Loan Party is reasonably expected within 15
days; or
(iv) it is not subject to a valid and perfected first priority
Lien in favor of Collateral Agent except, with respect to
Inventory stored at sites described in clause (iii) above, to
the extent such Lien is subject to Liens for unpaid rent or
normal and customary warehousing charges; provided that any
goods in transit to property owned or leased by a Loan Party
or to a contract warehouse, in each case subject to a
Collateral Access Agreement executed by any applicable
mortgagee, lessor or contract warehouseman, shall not be
excluded under this clause (iv) so long as title to such goods
has passed to a Loan Party, and delivery to the property or
warehouse of the Loan Party is reasonably expected within 15
days; or
(v) it is in excess of the amount required for 18 months
supply of such item of Inventory based on sales for the
12-month period ending as of the end of the most recently
ended Fiscal Quarter, provided that this clause (v) shall not
apply to Inventory in new stock keeping units first purchased
or produced by Company on or after the first day of the
12-month period ending as of the end of the most recently
ended Fiscal Quarter; or
(vi) it consists of goods returned or rejected by such Loan
Party's customers that are not first-quality goods or are
obsolete or goods in transit to third parties other than to
warehouse sites or trailers covered by a Collateral Access
Agreement or subject to such reserves as the Administrative
Agent may deem appropriate as set forth in the second proviso
of the definition of "Borrowing Base"; or
(vii) it is not first-quality goods, is obsolete (i.e. such
item is not included in the Company's current or
next-scheduled catalog) or does not otherwise conform to the
representations and warranties contained in the Revolving Loan
Documents;
provided that Administrative Agent, in the exercise of its commercially
reasonable judgment, may impose additional restrictions (or eliminate
the same) to the standards of eligibility set forth in this definition.
"EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" as
defined in Section 3(3) of ERISA which is or was maintained or
contributed to by Company, any of its Subsidiaries or any of their
respective ERISA Affiliates.
"EMPLOYMENT AGREEMENTS" means, collectively, the employment
agreements and stock and option agreements between the Company and
certain employees of the Company as set forth on Schedule 4.1C annexed
hereto, in certain cases providing
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for the exclusive employment of such Persons by Company, in the form
provided to Arranger and Administrative Agent pursuant to subsection
4.1C of the Existing Revolving Loan Credit Agreement on or prior to the
Closing Date or pursuant to subsection 4.1C of this Agreement on or
prior to the Restatement Effective Date.
"ENVIRONMENTAL CLAIM" means any investigation, notice, notice
of violation, claim, action, suit, proceeding, demand, abatement order
or other order or directive (conditional or otherwise), by any
governmental authority or any other Person, arising (i) pursuant to or
in connection with any actual or alleged violation of any Environmental
Law, (ii) in connection with any Hazardous Materials or any actual or
alleged Hazardous Materials Activity, or (iii) in connection with any
actual or alleged damage, injury, threat or harm to natural resources
or the environment.
"ENVIRONMENTAL LAWS" means any and all current or future
statutes, ordinances, orders, rules, regulations, guidance documents,
judgments, Governmental Authorizations, or any other requirements of
governmental authorities relating to (i) environmental matters,
including those relating to any Hazardous Materials Activity, (ii) the
generation, use, storage, transportation or disposal of Hazardous
Materials, or (iii) occupational safety and health, industrial hygiene,
land use or the protection of human, plant or animal health or welfare,
in any manner applicable to Company or any of its Subsidiaries or any
Facility, including the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. [Section] 9601 et seq.), the
Hazardous Materials Transportation Act (49 U.S.C. [Section] 1801 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C. [Section]
6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C.
[Section] 1251 et seq.), the Clean Air Act (42 U.S.C. [Section] 7401 et
seq.), the Toxic Substances Control Act (15 U.S.C. [Section] 2601 et
seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C.
[Section] 136 et seq.), the Occupational Safety and Health Act (29
U.S.C. [Section] 651 et seq.), the Oil Pollution Act (33 U.S.C.
[Section] 2701 et seq) and the Emergency Planning and Community
Right-to-Know Act (42 U.S.C. [Section] 11001 et seq.), each as amended
or supplemented, any analogous present or future state or local
statutes or laws, and any regulations promulgated pursuant to any of
the foregoing.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor thereto.
"ERISA AFFILIATE" means, as applied to any Person, (i) any
corporation which is a member of a controlled group of corporations
within the meaning of Section 414(b) of the Internal Revenue Code of
which that Person is a member; (ii) any trade or business (whether or
not incorporated) which is a member of a group of trades or businesses
under common control within the meaning of Section 414(c) of the
Internal Revenue Code of which that Person is a member; and (iii) any
member of an affiliated service group within the meaning of Section
414(m) or (o) of the Internal Revenue Code of which that Person, any
corporation described in clause (i)
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above or any trade or business described in clause (ii) above is a
member. Any former ERISA Affiliate of Company or any of its
Subsidiaries shall continue to be considered an ERISA Affiliate of
Company or such Subsidiary within the meaning of this definition with
respect to the period such entity was an ERISA Affiliate of Company or
such Subsidiary and with respect to liabilities arising after such
period for which Company or such Subsidiary could be liable under the
Internal Revenue Code or ERISA.
"ERISA EVENT" means (i) a "reportable event" within the
meaning of Section 4043 of ERISA and the regulations issued thereunder
with respect to any Pension Plan (excluding those for which the
provision for 30-day notice to the PBGC has been waived by regulation);
(ii) the failure to meet the minimum funding standard of Section 412 of
the Internal Revenue Code with respect to any Pension Plan (whether or
not waived in accordance with Section 412(d) of the Internal Revenue
Code) or the failure to make by its due date a required installment
under Section 412(m) of the Internal Revenue Code with respect to any
Pension Plan or the failure to make any required contribution to a
Multiemployer Plan; (iii) the provision by the administrator of any
Pension Plan pursuant to Section 4041(a)(2) of ERISA of a notice of
intent to terminate such plan in a distress termination described in
Section 4041(c) of ERISA; (iv) the withdrawal by Company, any of its
Subsidiaries or any of their respective ERISA Affiliates from any
Pension Plan with two or more contributing sponsors or the termination
of any such Pension Plan resulting in liability pursuant to Section
4063 or 4064 of ERISA; (v) the institution by the PBGC of proceedings
to terminate any Pension Plan, or the occurrence of any event or
condition which could reasonably be expected to constitute grounds
under ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan; (vi) the imposition of liability on
Company, any of its Subsidiaries or any of their respective ERISA
Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of
the application of Section 4212(c) of ERISA; (vii) the withdrawal of
Company, any of its Subsidiaries or any of their respective ERISA
Affiliates in a complete or partial withdrawal (within the meaning of
Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if there
is any potential liability therefor, or the receipt by Company, any of
its Subsidiaries or any of their respective ERISA Affiliates of notice
from any Multiemployer Plan that it is in reorganization or insolvency
pursuant to Section 4241 or 4245 of ERISA, or that it intends to
terminate or has terminated under Section 4041A or 4042 of ERISA;
(viii) the occurrence of an act or omission which could reasonably be
expected to give rise to the imposition on Company, any of its
Subsidiaries or any of their respective ERISA Affiliates of fines,
penalties, taxes or related charges under Chapter 43 of the Internal
Revenue Code or under Section 409, Section 502(c), (i) or (l), or
Section 4071 of ERISA in respect of any Employee Benefit Plan; (ix) the
assertion of a material claim (other than routine claims for benefits)
against any Employee Benefit Plan other than a Multiemployer Plan or
the assets thereof, or against Company, any of its Subsidiaries or any
of their respective ERISA Affiliates in connection with any Employee
Benefit
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Plan; (x) receipt from the Internal Revenue Service of notice of the
failure of any Pension Plan (or any other Employee Benefit Plan
intended to be qualified under Section 401(a) of the Internal Revenue
Code) to qualify under Section 401(a) of the Internal Revenue Code, or
the failure of any trust forming part of any Pension Plan to qualify
for exemption from taxation under Section 501(a) of the Internal
Revenue Code; or (xi) the imposition of a Lien pursuant to Section
401(a)(29) or 412(n) of the Internal Revenue Code or pursuant to ERISA
with respect to any Pension Plan.
"EUROCURRENCY LIABILITIES" has the meaning specified in
Regulation D of the Board of Governors of the Federal Reserve System,
as in effect from time to time.
"EURODOLLAR RATE LOANS" means Revolving Loans bearing interest
at rates determined by reference to the Adjusted Eurodollar Rate as
provided in subsection 2.2A.
"EURODOLLAR RATE RESERVE PERCENTAGE" means, for any Interest
Period for all Eurodollar Rate Loans comprising part of the same
Borrowing, the reserve percentage applicable two Business Days before
the first day of such Interest Period under regulations issued from
time to time by the Board of Governors of the Federal Reserve System
(or any successor) for determining the maximum reserve requirement
(including, without limitation, any emergency, supplemental or other
marginal reserve requirement) for a member bank of the Federal Reserve
System in New York City with respect to liabilities or assets
consisting of or including Eurocurrency Liabilities (or with respect to
any other category of liabilities that includes deposits by reference
to which the interest rate on Eurodollar Rate Loans is determined)
having a term equal to such Interest Period.
"EVENT OF DEFAULT" means each of the events set forth in
Section 8.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute.
"EXCHANGE RATE" means, on any date when an amount expressed in
a currency other than Dollars is to be determined with respect to any
Letter of Credit, the nominal rate of exchange of the applicable
Issuing Lender in the New York foreign exchange market for the purchase
by such Issuing Lender (by cable transfer) of such currency in exchange
for Dollars at 12:00 noon (New York time) one Business Day prior to
such date, expressed as a number of units of such currency per one
Dollar.
"EXISTING AMSCAN CREDIT AGREEMENTS" means any and all credit
agreements entered into by Company prior to the Closing Date, in each
case as amended prior to the Closing Date, as set forth on Schedule
4.1E-I.
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"EXISTING ANAGRAM CREDIT AGREEMENTS" means any and all credit
agreements entered into by Anagram and its Subsidiaries, in each case
as amended prior to the Restatement Effective Date, as set forth on
Schedule 4.1E-II.
"EXISTING AXELS" means, with respect to any AXEL Lender, the
AXELs under the AXEL Credit Agreement held by such AXEL Lender, in the
principal amount of such AXELs outstanding immediately prior to the
Restatement Effective Date, and "EXISTING AXELS" means such AXELs of
all AXEL Lenders, collectively.
"EXISTING LENDER" has the meaning assigned to such term in the
recitals to this Agreement.
"EXISTING REVOLVING LOANS" means, with respect to any Existing
Lender, the Revolving Loans under the Existing Revolving Loan Credit
Agreement held by such Existing Lender, in the principal amount of such
Revolving Loans outstanding immediately prior to the Restatement
Effective Date, and "EXISTING REVOLVING LOANS" means such Revolving
Loans of all Existing Lenders, collectively.
"EXISTING REVOLVING LOAN CREDIT AGREEMENT" has the meaning
assigned to that term in the recitals to this Agreement.
"EXISTING REVOLVING LOAN NOTES" means (i) the promissory notes
of Company issued pursuant to subsection 2.1E of the Existing Revolving
Loan Credit Agreement on the Closing Date and (ii) any promissory notes
issued by Company pursuant to the last sentence of subsection 9.1B(i)
of the Existing Revolving Loan Credit Agreement in connection with
assignments of the Existing Revolving Loans of any Existing Lenders, in
each case substantially in the form of Exhibit III annexed to the
Existing Revolving Loan Credit Agreement.
"FACILITIES" means any and all real property (including all
buildings, fixtures or other improvements located thereon) now,
hereafter or heretofore owned, leased, operated or used by Company or
any of its Subsidiaries or any of their respective predecessors or
Affiliates.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any period, a
fluctuating interest rate equal for each day during such period to the
weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds
brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding 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 such day on such
transactions received by Administrative Agent from three Federal funds
brokers of recognized standing selected by Administrative Agent.
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"FEE PROPERTY" means any real property owned in fee simple by
any Loan Party, other than any such real property designated from time
to time by Collateral Agent in its sole discretion as not being
required to be included in the Collateral.
"FINANCIAL PLAN" has the meaning assigned to that term in
subsection 6.1(xiii).
"FIRST PRIORITY" means, with respect to any Lien purported to
be created in any Collateral pursuant to any Collateral Document, that
(i) such Lien has priority over any other Lien on such Collateral
(other than Liens permitted pursuant to subsection 7.2A) and (ii) such
Lien is the only Lien (other than Permitted Encumbrances and Liens
permitted pursuant to subsection 7.2) to which such Collateral is
subject.
"FISCAL QUARTER" means a fiscal quarter of any Fiscal Year.
"FISCAL YEAR" means the fiscal year of Company and its
Subsidiaries ending on December 31 of each calendar year. For purposes
of this Agreement, any particular Fiscal Year shall be designated by
reference to the calendar year in which such Fiscal Year ends.
"FLEET" has the meaning assigned to that term in the
introduction to this Agreement.
"FLOOD HAZARD PROPERTY" means a Mortgaged Property located in
an area designated by the Federal Emergency Management Agency as having
special flood or mud slide hazards.
"FOREIGN SUBSIDIARY" means a Subsidiary of Company other than
a Domestic Subsidiary.
"FUNDING AND PAYMENT OFFICE" means (i) the office of
Administrative Agent located at Fleet National Bank, 1 Federal Street,
Boston, Massachusetts 02110, or (ii) such other office of
Administrative Agent as may from time to time hereafter be designated
as such in a written notice delivered by Administrative Agent to
Company and each Lender.
"FUNDING DATE" means the date of the funding of a Revolving
Loan.
"FUNDING DEFAULT" has the meaning assigned to that term in
subsection 2.9.
"GAAP" means, subject to the limitations on the application
thereof set forth in subsection 1.2, generally accepted accounting
principles set forth in opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial
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Accounting Standards Board or in such other statements by such other
entity as may be approved by a significant segment of the accounting
profession, in each case as the same are applicable to the
circumstances as of the date of determination.
"GOVERNMENTAL AUTHORIZATION" means any permit, license,
authorization, plan, directive, consent order or consent decree of or
from any federal, state or local governmental authority, agency or
court.
"GSCP" has the meaning assigned to that term in the
introduction to this Agreement.
"GSII" means, collectively, GS Capital Partners II, L.P., GS
Capital Partners II Offshore, L.P., Goldman, Sachs & Co. Verwaltungs
GmbH, Stone Street Fund 1997, L.P. and Bridge Street Fund 1997, L.P.
"HAZARDOUS MATERIALS" means (i) any chemical, material or
substance at any time defined as or included in the definition of
"hazardous substances", "hazardous wastes", "hazardous materials",
"extremely hazardous waste", "acutely hazardous waste", "radioactive
waste", "biohazardous waste", "pollutant", "toxic pollutant",
"contaminant", "restricted hazardous waste", "infectious waste", "toxic
substances", or any other term or expression intended to define, list
or classify substances by reason of properties harmful to health,
safety or the indoor or outdoor environment (including harmful
properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity, reproductive toxicity, "TCLP toxicity" or
"EP toxicity" or words of similar import under any applicable
Environmental Laws); (ii) any oil, petroleum, petroleum fraction or
petroleum derived substance; (iii) any drilling fluids, produced waters
and other wastes associated with the exploration, development or
production of crude oil, natural gas or geothermal resources; (iv) any
flammable substances or explosives; (v) any radioactive materials; (vi)
any asbestos-containing materials; (vii) urea formaldehyde foam
insulation; (viii) electrical equipment which contains any oil or
dielectric fluid containing polychlorinated biphenyls; (ix) pesticides;
and (x) any other chemical, material or substance, exposure to which is
prohibited, limited or regulated by any governmental authority or which
may or could pose a hazard to the health and safety of the owners,
occupants or any Persons in the vicinity of any Facility or to the
indoor or outdoor environment.
"HAZARDOUS MATERIALS ACTIVITY" means any past, current or
future activity, event or occurrence involving any Hazardous Materials,
including the use, manufacture, possession, storage, holding, presence,
existence, location, Release, threatened Release, discharge, placement,
generation, transportation, processing, construction, treatment,
abatement, removal, remediation, disposal, disposition or handling of
any Hazardous Materials, and any corrective action or response action
with respect to any of the foregoing.
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"HEDGE AGREEMENT" means an Interest Rate Agreement or a
Currency Agreement designed to hedge against fluctuations in interest
rates or currency values, respectively.
"INCREASED COST LENDER" has the meaning assigned to that term
in subsection 2.10.
"INDEBTEDNESS", as applied to any Person, means (i) all
indebtedness for borrowed money, (ii) that portion of obligations with
respect to Capital Leases that is properly classified as a liability on
a balance sheet in conformity with GAAP, (iii) notes payable and drafts
accepted representing extensions of credit whether or not representing
obligations for borrowed money, (iv) any obligation owed for all or any
part of the deferred purchase price of property or services (excluding
any such obligations incurred under ERISA), which purchase price is (a)
due more than six months from the date of incurrence of the obligation
in respect thereof or 12 months in the case of a bona fide trade
payable or (b) evidenced by a note or similar written instrument, and
(v) all indebtedness secured by any Lien on any property or asset owned
or held by that Person regardless of whether the indebtedness secured
thereby shall have been assumed by that Person or is nonrecourse to the
credit of that Person. Obligations under Interest Rate Agreements and
Currency Agreements constitute (X) in the case of Hedge Agreements,
Contingent Obligations, and (Y) in all other cases, Investments, and in
neither case constitute Indebtedness. Any contingent earnout
obligations incurred pursuant to any acquisition agreements shall
constitute Contingent Obligations and not Indebtedness until actually
earned and thereafter shall constitute Indebtedness until paid.
"INDEMNITEE" has the meaning assigned to that term in
subsection 10.3.
"INSOLVENCY EVENT" means, with respect to any Person, the
occurrence of any of the events described in subsection 8.6 or 8.7;
provided that, solely for purposes of this definition, any references
to Company or any of its Subsidiaries in subsection 8.6 or 8.7 shall be
deemed to be a reference to such Person.
"INSOLVENCY LAWS" means the Bankruptcy Code or any other
applicable bankruptcy, insolvency or similar law now or hereafter in
effect in the United States of America or any state thereof.
"INTELLECTUAL PROPERTY" means all patents, trademarks,
tradenames, copyrights, technology, know-how and processes used in or
necessary for the conduct of the business of Company and its
Subsidiaries as currently conducted that are material to the condition
(financial or otherwise), business or operations of Company and its
Subsidiaries, taken as a whole.
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"INTERCREDITOR AGREEMENT" means the Intercreditor Agreement
dated as of December 19, 1997 among the Administrative Agent, the AXEL
Facility Agent, the Collateral Agent the Company and the Subsidiary
Guarantors as such agreement may hereafter be amended, supplemented or
otherwise modified from time to time.
"INTEREST PAYMENT DATE" means (i) with respect to any Base
Rate Loan, each March 15, June 15, September 15 and December 15 of each
year, commencing on the first such date to occur after the Closing
Date, and (ii) with respect to any Eurodollar Rate Loan, the last day
of each Interest Period applicable to such Eurodollar Rate Loan;
provided that in the case of each Interest Period of longer than three
months "Interest Payment Date" shall also include each date that is
three months, or an integral multiple thereof, after the commencement
of such Interest Period.
"INTEREST PERIOD" has the meaning assigned to that term in
subsection 2.2B.
"INTEREST RATE AGREEMENT" means any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement
or other similar agreement or arrangement to which Company or any of
its Subsidiaries is a party.
"INTEREST RATE DETERMINATION DATE" means, with respect to any
Interest Period, the second Business Day prior to the first day of such
Interest Period.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of
1986, as amended to the date hereof and from time to time hereafter,
and any successor statute.
"INVENTORY" means, with respect to any Person as of any date
of determination, all goods, merchandise and other personal property
which are then held by such Person for sale or lease, including raw
materials and work in process.
"INVESTMENT" means (i) any direct or indirect purchase or
other acquisition by Company or any of its Subsidiaries of, or of a
beneficial interest in, any Securities of any other Person (including
any Subsidiary of Company), (ii) any direct or indirect redemption,
retirement, purchase or other acquisition for value, by any Subsidiary
of Company from any Person other than Company or any of its
Subsidiaries, of any equity Securities of such Subsidiary, (iii) any
direct or indirect loan, advance (other than advances to employees for
moving, entertainment and travel expenses, drawing accounts and similar
expenditures in the ordinary course of business) or capital
contribution by Company or any of its Subsidiaries to any other Person,
including all indebtedness and accounts receivable from that other
Person that are not current assets or did not arise from sales to that
other Person in the ordinary course of business, or (iv) Interest Rate
Agreements or Currency Agreements not constituting Hedge Agreements.
The amount of any Investment shall be the original cost of such
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Investment plus the cost of all additions thereto, without any
adjustments for increases or decreases in value, or write-ups,
write-downs or write-offs with respect to such Investment.
"IP COLLATERAL" means the Collateral under the Subsidiary
Patent and Trademark Security Agreements.
"ISSUING LENDER" means, with respect to any Letter of Credit,
the Lender which agrees or is otherwise obligated to issue such Letter
of Credit, determined as provided in subsection 3.1B(ii).
"JOINT VENTURE" means a joint venture, partnership or other
similar arrangement, whether in corporate, partnership or other legal
form; provided that in no event shall any corporate Subsidiary of any
Person be considered to be a Joint Venture to which such Person is a
party.
"LANDLORD CONSENT AND ESTOPPEL" means, with respect to any
Leasehold Property, a letter, certificate or other instrument in
writing from the lessor under the related lease, satisfactory in form
and substance to Collateral Agent, pursuant to which such lessor
agrees, for the benefit of Collateral Agent, (i) to the matters
contained in the form of Collateral Access Agreement applicable to a
Leasehold Property, and (ii) to such other matters relating to such
Leasehold Property as Collateral Agent may reasonably request,
including, without limitation that without any further consent of such
lessor or any further action on the part of the Loan Party holding such
Leasehold Property, such Leasehold Property may be encumbered pursuant
to a Mortgage and may be assigned to the purchaser at a foreclosure
sale or in a transfer in lieu of such a sale (and to a subsequent third
party assignee if Collateral Agent, any Lender, or an Affiliate of
either so acquires such Leasehold Property).
"LEASEHOLD PROPERTY" means any leasehold interest of any Loan
Party as lessee under any lease of real property, other than any such
leasehold interest designated from time to time by Collateral Agent in
its sole discretion as not being required to be included in the
Collateral.
"LENDER" and "LENDERS" means the persons identified as
"Lenders" and listed on the signature pages of this Agreement, together
with their successors and permitted assigns pursuant to subsection
10.1; provided that the term "Lenders", when used in the context of a
particular Commitment, shall mean Lenders having that Commitment. To
the extent the context so requires, the terms "LENDER" and "LENDERS"
shall include "Lenders" under, and as defined in, the Existing
Revolving Loan Credit Agreement.
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"LETTER OF CREDIT" or "LETTERS OF CREDIT" means Commercial
Letters of Credit and Standby Letters of Credit issued or to be issued
by Issuing Lenders for the account of Company pursuant to subsection
3.1.
"LETTER OF CREDIT USAGE" means, as at any date of
determination, the sum of (i) the maximum aggregate amount which is or
at any time thereafter may become available for drawing under all
Letters of Credit then outstanding plus (ii) the aggregate amount of
all drawings under Letters of Credit honored by Issuing Lenders and not
theretofore reimbursed by Company (including any such reimbursement out
of the proceeds of Revolving Loans pursuant to subsection 3.3B). For
purposes of this definition, any amount described in clause (i) or (ii)
of the preceding sentence which is denominated in a currency other than
Dollars shall be valued based on the applicable Exchange Rate for such
currency as of the applicable date of determination.
"LIEN" means any lien, mortgage, pledge, assignment, security
interest, charge or encumbrance of any kind (including any conditional
sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any security interest) and any
option, trust or other preferential arrangement having the practical
effect of any of the foregoing.
"LOAN DOCUMENTS" means the Revolving Loan Documents and the
AXEL Loan Documents.
"LOAN PARTY" means each of Company and any of Company's
Subsidiaries
from time to time executing a Loan Document, and "LOAN PARTIES" means
all such Persons, collectively.
"MANAGEMENT INVESTORS" means the management officers and
employees of Company and its Subsidiaries identified as Management
Investors on Schedule 4.1C annexed hereto.
"MARGIN STOCK" has the meaning assigned to that term in
Regulation U of the Board of Governors of the Federal Reserve System as
in effect from time to time.
"MATERIAL ADVERSE EFFECT" means (i) a material adverse effect
upon the business, operations, properties, assets, condition (financial
or otherwise) or prospects of Company or any of its Subsidiaries or
(ii) the impairment in any material respect of the ability of the Loan
Parties, taken as a whole, to perform, or of Administrative Agent or
Lenders to enforce, the Obligations.
"MATERIAL CONTRACT" means any contract or other arrangement to
which Company or any of its Subsidiaries is a party (other than the
Loan Documents) for
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which breach, nonperformance, cancellation or failure to renew could
reasonably be expected to have a Material Adverse Effect.
"MATERIAL DOMESTIC SUBSIDIARY" means each Domestic Subsidiary
of Company now existing or hereafter acquired or formed by Company
which, on a consolidated basis for such Subsidiary and its
Subsidiaries, (i) for the most recent Fiscal Year account for more than
5% of the consolidated revenues of Company and its Subsidiaries or (ii)
as at the end of such Fiscal Year, was the owner of more than 5% of the
consolidated assets of Company and its Subsidiaries; provided that, for
purposes of the calculations contemplated by the foregoing clauses (i)
and (ii), any Subsidiary of Company that was acquired by Company or any
of its Subsidiaries after the first day of the most recent Fiscal Year
(whether such acquisition was consummated during such most recent
Fiscal Year or the current Fiscal Year) shall be deemed to have been
acquired on and as of the first day of such most recent Fiscal Year.
"MATERIAL LEASEHOLD PROPERTY" means a Leasehold Property
reasonably determined by Administrative Agent to be of material value
as Collateral or of material importance to the operations of Company or
any of its Subsidiaries; provided, however that no Leasehold Property
with respect to which the aggregate amount of all rents payable during
any one Fiscal Year is not expected to exceed $500,000 shall be a
"Material Leasehold Property".
"MERGER" means the merger of Newco with and into Company in
accordance with the terms of the Recapitalization Agreement, with
Company being the surviving corporation in such Merger.
"MORTGAGE" means a security instrument (whether designated as
a deed of trust or a mortgage or by any similar title) executed and
delivered by any Loan Party, substantially in the form of Exhibit XVII
annexed hereto or in such other form as may be approved by Collateral
Agent in its sole discretion, in each case with such changes thereto as
may be recommended by Collateral Agent's local counsel based on local
laws or customary local mortgage or deed of trust practices.
"MORTGAGES" means all such instruments collectively.
"MORTGAGED PROPERTY" has the meaning assigned to that term in
subsection 6.9.
"MORTGAGE POLICY" has the meaning assigned to that term in
subsection 6.9.
"MULTIEMPLOYER PLAN" means any Employee Benefit Plan which is
a "multiemployer plan" as defined in Section 3(37) of ERISA.
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"NET ASSET SALE PROCEEDS" means, with respect to any Asset
Sale, Cash payments (including any Cash received by way of deferred
payment pursuant to, or by monetization of, a note receivable or
otherwise, but only as and when so received) received from such Asset
Sale, net of any bona fide direct costs, including, without limitation,
all transaction costs, incurred in connection with such Asset Sale,
including (i) income taxes reasonably estimated to be actually payable
within two years of the date of such Asset Sale as a result of any gain
recognized in connection with such Asset Sale and (ii) payment of the
outstanding principal amount of, premium or penalty, if any, and
interest on any Indebtedness that is secured by a Lien on the stock or
assets in question and that is prior to the Lien securing the Revolving
Loans on such stock or assets and is required to be repaid under the
terms thereof as a result of such Asset Sale.
"NET INSURANCE/CONDEMNATION PROCEEDS" means any Cash payments
or proceeds received by Company or any of its Subsidiaries (i) under
any business interruption or casualty insurance policy in respect of a
covered loss thereunder or (ii) as a result of the taking of any assets
of Company or any of its Subsidiaries by any Person pursuant to the
power of eminent domain, condemnation or otherwise, or pursuant to a
sale of any such assets to a purchaser with such power under threat of
such a taking, in each case net of (x) any actual and reasonable
documented costs incurred by Company or any of its Subsidiaries in
connection with the adjustment or settlement of any claims of Company
or such Subsidiary in respect thereof and (y) any amounts required to
be applied to the repayment of any Indebtedness secured by a Lien which
is prior to any Liens of the Lenders on the asset or assets that are
subject to the taking, condemnation or casualty but excluding, however,
in each case any payments or proceeds relating to assets having a value
of $500,000 or less in any single transaction or related series of
transactions.
"NEW COMPANY SHARES" has the meaning assigned to that term in
the recitals to this Agreement.
"NEW LENDER" means any Lender which is a party to this
Agreement on the Restatement Effective Date which is not an Existing
Lender.
"NEWCO" means Confetti Acquisition, Inc., a Delaware
corporation existing prior to the Merger.
"NEWCO COMMON STOCK" means the shares of common stock of Newco
par value $0.10 per share to be converted into shares of Company Common
Stock upon consummation of the Merger.
"NON-CONSENTING LENDER" has the meaning assigned to that term
in subsection 2.10.
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"NOTICE OF BORROWING" means a notice substantially in the form
of Exhibit I annexed hereto delivered by Company to Administrative
Agent pursuant to subsection 2.1B with respect to a proposed borrowing.
"NOTICE OF CONVERSION/CONTINUATION" means a notice
substantially in the form of Exhibit II annexed hereto delivered by
Company to Administrative Agent pursuant to subsection 2.2D with
respect to a proposed conversion or continuation of the applicable
basis for determining the interest rate with respect to the Revolving
Loans specified therein.
"NOTICE OF ISSUANCE OF LETTER OF CREDIT" means a notice
substantially in the form of Exhibit III annexed hereto delivered by
Company to Administrative Agent pursuant to subsection 3.1B(i) with
respect to the proposed issuance of a Letter of Credit.
"OBLIGATIONS" means all obligations of every nature of each
Loan Party from time to time owed to Agents, Lenders or their
respective Affiliates or any of them under the Revolving Loan
Documents, whether for principal, interest, reimbursement of amounts
drawn under Letters of Credit, fees, expenses, indemnification or
otherwise.
"OFFICERS' CERTIFICATE" means, as applied to any corporation,
a certificate executed on behalf of such corporation by its chairman of
the board (if an officer) or its president or one of its vice
presidents and by its chief financial officer or its treasurer;
provided that every Officers' Certificate with respect to the
compliance with a condition precedent to the making of any Revolving
Loans hereunder shall include (i) a statement that the officer or
officers making or giving such Officers' Certificate have read such
condition and any definitions or other provisions contained in this
Agreement relating thereto, (ii) a statement that, in the opinion of
the signers, they have made or have caused to be made such examination
or investigation as is necessary to enable them to express an informed
opinion as to whether or not such condition has been complied with, and
(iii) a statement as to whether, in the opinion of the signers, such
condition has been complied with.
"OPERATING LEASE" means, as applied to any Person, any lease
(including leases that may be terminated by the lessee at any time) of
any property (whether real, personal or mixed) that is not a Capital
Lease other than any such lease under which that Person is the lessor.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor thereto.
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"PENSION PLAN" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to Section 412 of the Internal
Revenue Code or Section 302 of ERISA.
"PERMITTED BUSINESS ACQUISITION" has the meaning assigned to
that term in subsection 7.7(vi).
"PERMITTED ENCUMBRANCES" means the following types of Liens
(excluding any such Lien imposed pursuant to Section 401(a)(29) or
412(n) of the Internal Revenue Code or by ERISA, any such Lien relating
to or imposed in connection with any Environmental Claim, and any such
Lien expressly prohibited by any applicable terms of any of the
Collateral Documents):
(i) Liens for taxes, assessments or governmental charges or
claims the payment of which is not, at the time, required by
subsection 6.3;
(ii) statutory Liens of landlords, statutory Liens of banks
and rights of set-off, statutory Liens of carriers,
warehousemen, mechanics, repairmen, workmen and materialmen,
and other Liens imposed by law, in each case incurred in the
ordinary course of business (a) for amounts not yet overdue or
(b) for amounts that are overdue and that (in the case of any
such amounts overdue for a period in excess of 15 days) are
being contested in good faith by appropriate proceedings, so
long as (1) such reserves or other appropriate provisions, if
any, as shall be required by GAAP shall have been made for any
such contested amounts, and (2) in the case of a Lien with
respect to any portion of the Collateral, such contest
proceedings conclusively operate to stay the sale of any
portion of the Collateral on account of such Lien;
(iii) Liens incurred or deposits made in the ordinary course
of business in connection with workers' compensation,
unemployment insurance and other types of social security, or
to secure the performance of tenders, statutory obligations,
surety and appeal bonds, bids, leases, government contracts,
trade contracts, performance and return-of-money bonds and
other similar obligations (exclusive of obligations for the
payment of borrowed money), so long as no foreclosure, sale or
similar proceedings have been commenced with respect to any
portion of the Collateral on account thereof;
(iv) any attachment or judgment Lien not constituting an Event
of Default under subsection 8.8;
(v) leases or subleases granted to third parties in accordance
with any applicable terms of the Collateral Documents and not
interfering in any material respect with the ordinary conduct
of the business of Company or any
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of its Subsidiaries or resulting in a material diminution in
the value of any Collateral as security for the Obligations;
(vi) easements, rights-of-way, covenants, conditions,
restrictions, encroachments, and other defects or
irregularities in title, in each case which do not and will
not interfere in any material respect with the ordinary
conduct of the business of Company or any of its Subsidiaries
or result in a material diminution in the value of any
Collateral as security for the Obligations;
(vii) any (a) interest or title of a lessor or sublessor under
any lease permitted by subsection 7.9, (b) restriction or
encumbrance that the interest or title of such lessor or
sublessor may be subject to, or (c) subordination of the
interest of the lessee or sublessee under such lease to any
restriction or encumbrance referred to in the preceding clause
(b), so long as the holder of such restriction or encumbrance
agrees to recognize the rights of such lessee or sublessee
under such lease;
(viii) Liens arising from filing UCC financing statements
relating solely to leases permitted by this Agreement;
(ix) Liens in favor of customs and revenue authorities arising
as a matter of law to secure payment of customs duties in
connection with the importation of goods;
(x) any zoning or similar law or right reserved to or vested
in any governmental office or agency to control or regulate
the use of any real property;
(xi) Liens securing obligations (other than obligations
representing Indebtedness for borrowed money) under operating,
reciprocal easement or similar agreements entered into in the
ordinary course of business of Company and its Subsidiaries;
and
(xii) licenses of patents, trademarks and other intellectual
property rights granted by Company or any of its Subsidiaries
in the ordinary course of business and not interfering in any
material respect with the ordinary conduct of the business of
Company or such Subsidiary.
"PERSON" means and includes natural persons, corporations,
limited partnerships, general partnerships, limited liability
companies, limited liability partnerships, joint stock companies, Joint
Ventures, associations, companies, trusts, banks, trust companies, land
trusts, business trusts or other organizations, whether or not legal
entities, and governments (whether federal, state or local, domestic or
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foreign, and including political subdivisions thereof) and agencies or
other administrative or regulatory bodies thereof.
"PLEDGED COLLATERAL" means, collectively, the "Pledged
Collateral" as defined in the Company Pledge Agreement and the
Subsidiary Pledge Agreements.
"POTENTIAL EVENT OF DEFAULT" means a condition or event that,
after notice or lapse of time or both, would constitute an Event of
Default.
"PRIME RATE" means the rate that Fleet announces from time to
time as its prime lending rate, as in effect from time to time. The
Prime Rate is a reference rate and does not necessarily represent the
lowest or best rate actually charged to any customer. Fleet or any
other Lender may make commercial loans or other loans at rates of
interest at, above or below the Prime Rate.
"PRO FORMA BASIS" means(i) with respect to compliance with the
Consolidated Leverage Ratio for purposes of subsection 7.1 (viii),
compliance with the Consolidated Leverage Ratio after giving effect to
acquisitions and incurrence or assumption of any Indebtedness in
connection therewith, and (ii) with respect to compliance with the
Consolidated Senior Leverage Ratio for purposes of subsection 7.7 (vi),
compliance with the Consolidated Senior Leverage Ratio after giving
effect to acquisitions and incurrence or assumption of any Indebtedness
in connection therewith. For purposes of such calculations any
Indebtedness incurred under subsection 7.1 (viii) or 7.7(vi) or
otherwise incurred or assumed in connection with an acquisition
subsequent to the beginning of the four quarter calculation period, but
on or prior to the date of calculation of the Consolidated Leverage
Ratio or the Consolidated Senior Leverage Ratio, as the case may be,
shall be deemed to have been incurred or assumed at the beginning of
such four quarter calculation period. In addition, for such purposes,
acquisitions will be given pro forma effect as follows:
(i) (A) acquisitions that have been made or are being
made by the Company or any of its Subsidiaries during
the four-quarter reference period or subsequent to
such reference period and on or prior to the
calculation date (including through mergers or
consolidations and including any related financing
transactions) shall be deemed to have occurred on the
first day of the four-quarter reference period, and
(B) for purposes of determining the pro forma effects
of any such acquisition, Consolidated Adjusted EBITDA
shall be increased to reflect the annualized amount
of any cost savings expected by the Company to be
realized in connection with such acquisition (from
steps to be taken not later than the first
anniversary of such acquisition, and without
reduction for any non-recurring charges expected in
connection with such acquisition), as set forth in an
Officers' Certificate signed by
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the Company's chief executive and chief financial
officers (which shall be determinative of such
matters) which states (x) the amount of such
increase, (y) that such increase is based on the
reasonable beliefs of the officers executing such
Officers' Certificate at the time of such execution
(and that estimates of cost savings from prior
acquisitions have been reevaluated and updated) and
(z) that any related incurrence of Indebtedness is
permitted pursuant to this Agreement.
(ii) Consolidated Adjusted EBITDA shall be further increased
to reflect the annualized amount of any cost savings expected
by the Company but not yet realized in respect of any
acquisition made by the Company during the four fiscal
quarters immediately preceding the four-quarter calculation
period prior to the calculation date, to the extent such cost
savings are (x) expected to result from steps taken not later
than the first anniversary of the relevant acquisition and (y)
determined and certified as set forth in clause (i) above.
In addition, in calculating the Consolidated Leverage Ratio or the
Consolidated Senior Leverage Ratio, as the case may be, discontinued
operations will be given pro forma effect by excluding any Consolidated
Adjusted EBITDA attributable to discontinued operations, as determined
in accordance with GAAP, and operations or businesses disposed of on or
prior to the calculation date.
"PRO RATA SHARE" means with respect to all payments,
computations and other matters relating to the Revolving Loan
Commitment or the Revolving Loans of any Lender or any Letters of
Credit issued or participations therein purchased by any Lender, the
percentage obtained by dividing (x) the Revolving Loan Exposure of that
Lender by (y) the aggregate Revolving Loan Exposure of all Lenders, in
any such case as the applicable percentage may be adjusted by
assignments permitted pursuant to subsection 10.1.
"PTO" means the United States Patent and Trademark Office or
any successor or substitute office in which filings are necessary or,
in the opinion of the Administrative Agent, desirable in order to
create or perfect Liens on any IP Collateral.
"QUALIFIED PUBLIC OFFERING" means any sale of capital stock of
the Company to the public pursuant to an offering registered under the
Securities Act of 1933 pursuant to which the Company receives cash
proceeds (net of all fees and expenses (including underwriting
discounts and legal, investment banking and accounting and other
professional fees) and disbursements actually incurred in connection
therewith) in an amount not less than $50,000,000.
"REAL PROPERTY ASSET" means, at any time of determination, any
interest then owned by any Loan Party in any real property.
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"RECAPITALIZATION AGREEMENT" means that certain Agreement and
Plan of Merger between Company and Newco dated as of August 10, 1997,
in the form delivered to Arranger, Administrative Agent and Lenders
prior to their execution of the Existing Revolving Loan Credit
Agreement and as such agreement may hereafter be amended from time to
time thereafter to the extent permitted under subsection 7.15A.
"RECAPITALIZATION CONSIDERATION" means payments required under
Article II of the Recapitalization Agreement.
"RECAPITALIZATION DOCUMENTS" means the Recapitalization
Agreement and all other instruments or documents relating to the
Recapitalization Agreement.
"RECAPITALIZATION FINANCING REQUIREMENTS" means the aggregate
of all amounts necessary (i) to pay the Recapitalization Consideration,
(ii) to refinance all Indebtedness outstanding under the Existing
Amscan Credit Agreements, and (iii) to pay Recapitalization Transaction
Costs.
"RECAPITALIZATION TRANSACTION COSTS" means the fees, costs and
expenses payable by Company in connection with the transactions
contemplated by the Loan Documents and the Related Agreements, in each
case as in effect on the Closing Date.
"RECORDED LEASEHOLD INTEREST" means a Leasehold Property with
respect to which a Record Document (as hereinafter defined) has been
recorded in all places necessary or desirable, in Collateral Agent's
reasonable judgment, to give constructive notice of such Leasehold
Property to third-party purchasers and encumbrancers of the affected
real property. For purposes of this definition, the term "RECORD
DOCUMENT" means, with respect to any Leasehold Property, (a) the lease
evidencing such Leasehold Property or a memorandum thereof, executed
and acknowledged by the owner of the affected real property, as lessor,
or (b) if such Leasehold Property was acquired or subleased from the
holder of a Recorded Leasehold Interest, the applicable assignment or
sublease document, executed and acknowledged by such holder, in each
case in form sufficient to give such constructive notice upon
recordation and otherwise in form reasonably satisfactory to
Administrative Agent.
"REGISTER" has the meaning assigned to that term in subsection
2.1D.
"REGULATION D" means Regulation D of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
"REIMBURSEMENT DATE" has the meaning assigned to that term in
subsection 3.3B.
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"RELATED AGREEMENTS" means, collectively, the Certificate of
Merger, the Stockholders Agreement, the Employment Agreements, the Tax
Indemnification Agreement, the Recapitalization Agreement and the
Senior Subordinated Note Indenture.
"RELATED FUND" means, with respect to any Lender that is a
fund that invests in commercial loans, any other fund that invests in
commercial loans and is managed by the same investment advisor as such
Lender or by an Affiliate of such investment advisor.
"RELEASE" means any release, spill, emission, leaking,
pumping, pouring, injection, escaping, deposit, disposal, discharge,
dispersal, dumping, leaching or migration of Hazardous Materials into
the indoor or outdoor environment (including the abandonment or
disposal of any barrels, containers or other closed receptacles
containing any Hazardous Materials), including the movement of any
Hazardous Materials through the air, soil, surface water or
groundwater.
"REPLACEMENT LENDER" has the meaning assigned to that term in
subsection 2.10.
"REQUIREMENT OF LAW" means, with respect to any Person, (i)
the certificate or articles of incorporation, by-laws and other
organizational or governing documents of such Person, (ii) any law,
treaty, rule, regulation or determination of an arbitrator, court or
other governmental authority binding on such Person or any of its
property, or (iii) any franchise, license, lease, permit, certificate,
authorization, qualification, easement, right of way, or right of
approval binding on such Person or any of its property.
"REQUIRED PREPAYMENT DATE" has the meaning assigned to that
term in subsection 2.4.
"REQUISITE LENDERS" means Lenders having or holding more than
50% of the aggregate Revolving Loan Exposure of all Lenders.
"RESTATEMENT EFFECTIVE DATE" means the date on or before
October 31, 1998 on which (i) the conditions precedent to the
effectiveness of this Agreement set forth in subsection 4.1 shall be
satisfied and (ii) the conditions precedent set forth in subsection 4.2
shall be satisfied or waived in accordance with the terms hereof.
"RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class
of stock of Company now or hereafter outstanding, except a dividend
payable solely in shares of that class of stock to the holders of that
class, (ii) any redemption, retirement, sinking fund or similar
payment, purchase or other acquisition for value, direct or indirect,
of any shares of
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any class of stock of Company now or hereafter outstanding, (iii) any
payment made to retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire shares of any class of
stock of Company now or hereafter outstanding, and (iv) any payment or
prepayment of principal of, premium, if any, or interest on, or
redemption, purchase, retirement, defeasance (including in-substance or
legal defeasance), sinking fund or similar payment with respect to, any
Subordinated Indebtedness.
"REVOLVING LOAN COMMITMENT" means the commitment of a Lender
to make Revolving Loans to Company pursuant to subsection 2.1A, and
"REVOLVING LOAN COMMITMENTS" means such commitments of all Lenders in
the aggregate.
"REVOLVING LOAN COMMITMENT TERMINATION DATE" means December
31, 2002.
"REVOLVING LOAN DOCUMENTS" means this Agreement, the Revolving
Notes, the Letters of Credit (and any applications for, or
reimbursement agreements or other documents or certificates executed by
Company in favor of an Issuing Lender relating to, the Letters of
Credit), the Subsidiary Guaranty, the Collateral Documents, any Hedging
Agreements with Lenders and the Intercreditor Agreement.
"REVOLVING LOAN EXPOSURE" means, with respect to any Lender as
of any date of determination (i) prior to the termination of the
Revolving Loan Commitments, that Lender's Revolving Loan Commitment and
(ii) after the termination of the Revolving Loan Commitments, the sum
of (a) the aggregate outstanding principal amount of the Revolving
Loans of that Lender plus (b) in the event that Lender is an Issuing
Lender, the aggregate Letter of Credit Usage in respect of all Letters
of Credit issued by that Lender (in each case net of any participations
purchased by other Lenders in such Letters of Credit or any
unreimbursed drawings thereunder) plus (c) the aggregate amount of all
participations purchased by that Lender in any outstanding Letters of
Credit or any unreimbursed drawings under any Letters of Credit.
"REVOLVING LOANS" means the loans made by Lenders to Company
pursuant to subsection 2.1A.
"REVOLVING NOTES" means (i) the promissory notes of Company
issued pursuant to subsection 2.1E on the Closing Date and (ii) any
promissory notes issued by Company pursuant to the last sentence of
subsection 10.1B(i) in connection with assignments of the Revolving
Loan Commitments and Revolving Loans of any Lenders, in each case
substantially in the form of Exhibit V annexed hereto, as they may be
amended, supplemented or otherwise modified from time to time.
"SEASONAL/PROMOTIONAL ACCOUNTS" means (i) Accounts relating to
sales of merchandise which Accounts are categorized as seasonal by the
Company consistent
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with past practices and (ii) Accounts which are categorized as
promotional consistent with past practices of the Company because such
Accounts are with new Account Debtors (including, without limitation,
new stores for existing Account Debtors) or relate to new products.
"SECURED PARTIES" has the meaning assigned to that term in the
introduction to this Agreement.
"SECURITIES" means any stock, shares, partnership interests,
voting trust certificates, certificates of interest or participation in
any profit-sharing agreement or arrangement, options, warrants, bonds,
debentures, notes, or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise, or in general any
instruments commonly known as "securities" or any certificates of
interest, shares or participations in temporary or interim certificates
for the purchase or acquisition of, or any right to subscribe to,
purchase or acquire, any of the foregoing provided that "Securities"
shall not include any earnout agreement or obligation or any employee
bonus or other incentive compensation plan or agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended
from time to time, and any successor statute.
"SENIOR SUBORDINATED NOTE INDENTURE" means the indenture
pursuant to which the Senior Subordinated Notes are issued, as such
indenture may hereafter be amended from time to time to the extent
permitted under subsection 7.15B.
"SENIOR SUBORDINATED NOTES" means the $110,000,000 in
aggregate principal amount of 9,875% Senior Subordinated Notes due 2007
of Company issued pursuant to the Senior Subordinated Note Indenture.
"SOLVENT" means, with respect to any Person, that as of the
date of determination both (A) (i) the then fair saleable value of the
property of such Person is (y) greater than the total amount of
liabilities (including contingent liabilities) of such Person and (z)
not less than the amount that will be required to pay the probable
liabilities on such Person's then existing debts as they become
absolute and matured considering all financing alternatives and
potential asset sales reasonably available to such Person; (ii) such
Person's capital is not unreasonably small in relation to its business
or any contemplated or undertaken transaction; and (iii) such Person
does not intend to incur, or believe (nor should it reasonably believe)
that it will incur, debts beyond its ability to pay such debts as they
become due; and (B) such Person is "solvent" within the meaning given
that term and similar terms under applicable laws relating to
fraudulent transfers and conveyances. For purposes of this definition,
the amount of any contingent liability at any time shall be computed as
the amount that, in light of all of the facts and circumstances
existing at such time, represents the amount that can reasonably be
expected to become an actual or matured liability.
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"STANDBY LETTER OF CREDIT" means any standby letter of credit
or similar instrument issued for the purpose of supporting (i)
Indebtedness of Company or any of its Subsidiaries in respect of
industrial revenue or development bonds or financings, (ii) workers'
compensation liabilities of Company or any of its Subsidiaries, (iii)
the obligations of third party insurers of Company or any of its
Subsidiaries arising by virtue of the laws of any jurisdiction
requiring third party insurers, (iv) obligations with respect to
Capital Leases or Operating Leases of Company or any of its
Subsidiaries, and (v) performance, payment, deposit or surety
obligations of Company or any of its Subsidiaries, in any case if
required by law or governmental rule or regulation or in accordance
with custom and practice in the industry; provided that Standby Letters
of Credit may not be issued for the purpose of supporting (a) trade
payables or (b) any Indebtedness constituting "antecedent debt" (as
that term is used in Section 547 of the Bankruptcy Code).
"STOCKHOLDERS AGREEMENT" means the Stockholders Agreement
dated as of December 19, 1997 by and among Company, GSII, the Estate of
John A. Svenningsen and certain other individuals and as such agreement
may heretofore have been or hereafter may be amended from time to time
to the extent permitted under subsection 7.14A of the Existing
Revolving Loan Credit Agreement or subsection 7.13 of this Agreement.
"SUBORDINATED INDEBTEDNESS" means (i) the Indebtedness of
Company evidenced by the Senior Subordinated Notes and (ii) any other
Indebtedness of Company subordinated in right of payment to the
Obligations pursuant to documentation containing maturities,
amortization schedules, covenants, defaults, remedies, subordination
provisions and other material terms in form and substance satisfactory
to Administrative Agent and Requisite Lenders.
"SUBSIDIARY" means, with respect to any Person, any
corporation, partnership, limited liability company, association, joint
venture or other business entity of which more than 50% of the total
voting power of shares of stock or other ownership interests entitled
(without regard to the occurrence of any contingency) to vote in the
election of the Person or Persons (whether directors, managers,
trustees or other Persons performing similar functions) having the
power to direct or cause the direction of the management and policies
thereof is at the time owned or controlled, directly or indirectly, by
that Person or one or more of the other Subsidiaries of that Person or
a combination thereof.
"SUBSIDIARY GUARANTOR" means, collectively, (i) any Subsidiary
of Company that executed and delivered a counterpart of the Subsidiary
Guaranty on the Closing Date or from time to time thereafter pursuant
to subsection 6.8 of the Existing Revolving Loan Credit Agreement and
(ii) any Subsidiary of Company that executes and delivers a counterpart
of the Subsidiary Guaranty on the Restatement Effective Date or from
time to time thereafter pursuant to subsection 6.8.
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"SUBSIDIARY GUARANTY" means the Subsidiary Guaranty (i)
heretofore executed and delivered by certain existing Domestic
Subsidiaries of Company on the Closing Date or from time to time
thereafter in accordance with subsection 6.8 of the Existing Revolving
Loan Credit Agreement and (ii) to be executed and delivered by
additional Domestic Subsidiaries of Company on the Restatement
Effective Date and from time to time thereafter in accordance with
subsection 6.8, substantially in the form of Exhibit XIV annexed
hereto, as such Subsidiary Guaranty may heretofore have been or
hereafter may be amended, supplemented or otherwise modified from time
to time.
"SUBSIDIARY PATENT AND TRADEMARK SECURITY AGREEMENT" means (i)
each Subsidiary Patent and Trademark Security Agreement executed and
delivered by any Subsidiary Guarantor on the Restatement Effective Date
and (ii) each Subsidiary Patent and Trademark Security Agreement
executed and delivered by any additional Subsidiary Guarantor from time
to time thereafter in accordance with subsection 6.8, in each case
substantially in the form of Exhibit XX annexed hereto, as such
Subsidiary Patent and Trademark Security Agreement may hereafter be
amended, supplemented or otherwise modified from time to time, and
"SUBSIDIARY PATENT AND TRADEMARK SECURITY AGREEMENTS" means all such
Subsidiary Patent and Trademark Security Agreements, collectively.
"SUBSIDIARY PLEDGE AGREEMENT" means (i) each Subsidiary Pledge
Agreement executed and delivered by an existing Subsidiary Guarantor on
the Closing Date or from time to time thereafter in accordance with
subsection 6.8 of the Existing Revolving Loan Credit Agreement, (ii)
each Subsidiary Pledge Agreement executed and delivered by a new
Subsidiary Guarantor on the Restatement Effective Date, and (iii) each
Subsidiary Pledge Agreement executed and delivered by any additional
Subsidiary Guarantor from time to time thereafter in accordance with
subsection 6.8, in each case substantially in the form of Exhibit XV
annexed hereto, as such Subsidiary Pledge Agreement may heretofore have
been or hereafter may be amended, supplemented or otherwise modified
from time to time, and "SUBSIDIARY PLEDGE AGREEMENTS" means all such
Subsidiary Pledge Agreements, collectively.
"SUBSIDIARY SECURITY AGREEMENT" means (i) each Subsidiary
Security Agreement executed and delivered by an existing Subsidiary
Guarantor on the Closing Date or from time to time thereafter in
accordance with subsection 6.8 of the Existing Revolving Loan Credit
Agreement, (ii) each Subsidiary Security Agreement executed and
delivered by a new Subsidiary Guarantor on the Restatement Effective
Date, and (iii) each Subsidiary Security Agreement executed and
delivered by any additional Subsidiary Guarantor from time to time
thereafter in accordance with subsection 5.8, in each case
substantially in the form of Exhibit XVI annexed hereto, as such
Subsidiary Security Agreement may heretofore have been or hereafter may
be amended, supplemented or otherwise modified from time to time, and
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"SUBSIDIARY SECURITY AGREEMENTS" means all such Subsidiary Security
Agreements, collectively.
"SUPPLEMENTAL COLLATERAL AGENT" has the meaning assigned to
that term in subsection 9.1D.
"SYNDICATION AGENT" has the meaning assigned to that term in
the introduction to this Agreement.
"TAX" or "TAXES" means any present or future tax, levy,
impost, duty, charge, fee, deduction or withholding of any nature and
whatever called, by whomsoever, on whomsoever and wherever imposed,
levied, collected, withheld or assessed; provided that "TAX ON THE
OVERALL NET INCOME" of a Person shall be construed as a reference to a
tax imposed by the jurisdiction in which that Person is organized or in
which that Person's principal office (and/or, in the case of a Lender,
its lending office) is located or in which that Person (and/or, in the
case of a Lender, its lending office) is deemed to be doing business on
all or part of the net income, profits or gains (whether worldwide, or
only insofar as such income, profits or gains are considered to arise
in or to relate to a particular jurisdiction, or otherwise) of that
Person (and/or, in the case of a Lender, its lending office).
"TAX INDEMNIFICATION AGREEMENT" means the Tax Indemnification
Agreement dated as of August 10, 1997 by and between Company, Christine
Svenningsen and the Estate of John A. Svenningsen and as such agreement
may heretofore have been or hereafter may be amended from time to time
to the extent permitted under subsection 7.14A of the Existing
Revolving Loan Credit Agreement or subsection 7.13 of this Agreement.
"TERMINATED LENDER" has the meaning assigned to that term in
subsection 2.10.
"TITLE COMPANY" means, collectively one or more title
insurance companies that are members of ALTA and are reasonably
satisfactory to Arranger and Administrative Agent.
"TOTAL UTILIZATION OF REVOLVING LOAN COMMITMENTS" means, as at
any date of determination, the sum of (i) the aggregate principal
amount of all outstanding Revolving Loans (other than Revolving Loans
made for the purpose of reimbursing the applicable Issuing Lender for
any amount drawn under any Letter of Credit but not yet so applied)
plus (ii) the Letter of Credit Usage.
"UCC" means the Uniform Commercial Code (or any similar or
equivalent legislation) as in effect in any applicable jurisdiction.
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"UNREINVESTED ASSET SALE PROCEEDS" means that portion, if any,
of any Net Asset Sale Proceeds that shall not have been reinvested by
Company and its Subsidiaries in the business of Company and its
Subsidiaries within six months after the date of receipt by Company or
any of its Subsidiaries of such Net Asset Sale Proceeds or, in the case
of Net Asset Sale Proceeds from the sale of the Chester, New York,
Montreal, Quebec or Melbourne, Australia properties, (i) that portion
of Net Asset Sale Proceeds that is not subject to a binding agreement
with a third party to reinvest such Net Asset Sale Proceeds entered
into within six months after the date of receipt of such Net Asset Sale
Proceeds or (ii) if subject to such a binding agreement, that portion
of such Net Asset Sale Proceeds that shall not have been reinvested
within nine months of such binding agreement, such reinvestment to be
evidenced by an Officers' Certificate, satisfactory in form and
substance to Administrative Agent, delivered by Company to
Administrative Agent prior to the expiration of such six-month period
and demonstrating in reasonable detail the reinvestment of such Net
Asset Sale Proceeds as aforesaid.
1.2 ACCOUNTING TERMS; UTILIZATION OF GAAP FOR PURPOSES OF CALCULATIONS
UNDER AGREEMENT
Except as otherwise expressly provided in this Agreement, all
accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP. Financial statements and other information
required to be delivered by Company to Lenders pursuant to clauses (i), (ii),
(iii) and (xiii) of subsection 6.1 shall be prepared in accordance with GAAP as
in effect at the time of such preparation (and delivered together with the
reconciliation statements provided for in subsection 6.1(v)). Calculations in
connection with the definitions, covenants and other provisions of this
Agreement shall utilize accounting principles and policies in conformity with
those used to prepare the financial statements referred to in subsection 5.3.
1.3 OTHER DEFINITIONAL PROVISIONS AND RULES OF CONSTRUCTION.
A. Any of the terms defined herein may, unless the context otherwise
requires, be used in the singular or the plural, depending on the reference.
B. References to "Sections" and "subsections" shall be to Sections and
subsections, respectively, of this Agreement unless otherwise specifically
provided.
C. The use herein of the word "include" or "including", when following
any general statement, term or matter, shall not be construed to limit such
statement, term or matter to the specific items or matters set forth immediately
following such word or to similar items or matters, whether or not nonlimiting
language (such as "without limitation" or "but not limited to" or words of
similar import) is used with reference thereto, but rather
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shall be deemed to refer to all other items or matters that fall within the
broadest possible scope of such general statement, term or matter.
SECTION 2.
AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 COMMITMENTS; MAKING OF LOANS; THE REGISTER; NOTES.
A. COMMITMENTS. Subject to the terms and conditions of this Agreement
and in reliance upon the representations and warranties of Company herein set
forth, each Lender hereby severally agrees, subject to the limitations set forth
below with respect to the maximum amount of Revolving Loans permitted to be
outstanding from time to time, to maintain or to lend to Company, as the case
may be, from time to time during the period from the Restatement Effective Date
to but excluding the Revolving Loan Commitment Termination Date, an aggregate
amount not exceeding its Pro Rata Share of the aggregate amount of the Revolving
Loan Commitments to be used for the purposes identified in subsection 2.5A.
Company acknowledges and confirms that each Existing Lender holds Existing
Revolving Loans in the respective principal amounts outstanding prior to the
Restatement Effective Date set forth opposite its name on Schedule 2.1 annexed
hereto. The aggregate amount of the Revolving Loan Commitments as of the
Restatement Effective Date is $50,000,000; provided that the Revolving Loan
Commitments of Lenders shall be adjusted to give effect to any assignments of
the Revolving Loan Commitments pursuant to subsection 10.1B; and provided,
further that the amount of the Revolving Loan Commitments shall be reduced from
time to time by the amount of any reductions thereto made pursuant to
subsections 2.4A(ii) and 2.4A(iii). Company hereby represents, warrants, agrees,
covenants and (1) reaffirms that it has no defense, set off, claim or
counterclaim against any Agent or Lender in regard to its Obligations in respect
of such Existing Revolving Loans and (2) reaffirms its obligation to pay such
Existing Revolving Loans in accordance with the terms and conditions of this
Agreement and the other Loan Documents. Based on the foregoing, (A) Company and
each Lender agree that the Existing Revolving Loans and any amounts owed
(whether or not presently due and payable, and including all interest accrued to
the Restatement Effective Date (which shall be payable on the next Interest
Payment Date with respect to the Revolving Loans to which such interest
relates)) by Company to Lenders thereunder or in respect thereof shall, as of
the Restatement Effective Date, be converted to, maintained as, and owed by
Company under and in respect of Revolving Loans hereunder. Each Lender's
Revolving Loan Commitment shall expire on the Revolving Loan Commitment
Termination Date and all Revolving Loans and all other amounts owed hereunder
with respect to the Revolving Loans and the Revolving Loan Commitments shall be
paid in full no later than that date. Amounts borrowed under this subsection
2.1A may be repaid and reborrowed to but excluding the Revolving Loan Commitment
Termination Date.
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Anything contained in this Agreement to the contrary notwithstanding,
the Revolving Loans and the Revolving Loan Commitments shall be subject to the
following limitations in the amounts and during the periods indicated:
(i) in no event shall the Total Utilization of Revolving Loan
Commitments at any time exceed either (a) the Revolving Loan
Commitments then in effect or (b) the sum of the Borrowing Base then in
effect plus (1) all amounts up to $23,500,000 spent on the Anagram
Acquisition and (2) all amounts spent through such time on Permitted
Business Acquisitions (in each case other than amounts funded through
equity issuances or indebtedness other than Revolving Loans); and
(ii) for 30 consecutive days during each consecutive twelve-month
period, the aggregate outstanding principal amount of all Revolving
Loans shall not exceed $10,000,000 plus (1) all amounts up to
$23,500,000 spent on the Anagram Acquisition and (2) all amounts spent
through any given date of determination on Permitted Business
Acquisitions (in each case other than amounts funded through equity
issuances or indebtedness other than Revolving Loans).
B. BORROWING MECHANICS. Revolving Loans made on any Funding Date (other
than Revolving Loans made pursuant to subsection 3.3B for the purpose of
reimbursing any Issuing Lender for the amount of a drawing under a Letter of
Credit issued by it) shall be in an aggregate minimum amount of (x) $1,000,000
and integral multiples of $100,000 in excess of that amount in the case of
Eurodollar Rate Loans and (y) $100,000 and integral multiples of $100,000 in
excess of that amount in the case of Base Rate Loans. Whenever Company desires
that Lenders make Revolving Loans it shall deliver to Administrative Agent a
Notice of Borrowing no later than 10:00 A.M. (New York City time) at least three
Business Days in advance of the proposed Funding Date (in the case of a
Eurodollar Rate Loan) or at least one Business Day in advance of the proposed
Funding Date (in the case of a Base Rate Loan). The Notice of Borrowing shall
specify (i) the proposed Funding Date (which shall be a Business Day), (ii) the
amount requested, (iii) whether such Revolving Loans shall be Base Rate Loans or
Eurodollar Rate Loans, (iv) in the case of any Revolving Loans requested to be
made as Eurodollar Rate Loans, the initial Interest Period requested therefor
and (v) that, after giving effect to the requested Revolving Loans, the Total
Utilization of Revolving Loan Commitments will not exceed the Revolving Loan
Commitment then in effect or the sum of the Borrowing Base then in effect plus
amounts (up to $23,500,000) spent on the Anagram Acquisition plus amounts spent
on Permitted Business Acquisitions (in each case other than amounts funded
through equity issuances or indebtedness other than Revolving Loans). Revolving
Loans may be continued as or converted into Base Rate Loans and Eurodollar Rate
Loans in the manner provided in subsection 2.2D. In lieu of delivering the
above-described Notice of Borrowing, Company may give Administrative Agent
telephonic notice by the required time of any proposed borrowing under this
subsection 2.1B; provided that such notice shall be promptly confirmed in
writing by delivery of a Notice of Borrowing to Administrative Agent on or
before the applicable Funding Date.
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Neither Administrative Agent nor any Lender shall incur any liability
to Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to borrow on behalf of Company or
for otherwise acting in good faith under this subsection 2.1B, and upon funding
of Revolving Loans by Lenders in accordance with this Agreement pursuant to any
such telephonic notice Company shall have effected Revolving Loans hereunder.
Company shall notify Administrative Agent prior to the funding of any
Revolving Loans in the event that any of the matters to which Company is
required to certify in the applicable Notice of Borrowing is no longer true and
correct as of the applicable Funding Date, and the acceptance by Company of the
proceeds of any Revolving Loans shall constitute a re-certification by Company,
as of the applicable Funding Date, as to the matters to which Company is
required to certify in the applicable Notice of Borrowing.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a
Notice of Borrowing for a Eurodollar Rate Loan (or telephonic notice in lieu
thereof) shall be irrevocable on and after the related Interest Rate
Determination Date, and Company shall be bound to make a borrowing in accordance
therewith.
C. DISBURSEMENT OF FUNDS. All Revolving Loans under this Agreement
shall be made by Lenders simultaneously and proportionately to their respective
Pro Rata Shares, it being understood that no Lender shall be responsible for any
default by any other Lender in that other Lender's obligation to make a
Revolving Loan requested hereunder nor shall the Revolving Loan Commitment of
any Lender be increased or decreased as a result of a default by any other
Lender in that other Lender's obligation to make a Revolving Loan requested
hereunder. Promptly after receipt by Administrative Agent of a Notice of
Borrowing pursuant to subsection 2.1B (or telephonic notice in lieu thereof),
Administrative Agent shall notify each Lender of the proposed borrowing. Each
Lender shall make the amount of its Revolving Loan available to Administrative
Agent not later than 12:00 Noon (New York City time) on the applicable Funding
Date, in same day funds in Dollars, at the Funding and Payment Office. Except as
provided in subsection 3.3B with respect to Revolving Loans used to reimburse
any Issuing Lender for the amount of a drawing under a Letter of Credit issued
by it, upon satisfaction or waiver of the conditions precedent specified in
subsections 4.1 (in the case of Revolving Loans made on the Closing Date) and
4.2 (in the case of all Revolving Loans), Administrative Agent shall make the
proceeds of such Revolving Loans available to Company on the applicable Funding
Date by causing an amount of same day funds in Dollars equal to the proceeds of
all such Revolving Loans received by Administrative Agent from Lenders to be
credited to the account of Company at the Funding and Payment Office.
Unless Administrative Agent shall have been notified by any Lender
prior to the Funding Date for any Revolving Loans that such Lender does not
intend to make available to Administrative Agent the amount of such Lender's
Revolving Loan requested on such
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Funding Date, Administrative Agent may assume that such Lender has made such
amount available to Administrative Agent on such Funding Date and Administrative
Agent may, in its sole discretion, but shall not be obligated to, make available
to Company a corresponding amount on such Funding Date. If such corresponding
amount is not in fact made available to Administrative Agent by such Lender,
Administrative Agent shall be entitled to recover such corresponding amount on
demand from such Lender together with interest thereon, for each day from such
Funding Date until the date such amount is paid to Administrative Agent, at the
customary rate set by Administrative Agent for the correction of errors among
banks for three Business Days and thereafter at the Base Rate. If such Lender
does not pay such corresponding amount forthwith upon Administrative Agent's
demand therefor, Administrative Agent shall promptly notify Company and Company
shall immediately pay such corresponding amount to Administrative Agent together
with interest thereon, for each day from such Funding Date until the date such
amount is paid to Administrative Agent, at the rate payable under this Agreement
for Base Rate Loans. Nothing in this subsection 2.1C shall be deemed to relieve
any Lender from its obligation to fulfill its Revolving Loan Commitments
hereunder or to prejudice any rights that Company may have against any Lender as
a result of any default by such Lender hereunder.
D. THE REGISTER.
(i) Administrative Agent shall maintain, at its address
referred to in subsection 10.8, a register for the recordation of the
names and addresses of Lenders and the Revolving Loan Commitments and
Revolving Loans of each Lender from time to time (the "REGISTER"). The
Register shall be available for inspection by Company or any Lender at
any reasonable time and from time to time upon reasonable prior notice.
(ii) Administrative Agent shall record in the Register the
Revolving Loan Commitment and the Revolving Loans from time to time of
each Lender and each repayment or prepayment in respect of the
principal amount of the Revolving Loans of each Lender. Any such
recordation shall be conclusive and binding on Company and each Lender,
absent manifest error; provided that failure to make any such
recordation, or any error in such recordation, shall not affect any
Lender's Revolving Loan Commitments or Company's Obligations in respect
of any applicable Revolving Loans.
(iii) Each Lender shall record on its internal records
(including the Notes held by such Lender) the amount of each Revolving
Loan made by it and each payment in respect thereof. Any such
recordation shall be conclusive and binding on Company, absent manifest
error; provided that failure to make any such recordation, or any error
in such recordation, shall not affect any Lender's Revolving Loan
Commitments or Company's Obligations in respect of any applicable
Revolving Loans; and provided, further that in the event of any
inconsistency between the Register and any Lender's records, the
recordations in the Register shall govern.
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(iv) Company, Administrative Agent and Lenders shall deem and
treat the Persons listed as Lenders in the Register as the holders and
owners of the corresponding Revolving Loan Commitments and Revolving
Loans listed therein for all purposes hereof, and no assignment or
transfer of any such Revolving Loan Commitment or Revolving Loan shall
be effective, in each case unless and until an Assignment Agreement
effecting the assignment or transfer thereof shall have been accepted
by Administrative Agent and recorded in the Register as provided in
subsection 10.1B(ii). Prior to such recordation, all amounts owed with
respect to the applicable Revolving Loan Commitment or Revolving Loan
shall be owed to the Lender listed in the Register as the owner
thereof, and any request, authority or consent of any Person who, at
the time of making such request or giving such authority or consent, is
listed in the Register as a Lender shall be conclusive and binding on
any subsequent holder, assignee or transferee of the corresponding
Revolving Loan Commitments or Revolving Loans.
(v) Company hereby designates Fleet to serve as Company's
agent solely for purposes of maintaining the Register as provided in
this subsection 2.1D, and Company hereby agrees that, to the extent
Fleet serves in such capacity, Fleet and its officers, directors,
employees, agents and affiliates shall constitute Indemnitees for all
purposes under subsection 10.3.
E. NOTES. Company has executed and delivered on the Closing Date to
each Lender (or to Administrative Agent for that Lender) a Revolving Note
substantially in the form of Exhibit V annexed hereto to evidence that Lender's
Revolving Loans, in the principal amount of that Lender's Revolving Loan
Commitment and with other appropriate insertions.
2.2 INTEREST ON THE REVOLVING LOANS.
A. RATE OF INTEREST. Subject to the provisions of subsections 2.6 and
2.7, each Revolving Loan shall bear interest on the unpaid principal amount
thereof from the date made through maturity (whether by acceleration or
otherwise) at a rate determined by reference to the Base Rate or the Adjusted
Eurodollar Rate. The applicable basis for determining the rate of interest with
respect to any Revolving Loan shall be selected by Company initially at the time
a Notice of Borrowing is given with respect to such Revolving Loan pursuant to
subsection 2.1B. The basis for determining the interest rate with respect to any
Revolving Loan may be changed from time to time pursuant to subsection 2.2D. If
on any day a Revolving Loan is outstanding with respect to which notice has not
been delivered to Administrative Agent in accordance with the terms of this
Agreement specifying the applicable basis for determining the rate of interest,
then for that day that Revolving Loan shall bear interest determined by
reference to the Base Rate. Subject to the provisions of subsections 2.2E and
2.7, the Revolving Loans shall bear interest through maturity as follows:
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(i) if a Base Rate Loan, then at the sum of the Base Rate plus
the Applicable Revolving Base Rate Margin then in effect; or
(ii) if a Eurodollar Rate Loan, then at the sum of the
Adjusted Eurodollar Rate plus the Applicable Revolving Eurodollar Rate
Margin then in effect.
B. INTEREST PERIODS. In connection with each Eurodollar Rate Loan,
Company may, pursuant to the applicable Notice of Borrowing or Notice of
Conversion/Continuation, as the case may be, select an interest period (each an
"INTEREST PERIOD") to be applicable to such Revolving Loan, which Interest
Period shall be, at Company's option, either a one-, two-, three-or six-month
period; provided that:
(i) the initial Interest Period for any Eurodollar Rate Loan
shall commence on the Funding Date in respect of such Revolving Loan,
in the case of a Revolving Loan initially made as a Eurodollar Rate
Loan, or on the date specified in the applicable Notice of
Conversion/Continuation, in the case of a Revolving Loan converted to a
Eurodollar Rate Loan;
(ii) in the case of immediately successive Interest Periods
applicable to a Eurodollar Rate Loan continued as such pursuant to a
Notice of Conversion/Continuation, each successive Interest Period
shall commence on the day on which the next preceding Interest Period
expires;
(iii) if an Interest Period would otherwise expire on a day
that is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day; provided that, if any Interest Period
would otherwise expire on a day that is not a Business Day but is a day
of the month after which no further Business Day occurs in such month,
such Interest Period shall expire on the next preceding Business Day;
(iv) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall, subject to clause (v) of this subsection 2.2B, end on
the last Business Day of a calendar month;
(v) no Interest Period with respect to any portion of the
Revolving Loans shall extend beyond the Revolving Loan Commitment
Termination Date;
(vi) there shall be no more than seven (7) Interest Periods
outstanding at any time under this Agreement and the AXEL Credit
Agreement; and
(vii) in the event Company fails to specify an Interest Period
for any Eurodollar Rate Loan in the applicable Notice of Borrowing or
Notice of Conversion/Continuation, Company shall be deemed to have
selected an Interest Period of one month.
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C. INTEREST PAYMENTS. Subject to the provisions of subsection 2.2E,
interest on each Revolving Loan shall be payable in arrears on and to each
Interest Payment Date applicable to that Revolving Loan, upon any prepayment of
that Revolving Loan (to the extent accrued on the amount being prepaid) and at
maturity (including final maturity); provided that in the event any Revolving
Loans that are Base Rate Loans are prepaid pursuant to subsection 2.4A(i),
interest accrued on such Revolving Loans through the date of such prepayment
shall be payable on the next succeeding Interest Payment Date applicable to Base
Rate Loans (or, if earlier, at final maturity).
D. CONVERSION OR CONTINUATION. Subject to the provisions of subsection
2.6, Company shall have the option (i) to convert at any time all or any part of
its outstanding Revolving Loans equal to $1,000,000 and integral multiples of
$100,000 in excess of that amount from Base Rate Loans to Eurodollar Rate Loans
or (ii) to convert at any time all or any part of its outstanding Revolving
Loans equal to $100,000 and integral multiples of $100,000 in excess of that
amount from Eurodollar Rate Loans to Base Rate Loans upon the expiration of any
Interest Period applicable to a Eurodollar Rate Loan, to continue all or any
portion of such Revolving Loan equal to $1,000,000 and integral multiples of
$100,000 in excess of that amount as a Eurodollar Rate Loan; provided, however,
that a Eurodollar Rate Loan may only be converted into a Base Rate Loan on the
expiration date of an Interest Period applicable thereto.
Company shall deliver a Notice of Conversion/Continuation to
Administrative Agent no later than 10:00 A.M. (New York City time) at least one
Business Day in advance of the proposed conversion date (in the case of a
conversion to a Base Rate Loan) and at least three Business Days in advance of
the proposed conversion/continuation date (in the case of a conversion to, or a
continuation of, a Eurodollar Rate Loan). A Notice of Conversion/Continuation
shall specify (i) the proposed conversion/continuation date (which shall be a
Business Day), (ii) the amount to be converted/continued, (iii) the nature of
the proposed conversion/continuation, (iv) in the case of a conversion to, or a
continuation of, a Eurodollar Rate Loan, the requested Interest Period, and (v)
in the case of a conversion to, or a continuation of, a Eurodollar Rate Loan,
that no Potential Event of Default or Event of Default has occurred and is
continuing. In lieu of delivering the above-described Notice of
Conversion/Continuation, Company may give Administrative Agent telephonic notice
by the required time of any proposed conversion/continuation under this
subsection 2.2D; provided that such notice shall be promptly confirmed in
writing by delivery of a Notice of Conversion/Continuation to Administrative
Agent on or before the proposed conversion/continuation date. Upon receipt of
written or telephonic notice of any proposed conversion/continuation under this
subsection 2.2D, Administrative Agent shall promptly transmit such notice by
telefacsimile or telephone to each Lender.
Neither Administrative Agent nor any Lender shall incur any liability
to Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to act on behalf of Company or for
otherwise acting in good faith under this subsection 2.2D,
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and upon conversion or continuation of the applicable basis for determining the
interest rate with respect to any Revolving Loans in accordance with this
Agreement pursuant to any such telephonic notice Company shall have effected a
conversion or continuation, as the case may be, hereunder.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a
Notice of Conversion/Continuation for conversion to, or continuation of, a
Eurodollar Rate Loan (or telephonic notice in lieu thereof) shall be irrevocable
on and after the related Interest Rate Determination Date, and Company shall be
bound to effect a conversion or continuation in accordance therewith.
E. DEFAULT RATE. Upon the occurrence and during the continuation of any
Event of Default, the outstanding principal amount of all Revolving Loans and,
to the extent permitted by applicable law, any interest payments thereon not
paid when due and any fees and other amounts then due and payable hereunder,
shall thereafter bear interest (including post-petition interest in any
proceeding under the Bankruptcy Code or other applicable bankruptcy laws)
payable upon demand at a rate that is 2% per annum in excess of the interest
rate otherwise payable under this Agreement with respect to the applicable
Revolving Loans (or, in the case of any such fees and other amounts, at a rate
which is 2% per annum in excess of the interest rate otherwise payable under
this Agreement for Base Rate Loans); provided that, in the case of Eurodollar
Rate Loans, upon the expiration of the Interest Period in effect at the time any
such increase in interest rate is effective such Eurodollar Rate Loans shall
thereupon become Base Rate Loans and shall thereafter bear interest payable upon
demand at a rate which is 2% per annum in excess of the interest rate otherwise
payable under this Agreement for Base Rate Loans. Payment or acceptance of the
increased rates of interest provided for in this subsection 2.2E is not a
permitted alternative to timely payment and shall not constitute a waiver of any
Event of Default or otherwise prejudice or limit any rights or remedies of
Administrative Agent or any Lender.
F. COMPUTATION OF INTEREST. Interest on the Revolving Loans shall be
computed on the basis of a 360-day year, in each case for the actual number of
days elapsed in the period during which it accrues. In computing interest on any
Revolving Loan, the date of the making of such Revolving Loan or the first day
of an Interest Period applicable to such Revolving Loan or, with respect to a
Base Rate Loan being converted from a Eurodollar Rate Loan, the date of
conversion of such Eurodollar Rate Loan to such Base Rate Loan, as the case may
be, shall be included, and the date of payment of such Revolving Loan or the
expiration date of an Interest Period applicable to such Revolving Loan or, with
respect to a Base Rate Loan being converted to a Eurodollar Rate Loan, the date
of conversion of such Base Rate Loan to such Eurodollar Rate Loan, as the case
may be, shall be excluded; provided that if a Revolving Loan is repaid on the
same day on which it is made, one day's interest shall be paid on that Revolving
Loan.
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2.3 FEES.
A. COMMITMENT FEES. Company agrees to pay to Administrative Agent, for
distribution to each Lender in proportion to that Lender's Pro Rata Share,
commitment fees for the period from and including the Closing Date to and
excluding the Revolving Loan Commitment Termination Date equal to the average of
the daily excess of the Revolving Loan Commitments over the sum of (i) the
aggregate principal amount of outstanding Revolving Loans plus (ii) the Letter
of Credit Usage multiplied by the Applicable Commitment Fee Percentage such
commitment fees to be calculated on the basis of a 360-day year and the actual
number of days elapsed and to be payable quarterly in arrears on March 15, June
15, September 15 and December 15 of each year, commencing on the first such date
to occur after the Closing Date, and on the Revolving Loan Commitment
Termination Date.
B. OTHER FEES. Company agrees to pay to Arranger and Administrative
Agent (including fees payable to Administrative Agent for distribution to
Existing Lenders) such other fees in the amounts and at the times separately
agreed upon between Company, Arranger and Administrative Agent.
2.4 PREPAYMENTS AND REDUCTIONS IN REVOLVING LOAN COMMITMENTS; GENERAL
PROVISIONS REGARDING PAYMENTS; APPLICATION OF PROCEEDS OF COLLATERAL
AND PAYMENTS UNDER SUBSIDIARY GUARANTY.
A.PREPAYMENTS AND UNSCHEDULED REDUCTIONS IN REVOLVING LOAN COMMITMENTS.
(i) Voluntary Prepayments. Company may, upon not less than one
Business Day's prior written or telephonic notice, in the case of Base
Rate Loans, and three Business Days' prior written or telephonic
notice, in the case of Eurodollar Rate Loans, in each case given to
Administrative Agent by 12:00 Noon (New York City time) on the date
required and, if given by telephone, promptly confirmed in writing to
Administrative Agent (which original written or telephonic notice
Administrative Agent will promptly transmit by telefacsimile or
telephone to each Lender), at any time and from time to time prepay any
Revolving Loans on any Business Day in whole or in part in an aggregate
minimum amount of $1,000,000 and integral multiples of $500,000 in
excess of that amount. Notice of prepayment having been given as
aforesaid, the principal amount of the Revolving Loans specified in
such notice shall become due and payable on the prepayment date
specified therein. Any such voluntary prepayment shall be applied as
specified in subsection 2.4A(iv).
(ii) Voluntary Reductions of Revolving Loan Commitments.
Company may, upon not less than three Business Days' prior written or
telephonic notice confirmed in writing to Administrative Agent (which
original written or telephonic notice Administrative Agent will
promptly transmit by telefacsimile or telephone to each Lender), at any
time and from time to time terminate in whole or permanently
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reduce in part, without premium or penalty, the Revolving Loan
Commitments in an amount up to the amount by which the Revolving Loan
Commitments exceed the Total Utilization of Revolving Loan Commitments
at the time of such proposed termination or reduction; provided that
any such partial reduction of the Revolving Loan Commitments shall be
in an aggregate minimum amount of $1,000,000 and integral multiples of
$500,000 in excess of that amount. Company's notice to Administrative
Agent shall designate the date (which shall be a Business Day) of such
termination or reduction and the amount of any partial reduction, and
such termination or reduction of the Revolving Loan Commitments shall
be effective on the date specified in Company's notice and shall reduce
the Revolving Loan Commitment of each Lender proportionately to its Pro
Rata Share. Any such voluntary reduction of the Revolving Loan
Commitments shall be applied as specified in subsection 2.4A(iv).
(iii) Mandatory Prepayments and Mandatory Reductions of
Revolving Loan Commitments. The AXELs under the AXEL Credit Agreement
and the Revolving Loans shall be prepaid and/or the Revolving Loan
Commitments shall be permanently reduced in the amounts and under the
circumstances set forth below, all such prepayments and/or reductions
to be applied as set forth below or as more specifically provided in
subsection 2.4A(iv):
(a) Prepayments and Reductions From Unreinvested
Asset Sale Proceeds. No later than the first Business Day
following the date on which any Net Asset Sale Proceeds become
Unreinvested Asset Sale Proceeds, Company shall prepay the
AXELs under the AXEL Credit Agreement and the Revolving Loans
and/or the Revolving Loan Commitments shall be permanently
reduced in an aggregate amount equal to such Unreinvested
Asset Sale Proceeds; provided, further that, with respect to
an Asset Sale of any asset owned by a Foreign Subsidiary, the
Unreinvested Asset Sale Proceeds in respect thereof shall be
applied (i) first, to the extent such Unreinvested Net Asset
Sale Proceeds may be repatriated to the United States without
in the reasonable judgment of the Company resulting in a
material tax liability to Company in relation to the amount of
proceeds to be repatriated, to prepay the AXELs under the AXEL
Credit Agreement and the Revolving Loans and/or permanently
reduce the Revolving Loan Commitments as set forth above in
this subsection 2.4A(iii)(a), (ii) second, to the extent of
any remaining portion of such Unreinvested Asset Sale
Proceeds, to finance the general corporate purposes of such
Foreign Subsidiary so long as the aggregate of all such
amounts so applied by all Foreign Subsidiaries with respect to
Asset Sales consummated after the Closing Date does not exceed
$5,000,000, and (iii) third, to the extent of any remaining
portion of such Unreinvested Asset Sale Proceeds, to prepay
the AXELs under the AXEL Credit Agreement and the Revolving
Loans and/or reduce the Revolving Loan Commitments as set
forth above in this subsection 2.4A(iii)(a).
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Concurrently with any determination by Company that any
portion of any Unreinvested Asset Sale Proceeds of any Foreign
Subsidiary will be applied as described in clause (ii) of the
immediately preceding proviso, Company shall deliver to Agent
an Officers' Certificate (w) certifying that such Unreinvested
Asset Sale Proceeds cannot be repatriated to the United States
without resulting in a material tax liability to Company and
the reasons therefor, (y) specifying the amount of
Unreinvested Asset Sale Proceeds to be retained by such
Foreign Subsidiary as described in said clause (ii) and the
cumulative aggregate amount of all such Unreinvested Asset
Sale Proceeds so retained by all Foreign Subsidiaries since
the date of this Agreement and (z) demonstrating the
derivation of the Unreinvested Asset Sale Proceeds of the
correlative Asset Sale from the gross sales price thereof.
(b) Prepayments and Reductions from Net
Insurance/Condemnation Proceeds. No later than the first
Business Day following the date of receipt by Administrative
Agent or by Company or any of its Subsidiaries of any Net
Insurance/Condemnation Proceeds that are required to be
applied to prepay the AXELs under the AXEL Credit Agreement
and the Revolving Loans and/or reduce the Revolving Loan
Commitments pursuant to the provisions of subsection 6.4C or
the Intercreditor Agreement, Company shall prepay the AXELs
under the AXEL Credit Agreement and the Revolving Loans and/or
the Revolving Loan Commitments shall be permanently reduced in
an aggregate amount equal to the amount of such Net
Insurance/Condemnation Proceeds.
(c) Prepayments and Reductions Due to Issuance of
Debt or Equity Securities. On the date of receipt by Company
or any of its Subsidiaries of the Cash proceeds (any such
proceeds, net of underwriting discounts and commissions and
other reasonable costs and expenses associated therewith,
including reasonable legal fees and expenses, being "NET
SECURITIES PROCEEDS") from the issuance of any debt (other
than debt permitted by Section 7.1) or equity Securities of
Company or any of its Subsidiaries to any Person other than
Company or any of its Subsidiaries (and excluding any private
issuances of Company Common Stock after the Closing Date to
the extent such funds would not be required to prepay any
other Indebtedness of the Company and its Subsidiaries) after
the Closing Date, Company shall prepay the AXELs under the
AXEL Credit Agreement and the Revolving Loans and/or the
Revolving Loan Commitments shall be permanently reduced in an
aggregate amount equal to such Net Securities Proceeds.
(d) Prepayments and Reductions from Consolidated
Excess Cash Flow. In the event that there shall be
Consolidated Excess Cash Flow for any Fiscal Year (commencing
with Fiscal Year 1998), Company shall, no later than 90 days
after the end of such Fiscal Year, prepay the AXELs under the
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AXEL Credit Agreement and the Revolving Loans and/or the
Revolving Loan Commitments shall be permanently reduced in an
aggregate amount equal to 75% of such Consolidated Excess Cash
Flow; provided that for any Fiscal Year in which the
Consolidated Leverage Ratio as of the end of any such Fiscal
Year is less than 3.75:1, such percentage of Consolidated
Excess Cash Flow applied to prepay the AXELs under the AXEL
Credit Agreement or reduce Revolving Loan Commitments shall be
reduced to 50%.
(e) Calculations of Net Proceeds Amounts; Additional
Prepayments and Reductions Based on Subsequent Calculations.
Concurrently with any prepayment of the AXELs under the AXEL
Credit Agreement and the Revolving Loans and/or reduction of
the Revolving Loan Commitments pursuant to subsections
2.4A(iii)(a)-(d), Company shall deliver to Administrative
Agent an Officers' Certificate demonstrating the calculation
of the amount (the "NET PROCEEDS AMOUNT") of the applicable
Unreinvested Asset Sale Proceeds or Net Insurance/Condemnation
Proceeds, the applicable Net Securities Proceeds (as such term
is defined in subsection 2.4A(iii)(c)) or the applicable
Consolidated Excess Cash Flow, as the case may be, that gave
rise to such prepayment and/or reduction. In the event that
Company shall subsequently determine that the actual Net
Proceeds Amount was greater than the amount set forth in such
Officers' Certificate, Company shall promptly make an
additional prepayment of the AXELs under the AXEL Credit
Agreement and the Revolving Loans (and/or, if applicable, the
Revolving Loan Commitments shall be permanently reduced) in an
amount equal to the amount of such excess, and Company shall
concurrently therewith deliver to Administrative Agent an
Officers' Certificate demonstrating the derivation of the
additional Net Proceeds Amount resulting in such excess.
(f) Prepayments Due to Reductions or Restrictions of
Revolving Loan Commitments or Due to Insufficient Borrowing
Base. Company shall from time to time prepay the Revolving
Loans to the extent necessary to give effect to the
limitations set forth in clauses (i) and (ii) of the second
paragraph of subsection 2.1A.
(iv) Application of Prepayments.
(a) Application of Voluntary Prepayments by Type of
Loans and Order of Maturity. Any voluntary prepayments
pursuant to subsection 2.4A(i) shall be applied as specified
by Company in the applicable notice of prepayment.
(b) Application of Mandatory Prepayments by Type of
Loans. Any amount (the "APPLIED AMOUNT") required to be
applied as a mandatory
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prepayment of the AXELs under the AXEL Credit Agreement or the
Revolving Loans and/or a reduction of the Revolving Loan
Commitments pursuant to subsections 2.4A(iii)(a)-(e) shall be
applied first to prepay the AXELs under the AXEL Credit
Agreement to the full extent thereof, second, to the extent of
any remaining portion of the Applied Amount, to prepay the
Revolving Loans to the full extent thereof and to further
permanently reduce the Revolving Loan Commitments by the
amount of such prepayment, and third, to the extent of any
remaining portion of the Applied Amount, to further
permanently reduce the Revolving Loan Commitments to the full
extent thereof and to cash collateralize any Letters of Credit
outstanding (with any such amounts held in the Collateral
Accounts pursuant to the Intercreditor Agreement). Any
prepayments of the Revolving Loans under subsection
2.4A(iii)(f) shall be applied to reduce the Revolving Loans.
(c) Application of Prepayments to Base Rate Loans and
Eurodollar Rate Loans. Considering Revolving Loans being
prepaid, any prepayment thereof shall be applied first to Base
Rate Loans, to the full extent thereof before application to
Eurodollar Rate Loans, in a manner which minimizes the amount
of any payments required to be made by Company pursuant to
subsection 2.6D.
B. GENERAL PROVISIONS REGARDING PAYMENTS.
(i) Manner and Time of Payment. All payments by Company of
principal, interest, fees and other Obligations hereunder and under the
Revolving Notes shall be made in Dollars in same day funds, without
defense, setoff or counterclaim, free of any restriction or condition,
and delivered to Administrative Agent not later than 12:00 Noon (New
York City time) on the date due at the Funding and Payment Office for
the account of Lenders; funds received by Administrative Agent after
that time on such due date shall be deemed to have been paid by Company
on the next succeeding Business Day. Company hereby authorizes
Administrative Agent to charge its accounts with Administrative Agent
in order to cause timely payment to be made to Administrative Agent of
all principal, interest, fees and expenses due hereunder (subject to
sufficient funds being available in its accounts for that purpose).
(ii) Application of Payments to Principal and Interest. Except
as provided in subsection 2.2C, all payments in respect of the
principal amount of any Revolving Loan shall include payment of accrued
interest on the principal amount being repaid or prepaid, and all such
payments (and, in any event, any payments in respect of any Revolving
Loan on a date when interest is due and payable with respect to such
Loan) shall be applied to the payment of interest before application to
principal.
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(iii) Apportionment of Payments. Aggregate principal and
interest payments shall be apportioned among all outstanding Revolving
Loans to which such payments relate, in each case proportionately to
Lenders' respective Pro Rata Shares. Administrative Agent shall
promptly distribute to each Lender, at its primary address set forth
below its name on the appropriate signature page hereof or at such
other address as such Lender may request, its Pro Rata Share of all
such payments received by Administrative Agent and the commitment fees
of such Lender when received by Administrative Agent pursuant to
subsection 2.3. Notwithstanding the foregoing provisions of this
subsection 2.4C(iii), if, pursuant to the provisions of subsection
2.6B, any Notice of Conversion/Continuation is withdrawn as to any
Affected Lender or if any Affected Lender makes Base Rate Loans in lieu
of its Pro Rata Share of any Eurodollar Rate Loans, Administrative
Agent shall give effect thereto in apportioning payments received
thereafter.
(iv) Payments on Business Days. Whenever any payment to be
made hereunder shall be stated to be due on a day that is not a
Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the
computation of the payment of interest hereunder or of the commitment
fees hereunder, as the case may be.
(v) Notation of Payment. Each Lender agrees that before
disposing of any Note held by it, or any part thereof (other than by
granting participations therein), that Lender will make a notation
thereon of all Revolving Loans evidenced by that Revolving Note and all
principal payments previously made thereon and of the date to which
interest thereon has been paid; provided that the failure to make (or
any error in the making of) a notation of any Revolving Loan made under
such Revolving Note shall not limit or otherwise affect the obligations
of Company hereunder or under such Revolving Note with respect to any
Revolving Loan or any payments of principal or interest on such
Revolving Note.
2.5 USE OF PROCEEDS.
A. REVOLVING LOANS. The proceeds of Revolving Loans made on and after
the Restatement Effective Date are to be applied for working capital and general
corporate purposes, which may include the Anagram Acquisition and future
Permitted Business Acquisitions (provided that (i) no more than $23,500,000 plus
the excess, if any, of $15,000,000 over the amount of cash on hand at Company on
the Restatement Effective Date may be borrowed in connection with the Anagram
Acquisition and (ii) after giving effect to any borrowings to fund any portion
of a Permitted Business Acquisition, the sum of (1) unrestricted Cash and Cash
Equivalents on the balance sheet of Company plus (2) the difference between the
Revolving Loan Commitments and the aggregate outstanding principal amount of
Revolving Loans is equal to at least $10,000,000) and the making of intercompany
loans to any of Company's wholly-owned Subsidiaries, in accordance with
subsection 7.1(iv), for their own working capital and general corporate
purposes.
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B. MARGIN REGULATIONS. No portion of the proceeds of any borrowing
under this Agreement shall be used by Company or any of its Subsidiaries in any
manner that might cause the borrowing or the application of such proceeds to
violate Regulation G, Regulation U, Regulation T or Regulation X of the Board of
Governors of the Federal Reserve System or any other regulation of such Board or
to violate the Exchange Act, in each case as in effect on the date or dates of
such borrowing and such use of proceeds.
2.6 SPECIAL PROVISIONS GOVERNING EURODOLLAR RATE LOANS.
Notwithstanding any other provision of this Agreement to the contrary,
the following provisions shall govern with respect to Eurodollar Rate Loans as
to the matters covered:
A. DETERMINATION OF APPLICABLE INTEREST RATE. As soon as practicable
after 10:00 A.M. (New York City time) on each Interest Rate Determination Date,
Administrative Agent shall determine (which determination shall, absent manifest
error, be final, conclusive and binding upon all parties) the interest rate that
shall apply to the Eurodollar Rate Loans for which an interest rate is then
being determined for the applicable Interest Period and shall promptly give
notice thereof (in writing or by telephone confirmed in writing) to Company and
each Lender.
B. INABILITY TO DETERMINE APPLICABLE INTEREST RATE. In the event that
Administrative Agent shall have determined (which determination shall be final
and conclusive and binding upon all parties hereto), on any Interest Rate
Determination Date with respect to any Eurodollar Rate Loans, that by reason of
circumstances affecting the Eurodollar market adequate and fair means do not
exist for ascertaining the interest rate applicable to such Eurodollar Rate
Loans on the basis provided for in the definition of Adjusted Eurodollar Rate,
Administrative Agent shall on such date give notice (by telefacsimile or by
telephone confirmed in writing) to Company and each Lender of such
determination, whereupon (i) no Revolving Loans may be made as, or converted to,
Eurodollar Rate Loans until such time as Administrative Agent notifies Company
and Lenders that the circumstances giving rise to such notice no longer exist
and (ii) any Notice of Borrowing or Notice of Conversion/Continuation given by
Company with respect to the Revolving Loans in respect of which such
determination was made shall be deemed to be rescinded by Company.
C. ILLEGALITY OR IMPRACTICABILITY OF EURODOLLAR RATE LOANS. In the
event that on any date any Lender shall have determined (which determination
shall be final and conclusive and binding upon all parties hereto but shall be
made only after consultation with Company and Administrative Agent) that the
making, maintaining or continuation of its Eurodollar Rate Loans (i) has become
unlawful as a result of compliance by such Lender in good faith with any law,
treaty, governmental rule, regulation, guideline or order (or would conflict
with any such treaty, governmental rule, regulation, guideline or order not
having the force of law even though the failure to comply therewith would not be
unlawful) or (ii) has become impracticable, or would cause such Lender material
hardship, as a result of contingencies occurring after the date of this
Agreement which materially and adversely
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affect the Eurodollar market or the position of such Lender in that market,
then, and in any such event, such Lender shall be an "AFFECTED LENDER" and it
shall on that day give notice (by telefacsimile or by telephone confirmed in
writing) to Company and Administrative Agent of such determination (which notice
Administrative Agent shall promptly transmit to each other Lender). Thereafter
(a) the obligation of the Affected Lender to make Revolving Loans as, or to
convert Revolving Loans to, Eurodollar Rate Loans shall be suspended until such
notice shall be withdrawn by the Affected Lender, (b) to the extent such
determination by the Affected Lender relates to a Eurodollar Rate Loan then
being requested by Company pursuant to a Notice of Borrowing or a Notice of
Conversion/Continuation, the Affected Lender shall make such Revolving Loan as
(or convert such Revolving Loan to, as the case may be) a Base Rate Loan, (c)
the Affected Lender's obligation to maintain its outstanding Eurodollar Rate
Loans (the "AFFECTED LOANS") shall be terminated at the earlier to occur of the
expiration of the Interest Period then in effect with respect to the Affected
Loans or when required by law, and (d) the Affected Loans shall automatically
convert into Base Rate Loans on the date of such termination. Notwithstanding
the foregoing, to the extent a determination by an Affected Lender as described
above relates to a Eurodollar Rate Loan then being requested by Company pursuant
to a Notice of Borrowing or a Notice of Conversion/Continuation, Company shall
have the option, subject to the provisions of subsection 2.6D, to rescind such
Notice of Borrowing or Notice of Conversion/Continuation as to all Lenders by
giving notice (by telefacsimile or by telephone confirmed in writing) to
Administrative Agent of such rescission on the date on which the Affected Lender
gives notice of its determination as described above (which notice of rescission
Administrative Agent shall promptly transmit to each other Lender). Except as
provided in the immediately preceding sentence, nothing in this subsection 2.6C
shall affect the obligation of any Lender other than an Affected Lender to make
or maintain Revolving Loans as, or to convert Revolving Loans to, Eurodollar
Rate Loans in accordance with the terms of this Agreement.
D. COMPENSATION FOR BREAKAGE OR NON-COMMENCEMENT OF INTEREST PERIODS.
Company shall compensate each Lender, upon written request by that Lender (which
request shall set forth the basis for requesting such amounts), for all
reasonable losses, expenses and liabilities (including any interest paid by that
Lender to lenders of funds borrowed by it to make or carry its Eurodollar Rate
Loans and any loss, expense or liability sustained by that Lender in connection
with the liquidation or re-employment of such funds) which that Lender may
sustain: (i) if for any reason (other than a default by that Lender) a borrowing
of any Eurodollar Rate Loan does not occur on a date specified therefor in a
Notice of Borrowing or a telephonic request for borrowing, or a conversion to or
continuation of any Eurodollar Rate Loan does not occur on a date specified
therefor in a Notice of Conversion/Continuation or a telephonic request for
conversion or continuation, (ii) if any prepayment (including any prepayment
pursuant to subsection 2.4A(i)) or other principal payment or any conversion of
any of its Eurodollar Rate Loans occurs on a date prior to the last day of an
Interest Period applicable to that Eurodollar Rate Loan, (iii) if any prepayment
of any of its Eurodollar Rate Loans is not made on any date specified in a
notice of prepayment given by Company, or (iv) as a consequence of any other
default by
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Company in the repayment of its Eurodollar Rate Loans when required by the terms
of this Agreement.
E. BOOKING OF EURODOLLAR RATE LOANS. Any Lender may make, carry or
transfer Eurodollar Rate Loans at, to, or for the account of any of its branch
offices or the office of an Affiliate of that Lender.
F. ASSUMPTIONS CONCERNING FUNDING OF EURODOLLAR RATE LOANS. Calculation
of all amounts payable to a Lender under this subsection 2.6 and under
subsection 2.7A shall be made as though that Lender had actually funded each of
its relevant Eurodollar Rate Loans through the purchase of a Eurodollar deposit
bearing interest at the rate obtained pursuant to clause (i) of the definition
of Adjusted Eurodollar Rate in an amount equal to the amount of such Eurodollar
Rate Loan and having a maturity comparable to the relevant Interest Period and
through the transfer of such Eurodollar deposit from an offshore office of that
Lender to a domestic office of that Lender in the United States of America;
provided, however, that each Lender may fund each of its Eurodollar Rate Loans
in any manner it sees fit and the foregoing assumptions shall be utilized only
for the purposes of calculating amounts payable under this subsection 2.6 and
under subsection 2.7A.
G. EURODOLLAR RATE LOANS AFTER DEFAULT. After the occurrence of and
during the continuation of a Potential Event of Default or an Event of Default,
(i) Company may not elect to have a Revolving Loan be made or maintained as, or
converted to, a Eurodollar Rate Loan after the expiration of any Interest Period
then in effect for that Revolving Loan and (ii) subject to the provisions of
subsection 2.6D, any Notice of Borrowing or Notice of Conversion/Continuation
given by Company with respect to a requested borrowing or
conversion/continuation that has not yet occurred shall be deemed to be
rescinded by Company.
2.7 INCREASED COSTS; TAXES; CAPITAL ADEQUACY.
A. COMPENSATION FOR INCREASED COSTS AND TAXES. Subject to the
provisions of subsection 2.7B (which shall be controlling with respect to the
matters covered thereby and to the extent a Lender is not entitled to payment
under the terms of Section 2.7B, it shall not be entitled to such payment
pursuant to this subsection 2.7A), in the event that any Lender shall determine
(which determination shall, absent manifest error, be final and conclusive and
binding upon all parties hereto) that any law, treaty or governmental rule,
regulation or order, or any change therein or in the interpretation,
administration or application thereof (including the introduction of any new
law, treaty or governmental rule, regulation or order), or any determination of
a court or governmental authority, in each case that becomes effective after the
Closing Date, or compliance by such Lender with any guideline, request or
directive issued or made after the Closing Date by any central bank or other
governmental or quasi-governmental authority (whether or not having the force of
law):
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(i) subjects such Lender (or its applicable lending office) to
any additional Tax (other than any Tax on the overall net income of
such Lender) with respect to this Agreement or any of its obligations
hereunder or any payments to such Lender (or its applicable lending
office) of principal, interest, fees or any other amount payable
hereunder;
(ii) imposes, modifies or holds applicable any reserve
(including any marginal, emergency, supplemental, special or other
reserve), special deposit, compulsory loan, FDIC insurance or similar
requirement against assets held by, or deposits or other liabilities in
or for the account of, or advances or loans by, or other credit
extended by, or any other acquisition of funds by, any office of such
Lender (other than any such reserve or other requirements with respect
to Eurodollar Rate Loans that are reflected in the definition of
Adjusted Eurodollar Rate); or
(iii) imposes any other condition (other than with respect to
a Tax matter) on or affecting such Lender (or its applicable lending
office) or its obligations hereunder or the Eurodollar market;
and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining Revolving Loans hereunder or to reduce
any amount received or receivable by such Lender (or its applicable lending
office) with respect thereto by an amount considered by the Lender to be
material; then, in any such case, Company shall promptly pay to such Lender,
upon receipt of the statement referred to in the next sentence, such additional
amount or amounts (in the form of an increased rate of, or a different method of
calculating, interest or otherwise as such Lender in its sole discretion shall
determine) as may be necessary to compensate such Lender for any such increased
cost or reduction in amounts received or receivable hereunder. Such Lender shall
deliver to Company (with a copy to Administrative Agent) a written statement,
setting forth in reasonable detail the basis for calculating the additional
amounts owed to such Lender under this subsection 2.7A, which statement shall be
conclusive and binding upon all parties hereto absent manifest error.
B. WITHHOLDING OF TAXES.
(i) Payments to Be Free and Clear. All sums payable by Company
under this Agreement and the other Revolving Loan Documents shall
(except to the extent required by law) be paid free and clear of, and
without any deduction or withholding on account of, any Tax (other than
a Tax on the overall net income of any Lender) imposed, levied,
collected, withheld or assessed by or within the United States of
America or any political subdivision in or of the United States of
America or any other jurisdiction from or to which a payment is made by
or on behalf of Company or by any federation or organization of which
the United States of America or any such jurisdiction is a member at
the time of payment.
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(ii) Grossing-up of Payments. If Company or any other Person
is required by law to make any deduction or withholding on account of
any such Tax from any sum paid or payable by Company to Administrative
Agent or any Lender under any of the Revolving Loan Documents:
(a) Company shall notify Administrative Agent of any
such requirement or any change in any such requirement as soon
as Company becomes aware of it;
(b) Company shall pay any such Tax before the date on
which penalties attach thereto, such payment to be made (if
the liability to pay is imposed on Company) for its own
account or (if that liability is imposed on Administrative
Agent or such Lender, as the case may be) on behalf of and in
the name of Administrative Agent or such Lender;
(c) the sum payable by Company in respect of which
the relevant deduction, withholding or payment is required
shall be increased to the extent necessary to ensure that,
after the making of that deduction, withholding or payment,
Administrative Agent or such Lender, as the case may be,
receives on the due date a net sum equal to what it would have
received had no such deduction, withholding or payment been
required or made; and
(d) within 30 days after paying any sum from which it
is required by law to make any deduction or withholding, and
within 30 days after the due date of payment of any Tax which
it is required by clause (b) above to pay, Company shall
deliver to Administrative Agent evidence satisfactory to the
other affected parties of such deduction, withholding or
payment and of the remittance thereof to the relevant taxing
or other authority;
provided that no such additional amount shall be required to be paid to
any Lender under clause (c) above except to the extent that any change
after the Closing Date (in the case of each Existing Lender), after the
Restatement Effective Date (in the case of each New Lender) or after
the date of the Assignment Agreement pursuant to which such Lender
became a Lender (in the case of each other Lender) in any such
requirement for a deduction, withholding or payment as is mentioned
therein shall result in an increase in the rate of such deduction,
withholding or payment from that in effect on the Closing Date, at the
date of this Agreement or at the date of such Assignment Agreement, as
the case may be, in respect of payments to such Lender.
(iii) Evidence of Exemption from U.S. Withholding Tax.
(a) Each Lender that is organized under the laws of
any jurisdiction other than the United States or any state or
other political subdivision thereof
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(for purposes of this subsection 2.7B(iii), a "NON-US LENDER")
shall deliver to Administrative Agent for transmission to
Company, on or prior to the Closing Date (in the case of each
Existing Lender), on or prior to the Restatement Effective
Date (in the case of each New Lender), or on or prior to the
date of the Assignment Agreement pursuant to which it becomes
a Lender (in the case of each other Lender), and at such other
times as may be necessary in the determination of Company or
Administrative Agent (each in the reasonable exercise of its
discretion), (1) two original copies of Internal Revenue
Service Form 1001 or 4224 (or any successor forms), properly
completed and duly executed by such Lender, together with any
other certificate or statement of exemption required under the
Internal Revenue Code or the regulations issued thereunder to
establish that such Lender is not subject to deduction or
withholding of United States federal income tax with respect
to any payments to such Lender of principal, interest, fees or
other amounts payable under any of the Revolving Loan
Documents or (2) if such Lender is not a "bank" or other
Person described in Section 881(c)(3) of the Internal Revenue
Code and cannot deliver either Internal Revenue Service Form
1001 or 4224 pursuant to clause (1) above, a Certificate re
Non-Bank Status together with two original copies of Internal
Revenue Service Form W-8 (or any successor form), properly
completed and duly executed by such Lender, together with any
other certificate or statement of exemption required under the
Internal Revenue Code or the regulations issued thereunder to
establish that such Lender is not subject to deduction or
withholding of United States federal income tax with respect
to any payments to such Lender of interest payable under any
of the Revolving Loan Documents.
(b) Each Lender required to deliver any forms,
certificates or other evidence with respect to United States
federal income tax withholding matters pursuant to subsection
2.7B(iii)(a) hereby agrees, from time to time after the
initial delivery by such Lender of such forms, certificates or
other evidence, whenever a lapse in time or change in
circumstances renders such forms, certificates or other
evidence obsolete or inaccurate in any material respect, that
such Lender shall promptly (1) deliver to Administrative Agent
for transmission to Company two new original copies of
Internal Revenue Service Form 1001 or 4224, or a Certificate
re Non-Bank Status and two original copies of Internal Revenue
Service Form W-8, as the case may be, properly completed and
duly executed by such Lender, together with any other
certificate or statement of exemption required in order to
confirm or establish that such Lender is not subject to
deduction or withholding of United States federal income tax
with respect to payments to such Lender under the Revolving
Loan Documents or (2) notify Administrative Agent and Company
of its inability to deliver any such forms, certificates or
other evidence.
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(c) Company shall not be required to pay any
additional amount to any Non-US Lender under clause (c) of
subsection 2.7B(ii) if such Lender shall have failed to
satisfy the requirements of clause (a) or (b)(1) of this
subsection 2.7B(iii); provided that if such Lender shall have
satisfied the requirements of subsection 2.7B(iii)(a) on the
Closing Date (in the case of each Existing Lender), on the
Restatement Effective Date (in the case of each New Lender) or
on the date of the Assignment Agreement pursuant to which it
became a Lender (in the case of each other Lender), nothing in
this subsection 2.7B(iii)(c) shall relieve Company of its
obligation to pay any additional amounts pursuant to clause
(c) of subsection 2.7B(ii) in the event that, as a result of
any change in any applicable law, treaty or governmental rule,
regulation or order, or any change in the interpretation,
administration or application thereof, such Lender is no
longer properly entitled to deliver forms, certificates or
other evidence at a subsequent date establishing the fact that
such Lender is not subject to withholding as described in
subsection 2.7B(iii)(a).
C. CAPITAL ADEQUACY ADJUSTMENT. If any Lender shall have determined
that the adoption, effectiveness, phase-in or applicability after the Closing
Date (in the case of an Existing Lender) or the Restatement Effective Date (in
the case of each New Lender) of any law, rule or regulation (or any provision
thereof) regarding capital adequacy, or any change therein or in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or its applicable lending office) with any
guideline, request or directive regarding capital adequacy (whether or not
having the force of law) of any such governmental authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on the capital of such Lender or any corporation controlling such Lender as a
consequence of, or with reference to, such Lender's Revolving Loans or Revolving
Loan Commitments or Letters of Credit or participations therein or other
obligations hereunder with respect to the Revolving Loans or the Letters of
Credit to a level below that which such Lender or such controlling corporation
could have achieved but for such adoption, effectiveness, phase-in,
applicability, change or compliance (taking into consideration the policies of
such Lender or such controlling corporation with regard to capital adequacy) by
an amount considered by the Lender to be material, then from time to time,
within five Business Days after receipt by Company from such Lender of the
statement referred to in the next sentence, Company shall pay to such Lender
such additional amount or amounts as will compensate such Lender or such
controlling corporation on an after-tax basis for such reduction. Such Lender
shall deliver to Company (with a copy to Administrative Agent) a written
statement, setting forth in reasonable detail the basis of the calculation of
such additional amounts, which statement shall be conclusive and binding upon
all parties hereto absent manifest error.
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2.8 OBLIGATION OF LENDERS AND ISSUING LENDERS TO MITIGATE.
Each Lender and Issuing Lender agrees that, as promptly as practicable
after the officer of such Lender or Issuing Lender responsible for administering
the Revolving Loans or Letters of Credit of such Lender or Issuing Lender, as
the case may be, becomes aware of the occurrence of an event or the existence of
a condition that would cause such Lender to become an Affected Lender or that
would entitle such Lender or Issuing Lender to receive payments under subsection
2.7 or subsection 3.6, it will, to the extent not inconsistent with the internal
policies of such Lender or Issuing Lender and any applicable legal or regulatory
restrictions, use reasonable efforts (i) to make, issue, fund or maintain the
Revolving Loan Commitments of such Lender or the affected Revolving Loans or
Letters of Credit of such Lender or Issuing Lender through another lending or
letter of credit office of such Lender or Issuing Lender, or (ii) take such
other measures as such Lender or Issuing Lender may deem reasonable, if as a
result thereof the circumstances which would cause such Lender to be an Affected
Lender would cease to exist or the additional amounts which would otherwise be
required to be paid to such Lender or Issuing Lender pursuant to subsection 2.7
or subsection 3.6 would be materially reduced and if, as determined by such
Lender or Issuing Lender in its sole discretion, the making, issuing, funding or
maintaining of such Revolving Loan Commitments or Revolving Loans or Letters of
Credit through such other lending or letter of credit office or in accordance
with such other measures, as the case may be, would not otherwise materially
adversely affect such Revolving Loan Commitments or Revolving Loans or Letters
of Credit or the interests of such Lender or Issuing Lender; provided that such
Lender or Issuing Lender will not be obligated to utilize such other lending or
letter of credit office pursuant to this subsection 2.8 unless Company agrees to
pay all incremental expenses incurred by such Lender or Issuing Lender as a
result of utilizing such other lending or letter of credit office as described
in clause (i) above. A certificate as to the amount of any such expenses payable
by Company pursuant to this subsection 2.8 (setting forth in reasonable detail
the basis for requesting such amount) submitted by such Lender or Issuing Lender
to Company (with a copy to Administrative Agent) shall be conclusive absent
manifest error.
2.9 DEFAULTING LENDERS.
Anything contained herein to the contrary notwithstanding, in the event
that any Lender (a "DEFAULTING LENDER") defaults (a "FUNDING DEFAULT") in its
obligation to fund any Revolving Loan (a "DEFAULTED REVOLVING Loan") in
accordance with subsection 2.1 as a result of the appointment of a receiver or
conservator with respect to such Lender at the direction or request of any
regulatory agency or authority, then (i) during any Default Period (as defined
below) with respect to such Defaulting Lender, such Defaulting Lender shall be
deemed not to be a "Lender" for purposes of voting on any matters (including the
granting of any consents or waivers) with respect to any of the Revolving Loan
Documents, (ii) to the extent permitted by applicable law, until such time as
the Default Excess (as defined below) with respect to such Defaulting Lender
shall have been reduced to zero, (a) any voluntary prepayment of the Revolving
Loans pursuant to subsection 2.4B(i) shall, if
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Company so directs at the time of making such voluntary prepayment, be applied
to the Revolving Loans of other Lenders as if such Defaulting Lender had no
Revolving Loans outstanding and the Revolving Loan Exposure of such Defaulting
Lender were zero, and (b) any mandatory prepayment of the Revolving Loans
pursuant to subsection 2.4B(iii) shall, if Company so directs at the time of
making such mandatory prepayment, be applied to the Revolving Loans of other
Lenders (but not to the Revolving Loans of such Defaulting Lender) as if such
Defaulting Lender had funded all Defaulted Revolving Loans of such Defaulting
Lender, it being understood and agreed that Company shall be entitled to retain
any portion of any mandatory prepayment of the Revolving Loans that is not paid
to such Defaulting Lender solely as a result of the operation of the provisions
of this clause (b), (iii) such Defaulting Lender's Revolving Loan Commitment and
outstanding Revolving Loans and such Defaulting Lender's Pro Rata Share of the
Letter of Credit Usage shall be excluded for purposes of calculating the
commitment fee payable to Lenders pursuant to subsection 2.3A in respect of any
day during any Default Period with respect to such Defaulting Lender, and such
Defaulting Lender shall not be entitled to receive any commitment fee pursuant
to subsection 2.3A with respect to such Defaulting Lender's Revolving Loan
Commitment in respect of any Default Period with respect to such Defaulting
Lender, and (iv) the Total Utilization of Revolving Loan Commitments as at any
date of determination shall be calculated as if such Defaulting Lender had
funded all Defaulted Revolving Loans of such Defaulting Lender.
For purposes of this Agreement, (I) "DEFAULT PERIOD" means, with
respect to any Defaulting Lender, the period commencing on the date of the
applicable Funding Default and ending on the earliest of the following dates:
(A) the date on which all Revolving Loan Commitments are cancelled or terminated
and/or the Obligations are declared or become immediately due and payable, (B)
the date on which (1) the Default Excess with respect to such Defaulting Lender
shall have been reduced to zero (whether by the funding by such Defaulting
Lender of any Defaulted Revolving Loans of such Defaulting Lender or by the
non-pro rata application of any voluntary or mandatory prepayments of the
Revolving Loans in accordance with the terms of this subsection 2.9 or by a
combination thereof) and (2) such Defaulting Lender shall have delivered to
Company and Administrative Agent a written reaffirmation of its intention to
honor its obligations under this Agreement with respect to its Revolving Loan
Commitment, and (C) the date on which Company, Administrative Agent and
Requisite Lenders waive all Funding Defaults of such Defaulting Lender in
writing, and (II) "DEFAULT EXCESS" means, with respect to any Defaulting Lender,
the excess, if any, of such Defaulting Lender's Pro Rata Share of the aggregate
outstanding principal amount of Revolving Loans of all Lenders (calculated as if
all Defaulting Lenders (other than such Defaulting Lender) had funded all of
their respective Defaulted Revolving Loans) over the aggregate outstanding
principal amount of Revolving Loans of such Defaulting Lender.
No Revolving Loan Commitment of any Lender shall be increased
or otherwise affected, and, except as otherwise expressly provided in this
subsection 2.9, performance by Company of its obligations under this Agreement
and the other Revolving
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Loan Documents shall not be excused or otherwise modified, as a result of any
Funding Default or the operation of this subsection 2.9. The rights and remedies
against a Defaulting Lender under this subsection 2.9 are in addition to other
rights and remedies which Company may have against such Defaulting Lender with
respect to any Funding Default and which Administrative Agent or any Lender may
have against such Defaulting Lender with respect to any Funding Default.
2.10 REMOVAL OR REPLACEMENT OF A LENDER.
A. Anything contained in this Agreement to the contrary
notwithstanding, in the event that:
(i) (a) any Lender (an "INCREASED-COST LENDER") shall give
notice to Company that such Lender is an Affected Lender or that such
Lender is entitled to receive payments under subsection 2.7 or
subsection 3.6, (b) the circumstances which have caused such Lender to
be an Affected Lender or which entitle such Lender to receive such
payments shall remain in effect, and (c) such Lender shall fail to
withdraw such notice within five Business Days after Company's request
for such withdrawal; or
(ii) (a) any Lender shall become a Defaulting Lender, (b) the
Default Period for such Defaulting Lender shall remain in effect, and
(c) such Defaulting Lender shall fail to cure the default as a result
of which it has become a Defaulting Lender within five Business Days
after Company's request that it cure such default; or
(iii) (a) in connection with any proposed amendment,
modification, termination, waiver or consent with respect to any of the
provisions of this Agreement as contemplated by clauses (i) through (v)
of the first proviso to subsection 10.6A, the consent of Requisite
Lenders shall have been obtained but the consent of one or more of such
other Lenders (each a "NON-CONSENTING LENDER") whose consent is
required shall not have been obtained, and (b) the failure to obtain
Non-Consenting Lenders' consents does not result solely from the
exercise of Non-Consenting Lenders' rights (and the withholding of any
required consents by Non-Consenting Lenders) pursuant to the second
proviso to subsection 10.6A;
then, and in each such case, Company shall have the right, at its option, to
remove or replace the applicable Increased-Cost Lender, Defaulting Lender or
Non-Consenting Lender (the "TERMINATED LENDER") to the extent permitted by
subsection 2.10B.
B. Company may, by giving written notice to Administrative Agent and
any Terminated Lender of its election to do so:
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(i) elect to (a) terminate the Revolving Loan Commitment, if
any, of such Terminated Lender upon receipt by such Terminated Lender
of such notice and (b) prepay on the date of such termination any
outstanding Revolving Loans made by such Terminated Lender, together
with accrued and unpaid interest thereon and any other amounts payable
to such Terminated Lender hereunder pursuant to subsection 2.6,
subsection 2.7 or subsection 3.6 or otherwise; provided that, in the
event such Terminated Lender has any Revolving Loans outstanding at the
time of such termination, the written consent of Administrative Agent
and Requisite Lenders (which consent shall not be unreasonably withheld
or delayed) shall be required in order for Company to make the election
set forth in this clause (i); or
(ii) elect to cause such Terminated Lender (and such
Terminated Lender hereby irrevocably agrees) to assign its outstanding
Revolving Loans and its Revolving Loan Commitment, if any, in full at
par to one or more Eligible Assignees (each a "REPLACEMENT LENDER") in
accordance with the provisions of subsection 10.1B; provided that (a)
on the date of such assignment, Company shall pay any amounts payable
to such Terminated Lender pursuant to subsection 2.6, subsection 2.7 or
subsection 3.6 or otherwise as if it were a prepayment and (b) in the
event such Terminated Lender is a Non-Consenting Lender, each
Replacement Lender shall consent, at the time of such assignment, to
each matter in respect of which such Terminated Lender was a
Non-Consenting Lender;
provided that (X) Company may not make either of the elections set forth in
clauses (i) or (ii) above with respect to any Non-Consenting Lender unless
Company also makes one of such elections with respect to each other Terminated
Lender which is a Non-Consenting Lender and (Y) Company may not make either of
such elections with respect to any Terminated Lender that is an Issuing Lender
unless, prior to the effectiveness of such election, Company shall have caused
each outstanding Letter of Credit issued by such Issuing Lender to be cancelled.
C. Upon the prepayment of all amounts owing to any Terminated Lender
and the termination of such Terminated Lender's Revolving Loan Commitment, if
any, pursuant to clause (i) of subsection 2.10B, (i) Schedule 2.1 shall be
deemed modified to reflect any corresponding changes in the Revolving Loan
Commitments and (ii) such Terminated Lender shall no longer constitute a
"Lender" for purposes of this Agreement; provided that any rights of such
Terminated Lender to indemnification under this Agreement (including under
subsections 2.6D, 2.7, 3.6, 10.2 and 10.3) shall survive as to such Terminated
Lender.
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SECTION 3.
LETTERS OF CREDIT
3.1 ISSUANCE OF LETTERS OF CREDIT AND LENDERS' PURCHASE OF PARTICIPATIONS
THEREIN.
A. LETTERS OF CREDIT. In addition to Company requesting that
Lenders make Revolving Loans pursuant to subsection 2.1A, Company may request,
in accordance with the provisions of this subsection 3.1, from time to time
during the period from the Closing Date to but excluding the Revolving Loan
Commitment Termination Date, that one or more Lenders issue Letters of Credit
for the account of Company for the purposes specified in the definitions of
Commercial Letters of Credit and Standby Letters of Credit. Subject to the terms
and conditions of this Agreement and in reliance upon the representations and
warranties of Company herein set forth, any one or more Lenders may, but (except
as provided in subsection 3.1B(ii)) shall not be obligated to, issue such
Letters of Credit in accordance with the provisions of this subsection 3.1;
provided that Company shall not request that any Lender issue (and no Lender
shall issue):
(i) any Letter of Credit if, after giving effect to such
issuance, the Total Utilization of Revolving Loan Commitments would
exceed the Revolving Loan Commitments then in effect or the sum of
Borrowing Base then in effect plus all amounts up to $23,500,000 spent
on the Anagram Acquisition plus all amounts spent through such date on
Permitted Business Acquisitions (in each case other than amounts funded
through equity issuances or indebtedness other than Revolving Loans);
(ii) any Letter of Credit if, after giving effect to such
issuance, the Letter of Credit Usage would exceed $15,000,000;
(iii) any Standby Letter of Credit having an expiration date
later than the earlier of (a) the date which is 30 days prior to the
Revolving Loan Commitment Termination Date and (b) the date which is
not more than 365 days from the date of issuance of such Standby Letter
of Credit; provided that the immediately preceding clause (b) shall not
prevent any Issuing Lender from agreeing that a Standby Letter of
Credit will automatically be extended for one or more successive
periods not to exceed one year each unless such Issuing Lender elects
not to extend for any such additional period; and provided, further
that such Issuing Lender shall elect not to extend such Standby Letter
of Credit if it has knowledge that an Event of Default has occurred and
is continuing (and has not been waived in accordance with subsection
10.6) at the time such Issuing Lender must elect whether or not to
allow such extension; or
(iv) any Commercial Letter of Credit having an expiration date
(a) later than the earlier of (X) the date which is 30 days prior to
the Revolving Loan Commitment Termination Date and (Y) the date which
is 180 days from the date of
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issuance of such Commercial Letter of Credit or (b) that is otherwise
unacceptable to the applicable Issuing Lender in its reasonable
discretion.
B. MECHANICS OF ISSUANCE.
(i) Notice of Issuance. Whenever Company desires the issuance
of a Letter of Credit, it shall deliver to Administrative Agent a
Notice of Issuance of Letter of Credit substantially in the form of
Exhibit III annexed hereto no later than 12:00 Noon (New York City
time) at least three Business Days (in the case of Standby Letters of
Credit) or five Business Days (in the case of Commercial Letters of
Credit), or in each case such shorter period as may be agreed to by the
Issuing Lender in any particular instance, in advance of the proposed
date of issuance. The Notice of Issuance of Letter of Credit shall
specify (a) the proposed date of issuance (which shall be a Business
Day), (b) whether the Letter of Credit is to be a Standby Letter of
Credit or a Commercial Letter of Credit, (c) the face amount of the
Letter of Credit, (d) in the case of a Letter of Credit which Company
requests to be denominated in a currency other than Dollars, the
currency in which Company requests such Letter of Credit to be issued,
(e) the expiration date of the Letter of Credit, (f) the name and
address of the beneficiary, (g) either the verbatim text of the
proposed Letter of Credit or the proposed terms and conditions thereof,
including a precise description of any documents to be presented by the
beneficiary which, if presented by the beneficiary prior to the
expiration date of the Letter of Credit, would require the Issuing
Lender to make payment under the Letter of Credit, and (h) that, after
giving effect to the issuance of the Letter of Credit, the Total
Utilization of Revolving Loan Commitments will not exceed the Revolving
Loan Commitments then in effect or the Borrowing Base then in effect;
provided that the Issuing Lender, in its reasonable discretion, may
require changes in the text of the proposed Letter of Credit or any
such documents; and provided, further that no Letter of Credit shall
require payment against a conforming draft to be made thereunder on the
same business day (under the laws of the jurisdiction in which the
office of the Issuing Lender to which such draft is required to be
presented is located) that such draft is presented if such presentation
is made after 10:00 A.M. (in the time zone of such office of the
Issuing Lender) on such business day.
Company shall notify the applicable Issuing Lender (and Administrative
Agent, if Administrative Agent is not such Issuing Lender) prior to the
issuance of any Letter of Credit in the event that any of the matters
to which Company is required to certify in the applicable Notice of
Issuance of Letter of Credit is no `longer true and correct as of the
proposed date of issuance of such Letter of Credit, and upon the
issuance of any Letter of Credit Company shall be deemed to have
re-certified, as of the date of such issuance, as to the matters to
which Company is required to certify in the applicable Notice of
Issuance of Letter of Credit.
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(ii) Determination of Issuing Lender. Upon receipt by
Administrative Agent of a Notice of Issuance of Letter of Credit
pursuant to subsection 3.1B(i) requesting the issuance of a Letter of
Credit, in the event Administrative Agent elects to issue such Letter
of Credit, Administrative Agent shall promptly so notify Company, and
Administrative Agent shall be the Issuing Lender with respect thereto.
In the event that Administrative Agent, in its sole discretion, elects
not to issue such Letter of Credit, Administrative Agent shall promptly
so notify Company, whereupon Company may request any other Lender to
issue such Letter of Credit by delivering to such Lender a copy of the
applicable Notice of Issuance of Letter of Credit. Any Lender so
requested to issue such Letter of Credit shall promptly notify Company
and Administrative Agent whether or not, in its sole discretion, it has
elected to issue such Letter of Credit, and any such Lender which so
elects to issue such Letter of Credit shall be the Issuing Lender with
respect thereto. In the event that all other Lenders shall have
declined to issue such Letter of Credit, notwithstanding the prior
election of Administrative Agent not to issue such Letter of Credit,
Administrative Agent shall be obligated to issue such Letter of Credit
and shall be the Issuing Lender with respect thereto, notwithstanding
the fact that the Letter of Credit Usage with respect to such Letter of
Credit and with respect to all other Letters of Credit issued by
Administrative Agent, when aggregated with Administrative Agent's
outstanding Revolving Loans, may exceed Administrative Agent's
Revolving Loan Commitment then in effect; provided that Administrative
Agent shall not be obligated to issue any Letter of Credit denominated
in a foreign currency which in the judgment of Administrative Agent is
not readily and freely available.
(iii) Issuance of Letter of Credit. Upon satisfaction or
waiver (in accordance with subsection 10.6) of the conditions set forth
in subsection 4.3, the Issuing Lender shall issue the requested Letter
of Credit in accordance with the Issuing Lender's standard operating
procedures.
(iv) Notification to Lenders. Upon the issuance of any Letter
of Credit the applicable Issuing Lender shall promptly notify
Administrative Agent and each other Lender of such issuance, which
notice shall be accompanied by a copy of such Letter of Credit.
Promptly after receipt of such notice (or, if Administrative Agent is
the Issuing Lender, together with such notice), Administrative Agent
shall notify each Lender of the amount of such Lender's respective
participation in such Letter of Credit, determined in accordance with
subsection 3.1C.
(v) Reports to Lenders. Within 15 days after the end of each
month ending after the Closing Date, so long as any Letter of Credit
shall have been outstanding during such month, each Issuing Lender
shall deliver to each other Lender a report setting forth for such
month the daily aggregate amount available to be drawn under the
Letters of Credit issued by such Issuing Lender that were outstanding
during such month.
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C. LENDERS' PURCHASE OF PARTICIPATIONS IN LETTERS OF CREDIT.
Immediately upon the issuance of each Letter of Credit, each Lender shall be
deemed to, and hereby agrees to, have irrevocably purchased from the Issuing
Lender a participation in such Letter of Credit and any drawings honored
thereunder in an amount equal to such Lender's Pro Rata Share of the maximum
amount which is or at any time may become available to be drawn thereunder.
3.2 LETTER OF CREDIT FEES.
Company agrees to pay the following amounts with respect to Letters of
Credit issued hereunder:
(i) with respect to each Standby Letter of Credit, (a) a
fronting fee, payable directly to the applicable Issuing Lender for its
own account, equal to 0.25% per annum of the daily amount available to
be drawn under such Standby Letter of Credit and (b) a letter of credit
fee, payable to Administrative Agent for the account of Lenders, equal
to the Applicable Revolving Eurodollar Rate Margin in effect with
respect to Eurodollar Rate Loans from time to time multiplied by the
daily amount available to be drawn under such Standby Letter of Credit,
each such fronting fee or letter of credit fee to be payable in arrears
on and to (but excluding) each March 15, June 15, September 15 and
December 15 of each year and computed on the basis of a 360-day year
for the actual number of days elapsed;
(ii) with respect to each Commercial Letter of Credit, (a) a
fronting fee, payable directly to the applicable Issuing Lender for its
own account, equal to 0.25% per annum of the daily amount available to
be drawn under such Commercial Letter of Credit and (b) a letter of
credit fee, payable to Administrative Agent for the account of Lenders,
equal to the Applicable Revolving Eurodollar Rate Margin in effect with
respect to Eurodollar Rate Loans from time to time multiplied by the
daily amount available to be drawn under such Commercial Letter of
Credit, each such fronting fee or letter of credit fee to be payable in
arrears on and to (but excluding) each March 15, June 15, September 15
and December 15 of each year and computed on the basis of a 360-day
year for the actual number of days elapsed; and
(iii) with respect to the issuance, amendment or transfer of
each Letter of Credit and each payment of a drawing made thereunder
(without duplication of the fees payable under clauses (i) and (ii)
above), documentary and processing charges payable directly to the
applicable Issuing Lender for its own account in accordance with such
Issuing Lender's standard schedule for such charges in effect at the
time of such issuance, amendment, transfer or payment, as the case may
be.
For purposes of calculating any fees payable under clauses (i) and (ii) of this
subsection 3.2, the daily amount available to be drawn under any Letter of
Credit shall be determined as of the close of business on any date of
determination. Promptly upon receipt by
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Administrative Agent of any amount described in clause (i)(b) or (ii)(b) of this
subsection 3.2, Administrative Agent shall distribute to each Lender its Pro
Rata Share of such amount.
3.3 DRAWINGS AND REIMBURSEMENT OF AMOUNTS PAID UNDER LETTERS OF CREDIT.
A. RESPONSIBILITY OF ISSUING LENDER WITH RESPECT TO DRAWINGS. In
determining whether to honor any drawing under any Letter of Credit by the
beneficiary thereof, the Issuing Lender shall be responsible only to examine the
documents delivered under such Letter of Credit with reasonable care so as to
ascertain whether they appear on their face to be in accordance with the terms
and conditions of such Letter of Credit.
B. REIMBURSEMENT BY COMPANY OF AMOUNTS PAID UNDER LETTERS OF CREDIT. In
the event an Issuing Lender has determined to honor a drawing under a Letter of
Credit issued by it, such Issuing Lender shall immediately notify Company and
Administrative Agent, and Company shall reimburse such Issuing Lender on or
before the Business Day immediately following the date on which such drawing is
honored (the "REIMBURSEMENT DATE") in an amount in Dollars (which amount, in the
case of a drawing under a Letter of Credit which is denominated in a currency
other than Dollars, shall be calculated by reference to the applicable Exchange
Rate) and in same day funds equal to the amount of such honored drawing;
provided that, anything contained in this Agreement to the contrary
notwithstanding, (i) unless Company shall have notified Administrative Agent and
such Issuing Lender prior to 10:00 A.M. (New York City time) on the date such
drawing is honored that Company intends to reimburse such Issuing Lender for the
amount of such honored drawing with funds other than the proceeds of Revolving
Loans, Company shall be deemed to have given a timely Notice of Borrowing to
Administrative Agent requesting Lenders to make Revolving Loans that are Base
Rate Loans on the Reimbursement Date in an amount in Dollars (which amount, in
the case of a drawing under a Letter of Credit which is denominated in a
currency other than Dollars, shall be calculated by reference to the applicable
Exchange Rate) equal to the amount of such honored drawing and (ii) subject to
satisfaction or waiver of the conditions specified in subsection 4.2B, Lenders
shall, on the Reimbursement Date, make Revolving Loans that are Base Rate Loans
in the amount of such honored drawing, the proceeds of which shall be applied
directly by Administrative Agent to reimburse such Issuing Lender for the amount
of such honored drawing; and provided, further that if for any reason proceeds
of Revolving Loans are not received by such Issuing Lender on the Reimbursement
Date in an amount equal to the amount of such honored drawing, Company shall
reimburse such Issuing Lender, on demand, in an amount in same day funds equal
to the excess of the amount of such honored drawing over the aggregate amount of
such Revolving Loans, if any, which are so received. Nothing in this subsection
3.3B shall be deemed to relieve any Lender from its obligation to make Revolving
Loans on the terms and conditions set forth in this Agreement, and Company shall
retain any and all rights it may have against any Lender resulting from the
failure of such Lender to make such Revolving Loans under this subsection 3.3B.
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C. PAYMENT BY LENDERS OF UNREIMBURSED AMOUNTS PAID UNDER LETTERS
OF CREDIT.
(i) Payment by Lenders. In the event that Company shall fail
for any reason to reimburse any Issuing Lender as provided in
subsection 3.3B in an amount (calculated, in the case of a drawing
under a Letter of Credit denominated in a currency other than Dollars,
by reference to the applicable Exchange Rate) equal to the amount of
any drawing honored by such Issuing Lender under a Letter of Credit
issued by it, such Issuing Lender shall promptly notify each other
Lender of the unreimbursed amount of such honored drawing and of such
other Lender's respective participation therein based on such Lender's
Pro Rata Share. Each Lender shall make available to such Issuing Lender
an amount equal to its respective participation, in Dollars and in same
day funds, at the office of such Issuing Lender specified in such
notice, not later than 12:00 Noon (New York City time) on the first
business day (under the laws of the jurisdiction in which such office
of such Issuing Lender is located) after the date notified by such
Issuing Lender. In the event that any Lender fails to make available to
such Issuing Lender on such business day the amount of such Lender's
participation in such Letter of Credit as provided in this subsection
3.3C, such Issuing Lender shall be entitled to recover such amount on
demand from such Lender together with interest thereon at the rate
customarily used by such Issuing Lender for the correction of errors
among banks for three Business Days and thereafter at the Base Rate.
Nothing in this subsection 3.3C shall be deemed to prejudice the right
of any Lender to recover from any Issuing Lender any amounts made
available by such Lender to such Issuing Lender pursuant to this
subsection 3.3C in the event that it is determined by the final
judgment of a court of competent jurisdiction that the payment with
respect to a Letter of Credit by such Issuing Lender in respect of
which payment was made by such Lender constituted gross negligence or
willful misconduct on the part of such Issuing Lender.
(ii) Distribution to Lenders of Reimbursements Received From
Company. In the event any Issuing Lender shall have been reimbursed by
other Lenders pursuant to subsection 3.3C(i) for all or any portion of
any drawing honored by such Issuing Lender under a Letter of Credit
issued by it, such Issuing Lender shall distribute to each other Lender
which has paid all amounts payable by it under subsection 3.3C(i) with
respect to such honored drawing such other Lender's Pro Rata Share of
all payments subsequently received by such Issuing Lender from Company
in reimbursement of such honored drawing when such payments are
received. Any such distribution shall be made to a Lender at its
primary address set forth below its name on the appropriate signature
page hereof or at such other address as such Lender may request.
D. INTEREST ON AMOUNTS PAID UNDER LETTERS OF CREDIT.
(i) Payment of Interest by Company. Company agrees to pay to
each Issuing Lender, with respect to drawings honored under any Letters
of Credit issued
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by it, interest on the amount paid by such Issuing Lender in respect of
each such honored drawing from the date such drawing is honored to but
excluding the date such amount is reimbursed by Company (including any
such reimbursement out of the proceeds of Revolving Loans pursuant to
subsection 3.3B) at a rate equal to (a) for the period from the date
such drawing is honored to but excluding the Reimbursement Date, the
rate then in effect under this Agreement with respect to Revolving
Loans that are Base Rate Loans and (b) thereafter, a rate which is 2%
per annum in excess of the rate of interest otherwise payable under
this Agreement with respect to Revolving Loans that are Base Rate
Loans. Interest payable pursuant to this subsection 3.3D(i) shall be
computed on the basis of a 360-day year for the actual number of days
elapsed in the period during which it accrues and shall be payable on
demand or, if no demand is made, on the date on which the related
drawing under a Letter of Credit is reimbursed in full.
(ii) Distribution of Interest Payments by Issuing Lender.
Promptly upon receipt by any Issuing Lender of any payment of interest
pursuant to subsection 3.3D(i) with respect to a drawing honored under
a Letter of Credit issued by it, (a) such Issuing Lender shall
distribute to each other Lender, out of the interest received by such
Issuing Lender in respect of the period from the date such drawing is
honored to but excluding the date on which such Issuing Lender is
reimbursed for the amount of such drawing (including any such
reimbursement out of the proceeds of Revolving Loans pursuant to
subsection 3.3B), the amount that such other Lender would have been
entitled to receive in respect of the letter of credit fee that would
have been payable in respect of such Letter of Credit for such period
pursuant to subsection 3.2 if no drawing had been honored under such
Letter of Credit, and (b) in the event such Issuing Lender shall have
been reimbursed by other Lenders pursuant to subsection 3.3C(i) for all
or any portion of such honored drawing, such Issuing Lender shall
distribute to each other Lender which has paid all amounts payable by
it under subsection 3.3C(i) with respect to such honored drawing such
other Lender's Pro Rata Share of any interest received by such Issuing
Lender in respect of that portion of such honored drawing so reimbursed
by other Lenders for the period from the date on which such Issuing
Lender was so reimbursed by other Lenders to but excluding the date on
which such portion of such honored drawing is reimbursed by Company.
Any such distribution shall be made to a Lender at its primary address
set forth below its name on the appropriate signature page hereof or at
such other address as such Lender may request.
3.4 OBLIGATIONS ABSOLUTE.
The obligation of Company to reimburse each Issuing Lender for drawings
honored under the Letters of Credit issued by it and to repay any Revolving
Loans made by Lenders pursuant to subsection 3.3B and the obligations of Lenders
under subsection 3.3C(i) shall be unconditional and irrevocable and shall be
paid strictly in accordance with the terms of this Agreement under all
circumstances including any of the following circumstances:
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(i) any lack of validity or enforceability of any Letter of
Credit;
(ii) the existence of any claim, set-off, defense or other
right which Company or any Lender may have at any time against a
beneficiary or any transferee of any Letter of Credit (or any Persons
for whom any such transferee may be acting), any Issuing Lender or
other Lender or any other Person or, in the case of a Lender, against
Company, whether in connection with this Agreement, the transactions
contemplated herein or any unrelated transaction (including any
underlying transaction between Company or one of its Subsidiaries and
the beneficiary for which any Letter of Credit was procured);
(iii) any draft or other document presented under any Letter
of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any
respect;
(iv) payment by the applicable Issuing Lender under any Letter
of Credit against presentation of a draft or other document which does
not substantially comply with the terms of such Letter of Credit;
(v) any adverse change in the business, operations,
properties, assets, condition (financial or otherwise) or prospects of
Company or any of its Subsidiaries;
(vi) any breach of this Agreement or any other Loan Document
by any party thereto;
(vii) any other circumstance or happening whatsoever, whether
or not similar to any of the foregoing; or
(viii) the fact that an Event of Default or a Potential Event
of Default shall have occurred and be continuing;
provided, in each case, that payment by the applicable Issuing Lender under the
applicable Letter of Credit shall not have constituted gross negligence or
willful misconduct of such Issuing Lender under the circumstances in question
(as determined by a final judgment of a court of competent jurisdiction).
3.5 INDEMNIFICATION; NATURE OF ISSUING LENDERS' DUTIES
A. INDEMNIFICATION. In addition to amounts payable as provided in
subsection 3.6, Company hereby agrees to protect, indemnify, pay and save
harmless each Issuing Lender from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
fees, expenses and disbursements of counsel and allocated costs of internal
counsel) which such Issuing Lender may incur or be subject to as a consequence,
direct or indirect, of (i) the issuance of any Letter of Credit by such Issuing
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Lender, other than as a result of (a) the gross negligence or willful misconduct
of such Issuing Lender as determined by a final judgment of a court of competent
jurisdiction or (b) subject to the following clause (ii), the wrongful dishonor
by such Issuing Lender of a proper demand for payment made under any Letter of
Credit issued by it or (ii) the failure of such Issuing Lender to honor a
drawing under any such Letter of Credit as a result of any act or omission,
whether rightful or wrongful, of any present or future de jure or de facto
government or governmental authority (all such acts or omissions herein called
"GOVERNMENTAL ACTS").
B. NATURE OF ISSUING LENDERS' DUTIES. As between Company and any
Issuing Lender, Company assumes all risks of the acts and omissions of, or
misuse of the Letters of Credit issued by such Issuing Lender by, the respective
beneficiaries of such Letters of Credit. In furtherance and not in limitation of
the foregoing, such Issuing Lender shall not be responsible for: (i) the form,
validity, sufficiency, accuracy, genuineness or legal effect of any document
submitted by any party in connection with the application for and issuance of
any such Letter of Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any such Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove to
be invalid or ineffective for any reason; (iii) failure of the beneficiary of
any such Letter of Credit to comply fully with any conditions required in order
to draw upon such Letter of Credit; (iv) errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher; (v) errors in
interpretation of technical terms; (vi) any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under any such
Letter of Credit or of the proceeds thereof; (vii) the misapplication by the
beneficiary of any such Letter of Credit of the proceeds of any drawing under
such Letter of Credit; or (viii) any consequences arising from causes beyond the
control of such Issuing Lender, including any Governmental Acts, and none of the
above shall affect or impair, or prevent the vesting of, any of such Issuing
Lender's rights or powers hereunder.
In furtherance and extension and not in limitation of the specific
provisions set forth in the first paragraph of this subsection 3.5B, any action
taken or omitted by any Issuing Lender under or in connection with the Letters
of Credit issued by it or any documents and certificates delivered thereunder,
if taken or omitted in good faith, shall not put such Issuing Lender under any
resulting liability to Company.
Notwithstanding anything to the contrary contained in this subsection
3.5, Company shall retain any and all rights it may have against any Issuing
Lender for any liability arising solely out of the gross negligence or willful
misconduct of such Issuing Lender, as determined by a final judgment of a court
of competent jurisdiction.
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3.6 INCREASED COSTS AND TAXES RELATING TO LETTERS OF CREDIT
Subject to the provisions of subsection 2.7B (which shall be
controlling with respect to the matters covered thereby and to the extent a
Lender is not entitled to payment under the terms of Section 2.7B, it shall not
be entitled to payment pursuant to this section), in the event that any Issuing
Lender or Lender shall determine (which determination shall, absent manifest
error, be final and conclusive and binding upon all parties hereto) that any
law, treaty or governmental rule, regulation or order, or any change therein or
in the interpretation, administration or application thereof (including the
introduction of any new law, treaty or governmental rule, regulation or order),
or any determination of a court or governmental authority, in each case that
becomes effective after the date hereof, or compliance by any Issuing Lender or
Lender with any guideline, request or directive issued or made after the date
hereof by any central bank or other governmental or quasi-governmental authority
(whether or not having the force of law):
(i) subjects such Issuing Lender or Lender (or its applicable
lending or letter of credit office) to any additional Tax (other than
any Tax on the overall net income of such Issuing Lender or Lender)
with respect to the issuing or maintaining of any Letters of Credit or
the purchasing or maintaining of any participations therein or any
other obligations under this Section 3, whether directly or by such
being imposed on or suffered by any particular Issuing Lender;
(ii) imposes, modifies or holds applicable any reserve
(including any marginal, emergency, supplemental, special or other
reserve), special deposit, compulsory loan, FDIC insurance or similar
requirement in respect of any Letters of Credit issued by any Issuing
Lender or participations therein purchased by any Lender; or
(iii) imposes any other condition (other than with respect to
a Tax matter) on or affecting such Issuing Lender or Lender (or its
applicable lending or letter of credit office) regarding this Section 3
or any Letter of Credit or any participation therein;
and the result of any of the foregoing is to increase the cost to such Issuing
Lender or Lender of agreeing to issue, issuing or maintaining any Letter of
Credit or agreeing to purchase, purchasing or maintaining any participation
therein or to reduce any amount received or receivable by such Issuing Lender or
Lender (or its applicable lending or letter of credit office) with respect
thereto by an amount considered by such Issuing Lender or Lender to be material;
then, in any case, Company shall promptly pay to such Issuing Lender or Lender,
upon receipt of the statement referred to in the next sentence, such additional
amount or amounts as may be necessary to compensate such Issuing Lender or
Lender for any such increased cost or reduction in amounts received or
receivable hereunder. Such Issuing Lender or Lender shall deliver to Company a
written statement, setting forth in reasonable detail the basis for calculating
the additional amounts owed to
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such Issuing Lender or Lender under this subsection 3.6, which statement shall
be conclusive and binding upon all parties hereto absent manifest error.
SECTION 4.
CONDITIONS TO EFFECTIVENESS; CONDITIONS TO LOANS AND LETTERS OF CREDIT
The effectiveness of this Agreement and the obligations of Lenders to
make (or maintain, as the case may be) Revolving Loans and the issuance of
Letters of Credit hereunder are subject to the satisfaction of the following
conditions.
4.1 CONDITIONS TO EFFECTIVENESS.
The effectiveness of this Agreement is subject to prior or concurrent
satisfaction of the following conditions:
A. LOAN PARTY DOCUMENTS. On or before the Restatement Effective Date,
Company shall, and shall cause each other Loan Party to, deliver to Lenders (or
to Administrative Agent for Lenders with sufficient originally executed copies,
where appropriate, for each Lender and its counsel) the following with respect
to Company or such Loan Party, as the case may be, each, unless otherwise noted,
dated the Restatement Effective Date:
(i) Certified copies of the Certificate or Articles of
Incorporation of such Person (or, in lieu thereof, a certificate of the
corporate secretary of such Person certifying as of the Restatement
Effective Date that its Certificate of Incorporation delivered on the
Closing Date pursuant to subsection 4.1 of the Existing Revolving Loan
Credit Agreement is in full force and effect without modification or
amendment), together with a good standing certificate from the
Secretary of State of its jurisdiction of incorporation and each other
state in which such Person is qualified as a foreign corporation to do
business and, to the extent generally available, a certificate or other
evidence of good standing as to payment of any applicable franchise or
similar taxes from the appropriate taxing authority of each of such
jurisdictions, each dated a recent date prior to the Restatement
Effective Date;
(ii) Copies of the Bylaws of such Person, certified as of the
Closing Date by such Person's corporate secretary or an assistant
secretary (or, in lieu thereof, a certificate of the corporate
secretary of such Person certifying as of the Restatement Effective
Date that its Bylaws delivered on the Closing Date pursuant to
subsection 4.1 of the Existing Revolving Loan Credit Agreement is in
full force and effect without modification or amendment);
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(iii) Resolutions of the Board of Directors of such Person
approving and authorizing the execution, delivery and performance of
the Revolving Loan Documents and the Anagram Acquisition Agreement to
which it is a party, certified as of the Restatement Effective Date by
the corporate secretary or an assistant secretary of such Person as
being in full force and effect without modification or amendment;
(iv) Signature and incumbency certificates of the officers of
such Person executing the Revolving Loan Documents to which it is a
party;
(v) Executed originals of this Agreement and (to the extent
not previously executed and delivered to Lenders) the other Revolving
Loan Documents to which such Person is a party; and
(vi) Such other documents as Arranger or Administrative Agent
may reasonably request.
B. NO MATERIAL ADVERSE EFFECT. Since December 31, 1997, no
Material Adverse Effect (in the opinions of Arranger and Administrative Agent)
shall have occurred. Since December 31, 1997, there shall not have been an
adverse change, or any development involving a prospective adverse change, in or
affecting Anagram or any of its Subsidiaries or the general affairs, management,
financial position, shareholders' equity or results of operation of Anagram and
its Subsidiaries which is, in the reasonable judgment of Arranger,
Administrative Agent or Requisite Lenders, material.
C. CORPORATE AND CAPITAL STRUCTURE, OWNERSHIP, MANAGEMENT, ETC.
(i) Corporate Structure. The corporate organizational
structure of Company and its Subsidiaries, both before and after giving
effect to the Anagram Acquisition, shall be as set forth on Schedule
4.1C annexed hereto.
(ii) Capital Structure and Ownership. The capital structure
and ownership of Company, both before and after giving effect to the
Anagram Acquisition, shall be as set forth on Schedule 4.1C annexed
hereto.
(iii) Management; Employment Agreements. The management
structure of Company after giving effect to the Anagram Acquisition
shall be as set forth on Schedule 4.1C annexed hereto. Arranger and
Administrative Agent shall have received duly executed copies of, and
shall be satisfied with the form and substance of, the Employment
Agreements as set forth on Schedule 4.1C annexed hereto.
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D. ANAGRAM ACQUISITION AGREEMENT.
(i) The Anagram Acquisition Agreement shall be satisfactory in
form and substance to Arranger and Administrative Agent;
(ii) On or prior to the Restatement Effective Date, Arranger
and Administrative Agent shall each have received a fully executed or
conformed copy of the Anagram Acquisition Agreement (including all
schedules and exhibits thereto) and any material documents executed in
connection therewith;
(iii) The Anagram Acquisition shall be in full force and
effect and no provision thereof shall have been modified or waived in
any respect determined by Arranger or Administrative Agent to be
material, in each case without the consent of Arranger and
Administrative Agent;
(iv) The parties thereto shall not have failed in any material
respect to perform any material obligation or covenant required by the
Anagram Acquisition Agreement to be performed or complied with by any
of them on or before the Restatement Effective Date; and
(v) Arranger and Administrative Agent shall have received an
Officer's Certificate from Company to the effect set forth in clauses
(ii)-(iv) above.
E. MATTERS RELATING TO EXISTING INDEBTEDNESS OF COMPANY AND ITS
SUBSIDIARIES.
(i) Termination of Existing Anagram Credit Agreements and
Related Liens; Existing Anagram Letters of Credit. On or prior to the
Restatement Effective Date, Anagram and its Subsidiaries shall have (a)
repaid in full all Indebtedness outstanding under the Existing Anagram
Credit Agreements as set forth on Schedule 4.1E-II (the aggregate
principal amount of which Indebtedness shall not exceed $19,000,000),
(b) terminated any commitments to lend or make other extensions of
credit thereunder, (c) delivered to Arranger and Administrative Agent
all documents or instruments necessary to release all Liens securing
Indebtedness or other obligations of Anagram and its Subsidiaries
thereunder, and (d) made arrangements satisfactory to Arranger and
Administrative Agent with respect to the cancellation of any letters of
credit outstanding thereunder or the issuance of Letters of Credit to
support the obligations of Company and its Subsidiaries (after giving
effect to the Anagram Acquisition) with respect thereto.
(ii) Existing Indebtedness to Remain Outstanding. On the
Restatement Effective Date, Arranger and Administrative Agent shall
have received an Officers' Certificate of Company stating that, after
giving effect to the transactions described in this subsection 4.1E,
the Indebtedness of Loan Parties (other than Indebtedness under the
Loan Documents and the Senior Subordinated Notes) shall consist of
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(a) approximately $5,809,255 in aggregate principal amount of
outstanding Indebtedness described in Part I of Schedule 7.1 annexed
hereto and (b) Indebtedness in an aggregate amount not to exceed
$4,123,512 in respect of Capital Leases described in Part II of
Schedule 7.1 annexed hereto. The terms and conditions of all such
Indebtedness shall be in form and in substance satisfactory to
Arranger, Administrative Agent and Requisite Lenders.
F. NECESSARY GOVERNMENTAL AUTHORIZATIONS AND CONSENTS; EXPIRATION
OF WAITING PERIODS, ETC. Company shall have obtained all Governmental
Authorizations and all consents of other Persons, in each case that are
necessary or advisable in connection with the Anagram Acquisition and the other
transactions contemplated by the Loan Documents and the Anagram Acquisition
Agreement and the continued operation of the business conducted by Company and
its Subsidiaries (including Anagram and its Subsidiaries) in substantially the
same manner as conducted prior to the consummation of the Anagram Acquisition,
and each of the foregoing shall be in full force and effect, in each case other
than those the failure to obtain or maintain which, either individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect. All applicable waiting periods shall have expired without any action
being taken or threatened by any competent authority which would restrain,
prevent or otherwise impose adverse conditions on the Anagram Acquisition or the
financing thereof. No action, request for stay, petition for review or
rehearing, reconsideration, or appeal with respect to any of the foregoing shall
be pending, and the time for any applicable agency to take action to set aside
its consent on its own motion shall have expired.
G. CONSUMMATION OF ANAGRAM ACQUISITION.
(i) All conditions to the Anagram Acquisition set forth in the
Anagram Acquisition Agreement shall have been satisfied or the
fulfillment of any such conditions shall have been waived; provided
that Arranger, Administrative Agent and Requisite Lenders shall have
consented to any such waiver of any such condition that Arranger or
Administrative Agent reasonably deems material;
(ii) The Anagram Acquisition shall have become effective in
accordance with the terms of the Anagram Acquisition Agreement at or
immediately prior to the time of funding of the Additional AXELs and
any Revolving Loans to be made hereunder on the Restatement Effective
Date;
(iii) Anagram Transaction Costs shall not exceed $4,000,000,
and Arranger shall have received evidence to its satisfaction to such
effect; and
(iv) Arranger and Administrative Agent shall have received an
Officers' Certificate of Company to the effect set forth in clauses
(i)-(iii) above.
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H. SECURITY INTERESTS IN PERSONAL AND MIXED PROPERTY. Collateral Agent
shall have received evidence satisfactory to it that Company and Subsidiary
Guarantors shall have taken or caused to be taken (to the extent not previously
taken pursuant to the terms of the Existing Revolving Loan Credit Agreement and
the other Loan Documents executed in connection therewith) all such actions,
executed and delivered or caused to be executed and delivered all such
agreements, documents and instruments, and made or caused to be made all such
filings and recordings (other than the filing or recording of items described in
clauses (iii), (iv) and (v) below) that may be necessary or, in the opinion of
Collateral Agent, desirable in order to create in favor of Collateral Agent, for
the benefit of Secured Parties, a valid and (upon such filing and recording)
perfected First Priority security interest in the entire personal and mixed
property Collateral. Such actions shall include the following:
(i) Schedules to Collateral Documents. Delivery to Collateral
Agent of accurate and complete schedules to all of the applicable
Collateral Documents.
(ii) Stock Certificates and Instruments. Delivery to
Collateral Agent of (a) certificates (which certificates shall be
accompanied by irrevocable undated stock powers, duly endorsed in blank
and otherwise satisfactory in form and substance to Collateral Agent)
representing all capital stock pledged pursuant to the Company Pledge
Agreement and the Subsidiary Pledge Agreements and (b) all promissory
notes or other instruments (duly endorsed, where appropriate, in a
manner satisfactory to Collateral Agent) evidencing any Collateral;
(iii) Lien Searches and UCC Termination Statements. Delivery
to Arranger and Administrative Agent of (a) the results of a recent
search, by a Person satisfactory to Arranger and Administrative Agent,
of all effective UCC financing statements and fixture filings and all
judgment and tax lien filings which may have been made with respect to
any personal or mixed property of Anagram or any of its Subsidiaries,
together with copies of all such filings disclosed by such search, and
(b) UCC termination statements duly executed by all applicable Persons
for filing in all applicable jurisdictions as may be necessary to
terminate any effective UCC financing statements or fixture filings
disclosed in such search (other than any such financing statements or
fixture filings in respect of Liens permitted to remain outstanding
pursuant to the terms of this Agreement).
(iv) UCC Financing Statements and Fixture Filings; PTO
Filings. (a) Delivery to Collateral Agent of UCC financing statements
and, where appropriate, fixture filings, duly executed by each
applicable Loan Party with respect to all personal and mixed property
Collateral of such Loan Party, for filing in all jurisdictions as may
be necessary or, in the reasonable opinion of Collateral Agent,
desirable to perfect the security interests created in such Collateral
pursuant to the Collateral Documents and (b) delivery to Administrative
Agent of all cover sheets or other documents or instruments required to
be filed with the PTO or the United
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States Copyright Office in order to create or perfect Liens in respect
of any IP Collateral;
(v) Auxiliary Pledge Agreements. Execution and delivery to
Collateral Agent of Auxiliary Pledge Agreements with respect to the
stock of all Foreign Subsidiaries organized under the laws of all
jurisdictions with respect to which Collateral Agent deems an Auxiliary
Pledge Agreement necessary or advisable to perfect or otherwise protect
the First Priority Liens granted to Collateral Agent on behalf of
Secured Parties in such stock, and the taking of all such other actions
under the laws of such jurisdictions as Collateral Agent may deem
necessary or advisable to perfect or otherwise protect such Liens; and
(vi) Opinions of Local Counsel. Delivery to Arranger and
Administrative Agent of an opinion of counsel (which counsel shall be
reasonably satisfactory to Arranger and Administrative Agent) under the
laws of each state in the United States in which any personal or mixed
property Collateral with an aggregate value in excess of $500,000 is
located with respect to the creation and perfection of the security
interests in favor of Collateral Agent in such Collateral and such
other matters governed by the laws of such jurisdiction regarding such
security interests as Arranger and Administrative Agent may reasonably
request, in each case in form and substance reasonably satisfactory to
Arranger and Administrative Agent.
I. EDEN PRAIRIE HOLDINGS. On or before the Restatement Effective
Date, Collateral Agent shall have received from Anagram:
(i) Certified copy of the Certificate of Formation of Eden
Prairie Holdings, together with a good standing certificate from the
Secretary of State of Delaware and each other state in which Eden
Prairie Holdings is qualified to do business, each dated a recent date
prior to the Restatement Effective Date;
(ii) Evidence in form and substance satisfactory to Arranger
and Administrative Agent that Anagram International has transferred all
its right, title and interest in and to the Anagram Headquarters
Facility to Eden Prairie Holdings;
(iii) Evidence in form and substance satisfactory to Arranger
and Administrative Agent that Company has assigned all its membership
interest in Eden Prairie Holdings to Anagram International;
(iv) Copy of a lease relating to the Anagram Headquarters
Facility entered into by and between Eden Prairie Holdings and Anagram
International, in form and substance satisfactory to Arranger and
Administrative Agent; and
(v) Evidence satisfactory to Arranger and Administrative Agent
that Anagram International has appointed an independent manager for
Eden Prairie
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Holdings in accordance with paragraph Seventh of the Certificate of
Formation of Eden Prairie Holdings; provided that, to the extent such
independent manager is not so appointed on or before the Restatement
Effective Date, Company shall cause Anagram International to appoint an
independent manager for Eden Prairie Holdings in accordance with
paragraph Seventh of the Certificate of Formation of Eden Prairie
Holdings as promptly as practicable after being requested to do so by
Collateral Agent in accordance with said paragraph Seventh.
J. ENVIRONMENTAL REPORTS. Arranger and Administrative Agent shall have
received such reports and other information, in form, scope and substance
satisfactory to Arranger and Administrative Agent, as Arranger and
Administrative Agent may reasonably require regarding environmental matters
relating to Anagram and its Subsidiaries and any of their respective Facilities.
K. FINANCIAL STATEMENTS; PRO FORMA BALANCE SHEET. On or before the
Restatement Effective Date, Lenders shall have received from Company (i) audited
financial statements of Anagram International, Inc. and its Subsidiaries for its
fiscal years ended December 31, 1996 and 1997, consisting of balance sheets and
the consolidated statements of income, stockholders' equity and cash flows for
such fiscal years, (ii) unaudited combined and combining financial statements of
Anagram and its Subsidiaries as at June 30, 1998, consisting of an unaudited
combined and combining balance sheet and the combined and combining statements
of income for the six-month period ending on such date, all in reasonable detail
and certified by the chief financial officer of Anagram that they fairly present
the financial condition of Anagram and its Subsidiaries as at the dates
indicated and the results of their operations for the periods indicated, subject
to changes resulting from audit and normal year-end adjustments, (iii) unaudited
financial statements of Company and its Subsidiaries as at June 30, 1998,
consisting of a balance sheet and the related consolidated statements of income,
stockholders' equity and cash flows for the six-month period ending on such
date, all in reasonable detail and certified by the chief financial officer of
Company that they fairly present the financial condition of Company and its
Subsidiaries as at the dates indicated and the results of their operations and
their cash flows for the periods indicated, subject to changes resulting from
audit and normal year-end adjustments,(iv) pro forma consolidated balance sheets
of Company and its Subsidiaries as of July 31, 1998, prepared in accordance with
GAAP and reflecting the consummation of the Anagram Acquisition, the related
financings and the other transactions contemplated by the Loan Documents and the
Anagram Acquisition Agreement, which pro forma financial statements shall be in
form and substance satisfactory to Lenders, and (v) pro forma financial
statements (including consolidated balance sheets, statements of operations,
stockholders' equity and cash flows) of Company and its Subsidiaries (after
giving effect to the Anagram Acquisition) for the 10-year period commencing on
the Restatement Effective Date, which pro forma financial statements shall be in
form and substance satisfactory to Lenders.
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L. EVIDENCE OF INSURANCE. Collateral Agent shall have received a
certificate from Company's insurance broker or other evidence satisfactory to it
that all insurance required to be maintained pursuant to subsection 6.4 is in
full force and effect and that Collateral Agent on behalf of Secured Parties has
been named as additional insured and/or loss payee thereunder to the extent
required under subsection 6.4.
M. OPINIONS OF COUNSEL TO LOAN PARTIES. Lenders and their respective
counsel shall have received (i) originally executed copies of one or more
favorable written opinions of (a) Wachtell, Lipton, Rosen & Katz, special
counsel for Loan Parties, in form and substance reasonably satisfactory to
Administrative Agent and Arranger and its counsel, dated as of the Restatement
Effective Date and setting forth substantially the matters in the opinions
designated in Exhibit VII-A annexed hereto and as to such other matters as
Administrative Agent or Arranger and acting on behalf of Lenders may reasonably
request and (b) Kurzman & Eisenberg counsel for Loan Parties, in form and
substance reasonably satisfactory to Administrative Agent and Arranger and its
counsel, dated as of the Restatement Effective Date and setting forth
substantially the matters in the opinions designated in Exhibit VII-B annexed
hereto and as to such other matters as Administrative Agent or Arranger and
acting on behalf of Lenders may reasonably request, and (ii) evidence
satisfactory to Arranger and Administrative Agent that Company has requested
such counsel to deliver such opinions to Lenders.
N. OPINIONS OF ARRANGER AND ADMINISTRATIVE AGENT'S COUNSEL. Lenders
shall have received originally executed copies of one or more favorable written
opinions of O'Melveny & Myers LLP, counsel to Arranger and Administrative Agent,
dated as of the Restatement Effective Date, substantially in the form of Exhibit
VIII annexed hereto and as to such other matters as Arranger and Administrative
Agent may reasonably request.
O. OPINIONS OF COUNSEL RELATING TO THE ANAGRAM ACQUISITION AGREEMENT.
On or prior to the Effective Date, Arranger and Administrative Agent shall each
have received executed copies of all opinions by counsel delivered in connection
with the Anagram Acquisition Agreement to Company or any of its Subsidiaries.
All such opinions shall be, to the extent agreed to by the person delivering
such opinion, addressed to Arranger, Administrative Agent and Lenders or
accompanied by written authorization from each person delivering such an opinion
stating that Arranger, Administrative Agent and Lenders may rely on such opinion
as though it were addressed to them.
P. FEES. Company shall have paid to Arranger and Administrative Agent,
for distribution (as appropriate) to Arranger, Administrative Agent and Lenders,
the fees payable on the Restatement Effective Date referred to in subsection
2.3B.
Q. REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF AGREEMENTS. Company
shall have delivered to Arranger and Administrative Agent an Officers'
Certificate, in form and substance satisfactory to Arranger and Administrative
Agent, to the effect that the representations and warranties in Section 5 hereof
are true, correct and complete in all
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material respects on and as of the Restatement Effective Date to the same extent
as though made on and as of that date (or, to the extent such representations
and warranties specifically relate to an earlier date, that such representations
and warranties were true, correct and complete in all material respects on and
as of such earlier date) and that Company shall have performed in all material
respects all agreements and satisfied all conditions which this Agreement
provides shall be performed or satisfied by it on or before the Restatement
Effective Date except as otherwise disclosed to and agreed to in writing by
Arranger, Administrative Agent and Requisite Lenders.
R. COMPLETION OF PROCEEDINGS. All corporate and other proceedings taken
or to be taken in connection with the transactions contemplated hereby and all
documents incidental thereto not previously found acceptable by Administrative
Agent, acting on behalf of Lenders, or Arranger and its counsel shall be
satisfactory in form and substance to Administrative Agent and Arranger and such
counsel, and Administrative Agent, Arranger and such counsel shall have received
all such counterpart originals or certified copies of such documents as
Administrative Agent or Arranger may reasonably request.
S. BORROWING BASE CERTIFICATE. Administrative Agent shall have received
a Borrowing Base Certificate dated as of July 31, 1998, in form, scope and
substance satisfactory to Arranger and Administrative Agent.
T. CASH MANAGEMENT SYSTEM. Administrative Agent shall have received
evidence satisfactory to it that Company and its Subsidiaries have established
and maintain a cash management system in form and substance reasonably
satisfactory to the Administrative Agent and in accordance with subsection 6.11.
U. COLLATERAL ACCESS AGREEMENTS. On or prior to the Restatement
Effective Date, Anagram and each applicable Subsidiary Guarantor shall have used
its reasonable good faith efforts to obtain, in the case of any Leasehold
Property or any real property in which Anagram or any of its Subsidiaries owns
or holds a fee interest and which is subject to a mortgage held by a third-party
mortgagee holding inventory or equipment with an aggregate fair market value
exceeding $500,000, a Collateral Access Agreement with respect thereto, in each
case in form and substance reasonably satisfactory to Arranger and
Administrative Agent; provided that, to the extent any such Collateral Access
Agreement is not so obtained on or before the Restatement Effective Date, upon
the reasonable request of Collateral Agent, Company hereby covenants and agrees
to cause the applicable Subsidiary Guarantor to continue to use its reasonable
good faith efforts to obtain such Collateral Access Agreement as promptly as
practicable after the Restatement Effective Date.
V. AXEL CREDIT AGREEMENT. Arranger and Administrative Agent shall each
have received a fully executed or conformed copy of the AXEL Credit Agreement,
as amended and restated in connection with the Anagram Acquisition, satisfactory
in form and substance to Arranger and Administrative Agent. The AXEL Credit
Agreement shall be in full force
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and effect and the conditions to advances of the AXELs thereunder shall have
been satisfied or waived by the AXEL Lenders.
U. NO EVENT OF DEFAULT. Company shall have delivered to Administrative
Agent an Officer's Certificate, in form and substance satisfactory to
Administrative Agent, to the effect that, immediately prior to the Restatement
Effective Date, no event has occurred and is continuing that would constitute an
Event of Default or Potential Event of Default under the Existing Revolving Loan
Credit Agreement or the AXEL Credit Agreement.
4.2 CONDITIONS TO ALL REVOLVING LOANS.
The obligations of Lenders to make Revolving Loans on each Funding Date
are subject to the following further conditions precedent:
A. Administrative Agent shall have received before that Funding
Date, in accordance with the provisions of subsection 2.1B, an originally
executed Notice of Borrowing, in each case signed by the chief executive
officer, the chief financial officer or the treasurer or corporate controller of
Company or by any executive officer of Company designated by any of the
above-described officers on behalf of Company in a writing delivered to
Administrative Agent.
B. As of that Funding Date:
(i) The representations and warranties contained herein and in
the other Revolving Loan Documents shall be true, correct and complete
in all material respects on and as of that Funding Date to the same
extent as though made on and as of that date, except to the extent such
representations and warranties specifically relate to an earlier date,
in which case such representations and warranties shall have been true,
correct and complete in all material respects on and as of such earlier
date;
(ii) No event shall have occurred and be continuing or would
result from the consummation of the borrowing contemplated by such
Notice of Borrowing that would constitute an Event of Default or a
Potential Event of Default;
(iii) Each Loan Party shall have performed in all material
respects all agreements and satisfied all conditions which this
Agreement provides shall be performed or satisfied by it on or before
that Funding Date;
(iv) No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain any Lender
from making the Revolving Loans to be made by it on that Funding Date;
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(v) The making of the Revolving Loans requested on such
Funding Date shall not violate any law including Regulation G,
Regulation T, Regulation U or Regulation X of the Board of Governors of
the Federal Reserve System; and
(vi) There shall not be pending or, to the knowledge of
Company, threatened, any action, suit, proceeding, governmental
investigation or arbitration against or affecting Company or any of its
Subsidiaries or any property of Company or any of its Subsidiaries that
has not been disclosed by Company in writing pursuant to subsection 5.6
or 6.1(x) prior to the making of the last preceding Revolving Loans
(or, in the case of the initial Revolving Loans, prior to the execution
of this Agreement), and there shall have occurred no development not so
disclosed in any such action, suit, proceeding, governmental
investigation or arbitration so disclosed, that, in either event, in
the opinion of Administrative Agent or of Requisite Lenders, would be
expected to have a Material Adverse Effect; and no injunction or other
restraining order shall have been issued and no hearing to cause an
injunction or other restraining order to be issued shall be pending or
noticed with respect to any action, suit or proceeding seeking to
enjoin or otherwise prevent the consummation of, or to recover any
damages or obtain relief as a result of, the transactions contemplated
by this Agreement or the making of Revolving Loans hereunder.
4.3 CONDITIONS TO LETTERS OF CREDIT.
The issuance of any Letter of Credit hereunder (whether or not the
applicable Issuing Lender is obligated to issue such Letter of Credit) is
subject to the following conditions precedent:
A. On or before the date of issuance of the initial Letter of
Credit pursuant to this Agreement, the initial Revolving Loans shall
have been made.
B. On or before the date of issuance of such Letter of Credit,
Administrative Agent shall have received, in accordance with the
provisions of subsection 3.1B(i), an originally executed Notice of
Issuance of Letter of Credit, in each case signed by the chief
executive officer, the chief financial officer or the treasurer or
corporate controller of Company or by any executive officer of Company
designated by any of the above-described officers on behalf of Company
in a writing delivered to Administrative Agent, together with all other
information specified in subsection 3.1B(i) and such other documents or
information as the applicable Issuing Lender may reasonably require in
connection with the issuance of such Letter of Credit.
C. On the date of issuance of such Letter of Credit, all
conditions precedent described in subsection 4.2B shall be satisfied to
the same extent as if the issuance of such Letter of Credit were the
making of a Revolving Loan and the date of issuance of such Letter of
Credit were a Funding Date.
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SECTION 5.
COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement and to make (or
maintain, as the case may be) the Revolving Loans, to induce Issuing Lenders to
issue Letters of Credit and to induce other Lenders to purchase participations
therein, Company represents and warrants to each Lender, on the date of this
Agreement, on each Funding Date, on the Restatement Effective Date and on the
date of issuance of each Letter of Credit, that the following statements are
true, correct and complete:
5.1 ORGANIZATION, POWERS, QUALIFICATION, GOOD STANDING, BUSINESS AND
SUBSIDIARIES.
A. ORGANIZATION AND POWERS. Each Loan Party is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation as specified in Schedule 5.1 annexed hereto as it
may be supplemented pursuant to subsection 6.1(xvi). Each Loan Party has all
requisite corporate power and authority to own and operate its properties, to
carry on its business as now conducted and as proposed to be conducted, to enter
into the Revolving Loan Documents, the Related Agreements and the Anagram
Acquisition Agreement to which it is a party and to carry out the transactions
contemplated thereby.
B. QUALIFICATION AND GOOD STANDING. Each Loan Party is qualified to do
business and in good standing in every jurisdiction where its assets are located
and wherever necessary to carry out its business and operations, except in
jurisdictions where the failure to be so qualified or in good standing has not
had and could not reasonably be expected to have a Material Adverse Effect.
C. CONDUCT OF BUSINESS. Company and its Subsidiaries are engaged only
in the businesses permitted to be engaged in pursuant to subsection 7.12.
D. SUBSIDIARIES. All of the Subsidiaries of Company as of the
Restatement Effective Date (after giving effect to the Anagram Acquisition) are
identified in Schedule 5.1 annexed hereto, as said Schedule 5.1 may be
supplemented from time to time pursuant to the provisions of subsection
6.1(xvi). The capital stock of each of the Subsidiaries of Company identified in
Schedule 5.1 annexed hereto (as so supplemented) is duly authorized, validly
issued, fully paid and nonassessable and none of such capital stock constitutes
Margin Stock. Each of the Subsidiaries of Company identified in Schedule 5.1
annexed hereto (as so supplemented) is a corporation duly organized, validly
existing and in good standing under the laws of its respective jurisdiction of
incorporation set forth therein, has all requisite corporate power and authority
to own and operate its properties and to carry on its business as now conducted
and as proposed to be conducted, and is qualified to do business and in good
standing in every jurisdiction where its assets are located and wherever
necessary to carry out its business and operations, in each case except
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where failure to be so qualified or in good standing or a lack of such corporate
power and authority has not had and could not reasonably be expected to have a
Material Adverse Effect. Schedule 5.1 annexed hereto (as so supplemented)
correctly sets forth, as of the Closing Date, the ownership interest of Company
and each of its Subsidiaries in each of the Subsidiaries of Company identified
therein.
5.2 AUTHORIZATION OF BORROWING, ETC.
A. AUTHORIZATION OF BORROWING. The execution, delivery and performance
of the Revolving Loan Documents, the Related Agreements and the Anagram
Acquisition Agreement have been duly authorized by all necessary corporate
action on the part of each Loan Party that is a party thereto.
B. NO CONFLICT. The execution, delivery and performance by Loan Parties
of the Revolving Loan Documents, the Related Agreements and the Anagram
Acquisition Agreement to which they are parties and the consummation of the
transactions contemplated by the Revolving Loan Documents, the Related
Agreements and the Anagram Acquisition Agreement do not and will not (i) violate
any provision of any law or any governmental rule or regulation applicable to
Company or any of its Subsidiaries, the Certificate or Articles of Incorporation
or Bylaws of Company or any of its Subsidiaries or any order, judgment or decree
of any court or other agency of government binding on Company or any of its
Subsidiaries, (ii) conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any Contractual Obligation of
Company or any of its Subsidiaries, except for any breach or default which could
not reasonably be expected to have a Material Adverse Effect, (iii) result in or
require the creation or imposition of any Lien upon any of the properties or
assets of Company or any of its Subsidiaries (other than any Liens created under
any of the Revolving Loan Documents in favor of Administrative Agent on behalf
of Lenders), or (iv) require any approval of stockholders or any approval or
consent of any Person under any Contractual Obligation of Company or any of its
Subsidiaries, except for such approvals or consents which will be obtained on or
before the Restatement Effective Date and disclosed in writing to Lenders and
such consents the failure of which to receive could not reasonably be expected
to have a Material Adverse Effect.
C. GOVERNMENTAL CONSENTS. Except as specified in Schedule 3.9(b) to the
Anagram Acquisition Agreement, the execution, delivery and performance by Loan
Parties of the Revolving Loan Documents, the Related Agreements and the Anagram
Acquisition Agreement to which they are parties and the consummation of the
transactions contemplated by the Revolving Loan Documents, such Related
Agreements and the Anagram Acquisition Agreement do not and will not require any
registration with, consent or approval of, or notice to, or other action to,
with or by, any federal, state or other governmental authority or regulatory
body the failure of which to receive could not reasonably be expected to cause a
Material Adverse Effect. Any such required consents, approvals, notices
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or other actions shall have been received, given or performed, as the case may
be, on or prior to the Restatement Effective Date.
D. BINDING OBLIGATION. Each of the Revolving Loan Documents,
the Related Agreements and the Anagram Acquisition Agreement has been duly
executed and delivered by each Loan Party that is a party thereto and is the
legally valid and binding obligation of such Loan Party, enforceable against
such Loan Party in accordance with its respective terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors' rights generally or by equitable principles
relating to enforceability.
E. VALID ISSUANCE OF COMPANY COMMON STOCK AND SENIOR SUBORDINATED
NOTES.
(i) Company Common Stock. The Company Common Stock to be
issued in the Merger on the Closing Date has been duly and validly
issued and is fully paid and nonassessable. The New Company Shares to
be issued in partial consideration for the Anagram Acquisition on or
before the Restatement Effective Date, when issued and delivered, will
be duly and validly issued, fully paid and nonassessable. No
stockholder of Company has or will have any preemptive rights to
subscribe for any additional equity Securities of Company. The issuance
and sale of such Company Common Stock or New Company Shares, upon such
issuance and sale, either (a) have been or will have been registered or
qualified under applicable federal and state securities laws or (b)
have been or will be exempt therefrom.
(ii) Senior Subordinated Notes. The Senior Subordinated Notes
are the legally valid and binding obligations of Company, enforceable
against Company in accordance with their respective terms, except as
may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to or limiting creditors' rights generally or by
equitable principles relating to enforceability. The subordination
provisions of the Senior Subordinated Notes will be enforceable against
the holders thereof and the Revolving Loans and all other monetary
Obligations hereunder are and will be within the definition of "Senior
Debt" and "Designated Senior Debt" included in such provisions. The
Senior Subordinated Notes either (a) have been registered or qualified
under applicable federal and state securities laws or (b) are exempt
therefrom.
5.3 FINANCIAL CONDITION.
Company has heretofore delivered to Lenders, at Lenders' request, the
following financial statements and information: (i) the audited consolidated
balance sheets of Company and its Subsidiaries as at December 31, 1997 and the
related consolidated statements of income, stockholders' equity and cash flows
of Company and its Subsidiaries for the Fiscal Year then ended, (ii) the
unaudited consolidated balance sheets of Company and its Subsidiaries as at June
30, 1998 and the related unaudited consolidated statements
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of income, stockholders' equity and cash flows of Company and its Subsidiaries
for the six-months then ended, (iii) the audited consolidated balance sheets of
Anagram International, Inc. and its Subsidiaries as at December 31, 1997 and the
consolidated statements of income, stockholders' equity and cash flows of
Anagram International, Inc. and its Subsidiaries for its fiscal year then ended
and (iv) the unaudited combined and combining balance sheets of Anagram and its
Subsidiaries as at June 30, 1998 and the unaudited combined and combining
statements of income of Anagram and its Subsidiaries for the six-months then
ended. All such statements were prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby (except as otherwise
indicated therein or in the Anagram Acquisition Agreement) and fairly present,
in all material respects, the financial position of the entities described in
such financial statements as of such respective dates and the results of
operations of the entities described therein for each of the periods then ended,
subject, in the case of any such unaudited financial statements, to changes
resulting from audit and normal year-end adjustments. Company does not (and did
not immediately following the funding of the initial Revolving Loans) have any
Contingent Obligation, contingent liability or liability for taxes, long-term
lease or unusual forward or long-term commitment that is not reflected in the
foregoing financial statements or the notes thereto and which in any such case
is material in relation to the business, operations, properties, assets,
condition (financial or otherwise) or prospects of Company or any of its
Subsidiaries (after giving effect to the Anagram Acquisition).
5.4 NO MATERIAL ADVERSE CHANGE.
Since December 31, 1997, no event or change has occurred that has
caused or evidences, either in any case or in the aggregate, a Material Adverse
Effect.
5.5 TITLE TO PROPERTIES; LIENS; REAL PROPERTY.
A. TITLE TO PROPERTIES; LIENS. After giving effect to the transactions
contemplated by this Agreement and the Anagram Acquisition Agreement to occur on
the Restatement Effective Date, except for Permitted Encumbrances and Liens,
Company and its Subsidiaries have (i) good, sufficient and legal title to (in
the case of fee interests in real property), (ii) valid leasehold interests in
(in the case of leasehold interests in real or personal property), or (iii) good
title to (in the case of all other personal property), all of their respective
properties and assets reflected in the financial statements referred to in
subsection 5.3 or in the most recent financial statements delivered pursuant to
subsection 6.1 of the Existing Revolving Loan Credit Agreement or this
Agreement, in each case except for assets disposed of since the date of such
financial statements in the ordinary course of business or as otherwise
permitted under subsection 7.7. All such properties and assets are free and
clear of Liens other than Permitted Encumbrances and other Liens permitted under
this Agreement.
B. REAL PROPERTY. After giving effect to the transactions contemplated
by this Agreement and the Anagram Acquisition Agreement, as of the Restatement
Effective Date,
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Schedule 5.5 annexed hereto contains a true, accurate and complete list of (i)
all Fee Properties and (ii) all leases, subleases or assignments of leases
(together with all amendments, modifications, supplements, renewals or
extensions of any thereof) affecting each Real Property Asset of any Loan Party,
regardless of whether such Loan Party is the landlord or tenant (whether
directly or as an assignee or successor in interest) under such lease, sublease
or assignment. As of the Restatement Effective Date, except as specified in
Schedule 5.5 annexed hereto, each agreement listed in clause (ii) of the
immediately preceding sentence is in full force and effect and Company does not
have knowledge of any material default that has occurred and is continuing
thereunder, and each such agreement constitutes the legally valid and binding
obligation of each applicable Loan Party, enforceable against such Loan Party in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles.
5.6 LITIGATION; ADVERSE FACTS.
Except as set forth in Schedule 5.6 annexed hereto, there are no
actions, suits, proceedings, arbitrations or governmental investigations
(whether or not purportedly on behalf of Company or any of its Subsidiaries) at
law or in equity, or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign (including any Environmental Claims) that are pending or, to
the knowledge of Company, threatened against or affecting Company or any of its
Subsidiaries or any property of Company or any of its Subsidiaries and that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. Neither Company nor any of its Subsidiaries (i) is in
violation of any applicable laws (including Environmental Laws) that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect, or (ii) is subject to or in default with respect to any
final judgments, writs, injunctions, decrees, rules or regulations of any court
or any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect.
5.7 PAYMENT OF TAXES.
Except to the extent permitted by subsection 6.3, all material tax
returns and reports of Company and its Subsidiaries required to be filed by any
of them have been timely filed, and all taxes shown on such tax returns to be
due and payable and all assessments, fees and other governmental charges upon
Company and its Subsidiaries and upon their respective properties, assets,
income, businesses and franchises which are due and payable have been paid when
due and payable. Company knows of no proposed material tax assessment against
Company or any of its Subsidiaries which is not being actively contested by
Company or such Subsidiary in good faith and by appropriate proceedings;
provided that such reserves or other appropriate provisions, if any, as shall be
required in conformity with GAAP shall have been made or provided therefor.
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5.8 PERFORMANCE OF AGREEMENTS; MATERIALLY ADVERSE AGREEMENTS; MATERIAL
CONTRACTS.
A. Neither Company nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any of its Contractual Obligations, and no condition
exists that, with the giving of notice or the lapse of time or both, would
constitute such a default, except where the consequences, direct or indirect, of
such default or defaults, if any, would not have a Material Adverse Effect.
B. Neither Company nor any of its Subsidiaries is a party to or is
otherwise subject to any agreements or instruments or any charter or other
internal restrictions which, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect.
C. Schedule 5.8 contains a true, correct and complete list of all the
Material Contracts in effect on the Restatement Effective Date. Except as
described on Schedule 5.8, all such Material Contracts are in full force and
effect and no defaults currently exist thereunder other than any such defaults
or failure to be in force and effect which could not reasonably be expected to
result in a Material Adverse Effect.
5.9 GOVERNMENTAL REGULATION.
Neither Company nor any of its Subsidiaries is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act or the Investment Company Act of 1940 or under any other
federal or state statute or regulation which may limit its ability to incur
Indebtedness or which may otherwise render all or any portion of the Obligations
unenforceable.
5.10 SECURITIES ACTIVITIES.
A. Neither Company nor any of its Subsidiaries is engaged principally,
or as one of its important activities, in the business of extending credit for
the purpose of purchasing or carrying any Margin Stock.
B. Following application of the proceeds of each AXEL under the AXEL
Credit Agreement and each Revolving Loan, not more than 25% of the value of the
assets (either of Company only or of Company and its Subsidiaries on a
consolidated basis) subject to the provisions of subsection 7.2 or 7.7 or
subject to any restriction contained in any agreement or instrument, between
Company and any Lender or any Affiliate of any Lender, relating to Indebtedness
and within the scope of subsection 8.2, will be Margin Stock.
5.11 EMPLOYEE BENEFIT PLANS.
A. Company, each of its Subsidiaries and each of their respective ERISA
Affiliates are in compliance with all applicable provisions and requirements of
ERISA and
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the regulations and published interpretations thereunder with respect to each
Employee Benefit Plan, and have performed all their obligations under each
Employee Benefit Plan. Each Employee Benefit Plan which is intended to qualify
under Section 401(a) of the Internal Revenue Code is so qualified.
B. No ERISA Events have occurred or are reasonably expected to occur
which could reasonably be expected to result in liabilities to the Company or
any of its Subsidiaries in excess of $1,000,000 in the aggregate.
C. As of the most recent valuation date for any Pension Plan, the
excess of (1) the actuarial present value (determined on the basis of reasonable
assumptions employed by the independent actuary for each Pension Plan for
purposes of Section 412 of the Internal Revenue Code or Section 302 of ERISA) of
benefit liabilities (as defined in Section 4001(a)(16) of ERISA) over (2) the
fair market value of the assets of such Pension Plan, individually or in the
aggregate for all Pension Plans (excluding for purposes of such computation any
Pension Plans with respect to which assets exceed benefit liabilities), does not
exceed $5,000,000.
D. As of the most recent valuation date for each Multiemployer Plan for
which the actuarial report is available, the potential liability of Company, its
Subsidiaries and their respective ERISA Affiliates for a complete withdrawal
from such Multiemployer Plan (within the meaning of Section 4203 of ERISA), when
aggregated with such potential liability for a complete withdrawal from all
Multiemployer Plans, based on information available pursuant to Section 4221(e)
of ERISA, does not exceed $5,000,000.
5.12 CERTAIN FEES.
Except as described in the Confidential Information Memorandum and the
advisory fee payable by Company to Piper Jaffray in an amount not to exceed
$700,000, no broker's or finder's fee or commission has been or will be payable
by Company with respect to this Agreement or any of the transactions
contemplated hereby, and Company hereby indemnifies Lenders against, and agrees
that it will hold Lenders harmless from, any claim, demand or liability for any
such broker's or finder's fees alleged to have been incurred in connection
herewith or therewith and any expenses (including reasonable fees, expenses and
disbursements of counsel) arising in connection with any such claim, demand or
liability.
5.13 ENVIRONMENTAL PROTECTION.
Except as set forth in Schedule 5.13 annexed hereto:
(i) neither Company nor any of its Subsidiaries nor any of
their respective Facilities or operations are subject to any
outstanding written order, consent decree or settlement agreement with
any Person relating to (a) any Environmental Law, (b) any Environmental
Claim, or (c) any Hazardous Materials Activity;
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(ii) neither Company nor any of its Subsidiaries has received
any letter or request for information under Section 104 of the
Comprehensive Environmental Response, Compensation, and Liability Act
(42 U.S.C. [Section] 9604) or any comparable state law;
(iii) there are and, to Company's knowledge, have been no
conditions, occurrences, or Hazardous Materials Activities which could
reasonably be expected to form the basis of an Environmental Claim
against Company or any of its Subsidiaries;
(iv) neither Company nor any of its Subsidiaries nor, to
Company's knowledge, any predecessor of Company or any of its
Subsidiaries has filed any notice under any Environmental Law
indicating past or present treatment of Hazardous Materials at any
Facility, and none of Company's or any of its Subsidiaries' operations
involves the generation, transportation, treatment, storage or disposal
of hazardous waste, as defined under 40 C.F.R. Parts 260-270 or any
state equivalent;
(v) compliance with all current or reasonably foreseeable
future requirements pursuant to or under Environmental Laws will not,
individually or in the aggregate, have a reasonable possibility of
giving rise to a Material Adverse Effect.
Notwithstanding anything in this subsection 5.13 to the contrary, no
event or condition has occurred or is occurring with respect to Company or any
of its Subsidiaries relating to any Environmental Law, any Release of Hazardous
Materials, or any Hazardous Materials Activity, including any matter disclosed
on Schedule 5.13 annexed hereto, which individually or in the aggregate has had
or could reasonably be expected to have a Material Adverse Effect.
5.14 EMPLOYEE MATTERS.
There is no strike or work stoppage in existence or threatened
involving Company or any of its Subsidiaries that could reasonably be expected
to have a Material Adverse Effect.
5.15 SOLVENCY.
Each Loan Party is and, upon the incurrence of any Obligations by such
Loan Party on any date on which this representation is made, will be, Solvent.
5.16 MATTERS RELATING TO COLLATERAL.
A. CREATION, PERFECTION AND PRIORITY OF LIENS. The execution and
delivery of the Collateral Documents by Loan Parties, together with (i) the
actions taken on or prior to the
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date hereof pursuant to subsections 4.1I, 6.8 and 6.9 of the Existing Revolving
Loan Credit Agreement and subsections 4.1I, 6.8 and 6.9 of this Agreement and
(ii) the delivery to Collateral Agent of any Pledged Collateral not delivered to
Collateral Agent at the time of execution and delivery of the applicable
Collateral Document (all of which Pledged Collateral has been so delivered) are
effective to create in favor of Collateral Agent for the benefit of Secured
Parties, as security for the respective Secured Obligations (as defined in the
applicable Collateral Document in respect of any Collateral), a valid and
perfected First Priority Lien on all of the Collateral, and all filings and
other actions necessary or desirable to perfect and maintain the perfection and
First Priority status of such Liens have been duly made or taken and remain in
full force and effect, other than the filing of any UCC financing statements
delivered to Collateral Agent for filing (but not yet filed) and the periodic
filing of UCC continuation statements in respect of UCC financing statements
filed by or on behalf of Collateral Agent.
B. GOVERNMENTAL AUTHORIZATIONS. No authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (i) the pledge or grant by any Loan Party
of the Liens purported to be created in favor of Collateral Agent pursuant to
any of the Collateral Documents or (ii) the exercise by Collateral Agent of any
rights or remedies in respect of any Collateral (whether specifically granted or
created pursuant to any of the Collateral Documents or created or provided for
by applicable law), except for filings or recordings contemplated by subsection
5.16A and except as may be required, in connection with the disposition of any
Pledged Collateral, by laws generally affecting the offering and sale of
securities.
C. ABSENCE OF THIRD-PARTY FILINGS. Except such as may have been filed
in favor of Collateral Agent as contemplated by subsection 5.16A, no effective
UCC financing statement, fixture filing or other instrument similar in effect
covering all or any part of the Collateral is on file in any filing or recording
office.
D. MARGIN REGULATIONS. The pledge of the Pledged Collateral pursuant to
the Collateral Documents does not violate Regulation G, T, U or X of the Board
of Governors of the Federal Reserve System.
E. INFORMATION REGARDING COLLATERAL. All information supplied to
Collateral Agent by or on behalf of any Loan Party with respect to any of the
Collateral (in each case taken as a whole with respect to any particular
Collateral) is accurate and complete in all material respects.
5.17 RELATED AGREEMENTS.
A. DELIVERY OF RELATED AGREEMENTS. Company has delivered to
Lenders complete and correct copies of each Related Agreement and the Anagram
Acquisition Agreement and of all exhibits and schedules thereto.
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B. WARRANTIES OF COMPANY.
(i) Except to the extent otherwise set forth herein or in the
schedules hereto, each of the representations and warranties given by
Company in the Recapitalization Agreement is true and correct in all
material respects as of the Closing Date (or as of any earlier date to
which such representation and warranty specifically relates) and will
be true and correct in all material respects as of the Closing Date (or
as of such earlier date, as the case may be), in each case subject to
the qualifications set forth in the schedules to the Recapitalization
Agreement.
(ii) Except to the extent otherwise set forth herein or in the
schedules hereto, each of the representations and warranties given by
Company in the Anagram Acquisition Agreement is true and correct in all
material respects as of the Restatement Effective Date (or as of any
earlier date to which such representation and warranty specifically
relates) and will be true and correct in all material respects as of
the date hereof (or as of such earlier date, as the case may be), in
each case subject to the qualifications set forth in the schedules to
the Anagram Acquisition Agreement.
C. SURVIVAL. Notwithstanding anything in the Recapitalization Agreement
or the Anagram Acquisition Agreement to the contrary, (i) the representations
and warranties of Company set forth in subsection 5.17B(i) shall, solely for
purposes of this Agreement, survive the Closing Date for the benefit of Lenders
and (ii) the representations and warranties of Company set forth in subsection
5.17B(ii) shall, solely for purposes of this Agreement, survive the Restatement
Effective Date for the benefit of Lenders.
5.18 DISCLOSURE.
No representation or warranty of Company or any of its Subsidiaries
contained in the Confidential Information Memorandum or in any Loan Document or
in any other document, certificate or written statement furnished to Lenders by
or on behalf of Company or any of its Subsidiaries for use in connection with
the transactions contemplated by this Agreement contains any untrue statement of
a material fact or omits to state a material fact (known to Company, in the case
of any document not furnished by it) necessary in order to make the statements
contained herein or therein not misleading in light of the circumstances in
which the same were made. Any projections and pro forma financial information
contained in such materials are based upon good faith estimates and assumptions
believed by Company to be reasonable at the time made, it being recognized by
Lenders that such projections as to future events are not to be viewed as facts
and that actual results during the period or periods covered by any such
projections may differ from the projected results. There are no facts known (or
which should upon the reasonable exercise of diligence be known) to Company
(other than matters of a general economic nature) that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect
and
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that have not been disclosed herein or in such other documents, certificates and
statements furnished to Lenders for use in connection with the transactions
contemplated hereby.
5.19 AXEL CREDIT AGREEMENT.
A. Delivery of AXEL Credit Agreement. Company has delivered to Lenders
complete and correct copies of the AXEL Credit Agreement, as amended and
restated as of the Restatement Effective Date, and of all exhibits and schedules
thereto.
B. Warranties of Company. Except to the extent otherwise set forth
herein or in the schedules hereto, each of the representations and warranties
given by Company in the AXEL Credit Agreement, as amended and restated as of the
Restatement Effective Date, is true and correct in all material respects as of
the date hereof (or as of any earlier date to which such representation and
warranty specifically relates) and will be true and correct in all material
respects as of the Restatement Effective Date (or as of such earlier date, as
the case may be), in each case subject to the qualifications set forth in the
schedules to the AXEL Credit Agreement, as so amended and restated.
SECTION 6.
COMPANY'S AFFIRMATIVE COVENANTS
Company covenants and agrees that, so long as any of the Revolving Loan
Commitments hereunder shall remain in effect and until payment in full of all of
the Revolving Loans and other Obligations and the cancellation or expiration of
all Letters of Credit, unless Requisite Lenders shall otherwise give prior
written consent, Company shall perform, and shall cause each of its Subsidiaries
to perform, all covenants in this Section 6.
6.1 FINANCIAL STATEMENTS AND OTHER REPORTS.
Company will maintain, and cause each of its Subsidiaries to maintain,
a system of accounting established and administered in accordance with sound
business practices to permit preparation of financial statements in conformity
with GAAP. Company will deliver to Administrative Agent and Lenders:
(i) Monthly Financials: as soon as available and in any event
within 30 days after the end of each month ending after the Restatement
Effective Date, commencing with the calendar month of August 1998 (or
within 45 days after the end of each month which ends a Fiscal
Quarter), the consolidated balance sheets of Company and its
Subsidiaries as at the end of such month and the related consolidated
statements of income, stockholders' equity and cash flows of Company
and its Subsidiaries for such month and for the period from the
beginning of the then current Fiscal Year to the end of such month,
setting forth in each case in comparative form the corresponding
figures for the corresponding periods of the previous Fiscal Year and
the corresponding figures from the Financial Plan for the
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current Fiscal Year, to the extent prepared on a monthly basis, all in
reasonable detail and certified by the chief financial officer of
Company that they fairly present, in all material respects, the
financial condition of Company and its Subsidiaries as at the dates
indicated and the results of their operations and their cash flows for
the periods indicated, subject to changes resulting from audit and
normal year-end adjustments, for such month and for the period from the
beginning of the then current Fiscal Year to the end of such month;
(ii) Quarterly Financials: as soon as available and in any
event within 45 days after the end of each of first three Fiscal
Quarters of each year, (a) the consolidated balance sheets of Company
and its Subsidiaries as at the end of such Fiscal Quarter and the
related consolidated statements of income, stockholders' equity and
cash flows of Company and its Subsidiaries for such Fiscal Quarter and
for the period from the beginning of the then current Fiscal Year to
the end of such Fiscal Quarter, setting forth in each case in
comparative form the corresponding figures for the corresponding
periods of the previous Fiscal Year and the corresponding figures from
the Financial Plan for the current Fiscal Year, all in reasonable
detail and certified by the chief financial officer of Company that
they fairly present, in all material respects, the financial condition
of Company and its Subsidiaries as at the dates indicated and the
results of their operations and their cash flows for the periods
indicated, subject to changes resulting from audit and normal year-end
adjustments, and (b) a narrative report describing the operations of
Company and its Subsidiaries in the form of the MD&A, which is prepared
by the Company for public filing for such Fiscal Quarter and for the
period from the beginning of the then current Fiscal Year to the end of
such Fiscal Quarter;
(iii) Year-End Financials: as soon as available and in any
event within 90 days after the end of each Fiscal Year, (a) the
consolidated balance sheets of Company and its Subsidiaries as at the
end of such Fiscal Year and the related consolidated statements of
income, stockholders' equity and cash flows of Company and its
Subsidiaries for such Fiscal Year, setting forth in each case in
comparative form the corresponding figures for the previous Fiscal Year
and the corresponding figures from the Financial Plan for the Fiscal
Year covered by such financial statements, all in reasonable detail and
certified by the chief financial officer of Company that they fairly
present, in all material respects, the financial condition of Company
and its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated, (b) a
narrative report describing the operations of Company and its
Subsidiaries in the form prepared for presentation to senior management
for such Fiscal Year, and (c) a report thereon of independent certified
public accountants of recognized national standing selected by Company
and satisfactory to Administrative Agent, which report shall be
unqualified, shall express no doubts about the ability of Company and
its Subsidiaries to continue as a going concern, and shall state that
such consolidated financial statements fairly present, in all material
respects, the consolidated financial position of Company and
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its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated in conformity
with GAAP applied on a basis consistent with prior years (except as
otherwise disclosed in such financial statements) and that the
examination by such accountants in connection with such consolidated
financial statements has been made in accordance with generally
accepted auditing standards;
(iv) Officers' and Compliance Certificates: together with each
delivery of financial statements of Company and its Subsidiaries
pursuant to subdivisions (ii) and (iii) above, (a) an Officers'
Certificate of Company stating that the signers have reviewed the terms
of this Agreement and have made, or caused to be made under their
supervision, a review in reasonable detail of the transactions and
condition of Company and its Subsidiaries during the accounting period
covered by such financial statements and that such review has not
disclosed the existence during or at the end of such accounting period,
and that the signers do not have knowledge of the existence as at the
date of such Officers' Certificate, of any condition or event that
constitutes an Event of Default or Potential Event of Default, or, if
any such condition or event existed or exists, specifying the nature
and period of existence thereof and what action Company has taken, is
taking and proposes to take with respect thereto; and (b) a Compliance
Certificate demonstrating in reasonable detail (1) compliance during
and at the end of the applicable accounting periods with the
restrictions contained in Section 7, in each case to the extent
compliance with such restrictions is required to be tested at the end
of the applicable accounting period and (2) with respect to any Net
Asset Sale Proceeds received by Company or any of its Subsidiaries
during the second Fiscal Quarter immediately preceding the Fiscal
Quarter in which the applicable accounting period ends, whether or not
all or any portion of such Net Asset Sale Proceeds shall have become
Unreinvested Asset Sale Proceeds;
(v) Reconciliation Statements: if, as a result of any change
in accounting principles and policies from those used in the
preparation of the audited financial statements referred to in
subsection 5.3, the consolidated financial statements of Company and
its Subsidiaries delivered pursuant to subdivisions (ii), (iii) or
(xiii) of this subsection 6.1 will differ in any material respect from
the consolidated financial statements that would have been delivered
pursuant to such subdivisions had no such change in accounting
principles and policies been made, then (a) together with the first
delivery of financial statements pursuant to subdivision (ii), (iii) or
(xiii) of this subsection 6.1 following such change, consolidated
financial statements of Company and its Subsidiaries for (y) the
current Fiscal Year to the effective date of such change and (z) the
two full Fiscal Years immediately preceding the Fiscal Year in which
such change is made, in each case prepared on a pro forma basis as if
such change had been in effect during such periods, and (b) together
with each delivery of financial statements pursuant to subdivision
(ii), (iii) or (xiii) of this subsection 6.1 following such change, a
written statement of the chief accounting officer or chief
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financial officer of Company setting forth the differences (including
any differences that would affect any calculations relating to the
financial covenants set forth in subsection 7.6) which would have
resulted if such financial statements had been prepared without giving
effect to such change;
(vi) Accountants' Certification: together with each delivery
of consolidated financial statements of Company and its Subsidiaries
pursuant to subdivision (iii) above, a written statement by the
independent certified public accountants giving the report thereon (a)
stating that their audit examination has included a review of the terms
of this Agreement and the other Revolving Loan Documents as they relate
to accounting matters, (b) stating whether, in connection with their
audit examination, any condition or event that constitutes an Event of
Default or Potential Event of Default has come to their attention and,
if such a condition or event has come to their attention, specifying
the nature and period of existence thereof; provided that such
accountants shall not be liable by reason of any failure to obtain
knowledge of any such Event of Default or Potential Event of Default
that would not be disclosed in the course of their audit examination,
and (c) stating that based on their audit examination nothing has come
to their attention that causes them to believe either or both that the
information contained in the certificates delivered therewith pursuant
to subdivision (iv) above is not correct or that the matters set forth
in the Compliance Certificates delivered therewith pursuant to clause
(b) of subdivision (iv) above for the applicable Fiscal Year are not
stated in accordance with the terms of this Agreement;
(vii) Accountants' Reports: promptly upon receipt thereof
(unless restricted by applicable professional standards), copies of all
reports submitted to Company by independent certified public
accountants in connection with each annual, interim or special audit of
the financial statements of Company and its Subsidiaries made by such
accountants, including any comment letter submitted by such accountants
to management in connection with their annual audit;
(viii) SEC Filings and Press Releases: promptly upon their
becoming available, copies of (a) all financial statements, reports,
notices and proxy statements sent or made available generally by
Company to its security holders or by any Subsidiary of Company to its
security holders other than Company or another Subsidiary of Company,
(b) all regular and periodic reports and all registration statements
(other than on Form S-8 or a similar form) and prospectuses, if any,
filed by Company or any of its Subsidiaries with any securities
exchange or with the Securities and Exchange Commission or any
governmental or private regulatory authority, and (c) all press
releases and other statements made available generally by Company or
any of its Subsidiaries to the public concerning material developments
in the business of Company or any of its Subsidiaries;
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(ix) Events of Default, etc.: promptly upon any officer of
Company obtaining knowledge (a) of any condition or event that
constitutes an Event of Default or Potential Event of Default, or
becoming aware that any Lender has given any notice (other than to
Administrative Agent) or taken any other action with respect to a
claimed Event of Default or Potential Event of Default, (b) that any
Person has given any notice to Company or any of its Subsidiaries or
taken any other action with respect to a claimed default or event or
condition of the type referred to in subsection 8.2, (c) of any
condition or event that would be required to be disclosed in a current
report filed by Company with the Securities and Exchange Commission on
Form 8-K (Items 1, 2, 4, 5 and 6 of such Form as in effect on the date
hereof) if Company were required to file such reports under the
Exchange Act, or (d) of the occurrence of any event or change that has
caused or evidences, either in any case or in the aggregate, a Material
Adverse Effect, an Officers' Certificate specifying the nature and
period of existence of such condition, event or change, or specifying
the notice given or action taken by any such Person and the nature of
such claimed Event of Default, Potential Event of Default, default,
event or condition, and what action Company has taken, is taking and
proposes to take with respect thereto;
(x) Litigation or Other Proceedings: (a) promptly upon any
officer of Company obtaining knowledge of (X) the institution of, or
non-frivolous threat of, any action, suit, proceeding (whether
administrative, judicial or otherwise), governmental investigation or
arbitration against or affecting Company or any of its Subsidiaries or
any property of Company or any of its Subsidiaries (collectively,
"PROCEEDINGS") not previously disclosed in writing by Company to
Lenders or (Y) any material development in any Proceeding that, in any
case:
(1) if adversely determined, has a reasonable
possibility of giving rise to a Material Adverse Effect; or
(2) seeks to enjoin or otherwise prevent the
consummation of, or to recover any damages or obtain relief as
a result of, the transactions contemplated hereby;
written notice thereof together with such other information as may be
reasonably available to Company to enable Lenders and their counsel to
evaluate such matters; and (b) within twenty days after the end of each
Fiscal Quarter, a schedule of all Proceedings involving an alleged
liability of, or claims against or affecting, Company or any of its
Subsidiaries equal to or greater than $500,000, and promptly after
request by Administrative Agent such other information as may be
reasonably requested by Administrative Agent to enable Administrative
Agent and its counsel to evaluate any of such Proceedings;
(xi) ERISA Events: promptly upon becoming aware of the
occurrence of or forthcoming occurrence of any ERISA Event, a written
notice specifying the
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nature thereof, what action Company, any of its Subsidiaries or any of
their respective ERISA Affiliates has taken, is taking or proposes to
take with respect thereto and, when known, any action taken or
threatened by the Internal Revenue Service, the Department of Labor or
the PBGC with respect thereto;
(xii) ERISA Notices: with reasonable promptness, copies of (a)
each Schedule B (Actuarial Information) to the annual report (Form 5500
Series) filed by Company, any of its Subsidiaries or any of their
respective ERISA Affiliates with the Internal Revenue Service with
respect to each Pension Plan; (b) all notices received by Company or
any of its Subsidiaries from a Multiemployer Plan sponsor concerning an
ERISA Event; and (c) copies of such other documents or governmental
reports or filings relating to any Employee Benefit Plan as
Administrative Agent shall reasonably request;
(xiii) Financial Plans: as soon as practicable and in any
event no later than 30 days prior to the beginning of each Fiscal Year,
a consolidated plan and financial forecast for such Fiscal Year and
each succeeding Fiscal Year through the Revolving Loan Commitment
Termination Date (the "FINANCIAL PLAN" for such Fiscal Years),
including (a) forecasted consolidated balance sheets and forecasted
consolidated statements of income and cash flows of Company and its
Subsidiaries for each such Fiscal Year, together with pro forma
Compliance Certificates for each such Fiscal Year and an explanation of
the assumptions on which such forecasts are based, (b) forecasted
consolidated statements of income and cash flows of Company and its
Subsidiaries for each month of the first such Fiscal Year, together
with an explanation of the assumptions on which such forecasts are
based, and (c) such other information and projections as any Lender may
reasonably request;
(xiv) Insurance: as soon as practicable and in any event by
the last day of each Fiscal Year, a report in form and substance
satisfactory to Administrative Agent outlining all material insurance
coverage maintained as of the date of such report by Company and its
Subsidiaries and all material insurance coverage planned to be
maintained by Company and its Subsidiaries in the immediately
succeeding Fiscal Year;
(xv) Board of Directors: with reasonable promptness, written
notice of any change in the Board of Directors of Company;
(xvi) New Subsidiaries: promptly upon any Person becoming a
Subsidiary of Company, a written notice setting forth with respect to
such Person (a) the date on which such Person became a Subsidiary of
Company and (b) all of the data required to be set forth in Schedule
5.1 annexed hereto with respect to all Subsidiaries of Company (it
being understood that such written notice shall be deemed to supplement
Schedule 5.1 annexed hereto for all purposes of this Agreement);
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(xvii) Material Contracts: promptly, and in any event within
ten Business Days after any Material Contract of Company or any of its
Subsidiaries is terminated or amended in a manner that is materially
adverse to Company or such Subsidiary, as the case may be, or any new
Material Contract is entered into, a written statement describing such
event with copies of such material amendments or new contracts, and an
explanation of any actions being taken with respect thereto;
(xviii) Borrowing Base Certificate: As soon as available and
in any event within ten Business Days after the last Business Day of
each month ending after the Closing Date, a Borrowing Base Certificate
dated as of the last Business Day of such month, together with any
additional schedules and other information that Administrative Agent
may reasonably request (it being understood that (a) Company, in
addition to such monthly Borrowing Base Certificates, may from time to
time deliver to Administrative Agent and Lenders, on any Business Day
after the Closing Date, a Borrowing Base Certificate dated as of a
recent day, together with any additional schedules and other
information that Administrative Agent may reasonably request, and (b)
the most recent Borrowing Base Certificate described in this
subdivision (xix) that is delivered to Administrative Agent shall be
used in calculating the Borrowing Base as of any date of
determination); and
(xix) Other Information: with reasonable promptness, such
other information and data with respect to Company or any of its
Subsidiaries as from time to time may be reasonably requested by any
Lender.
6.2 CORPORATE EXISTENCE, ETC.
Except as permitted under subsection 7.7, Company will, and will cause
each of its Subsidiaries to, at all times preserve and keep in full force and
effect its corporate existence and all rights and franchises material to its
business; provided, however that neither Company nor any of its Subsidiaries
shall be required to preserve any such right or franchise if the Board of
Directors of Company or such Subsidiary shall determine that the preservation
thereof is no longer desirable in the conduct of the business of Company or such
Subsidiary, as the case may be, and that the loss thereof is not disadvantageous
in any material respect to Company, such Subsidiary or Lenders.
6.3 PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION.
A. Company will, and will cause each of its Subsidiaries to, pay all
material taxes, assessments and other governmental charges imposed upon it or
any of its properties or assets or in respect of any of its income, businesses
or franchises before any penalty accrues thereon, and all claims (including
claims for labor, services, materials and supplies) for sums that have become
due and payable and that by law have or may become a Lien upon any of its
properties or assets, prior to the time when any penalty or fine shall be
incurred with respect thereto; provided that no such charge or claim need be
paid if it is being contested
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in good faith by appropriate proceedings promptly instituted and diligently
conducted, so long as (1) such reserve or other appropriate provision, if any,
as shall be required in conformity with GAAP shall have been made therefor and
(2) in the case of a charge or claim which has or may become a Lien against any
of the Collateral, such contest proceedings conclusively operate to stay the
sale of any portion of the Collateral to satisfy such charge or claim.
B. Company will not, nor will it permit any of its Subsidiaries to,
file or consent to the filing of any consolidated income tax return with any
Person (other than Company or any of its Subsidiaries).
6.4 MAINTENANCE OF PROPERTIES; INSURANCE; APPLICATION OF NET INSURANCE/
CONDEMNATION PROCEEDS.
A. MAINTENANCE OF PROPERTIES. Company will, and will cause each of its
Subsidiaries to, maintain or cause to be maintained in good repair, working
order and condition, ordinary wear and tear excepted, all material properties
used or useful in the business of Company and its Subsidiaries (including all
Intellectual Property) and from time to time will make or cause to be made all
appropriate repairs, renewals and replacements thereof except where the failure
to maintain such properties could not reasonably be expected in any individual
case or in the aggregate to have a Material Adverse Effect.
B. INSURANCE. Company will maintain or cause to be maintained, with
financially sound and reputable insurers, such public liability insurance, third
party property damage insurance, business interruption insurance and casualty
insurance with respect to liabilities, losses or damage in respect of the
assets, properties and businesses of Company and its Subsidiaries as may
customarily be carried or maintained under similar circumstances by corporations
of established reputation engaged in similar businesses, in each case in such
amounts (giving effect to self-insurance), with such deductibles, covering such
risks and otherwise on such terms and conditions as shall be customary for
corporations similarly situated in the industry. Without limiting the generality
of the foregoing, Company will maintain or cause to be maintained (i) flood
insurance with respect to each Flood Hazard Property that is located in a
community that participates in the National Flood Insurance Program, in each
case in compliance with any applicable regulations of the Board of Governors of
the Federal Reserve System, and (ii) replacement value casualty insurance on the
Collateral under such policies of insurance, with such insurance companies, in
such amounts, with such deductibles, and covering such risks as are at all times
satisfactory to Administrative Agent in its commercially reasonable judgment.
Each such policy of insurance shall (a) name Collateral Agent for the benefit of
Secured Parties as an additional insured thereunder as its interests may appear
and (b) in the case of each business interruption and casualty insurance policy,
contain a loss payable clause or endorsement, satisfactory in form and substance
to Collateral Agent, that names Collateral Agent for the benefit of Secured
Parties as the loss payee thereunder for any covered loss in excess of
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$1,500,000 and provides for at least 30 days prior written notice to
Administrative Agent of any modification or cancellation of such policy.
C. APPLICATION OF NET INSURANCE/CONDEMNATION PROCEEDS.
(i) Business Interruption Insurance. Upon receipt by Company
or any of its Subsidiaries of any business interruption insurance
proceeds constituting Net Insurance/Condemnation Proceeds, (a) so long
as no Event of Default shall have occurred and be continuing, Company
or such Subsidiary may retain and apply such Net Insurance/Condemnation
Proceeds for working capital purposes, and (b) if an Event of Default
shall have occurred and be continuing, Company shall apply an amount
equal to such Net Insurance/Condemnation Proceeds to prepay AXELs under
the AXEL Credit Agreement and the Revolving Loans (and/or the Revolving
Loan Commitments shall be reduced) as provided in subsection
2.4A(iii)(b);
(ii) Casualty Insurance/Condemnation Proceeds. Upon receipt by
Company or any of its Subsidiaries of any Net Insurance/Condemnation
Proceeds other than from business interruption insurance, (a) so long
as no Event of Default shall have occurred and be continuing, Company
shall, or shall cause one or more of its Subsidiaries to, (1) subject
to clause (iv) below, promptly and diligently and in any event within
six months of receipt apply such Net Insurance/Condemnation Proceeds to
pay or reimburse the costs of repairing, restoring or replacing the
assets in respect of which such Net Insurance/Condemnation Proceeds
were received or (2) to the extent not so applied or applied pursuant
to clause (iv) below within six months of receipt by Company or any of
its Subsidiaries, to prepay the AXELs under the AXEL Credit Agreement
and the Revolving Loans (and/or the Revolving Loan Commitments shall be
reduced) as provided in subsection 2.4A(iii)(b), and (b) if an Event of
Default shall have occurred and be continuing, Company shall apply an
amount equal to such Net Insurance/Condemnation Proceeds to prepay the
AXELs under the AXEL Credit Agreement and the Revolving Loans (and/or
the Revolving Loan Commitments shall be reduced) as provided in
subsection 2.4A(iii)(b).
(iii) Net Insurance/Condemnation Proceeds Received by
Collateral Agent. Upon receipt by Collateral Agent of any Net
Insurance/Condemnation Proceeds as loss payee, such loss proceeds shall
be held and applied in accordance with the terms of the Intercreditor
Agreement.
(iv) Reinvestment of Insurance Proceeds. So long as no Event
of Default or Potential Event of Default shall have occurred and be
continuing, Company and its Subsidiaries may reinvest in the business
of Company and its Subsidiaries up to $1,000,000 per year of Net
Insurance/Condemnation Proceeds recovered by Company or any of its
Subsidiaries provided that such funds are reinvested within six months
of receipt by Company or any of its Subsidiaries.
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6.5 INSPECTION RIGHTS; AUDITS OF INVENTORY AND ACCOUNTS RECEIVABLE; LENDER
MEETING.
A. INSPECTION RIGHTS. Company shall, and shall cause each of its
Subsidiaries to, permit any authorized representatives designated by any Lender
to visit and inspect any of the properties of Company or of any of its
Subsidiaries, to inspect, copy and take extracts from its and their financial
and accounting records, and to discuss its and their affairs, finances and
accounts with its and their officers and independent public accountants
(provided that Company may, if it so chooses, be present at or participate in
any such discussion), all upon reasonable notice and at such reasonable times
during normal business hours and as often as may reasonably be requested.
B. AUDITS OF INVENTORY AND ACCOUNTS RECEIVABLE. Company shall, and
shall cause each of its Subsidiaries to, permit any authorized representatives
designated by Administrative Agent to conduct audits of all Inventory and
accounts receivable of Loan Parties at any time and from time to time after the
Closing Date, such audit to be in form and substance reasonably acceptable to
Administrative Agent, all upon reasonable notice and at such reasonable times
during normal business hours as may reasonably be requested, provided that so
long as no Event of Default shall exist and be continuing Administrative Agent
may not conduct more than one such audit in any twelve month period.
C. LENDER MEETING. Company will, upon the request of Arranger,
Administrative Agent or Requisite Lenders, participate in a meeting of
Administrative Agent and Lenders once during each Fiscal Year to be held at
Company's corporate offices (or at such other location as may be agreed to by
Company and Administrative Agent) at such time as may be agreed to by Company
and Administrative Agent.
6.6 COMPLIANCE WITH LAWS, ETC.
Company shall comply, and shall cause each of its Subsidiaries and all
other Persons on or occupying any Facilities to comply, with the requirements of
all applicable laws, rules, regulations and orders of any governmental authority
(including all Environmental Laws), noncompliance with which could reasonably be
expected to cause, individually or in the aggregate, a Material Adverse Effect.
6.7 ENVIRONMENTAL REVIEW AND INVESTIGATION, DISCLOSURE, ETC.; COMPANY'S
ACTIONS REGARDING HAZARDOUS MATERIALS ACTIVITIES, ENVIRONMENTAL CLAIMS
AND VIOLATIONS OF ENVIRONMENTAL LAWS.
A. ENVIRONMENTAL REVIEW AND INVESTIGATION. Company agrees that
Administrative Agent may, from time to time and in its reasonable discretion,
(i) retain, at Company's expense, an independent professional consultant to
review any environmental audits, investigations, analyses and reports relating
to Hazardous Materials prepared by or for Company and (ii) conduct its own
investigation of any Facility; provided that, in the case of any Facility no
longer owned, leased, operated or used by Company or any of its
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Subsidiaries, Company shall only be obligated to use its good faith and
reasonable efforts to obtain permission for Administrative Agent's professional
consultant to conduct an investigation of such Facility. For purposes of
conducting such a review and/or investigation, Company hereby grants to
Administrative Agent and its agents, employees, consultants and contractors the
right to enter into or onto any Facilities currently owned, leased, operated or
used by Company or any of its Subsidiaries and to perform such tests on such
property (including taking samples of soil, groundwater and suspected
asbestos-containing materials) as are reasonably necessary in connection
therewith. Any such investigation of any Facility shall be conducted, unless
otherwise agreed to by Company and Administrative Agent, during normal business
hours and, to the extent reasonably practicable, shall be conducted so as not to
interfere with the ongoing operations at such Facility or to cause any damage or
loss to any property at such Facility. Company and Administrative Agent hereby
acknowledge and agree that any report of any investigation conducted at the
request of Administrative Agent pursuant to this subsection 6.7A will be
obtained and shall be used by Administrative Agent and Lenders for the purposes
of Lenders' internal credit decisions, to monitor and police the Revolving Loans
and to protect Lenders' security interests, if any, created by the Revolving
Loan Documents. Administrative Agent agrees to deliver a copy of any such report
to Company with the understanding that Company acknowledges and agrees that (x)
it will indemnify and hold harmless Administrative Agent and each Lender from
any costs, losses or liabilities relating to Company's use of or reliance on
such report, (y) neither Administrative Agent nor any Lender makes any
representation or warranty with respect to such report, and (z) by delivering
such report to Company, neither Administrative Agent nor any Lender is requiring
or recommending the implementation of any suggestions or recommendations
contained in such report.
B. ENVIRONMENTAL DISCLOSURE. Company will deliver to Administrative
Agent and Lenders:
(i) Environmental Audits and Reports. As soon as practicable
following receipt thereof, copies of all environmental audits,
investigations, analyses and reports of any kind or character, whether
prepared by personnel of Company or any of its Subsidiaries or by
independent consultants, governmental authorities or any other Persons,
with respect to significant environmental matters at any Facility or
with respect to any Environmental Claims;
(ii) Notice of Certain Releases, Remedial Actions, Etc.
Promptly upon the occurrence thereof, written notice describing in
reasonable detail (a) any Release required to be reported by Company or
any of its Subsidiaries to any federal, state or local governmental or
regulatory agency under any applicable Environmental Laws, (b) any
remedial action taken by Company or any of its Subsidiaries or any
other Person of which Company has knowledge in response to (1) any
Hazardous Materials Activities the existence of which has a reasonable
possibility of resulting in one or more Environmental Claims having,
individually or in the aggregate, a
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Material Adverse Effect, or (2) any Environmental Claims that,
individually or in the aggregate, have a reasonable possibility of
resulting in a Material Adverse Effect, and (c) Company's discovery of
any occurrence or condition on any real property adjoining or in the
vicinity of any Facility that reasonably could be expected to cause
such Facility or any part thereof to be subject to any material
restrictions on the ownership, occupancy, transferability or use
thereof under any Environmental Laws.
(iii) Written Communications Regarding Environmental Claims,
Releases, Etc. As soon as practicable following the sending or receipt
thereof,by Company or any of its Subsidiaries, a copy of any and all
written communications with respect to (a) any Environmental Claims
that, individually or in the aggregate, are reasonably expected to have
a Material Adverse Effect, (b) any Release required to be reported by
Company or any of its Subsidiaries to any federal, state or local
governmental or regulatory agency, and (c) any request made to Company
or any of its Subsidiaries for information from any governmental agency
that suggests such agency is investigating whether Company or any of
its Subsidiaries may be potentially responsible for any Hazardous
Materials Activity.
(iv) Notice of Certain Proposed Actions Having Environmental
Impact. Prompt written notice describing in reasonable detail (a) any
proposed acquisition of stock, assets, or property by Company or any of
its Subsidiaries that could reasonably be expected to (1) expose
Company or any of its Subsidiaries to, or result in, Environmental
Claims that would have, individually or in the aggregate, a Material
Adverse Effect or (2) result in Company or any of its Subsidiaries
failing to maintain in full force and effect all material Governmental
Authorizations required under any Environmental Laws for their
respective operations and (b) any proposed action to be taken by
Company or any of its Subsidiaries to modify current operations in a
manner that could reasonably be expected to subject Company or any of
its Subsidiaries to any additional obligations or requirements under
any Environmental Laws.
(v) Other Information. With reasonable promptness, such other
documents and information as from time to time may be reasonably
requested by Administrative Agent in relation to any matters disclosed
pursuant to this subsection 6.7.
C. COMPANY'S ACTIONS REGARDING HAZARDOUS MATERIALS ACTIVITIES,
ENVIRONMENTAL CLAIMS AND VIOLATIONS OF ENVIRONMENTAL LAWS.
(i) Remedial Actions Relating to Hazardous Materials
Activities. Company shall promptly undertake, and shall cause each of
its Subsidiaries promptly to undertake, any and all investigations,
studies, sampling, testing, abatement, cleanup, removal, remediation or
other response actions necessary to remove, remediate, clean up or
abate any Hazardous Materials Activity on, under or about any Facility
that is in violation of any Environmental Laws or that presents a
material
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risk of giving rise to an Environmental Claim. In the event Company or
any of its Subsidiaries undertakes any such action with respect to any
Hazardous Materials, Company or such Subsidiary shall conduct and
complete such action in compliance with all applicable Environmental
Laws and in accordance with the policies, orders and directives of all
federal, state and local governmental authorities except when, and only
to the extent that, Company's or such Subsidiary's liability with
respect to such Hazardous Materials Activity is being contested in good
faith by Company or such Subsidiary.
(ii) Actions with Respect to Environmental Claims and
Violations of Environmental Laws. Company shall promptly take, and
shall cause each of its Subsidiaries promptly to take, any and all
actions necessary to (i) cure any violation of applicable Environmental
Laws by Company or its Subsidiaries and (ii) make an appropriate
response to any Environmental Claim against Company or any of its
Subsidiaries and discharge any obligations it may have to any Person
thereunder.
6.8 EXECUTION OF SUBSIDIARY GUARANTY AND PERSONAL PROPERTY COLLATERAL
DOCUMENTS BY CERTAIN SUBSIDIARIES AND FUTURE SUBSIDIARIES
A. EXECUTION OF SUBSIDIARY GUARANTY AND PERSONAL PROPERTY COLLATERAL
DOCUMENTS. In the event that any Domestic Subsidiary existing on the Restatement
Effective Date that has not previously executed the Subsidiary Guaranty
hereafter owns or acquires assets with an aggregate fair market value (without
netting such fair market value against any liability of such Subsidiary)
exceeding $500,000, or in the event that any Person becomes a Material Domestic
Subsidiary after the date hereof, Company will promptly notify Collateral Agent
of that fact and cause such Subsidiary to execute and deliver to Collateral
Agent a counterpart of the Subsidiary Guaranty and a Subsidiary Pledge Agreement
and a Subsidiary Security Agreement and to take all such further actions and
execute all such further documents and instruments (including actions, documents
and instruments comparable to those described in subsection 4.1H) as may be
necessary or, in the opinion of Collateral Agent, desirable to create in favor
of Collateral Agent, for the benefit of Secured Parties, a valid and perfected
First Priority Lien on all of the personal and mixed property assets of such
Subsidiary described in the applicable forms of Collateral Documents.
B. SUBSIDIARY CHARTER DOCUMENTS, LEGAL OPINIONS, ETC. Company shall
deliver to Collateral Agent, together with such Revolving Loan Documents, (i)
certified copies of such Subsidiary's Certificate or Articles of Incorporation,
together with a good standing certificate from the Secretary of State of the
jurisdiction of its incorporation and each other state in which such Person is
qualified as a foreign corporation to do business and, to the extent generally
available, a certificate or other evidence of good standing as to payment of any
applicable franchise or similar taxes from the appropriate taxing authority of
each of such jurisdictions, each to be dated a recent date prior to their
delivery to Collateral Agent, (ii) a copy of such Subsidiary's Bylaws, certified
by its corporate secretary or an assistant
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secretary as of a recent date prior to their delivery to Collateral Agent, (iii)
a certificate executed by the secretary or an assistant secretary of such
Subsidiary as to (a) the fact that the attached resolutions of the Board of
Directors of such Subsidiary approving and authorizing the execution, delivery
and performance of such Revolving Loan Documents are in full force and effect
and have not been modified or amended and (b) the incumbency and signatures of
the officers of such Subsidiary executing such Revolving Loan Documents, and
(iv) a favorable opinion of counsel to such Subsidiary, in form and substance
satisfactory to Collateral Agent and its counsel, as to (a) the due organization
and good standing of such Subsidiary, (b) the due authorization, execution and
delivery by such Subsidiary of such Revolving Loan Documents, (c) the
enforceability of such Revolving Loan Documents against such Subsidiary, (d)
such other matters (including matters relating to the creation and perfection of
Liens in any Collateral pursuant to such Revolving Loan Documents) as Collateral
Agent may reasonably request, all of the foregoing to be satisfactory in form
and substance to Administrative Agent and its counsel.
C. FOREIGN SUBSIDIARY LOAN DOCUMENTS. In the event that any Foreign
Subsidiary existing on the Restatement Effective Date whose shares have not been
pledged pursuant to an Auxiliary Pledge Agreement owns or acquires assets with
an aggregate fair market value (without netting such fair market value against
any liability of such Subsidiary) exceeding $1,500,000, or in the event that any
person becomes a Foreign Subsidiary which owns assets with an aggregate fair
market value (without netting such fair market value against any liability of
such Subsidiary) exceeding $1,500,000, Company will promptly notify Collateral
Agent of that fact and shall or cause the applicable subsidiary which owns
equity in such Foreign Subsidiary to execute and deliver to Collateral Agent an
Auxiliary Pledge Agreement in form and substance satisfactory to Collateral
Agent; to take all such further actions and execute such further documents and
instruments as may be necessary or, in the opinion of Collateral Agent
reasonably desirable, to perfect a Lien on the equity interests of such Foreign
Subsidiary for the benefit of Secured Parties and to deliver to Collateral Agent
an opinion of counsel (which counsel shall be reasonably acceptable to
Collateral Agent) as to the enforceability of the Auxiliary Pledge Agreement
under the laws of such Foreign Subsidiary's jurisdiction of organization and
such other matters as Collateral Agent may reasonably request (including as to
the perfection of liens on such equity interests).
D. If at any time JCS Realty acquires any personal property assets with
an aggregate fair market value (without netting such fair market value against
any liability of JCS Realty) in excess of $500,000, Company will promptly notify
Collateral Agent of that fact and cause JCS Realty to execute and deliver all
documents and to take all such further actions as may be necessary or, in the
opinion of Collateral Agent, desirable to create in favor of Collateral Agent,
for the benefit of Secured Parties, a valid and perfected First Priority Lien on
such property in all relevant jurisdictions.
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6.9 CONFORMING LEASEHOLD INTERESTS; MATTERS RELATING TO REAL PROPERTY
COLLATERAL
A. CONFORMING LEASEHOLD INTERESTS. From and after the Restatement
Effective Date, if Company or any of its Subsidiaries acquires any Leasehold
Property, Company shall, or shall cause such Subsidiary to, use its reasonable
and good faith efforts (without requiring Company or such Subsidiary to
relinquish any material rights or incur any material obligations or to expend
more than a nominal amount of money over and above the reimbursement, if
required, of the Landlord's reasonable out-of-pocket costs, including attorneys'
fees) to cause such Leasehold Property to be a Conforming Leasehold Interest.
B. MORTGAGES, ETC. From and after the Restatement Effective Date, in
the event that (i) Company or any Subsidiary Guarantor acquires any fee interest
in real property or any Material Leasehold Property, (ii) with respect to any
Material Leasehold Property or any real property in which Company has a fee
interest in on or prior to the Restatement Effective Date, any first priority
mortgage existing on or prior to the Restatement Effective Date on such property
is removed or (iii) at the time any Person (including Eden Prairie Holdings)
becomes a Subsidiary Guarantor, such Person owns or holds any fee interest in
real property or any Material Leasehold Property, in all cases excluding (A) any
such Real Property Asset the encumbrancing of which requires the consent of any
applicable lessor or (in the case of clause (iii) above) then-existing senior
lienholder, where Company and its Subsidiaries are unable to obtain such
lessor's or senior lienholder's consent and (B) the Anagram Headquarters
Facility in the event (a) the mortgage recording tax payable in respect of a
Mortgage thereon would be based on an amount greater than the amount of Eden
Prairie Holdings' Additional Guarantor's Obligations under and as defined in the
Subsidiary Guaranty, or (b) in the opinion of counsel (which counsel shall be
reasonably satisfactory to Collateral Agent) in the state in which the Anagram
Headquarters Facility is located, there is a reasonable likelihood that a
mortgage to secure Eden Prairie Holdings' obligations under the Subsidiary
Guaranty in the form requested by the Collateral Agent would not be valid and
enforceable in the applicable jurisdictions of such state (any such non-excluded
Real Property Asset described in the foregoing clause (i), (ii) or (iii) a
"MORTGAGED PROPERTY"), Company or such Subsidiary Guarantor shall promptly
notify Collateral Agent, and shall deliver upon Collateral Agent's written
request, as soon as practicable after such Person acquires such Mortgaged
Property or becomes a Subsidiary Guarantor, as the case may be, the following:
(i) Mortgage. A fully executed and notarized Mortgage duly
recorded in all appropriate places in all applicable jurisdictions,
encumbering the interest of such Loan Party in such Mortgaged Property;
(ii) Opinions of Counsel. (a) A favorable opinion of counsel
to such Loan Party, in form and substance satisfactory to Collateral
Agent and its counsel, as to the due authorization, execution and
delivery by such Loan Party of such Mortgage and such other matters as
Collateral Agent may reasonably request, and (b) if required by
Collateral Agent, an opinion of counsel (which counsel shall be
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reasonably satisfactory to Collateral Agent) in the state in which such
Mortgaged Property is located with respect to the enforceability of
such Mortgage and such other matters (including any matters governed by
the laws of such state regarding personal property security interests
in respect of any Collateral) as Collateral Agent may reasonably
request, in each case in form and substance reasonably satisfactory to
Collateral Agent;
(iii) Landlord Consent and Estoppel; Recorded Leasehold
Interest. In the case of a Mortgaged Property consisting of a Leasehold
Property, (a) if such Leasehold Property is holding or will hold
inventory or equipment with an aggregate fair market value exceeding
$500,000, a Landlord Consent and Estoppel provided that Company shall
only be required to use reasonable and good faith efforts to obtain
such Landlord Consent and Estoppel and in no event shall Company be
obligated to pay any fee, charge or other consideration to any landlord
in order to obtain such Landlord Consent and Estoppel, other than, if
required, the landlord's reasonable out-of-pocket costs, including
attorneys' fees and (b) if such Leasehold Property is a Recorded
Leasehold Interest, evidence to that effect
(iv) Title Insurance. (a) If reasonably requested by
Collateral Agent, an ALTA mortgagee title insurance policy or an
unconditional commitment therefor (a "MORTGAGE POLICY") issued by the
Title Company with respect to such Mortgaged Property, in an amount
satisfactory to Collateral Agent, insuring fee simple title to, or a
valid leasehold interest in, such Mortgaged Property vested in such
Loan Party and assuring Collateral Agent that such Mortgage creates a
valid and enforceable First Priority mortgage Lien on such Mortgaged
Property, subject only to, if available in the state in which such
Mortgaged Property is located, a standard survey exception and to
Permitted Encumbrances, which Mortgage Policy (1) shall include, if
available in the state in which such Mortgaged Property is located, an
endorsement for mechanics' liens, for future advances under this
Agreement and for any other matters reasonably requested by Collateral
Agent and (2) shall provide for such affirmative insurance and such
reinsurance as Collateral Agent may reasonably request, all of the
foregoing in form and substance reasonably satisfactory to Collateral
Agent; and (b) evidence satisfactory to Collateral Agent that such Loan
Party has (i) delivered to the Title Company all certificates and
affidavits customarily required by the Title Company in connection with
the issuance of the Mortgage Policy and (ii) paid to the Title Company
or to the appropriate governmental authorities all expenses and
premiums of the Title Company in connection with the issuance of the
Mortgage Policy and all recording and stamp taxes (including mortgage
recording and intangible taxes) payable in connection with recording
the Mortgage in the appropriate real estate records; provided however,
that Administrative Agent shall allow for such reasonable revisions to
the applicable mortgage and shall otherwise take such steps as are
reasonable and customary to minimize recording, mortgage recording,
stamp, documentary and intangible taxes, at Company's cost; provided,
further, that in no event shall such Loan Party be required to pay any
additional
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mortgage recording tax after the initial recording of any such Mortgage
which may be required in order to maintain the secured or priority
status of such Mortgage.
(v) Title Report. If no Mortgage Policy is required with
respect to such Mortgaged Property, a title report issued by the Title
Company with respect thereto, dated not more than 30 days prior to the
date such Mortgage is to be recorded and satisfactory in form and
substance to Collateral Agent;
(vi) Copies of Documents Relating to Title Exceptions. Copies
of all recorded documents listed as exceptions to title or otherwise
referred to in the Mortgage Policy or title report delivered pursuant
to clause (iv) or (v) above;
(vii) Matters Relating to Flood Hazard Properties. (a)
Evidence, which may be in the form of a letter from an insurance broker
or a municipal engineer, as to (1) whether such Mortgaged Property is a
Flood Hazard Property and (2) if so, whether the community in which
such Flood Hazard Property is located is participating in the National
Flood Insurance Program, (b) if such Mortgaged Property is a Flood
Hazard Property, such Loan Party's written acknowledgement of receipt
of written notification from Collateral Agent (1) that such Mortgaged
Property is a Flood Hazard Property and (2) as to whether the community
in which such Flood Hazard Property is located is participating in the
National Flood Insurance Program, and (c) in the event such Mortgaged
Property is a Flood Hazard Property that is located in a community that
participates in the National Flood Insurance Program, evidence that
Company has obtained flood insurance in respect of such Flood Hazard
Property to the extent required under the applicable regulations of the
Board of Governors of the Federal Reserve System; and
(viii) Environmental Audit. If required by Collateral Agent,
reports and other information, in form, scope and substance
satisfactory to Collateral Agent and prepared by environmental
consultants satisfactory to Collateral Agent, concerning any
environmental hazards or liabilities to which Company or any of its
Subsidiaries may be subject with respect to such Mortgaged Property.
C. REAL ESTATE APPRAISALS. Company shall, and shall cause each of its
Subsidiaries to, permit an independent real estate appraiser satisfactory to
Collateral Agent, upon reasonable notice, to visit and inspect any Additional
Mortgaged Property for the purpose of preparing an appraisal of such Mortgaged
Property satisfying the requirements of any applicable laws and regulations (in
each case to the extent required under such laws and regulations as determined
by Collateral Agent in its discretion).
6.10 INTEREST RATE PROTECTION.
A. REVOLVING LOANS AND EXISTING AXELS. Company shall at all times
maintain in effect one or more Interest Rate Agreements with respect to the
Existing AXELs and the
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Revolving Loans, each such Interest Rate Agreement to be for a term of not less
than three years from the Closing Date and in form and substance reasonably
satisfactory to Administrative Agent, which Interest Rate Agreements shall
effectively limit the Unadjusted Eurodollar Rate Component (as hereinafter
defined) of the interest costs to Company (i) with respect to an aggregate
notional principal amount of not less than 25% of the aggregate principal amount
of the Existing AXELs outstanding on the Closing Date (based on the assumption
that such notional principal amount was a Eurodollar Rate Loan (as defined under
the AXEL Credit Agreement) with an Interest Period (as defined under the AXEL
Credit Agreement) of three months) to a rate equal to not more than 9% per annum
and (ii) with respect to an aggregate notional principal amount of not less than
25% of the aggregate principal amount of the Existing AXELs outstanding on the
Closing Date (based on the assumption that such notional principal amount was a
Eurodollar Rate Loan (as defined under the AXEL Credit Agreement) with an
Interest Period (as defined under the AXEL Credit Agreement) of three months) to
a rate equal to not more than 10% per annum. For purposes of this subsection
6.10, the term "UNADJUSTED EURODOLLAR RATE COMPONENT" means that component of
the interest costs to Company under the AXEL Credit Agreement in respect of a
Eurodollar Rate Loan that is based upon the rate obtained pursuant to the
definition of Adjusted Eurodollar Rate under the AXEL Credit Agreement without
giving effect to the last paragraph thereof.
B. ADDITIONAL AXELS. At all times after the date which is 45 days after
the Restatement Effective Date, Company shall maintain in effect one or more
Interest Rate Agreements with respect to the Additional AXELs, each such
Interest Rate Agreement to be for a term of not less than three years from the
Restatement Effective Date and in form and substance reasonably satisfactory to
Administrative Agent, which Interest Rate Agreements shall effectively limit the
Unadjusted Eurodollar Rate Component of the interest costs to Company (i) with
respect to an aggregate notional principal amount of not less than 25% of the
aggregate principal amount of the Additional AXELs outstanding on the
Restatement Effective Date (based on the assumption that such notional principal
amount was a Eurodollar Rate Loan (as defined under the AXEL Credit Agreement)
with an Interest Period (as defined under the AXEL Credit Agreement) of three
months) to a rate equal to not more than 9% per annum and (ii) with respect to
an aggregate notional principal amount of not less than 25% of the aggregate
principal amount of the Additional AXELs outstanding on the Restatement
Effective Date (based on the assumption that such notional principal amount was
a Eurodollar Rate Loan (as defined under the AXEL Credit Agreement) with an
Interest Period (as defined under the AXEL Credit Agreement) of three months) to
a rate equal to not more than 10% per annum.
6.11 CASH MANAGEMENT SYSTEMS.
Company shall at all times maintain a cash management system for the
Loan Parties in form and substance reasonably satisfactory to the Arranger and
the Administrative Agent. The terms and conditions of such cash management
system shall be as set forth in Schedule 6.11 annexed hereto.
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6.12 TRADEMARKS AND PATENTS.
If Company or any of its Subsidiaries acquires any material patents,
trademarks or copyrights, Company shall promptly notify the Collateral Agent of
that fact and, if requested by Administrative Agent, Company shall, or cause the
applicable Subsidiary to, execute and deliver to Collateral Agent supplemental
security agreements and take such other actions as the Collateral Agent may
reasonably request to create in favor of Collateral Agent, for the benefit of
Secured Parties, a valid and perfected First Priority Lien on such patents,
trademarks or copyrights.
SECTION 7.
COMPANY'S NEGATIVE COVENANTS
Company covenants and agrees that, so long as any of the Revolving Loan
Commitments hereunder shall remain in effect and until payment in full of all of
the Revolving Loans and other Obligations and the cancellation or expiration of
all Letters of Credit, unless Requisite Lenders shall otherwise give prior
written consent, Company shall perform, and shall cause each of its Subsidiaries
to perform, all covenants in this Section 7.
7.1 INDEBTEDNESS.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume or guaranty, or otherwise become
or remain directly or indirectly liable with respect to, any Indebtedness,
except:
(i) Company may become and remain liable with respect to the
Obligations;
(ii) Company and its Subsidiaries may become and remain liable
with respect to Contingent Obligations permitted by subsection 7.4 and,
upon any matured obligations actually arising pursuant thereto, the
Indebtedness corresponding to the Contingent Obligations so
extinguished;
(iii) Company may become and remain liable with respect to
Indebtedness to any of its wholly-owned Subsidiaries, and any
wholly-owned Subsidiary of Company may become and remain liable with
respect to Indebtedness to Company or any other wholly-owned Subsidiary
of Company; provided that (a) all such intercompany Indebtedness shall
be evidenced by promissory notes subject to a first priority perfected
pledge in favor of Lenders, (b) all such intercompany Indebtedness owed
by Company to any of its Subsidiaries shall be subordinated in right of
payment to the payment in full of the Obligations pursuant to the terms
of the applicable promissory notes or an intercompany subordination
agreement, (c) any payment by
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any Subsidiary of Company under any guaranty of the Obligations shall
result in a pro tanto reduction of the amount of any intercompany
Indebtedness owed by such Subsidiary to Company or to any of its
Subsidiaries for whose benefit such payment is made, and (d) the
aggregate principal amount of all Indebtedness of all Foreign
Subsidiaries to Company and its Domestic Subsidiaries shall not exceed
$2,000,000 at any time outstanding;
(iv) Company and its Subsidiaries, as applicable, may remain
liable with respect to Indebtedness described in Schedule 7.1 annexed
hereto;
(v) Company may become and remain liable with respect to
Indebtedness evidenced by the Senior Subordinated Notes in an amount
not to exceed $110,000,000;
(vi) Company and its Subsidiaries may become and remain liable
with respect to Indebtedness in an aggregate amount not to exceed
$5,000,000 at any time outstanding in respect of (i) purchase money
Indebtedness incurred to finance the purchase price of specific assets
and Capital Leases so long as, upon default, the holder of such
Indebtedness may seek recourse or payment against Company and its
Subsidiaries only through the return or sale of the assets financed
thereby and (ii) Indebtedness of a person which becomes a Subsidiary,
provided such Indebtedness is recourse only to such Subsidiary, and
neither Company nor any of its other Subsidiaries have any obligations
in respect thereof;
(vii) Company's Foreign Subsidiaries may become and remain
liable with respect to Indebtedness in an aggregate amount not to
exceed $2,000,000 outstanding at any time under any overdraft facility
with a foreign bank used to fund working capital obligations of such
Foreign Subsidiary;
(viii) Company may become and remain liable for additional
unsecured subordinated Indebtedness with substantially the same terms
as the Subordinated Notes, the net proceeds of which additional
subordinated Indebtedness are used solely to fund Permitted Business
Acquisitions; provided that (a) no Event of Default or Potential Event
of Default shall exist and be continuing at the time of the incurrence
thereof, (b) the aggregate amount of such additional subordinated
Indebtedness shall not exceed $90,000,000, (c) after giving effect to
the Permitted Business Acquisition being financed with such
Indebtedness (and the incurrence of such Indebtedness), Company and its
Subsidiaries are in compliance with the financial covenants under
subsection 7.6 on a Pro Forma Basis and (d) Company shall deliver to
Administrative Agent at least 10 days prior to such incurrence an
Officer's Certificate certifying the matters set forth in clauses
(a)-(c) above.
(ix) Company and its Subsidiaries may become and remain liable
for any Indebtedness replacing or refinancing any Indebtedness
permitted under clauses (iv),
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(vi), (vii), (viii) or (xi) of this subsection 7.1 provided that (a)
the principal amount of such Indebtedness does not exceed the principal
amount of the Indebtedness being refinanced or replaced, (b) such
Indebtedness has a final maturity on or later than the final maturity
of the Indebtedness being refinanced or replaced and a weighted average
life to maturity equal to or greater than the weighted average life to
maturity of the Indebtedness being refinanced or replaced, (c) the
interest rate (or, where applicable, interest rate margin) and fees
applicable to such Indebtedness is not higher than those applicable to
the Indebtedness being refinanced or replaced, (d) the covenants,
defaults and prepayment provisions, taken as a whole, are not more
burdensome or restrictive on the Company and its Subsidiaries than
those applicable to the Indebtedness being refinanced or replaced, (e)
such Indebtedness is secured only by Liens permitted under Section 7.2
for the Indebtedness being refinanced or replaced; (f) such
Indebtedness is incurred by Company or the Restricted Subsidiary who is
the obligor on the Indebtedness being refinanced or replaced, (g) if
the Indebtedness being refinanced or replaced is subordinated to the
Obligations, such Indebtedness is subordinated to the Obligations on
terms not less favorable to the Lenders than those applicable to the
Indebtedness being refinanced or replaced, and (h) without limiting the
generality of the foregoing clauses (a)-(g), any Indebtedness incurred
to replace or refinance any Indebtedness permitted under clause (viii)
of this subsection 7.1 shall be unsecured and shall have substantially
the same terms as the Indebtedness so replaced or refinanced;
(x) Company may become and remain liable for AXELs under the
AXEL Credit Agreement in an aggregate principal amount not to exceed
$157,000,000 at any time (reduced by any principal payments actually
made thereon); and
(xi) Company and its Subsidiaries may become and remain liable
with respect to other Indebtedness in an aggregate principal amount not
to exceed $5,000,000 at any time outstanding.
7.2 LIENS AND RELATED MATTERS.
A. PROHIBITION ON LIENS. Company shall not, and shall not permit any of
its Subsidiaries to, directly or indirectly, create, incur, assume or permit to
exist any Lien on or with respect to any property or asset of any kind
(including any document or instrument in respect of goods or accounts
receivable) of Company or any of its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, or file or permit the
filing of, or permit to remain in effect, any financing statement or other
similar notice of any Lien with respect to any such property, asset, income or
profits under the Uniform Commercial Code of any State or under any similar
recording or notice statute, except:
(i) Permitted Encumbrances;
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(ii) Liens granted pursuant to the Collateral Documents
securing the Obligations and obligations of Company and its
Subsidiaries under the AXEL Loan Documents;
(iii) Liens described in Schedule 7.2 annexed hereto;
(iv) Indebtedness incurred under subsection 7.1(vi) may be
secured by Liens on assets acquired or financed through the incurrence
of such Indebtedness or on the assets of the newly acquired Subsidiary,
provided that such Indebtedness was not created in contemplation of the
acquisition of such Subsidiary by Company or one of its Subsidiaries;
(v) Other Liens securing Indebtedness in an aggregate amount
not to exceed $5,000,000 at any time outstanding.
B. EQUITABLE LIEN IN FAVOR OF LENDERS. If Company or any of its
Subsidiaries shall create or assume any Lien upon any of its properties or
assets, whether now owned or hereafter acquired, other than Liens excepted by
the provisions of subsection 7.2A, it shall make or cause to be made effective
provision whereby the Obligations will be secured by such Lien equally and
ratably with any and all other Indebtedness secured thereby as long as any such
Indebtedness shall be so secured; provided that, notwithstanding the foregoing,
this covenant shall not be construed as a consent by Requisite Lenders to the
creation or assumption of any such Lien not permitted by the provisions of
subsection 7.2A.
C. NO FURTHER NEGATIVE PLEDGES. Except with respect to specific
property encumbered to secure payment of particular Indebtedness or to be sold
pursuant to an executed agreement with respect to an Asset Sale, neither Company
nor any of its Subsidiaries shall enter into any agreement (other than the
Senior Subordinated Note Indenture or any other agreement prohibiting only the
creation of Liens securing Subordinated Indebtedness and the AXEL Credit
Agreement) prohibiting the creation or assumption of any Lien upon any of its
properties or assets, whether now owned or hereafter acquired.
D. NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS TO COMPANY OR OTHER
SUBSIDIARIES. Except as provided herein or in the AXEL Credit Agreement, Company
will not, and will not permit any of its Subsidiaries to, create or otherwise
cause or suffer to exist or become effective any consensual encumbrance or
restriction of any kind on the ability of any such Subsidiary to (i) pay
dividends or make any other distributions on any of such Subsidiary's capital
stock owned by Company or any other Subsidiary of Company, (ii) repay or prepay
any Indebtedness owed by such Subsidiary to Company or any other Subsidiary of
Company, (iii) make loans or advances to Company or any other Subsidiary of
Company, or (iv) transfer any of its property or assets to Company or any other
Subsidiary of Company.
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7.3 INVESTMENTS; JOINT VENTURES.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, make or own any Investment in any Person, including any
Joint Venture, except:
(i) Company and its Subsidiaries may make and own Investments
in Cash Equivalents;
(ii) Company and its Subsidiaries may make intercompany loans
to the extent permitted under subsection 7.1(iii);
(iii) Company and its Subsidiaries may make Consolidated
Capital Expenditures permitted by subsection 7.8;
(iv) Company and its Subsidiaries may continue to own the
Investments owned by them and described in Schedule 7.3 annexed hereto;
(v) Company and its wholly owned Domestic Subsidiaries may
make and own investments in other wholly owned Domestic Subsidiaries;
(vi) Company and its wholly owned Domestic Subsidiaries may
make and own Investments in Persons that, as a result of such
Investments, become additional wholly-owned Domestic Subsidiaries, to
the extent such Investments are permitted under subsections 7.7(vi) and
7.7(vii); provided that Company shall, and shall cause its Subsidiaries
to, comply with the requirements of subsections 6.8 and 6.9 with
respect to each such additional Domestic Subsidiaries;
(vii) Company and its wholly owned Domestic Subsidiaries may
make additional Investments in their respective Foreign Subsidiaries;
provided that (a) the amount of all such Investments constituting
equity Investments does not exceed $7,000,000 in the aggregate for all
such Investments since the Closing Date and (b) the amount of all such
Investments constituting loans or advances does not exceed the amount
permitted under subsection 7.1(iii);
(viii) Company and its Subsidiaries may make and own other
Investments in an aggregate amount not to exceed at any time
$7,000,000.
Notwithstanding the foregoing, so long as no Event of Default or Potential Event
of Default shall exist and be continuing, Company and its Subsidiaries may make
and hold investments funded solely with the proceeds of any issuance of Company
Common Stock in a private issuance after the Closing Date.
7.4 CONTINGENT OBLIGATIONS.
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Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create or become or remain liable with respect to any
Contingent Obligation, except:
(i) Subsidiaries of Company may become and remain liable with
respect to Contingent Obligations in respect of the Subsidiary
Guaranty;
(ii) Company and its Subsidiaries may become and remain liable
in respect of obligations under any Hedge Agreements;
(iii) Company may become and remain liable with respect to
Contingent Obligations in respect of Letters of Credit; Company and its
Domestic Subsidiaries may become and remain liable with respect to
Contingent Obligations in respect of other Commercial Letters of Credit
in an aggregate amount not to exceed at any time $3,000,000 and
Contingent Obligations in respect of other Standby Letters of Credit in
an aggregate amount not to exceed at any time $2,000,000; and Foreign
Subsidiaries may become and remain liable with respect to Contingent
Obligations in respect of other Commercial Letters of Credit obtained
in the ordinary course of business in an aggregate amount not to exceed
at any time $2,000,000;
(iv) Company and its Subsidiaries may become and remain liable
with respect to Contingent Obligations in respect of customary
indemnification, purchase price adjustment and contingent earnout
obligations incurred in connection with Asset Sales or other sales or
purchases of assets, provided that the aggregate amount of all
obligations of Company and its Subsidiaries in respect of purchase
price adjustments and contingent earnouts may not exceed $5,000,000 at
any time;
(v) Company and its Subsidiaries may become and remain liable
with respect to Contingent Obligations under guarantees in the ordinary
course of business of the obligations of suppliers, customers,
franchisees and licensees of Company and its Subsidiaries in an
aggregate amount not to exceed at any time $1,000,000;
(vi) Company and its Subsidiaries may become and remain liable
with respect to Contingent Obligations in respect of any Indebtedness
of Company or any of its Subsidiaries permitted by subsection 7.1;
(vii) Company and its Subsidiaries, as applicable, may remain
liable with respect to Contingent Obligations described in Schedule 7.4
annexed hereto; and
(viii) Company and its Subsidiaries may become and remain
liable with respect to other Contingent Obligations; provided that the
maximum aggregate liability, contingent or otherwise, of Company and
its Subsidiaries in respect of all such Contingent Obligations shall at
no time exceed $5,000,000.
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7.5 RESTRICTED JUNIOR PAYMENTS.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, declare, order, pay, make or set apart any sum for any
Restricted Junior Payment; provided that so long as no Event of Default or
Potential Event of Default shall then exist and be continuing Company may (i)
make regularly scheduled payments of interest in respect of any Subordinated
Indebtedness in accordance with the terms of, and only to the extent required
by, and subject to the subordination provisions contained in, the indenture or
other agreement pursuant to which such Subordinated Indebtedness was issued, as
such indenture or other agreement may be amended from time to time to the extent
permitted under subsection 7.15B and (ii) repurchase stock and options from
officers, directors and employees in accordance with the terms of the
Stockholders' Agreement in an aggregate amount not to exceed (i) $5,000,000 per
year in the case of any then current or former chief executive officer, (ii)
$2,500,000 per year in the aggregate in the case of all other officers,
directors and employees and (iii) $10,000,000 in the aggregate for all such
Persons after the Closing Date.
7.6 FINANCIAL COVENANTS.
A. MINIMUM FIXED CHARGE COVERAGE RATIO. Company shall not permit the
ratio of (i) Consolidated Adjusted EBITDA to (ii) Consolidated Fixed Charges for
any four-Fiscal Quarter period ending on any of the dates set forth below to be
less than the correlative ratio indicated:
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=============================== ==============================
MINIMUM
PERIOD FIXED CHARGE
ENDING COVERAGE RATIO
=============================== ==============================
September 30, 1998 1.00:1.00
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December 31, 1998 1.00:1.00
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March 31, 1999 1.00:1.00
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June 30, 1999 1.00:1.00
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September 30, 1999 1.00:1.00
------------------------------- ------------------------------
December 31, 1999 1.00:1.00
------------------------------- ------------------------------
March 31, 2000 1.10:1.00
------------------------------- ------------------------------
June 30, 2000 1.10:1.00
------------------------------- ------------------------------
September 30, 2000 1.10:1.00
------------------------------- ------------------------------
December 31, 2000 1.10:1.00
------------------------------- ------------------------------
March 31, 2001 1.15:1.00
------------------------------- ------------------------------
June 30, 2001 1.15:1.00
------------------------------- ------------------------------
September 30, 2001 1.15:1.00
------------------------------- ------------------------------
December 31, 2001 1.15:1.00
------------------------------- ------------------------------
March 31, 2002 1.20:1.00
------------------------------- ------------------------------
June 30, 2002 1.20:1.00
------------------------------- ------------------------------
September 30, 2002 1.20:1.00
------------------------------- ------------------------------
December 31, 2002 1.20:1.00
=============================== ==============================
B. MINIMUM CONSOLIDATED ADJUSTED EBITDA. Company shall not permit
Consolidated Adjusted EBITDA for any four Fiscal Quarter period ending on the
dates set forth below to be less than the correlative amount indicated:
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============================== =============================
MINIMUM
PERIOD CONSOLIDATED ADJUSTED
ENDING EBITDA
============================== =============================
September 30, 1998 41,735,000
------------------------------ -----------------------------
December 31, 1998 45,560,000
------------------------------ -----------------------------
March 31, 1999 46,750,000
------------------------------ -----------------------------
June 30, 1999 47,090,000
------------------------------ -----------------------------
September 30, 1999 49,300,000
------------------------------ -----------------------------
December 31, 1999 52,360,000
------------------------------ -----------------------------
March 31, 2000 53,520,000
------------------------------ -----------------------------
June 30, 2000 54,680,000
------------------------------ -----------------------------
September 30, 2000 55,840,000
------------------------------ -----------------------------
December 31, 2000 57,000,000
------------------------------ -----------------------------
March 31, 2001 58,410,000
------------------------------ -----------------------------
June 30, 2001 59,825,000
------------------------------ -----------------------------
September 30, 2001 61,235,000
------------------------------ -----------------------------
December 31, 2001 62,645,000
------------------------------ -----------------------------
March 31, 2002 64,110,000
------------------------------ -----------------------------
June 30, 2002 65,575,000
------------------------------ -----------------------------
September 30, 2002 67,040,000
------------------------------ -----------------------------
December 31, 2002 68,510,000
============================== =============================
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C. CONSOLIDATED LEVERAGE RATIO. Company shall not permit the
Consolidated Leverage Ratio as of the last day of any four Fiscal Quarter period
ending on any of the dates set forth below to exceed the correlative ratio
indicated:
============================== =============================
MAXIMUM
PERIOD DEBT TO EBITDA RATIO
ENDING
============================== =============================
September 30, 1998 6.60:1.00
------------------------------ -----------------------------
December 31, 1998 6.40:1.00
------------------------------ -----------------------------
March 31, 1999 6.20:1:00
------------------------------ -----------------------------
June 30, 1999 6.00:1.00
------------------------------ -----------------------------
September 30, 1999 5.80:1.00
------------------------------ -----------------------------
December 31, 1999 5.50:1.00
------------------------------ -----------------------------
March 31, 2000 5.40:1.00
------------------------------ -----------------------------
June 30, 2000 5.25:1.00
------------------------------ -----------------------------
September 30, 2000 5.10:1.00
------------------------------ -----------------------------
December 31, 2000 5.00:1.00
------------------------------ -----------------------------
March 31, 2001 4.85:1.00
------------------------------ -----------------------------
June 30, 2001 4.70:1.00
------------------------------ -----------------------------
September 30, 2001 4.55:1.00
------------------------------ -----------------------------
December 31, 2001 4.40:1.00
------------------------------ -----------------------------
March 31, 2002 4.20:1.00
------------------------------ -----------------------------
June 30, 2002 4.10:1.00
------------------------------ -----------------------------
September 30, 2002 3.90:1.00
------------------------------ -----------------------------
December 31, 2002 3.70:1.00
============================== =============================
D. CERTAIN CALCULATIONS.
With respect to calculations of Consolidated Adjusted EBITDA and
Consolidated Fixed Charges for any four-Fiscal Quarter period including the
Closing Date, such
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calculations shall be made on a pro forma basis assuming, in each case, that the
Closing Date, the Merger, the repayment of debt to be repaid on the Closing
Date, the issuance and sale of the Company Common Stock in connection with the
Recapitalization Financing Requirements and the related borrowings by Company
pursuant to the Existing Revolving Loan Credit Agreement, the AXEL Credit
Agreement and the Senior Subordinated Note Indenture occurred on the first day
of the applicable four-Fiscal Quarter period and assuming further, for purposes
of calculation of the pro forma interest accrued on AXELs and Revolving Loans
during such four quarter periods prior to the Closing Date, that (i) all
Revolving Loans outstanding were Eurodollar Rate Loans and that the applicable
reference interest rates were the average effective Adjusted Eurodollar Rates on
the Revolving Loans for the period from the Closing Date through the date of
determination and (ii) all AXELs outstanding were Eurodollar Rate Loans (as
defined in the AXEL Credit Agreement) and that the applicable reference interest
rates were the average effective Adjusted Eurodollar Rates (as defined in the
AXEL Credit Agreement) on the AXELs for the period from the Closing Date through
the date of determination, all such calculations to be in form and substance
satisfactory to Arranger and Administrative Agent.
With respect to calculations of Consolidated Adjusted EBITDA and
Consolidated Fixed Charges for any four-Fiscal Quarter period including the
Restatement Effective Date, such calculations shall be made on a pro forma basis
assuming, in each case, that the Restatement Effective Date, the Anagram
Acquisition, the repayment of debt to be repaid on the Restatement Effective
Date, the issuance and sale of the New Company Shares and the related borrowings
on or about the Restatement Effective Date by Company pursuant to this Agreement
and the AXEL Credit Agreement occurred on the first day of the applicable
four-Fiscal Quarter period and assuming further, for purposes of calculation of
the pro forma interest accrued on AXELs and Revolving Loans during such four
quarter periods prior to the Restatement Effective Date, that (i) all Revolving
Loans outstanding were Eurodollar Rate Loans and that the applicable reference
interest rates were the average effective Adjusted Eurodollar Rates on the
Revolving Loans for the period from the Restatement Effective Date through the
date of determination and (ii) all AXELs outstanding were Eurodollar Rate Loans
(as defined in the AXEL Credit Agreement) and that the applicable reference
interest rates were the average effective Adjusted Eurodollar Rates (as defined
in the AXEL Credit Agreement) on the AXELs for the period from the Restatement
Effective Date through the date of determination, all such calculations to be in
form and substance satisfactory to Arranger and Administrative Agent.
During the first three Fiscal Quarters of Fiscal Year 1998, in
calculating Consolidated Fixed Charges for any such period, such calculation
shall be made using actual Consolidated Capital Expenditures paid in Cash from
the beginning of Fiscal Year 1998 and annualized.
With respect to any period during which new Subsidiaries, assets or
businesses are acquired pursuant to subsection 7.7(vi) or 7.7(vii), for purposes
of determining compliance with the financial covenants set forth in this
subsection 7.6, calculations of Consolidated Adjusted EBITDA and Consolidated
Fixed Charges shall exclude non-recurring restructuring
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charges associated with such transactions, one time costs associated with
financing raised and equity issued pursuant to subsections 7.1 (viii) and 7.1(x)
and the costs associated with the realization of cost savings described in the
next sentence, provided that such exclusion shall not apply with respect to any
non recurring restructuring charges and charges in connection with cost savings
to the extent they are paid in cash but only in the period in which they are
paid in cash. Consolidated Adjusted EBITDA and Consolidated Fixed Charges shall
also be calculated with respect to such periods and such Subsidiaries, assets or
businesses on a pro forma basis (including (without duplication for amounts
otherwise included in Consolidated Adjusted EBITDA) pro forma adjustments for
cost savings which have actually occurred (annualizing such cost savings) and
arise out of events which are directly attributable to a specific transaction,
are factually supportable and are expected to have a continuing impact,
including, without limitation, cost savings resulting from head count
reductions, closure of facilities and similar restructuring charges, which pro
forma adjustments shall be certified in an Officers Certificate of the Company)
using the historical financial statements of all entities or assets so acquired
or to be acquired and the consolidated financial statements of Company and its
Subsidiaries which shall be reformulated (i) as if such acquisition, and any
acquisitions which have been consummated during such four quarter period, and
any Indebtedness or other liabilities incurred in connection with any such
acquisition had been consummated or incurred at the beginning of such four
quarter period (and assuming that such Indebtedness bears interest during any
portion of the applicable measurement period prior to the relevant acquisition
at the weighted average of the interest rates applicable to such Indebtedness
during the period in which it is actually outstanding), and (ii) otherwise in
conformity with certain procedures to be agreed upon between Administrative
Agent and Company, all such calculations to be in form and substance
satisfactory to Administrative Agent.
In addition, in calculating compliance with Subsection 7.6A,
discontinued operations will be given pro forma effect as follows:
(1) Consolidated Adjusted EBITDA attributable to discontinued
operations, as determined in accordance with GAAP, and
operations or businesses disposed of on or prior to the
calculation date, shall be excluded, and
(2) Consolidated Fixed Charges attributable to discontinued
operations, as determined in accordance with GAAP, and
operations or businesses disposed of on or prior to the
calculation date, shall be excluded, but only to the extent
that the obligations giving rise to such Consolidated Fixed
Charges will not be obligations of the Company or any of its
Subsidiaries following the Calculation Date.
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7.7 RESTRICTION ON FUNDAMENTAL CHANGES; ASSET SALES AND ACQUISITIONS.
Company shall not, and shall not permit any of its Subsidiaries to,
alter the corporate, capital or legal structure of Company or any of its
Subsidiaries, or enter into any transaction of merger or consolidation, or
liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease or sub-lease (as lessor or sublessor),
transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any part of its business, property or assets, whether now
owned or hereafter acquired, or acquire by purchase or otherwise all or
substantially all the business, property or fixed assets of, or stock or other
evidence of beneficial ownership of, any Person or any division or line of
business of any Person, except:
(i) any Subsidiary of Company may be merged with or into
Company or any wholly-owned Subsidiary Guarantor, or be liquidated,
wound up or dissolved, or all or any part of its business, property or
assets may be conveyed, sold, leased, transferred or otherwise disposed
of, in one transaction or a series of transactions, to Company or any
wholly-owned Subsidiary Guarantor; provided that, in the case of such a
merger, Company or such wholly-owned Subsidiary Guarantor shall be the
continuing or surviving corporation;
(ii) Company and its Subsidiaries may make Consolidated
Capital Expenditures permitted under subsection 7.8;
(iii) Company and its Subsidiaries may dispose of obsolete,
worn out or surplus property in the ordinary course of business and any
assets acquired in connection with the acquisition of another Person or
a division or line of business of such Person which the Company
reasonably determines are surplus assets;
(iv) Company and its Subsidiaries may sell or otherwise
dispose of assets in transactions that do not constitute Asset Sales;
provided that the consideration received for such assets shall be in an
amount at least equal to the fair market value thereof;
(v) subject to subsection 7.12, Company and its Subsidiaries
may (x) sell the Chester, New York, Melbourne, Australia and Montreal,
Quebec real estate and (y) make other Asset Sales of assets having a
fair market value not in excess of $1,000,000 per year; provided that
(1) the consideration received for such assets shall be in an amount at
least equal to the fair market value thereof; (2) the consideration
received shall be at least 85% cash; and (3) no later than the first
Business Day following the date of receipt by Company or any of its
Subsidiaries of any Net Asset Sale Proceeds of such Asset Sale, Company
shall deliver to Agent an Officers' Certificate, satisfactory in form
and substance to Administrative Agent, demonstrating the derivation of
the Net Asset Sale Proceeds of such Asset Sale from the gross sales
price received in connection therewith;
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(vi) In addition to the Anagram Acquisition (which is
addressed in subsection 7.7 (vii)), Company and its Subsidiaries may
acquire all or substantially all the business, property or fixed assets
of, or stock or other evidence of beneficial ownership of, any Person
or any division or line of business of any Person that is in the same
line of business as Company and its Subsidiaries ("PERMITTED BUSINESS
ACQUISITIONS"); provided that, in the case of any Permitted Business
Acquisition that is financed in whole or in part with any consideration
other than (a) common stock of Company transferred to the seller, (b)
proceeds of additional cash common equity contributions by GSII to
Company, and/or (c) proceeds of additional subordinated indebtedness
incurred in compliance with the provisions of subsection 7.1(viii), (1)
Company and its Subsidiaries are in compliance with the financial
covenants under subsection 7.6 on a Pro Forma Basis for the four Fiscal
Quarters most recently completed prior to the consummation of such
Permitted Business Acquisition and (2) the Consolidated Senior Leverage
Ratio on a Pro Forma Basis for the four Fiscal Quarters most recently
completed prior to the consummation of such Permitted Business
Acquisition shall not exceed (A) for any such four-Fiscal Quarter
period ending on or before the last day of Fiscal Year 1999, 4.00:1.00,
and (b) for any such four-Fiscal Quarter period ending thereafter,
3.50:1.00; and
(vii) Company and its Subsidiaries may acquire the Anagram
Shares pursuant to the Anagram Acquisition Agreement on the Restatement
Effective Date.
7.8 CONSOLIDATED CAPITAL EXPENDITURES
Company shall not, and shall not permit its Subsidiaries to, make or
incur Consolidated Capital Expenditures, in any Fiscal Year ending on a date set
forth below (or any four quarter period ending on any date set forth below on or
prior to December 31, 1998), in an aggregate amount in excess of the
corresponding amount (the "MAXIMUM CONSOLIDATED CAPITAL EXPENDITURES AMOUNT")
set forth below opposite such date; provided that the Maximum Consolidated
Capital Expenditures Amount for any Fiscal Year, commencing with Fiscal Year
1999, shall be increased by an amount equal to the excess, if any, (but in no
event more than 50% of the Maximum Consolidated Capital Expenditures Amount for
the previous Fiscal Year (or, in the case of Fiscal Year 1999, for the four
Fiscal Quarter period ending as of December 31, 1998) of the Maximum
Consolidated Capital Expenditures Amount (as adjusted in accordance with this
proviso) over the actual amount of Consolidated Capital Expenditure for the
previous Fiscal Year (or, in the case of Fiscal Year 1999, for the four Fiscal
Quarter period ending as of December 31, 1998):
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============================== =============================
PERIOD MAXIMUM CONSOLIDATED CAPITAL
ENDING EXPENDITURES
------------------------------ -----------------------------
September 30, 1998 $8,000,000
------------------------------ -----------------------------
December 31, 1998 9,000,000
------------------------------ -----------------------------
December 31, 1999 14,000,000
------------------------------ -----------------------------
December 31, 2000 15,000,000
------------------------------ -----------------------------
December 31, 2001 15,000,000
------------------------------ -----------------------------
December 31, 2002 15,000,000
============================== =============================
Notwithstanding the foregoing, the Company and its Subsidiaries may
fund Consolidated Capital Expenditures in excess of the foregoing limits from
any proceeds of an additional issuance of Company common stock in a private
issuance after the Restatement Effective Date.
7.9 SALES AND LEASE-BACKS.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, become or remain liable as lessee or as a guarantor or
other surety with respect to any lease, whether an Operating Lease or a Capital
Lease, of any property (whether real, personal or mixed), whether now owned or
hereafter acquired, (i) which Company or any of its Subsidiaries has sold or
transferred or is to sell or transfer to any other Person (other than Company or
any of its Subsidiaries) or (ii) which Company or any of its Subsidiaries
intends to use for substantially the same purpose as any other property which
has been or is to be sold or transferred by Company or any of its Subsidiaries
to any Person (other than Company or any of its Subsidiaries) in connection with
such lease, provided that, for the period commencing the Restatement Effective
Date up to and including the second anniversary of the Restatement Effective
Date, Company and its Subsidiaries may become liable with respect to any such
leases relating to the Chester, New York and Montreal, Quebec real estate.
7.10 TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, enter into or permit to exist any transaction (including
the purchase, sale, lease or exchange of any property or the rendering of any
service) with any holder of 10% or more of any class of equity Securities of
Company or with any Affiliate of Company or of any such holder, on terms that
are less favorable to Company or that Subsidiary, as the case
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may be, than those that might be obtained at the time from Persons who are not
such a holder or Affiliate; provided that the foregoing restriction shall not
apply to (i) any transaction between Company and any of its wholly owned
Subsidiaries or between any of its wholly owned Subsidiaries, (ii) any
transaction between Company or any of its wholly owned Subsidiaries and Goldman,
Sachs & Co., GSCP or GSII or any Affiliate of any of them, (iii) reasonable and
customary fees paid to members of the Boards of Directors of Company and its
Subsidiaries or (iv) any transactions described on Schedule 7.10.
7.11 DISPOSAL OF SUBSIDIARY STOCK.
Except for any sale of 100% of the capital stock or other equity
Securities of any of its Subsidiaries in compliance with the provisions of
subsection 7.7(v), Company shall not:
(i) directly or indirectly sell, assign, pledge or otherwise
encumber or dispose of any shares of capital stock or other equity
Securities of any of its Subsidiaries, except to qualify directors if
required by applicable law; or
(ii) permit any of its Subsidiaries directly or indirectly to
sell, assign, pledge or otherwise encumber or dispose of any shares of
capital stock or other equity Securities of any of its Subsidiaries
(including such Subsidiary), except to Company, another Subsidiary of
Company, or to qualify directors if required by applicable law.
7.12 CONDUCT OF BUSINESS.
From and after the Restatement Effective Date, Company shall not, and
shall not permit any of its Subsidiaries to, engage in any business other than
(i) the businesses engaged in by Company and its Subsidiaries on the Restatement
Effective Date and similar or related businesses and (ii) such other lines of
business as may be consented to by Requisite Lenders.
7.13 AMENDMENTS OR WAIVERS OF CERTAIN RELATED AGREEMENTS AND THE ANAGRAM
ACQUISITION AGREEMENT; AMENDMENTS OF DOCUMENTS RELATING TO SUBORDINATED
INDEBTEDNESS.
A. AMENDMENTS OR WAIVERS OF CERTAIN RELATED AGREEMENTS. Neither Company
nor any of its Subsidiaries will agree to any material amendment to, or waive
any of its material rights under, any Related Agreement (other than any Related
Agreement evidencing or governing any Subordinated Indebtedness) or the Anagram
Acquisition Agreement after the Restatement Effective Date without in each case
obtaining the prior written consent of Requisite Lenders to such amendment or
waiver.
B. AMENDMENTS OF DOCUMENTS RELATING TO SUBORDINATED INDEBTEDNESS.
Company shall not, and shall not permit any of its Subsidiaries to, amend or
otherwise change the terms of any Subordinated Indebtedness, or make any payment
consistent with an
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amendment thereof or change thereto, if the effect of such amendment or change
is to increase the interest rate on such Subordinated Indebtedness, change (to
earlier dates) any dates upon which payments of principal or interest are due
thereon, change any event of default or condition to an event of default with
respect thereto (other than to eliminate any such event of default or increase
any grace period related thereto), change the redemption, prepayment or
defeasance provisions thereof, change the subordination provisions of such
Subordinated Indebtedness (or of any guaranty thereof), or change any collateral
therefor (other than to release such collateral), or if the effect of such
amendment or change, together with all other amendments or changes made, is to
increase materially the obligations of the obligor thereunder or to confer any
additional rights on the holders of such Subordinated Indebtedness (or a trustee
or other representative on their behalf) which would be adverse to Company or
Lenders.
7.14 FISCAL YEAR
Company shall not change its Fiscal Year-end from December 31.
SECTION 8.
EVENTS OF DEFAULT
If any of the following conditions or events ("EVENTS OF DEFAULT")
shall occur:
8.1 FAILURE TO MAKE PAYMENTS WHEN DUE.
Failure by Company to pay any installment of principal of any Revolving
Loan when due, whether at stated maturity, by acceleration, by notice of
voluntary prepayment, by mandatory prepayment or otherwise; failure by Company
to pay when due any amount payable to an Issuing Lender in reimbursement of any
drawing under a Letter of Credit; or failure by Company to pay any interest on
any Revolving Loan or any fee or any other amount due under this Agreement
within three days after the date due; or
8.2 DEFAULT IN OTHER AGREEMENTS.
(i) Failure of Company or any of its Subsidiaries to pay when due any
principal of or interest on or any other amount payable in respect of one or
more items of Indebtedness (other than Indebtedness referred to in subsection
8.1) or Contingent Obligations with an aggregate principal amount of $5,000,000
or more, in each case beyond the end of any grace period provided therefor; or
(ii) breach or default by Company or any of its Subsidiaries with respect to any
other material term of (a) one or more items of Indebtedness or Contingent
Obligations in the individual or aggregate principal amounts referred to in
clause (i) above or (b) any loan agreement (including the AXEL Credit
Agreement), mortgage, indenture or other agreement relating to such item(s) of
Indebtedness or Contingent Obligation(s), if the effect of such breach or
default is to cause, or to permit the holder or
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holders of that Indebtedness or Contingent Obligation(s) (or a trustee on behalf
of such holder or holders) to cause, that Indebtedness or Contingent
Obligation(s) to become or be declared due and payable prior to its stated
maturity or the stated maturity of any underlying obligation, as the case may be
(upon the giving or receiving of notice, lapse of time, both, or otherwise); or
8.3 BREACH OF CERTAIN COVENANTS.
Failure of Company to perform or comply with any term or condition
contained in subsection 2.5 or 6.2 or Section 7 of this Agreement; or
8.4 BREACH OF WARRANTY.
Any representation, warranty, certification or other statement made by
Company or any of its Subsidiaries in any Loan Document or in any statement or
certificate at any time given by Company or any of its Subsidiaries in writing
pursuant hereto or thereto or in connection herewith or therewith shall be false
in any material respect on the date as of which made; or
8.5 OTHER DEFAULTS UNDER REVOLVING LOAN DOCUMENTS.
Any Loan Party shall default in the performance of or compliance with
any term contained in this Agreement or any of the other Revolving Loan
Documents, other than any such term referred to in any other subsection of this
Section 8, and such default shall not have been remedied or waived within 30
days after the earlier of (i) an executive officer of Company or such Loan Party
becoming aware of such default or (ii) receipt by Company and such Loan Party of
notice from Administrative Agent or any Lender of such default; or
8.6 INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(i) A court having jurisdiction in the premises shall enter a decree or
order for relief in respect of Company or any of its Subsidiaries in an
involuntary case under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect, which decree
or order is not stayed; or any other similar relief shall be granted under any
applicable federal or state law; or (ii) an involuntary case shall be commenced
against Company or any of its Subsidiaries under the Bankruptcy Code or under
any other applicable bankruptcy, insolvency or similar law now or hereafter in
effect; or a decree or order of a court having jurisdiction in the premises for
the appointment of a receiver, liquidator, sequestrator, trustee, custodian or
other officer having similar powers over Company or any of its Subsidiaries, or
over all or a substantial part of its property, shall have been entered; or
there shall have occurred the involuntary appointment of an interim receiver,
trustee or other custodian of Company or any of its Subsidiaries for all or a
substantial part of its property; or a warrant of attachment, execution or
similar process shall have been issued against any substantial part of the
property of Company or any of its
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Subsidiaries, and any such event described in this clause (ii) shall continue
for 60 days unless dismissed, bonded or discharged; or
8.7 VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(i) Company or any of its Subsidiaries shall have an order for relief
entered with respect to it or commence a voluntary case under the Bankruptcy
Code or under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect, or shall consent to the entry of an order for relief in an
involuntary case, or to the conversion of an involuntary case to a voluntary
case, under any such law, or shall consent to the appointment of or taking
possession by a receiver, trustee or other custodian for all or a substantial
part of its property; or Company or any of its Subsidiaries shall make any
assignment for the benefit of creditors; or (ii) Company or any of its
Subsidiaries shall be unable, or shall fail generally, or shall admit in writing
its inability, to pay its debts as such debts become due; or the Board of
Directors of Company or any of its Subsidiaries (or any committee thereof) shall
adopt any resolution or otherwise authorize any action to approve any of the
actions referred to in clause (i) above or this clause (ii); or
8.8 JUDGMENTS AND ATTACHMENTS.
Any money judgment, writ or warrant of attachment or similar process
involving in the aggregate at any time an amount in excess of $5,000,000 (in
either case not adequately covered by insurance as to which a solvent and
unaffiliated insurance company has acknowledged coverage) shall be entered or
filed against Company or any of its Subsidiaries or any of their respective
assets and shall remain undischarged, unvacated, unbonded or unstayed for a
period of 60 days (or in any event later than five days prior to the date of any
proposed sale thereunder); or
8.9 DISSOLUTION.
Any order, judgment or decree shall be entered against Company or any
of its Subsidiaries decreeing the dissolution or split up of Company or that
Subsidiary and such order shall remain undischarged or unstayed for a period in
excess of 30 days; or
8.10 EMPLOYEE BENEFIT PLANS.
There shall occur one or more ERISA Events which individually or in the
aggregate results in or might reasonably be expected to result in liability of
Company or any of its Subsidiaries in excess of $5,000,000 during the term of
this Agreement; or the excess of (1) the actuarial present value (determined on
the basis of reasonable assumptions employed by the independent actuary for each
Pension Plan for purposes of Section 412 of the Internal Revenue Code or Section
302 of ERISA) of benefit liabilities (as defined in Section 4001(a)(16) of
ERISA) over (2) the fair market value of the assets of such Pension Plan,
individually or in the aggregate for all Pension Plans (excluding for purposes
of such
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computation any Pension Plans with respect to which assets exceed benefit
liabilities), exceeds $7,500,000; or
8.11 CHANGE IN CONTROL.
If (i) prior to a Qualified Public Offering GSII together with any
Affiliates of GSII shall cease to beneficially own and control 51% or more of
the combined voting power of all Securities of the Company, (ii) following
consummation of a Qualified Public Offering any Person or any two or more
Persons acting in concert shall have acquired beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission under the
Exchange Act), directly or indirectly, of Securities of Company (or other
Securities convertible into such Securities) representing more of the combined
voting power of all Securities of Company than is owned by GSII and its
Affiliates at such time, or (iii) a "Change of Control" as defined in the Senior
Subordinated Notes Indenture occurs; or
8.12 INVALIDITY OF SUBSIDIARY GUARANTY; FAILURE OF SECURITY; REPUDIATION OF
OBLIGATIONS
At any time after the execution and delivery thereof, (i) the
Subsidiary Guaranty for any reason, other than the satisfaction in full of all
Obligations, shall cease to be in full force and effect (other than in
accordance with its terms) or shall be declared to be null and void, (ii) any
Collateral Document shall cease to be in full force and effect (other than by
reason of a release of Collateral thereunder in accordance with the terms hereof
or thereof, the satisfaction in full of the Obligations or any other termination
of such Collateral Document in accordance with the terms hereof or thereof) or
shall be declared null and void, or Administrative Agent shall not have or shall
cease to have a valid and perfected First Priority Lien in any Collateral
purported to be covered thereby, in each case for any reason other than the
failure of Administrative Agent or any Lender to take any action within its
control, or (iii) any Loan Party shall contest the validity or enforceability of
any Loan Document in writing or deny in writing that it has any further
liability, including with respect to future advances by Lenders, under any Loan
Document to which it is a party; or
8.13 FAILURE TO CONSUMMATE ANAGRAM ACQUISITION.
The Anagram Acquisition shall not be consummated in accordance with
this Agreement, or the Anagram Acquisition shall be unwound, reversed or
otherwise rescinded in whole or in any material part for any reason; or
8.14 AMENDMENT OF CERTAIN DOCUMENTS OF COMPANY.
Company shall agree to any material amendment to, or waive any of its
material rights under, or otherwise change any material terms of, any of the
Recapitalization Documents, in each case as in effect on the Closing Date, in a
manner adverse to Company or any of its Subsidiaries or to Lenders without the
prior written consent of Administrative Agent and Requisite Lenders;
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THEN (i) upon the occurrence of any Event of Default described in subsection 8.6
or 8.7, each of (a) the unpaid principal amount of and accrued interest on the
Revolving Loans, (b) an amount equal to the maximum amount that may at any time
be drawn under all Letters of Credit then outstanding (whether or not any
beneficiary under any such Letter of Credit shall have presented, or shall be
entitled at such time to present, the drafts or other documents or certificates
required to draw under such Letter of Credit), and (c) all other Obligations
shall automatically become immediately due and payable, without presentment,
demand, protest or other requirements of any kind, all of which are hereby
expressly waived by Company, and the obligation of each Lender to make any
Revolving Loan, the obligation of Administrative Agent to issue any Letter of
Credit and the right of any Lender to issue any Letter of Credit hereunder shall
thereupon terminate, and (ii) upon the occurrence and during the continuation of
any other Event of Default, Administrative Agent shall, upon the written request
or with the written consent of Requisite Lenders, by written notice to Company,
declare all or any portion of the amounts described in clauses (a) through (c)
above to be, and the same shall forthwith become, immediately due and payable,
and the obligation of each Lender to make any Revolving Loan, the obligation of
Administrative Agent to issue any Letter of Credit and the right of any Lender
to issue any Letter of Credit hereunder shall thereupon terminate; provided that
the foregoing shall not affect in any way the obligations of Lenders under
subsection 3.3C(i).
Any amounts described in clause (b) above, when received by
Administrative Agent, shall be held by Collateral Agent pursuant to the terms of
the Intercreditor Agreement and shall be applied as therein provided.
Notwithstanding anything contained in the second preceding paragraph,
if at any time within 60 days after an acceleration of the Revolving Loans
pursuant to clause (ii) of such paragraph Company shall pay all arrears of
interest and all payments on account of principal which shall have become due
otherwise than as a result of such acceleration (with interest on principal and,
to the extent permitted by law, on overdue interest, at the rates specified in
this Agreement) and all Events of Default and Potential Events of Default (other
than non-payment of the principal of and accrued interest on the Revolving
Loans, in each case which is due and payable solely by virtue of acceleration)
shall be remedied or waived pursuant to subsection 10.6, then Requisite Lenders,
by written notice to Company, may at their option rescind and annul such
acceleration and its consequences; but such action shall not affect any
subsequent Event of Default or Potential Event of Default or impair any right
consequent thereon. The provisions of this paragraph are intended merely to bind
Lenders to a decision which may be made at the election of Requisite Lenders and
are not intended, directly or indirectly, to benefit Company, and such
provisions shall not at any time be construed so as to grant Company the right
to require Lenders to rescind or annul any acceleration hereunder or to preclude
Administrative Agent or Lenders from exercising any of the rights or remedies
available to them under any of the Revolving Loan Documents, even if the
conditions set forth in this paragraph are met.
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SECTION 9.
AGENTS
9.1 APPOINTMENT.
A. APPOINTMENT OF AGENTS. GSCP is hereby appointed Arranger and
Syndication Agent hereunder, and each Lender hereby authorizes Arranger and
Syndication Agent to act as its agent in accordance with the terms of this
Agreement and the other Revolving Loan Documents. Fleet is hereby appointed
Administrative Agent hereunder and under the other Revolving Loan Documents and
each Lender hereby authorizes Administrative Agent to act as its agent in
accordance with the terms of this Agreement and the other Revolving Loan
Documents. Fleet is also being appointed Collateral Agent under the
Intercreditor Agreement and each Lender hereby authorizes Collateral Agent to
act as its agent in accordance with the terms of the Intercreditor Agreement and
the other Revolving Loan Documents. Each Agent hereby agrees to act upon the
express conditions contained in this Agreement and the other Revolving Loan
Documents, as applicable. The provisions of this Section 9 are solely for the
benefit of Agents and Lenders and Company shall have no rights as a third party
beneficiary of any of the provisions thereof. In performing its functions and
duties under this Agreement, each Agent shall act solely as an agent of Lenders
and does not assume and shall not be deemed to have assumed any obligation
towards or relationship of agency or trust with or for Company or any of its
Subsidiaries. Each of Arranger and Syndication Agent, without consent of or
notice to any party hereto, may assign any and all of its rights or obligations
hereunder to any of its Affiliates. As of the Restatement Effective Date, all
obligations of Arranger and Syndication Agent hereunder shall terminate.
B. APPOINTMENT OF SUPPLEMENTAL COLLATERAL AGENTS. It is the purpose of
this Agreement and the other Revolving Loan Documents that there shall be no
violation of any law of any jurisdiction denying or restricting the right of
banking corporations or associations to transact business as agent or trustee in
such jurisdiction. It is recognized that in case of litigation under this
Agreement or any of the other Revolving Loan Documents, and in particular in
case of the enforcement of any of the Revolving Loan Documents, or in case
Administrative Agent deems that by reason of any present or future law of any
jurisdiction it may not exercise any of the rights, powers or remedies granted
herein or in any of the other Revolving Loan Documents or take any other action
which may be desirable or necessary in connection therewith, it may be necessary
that Administrative Agent appoint an additional individual or institution as a
separate trustee, co-trustee, collateral agent or collateral co-agent (any such
additional individual or institution being referred to herein individually as a
"SUPPLEMENTAL COLLATERAL AGENT" and collectively as "SUPPLEMENTAL COLLATERAL
AGENTS").
In the event that Administrative Agent appoints a Supplemental
Collateral Agent with respect to any Collateral, (i) each and every right,
power, privilege or duty expressed or intended by this Agreement or any of the
other Revolving Loan Documents to be exercised by or vested in or conveyed to
Administrative Agent with respect to such
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Collateral shall be exercisable by and vest in such Supplemental Collateral
Agent to the extent, and only to the extent, necessary to enable such
Supplemental Collateral Agent to exercise such rights, powers and privileges
with respect to such Collateral and to perform such duties with respect to such
Collateral, and every covenant and obligation contained in the Revolving Loan
Documents and necessary to the exercise or performance thereof by such
Supplemental Collateral Agent shall run to and be enforceable by either Agent or
such Supplemental Collateral Agent, and (ii) the provisions of this Section 9
and of subsections 10.2 and 10.3 that refer to Administrative Agent shall inure
to the benefit of such Supplemental Collateral Agent and all references therein
to Administrative Agent shall be deemed to be references to Administrative Agent
and/or such Supplemental Collateral Agent, as the context may require.
Should any instrument in writing from Company or any other Loan Party
be required by any Supplemental Collateral Agent so appointed by Administrative
Agent for more fully and certainly vesting in and confirming to him or it such
rights, powers, privileges and duties, Company shall, or shall cause such Loan
Party to, execute, acknowledge and deliver any and all such instruments promptly
upon request by Administrative Agent. In case any Supplemental Collateral Agent,
or a successor thereto, shall die, become incapable of acting, resign or be
removed, all the rights, powers, privileges and duties of such Supplemental
Collateral Agent, to the extent permitted by law, shall vest in and be exercised
by Administrative Agent until the appointment of a new Supplemental Collateral
Agent.
9.2 POWERS AND DUTIES; GENERAL IMMUNITY.
A. POWERS; DUTIES SPECIFIED. Each Lender irrevocably authorizes each
Agent to take such action on such Lender's behalf and to exercise such powers,
rights and remedies hereunder and under the other Revolving Loan Documents as
are specifically delegated or granted to such Agent by the terms hereof and
thereof, together with such powers, rights and remedies as are reasonably
incidental thereto. Each Agent shall have only those duties and responsibilities
that are expressly specified in this Agreement and the other Revolving Loan
Documents. Each Agent may exercise such powers, rights and remedies and perform
such duties by or through its agents or employees. No Agent shall have, by
reason of this Agreement or any of the other Revolving Loan Documents, a
fiduciary relationship in respect of any Lender; and nothing in this Agreement
or any of the other Revolving Loan Documents, expressed or implied, is intended
to or shall be so construed as to impose upon any Agent any obligations in
respect of this Agreement or any of the other Revolving Loan Documents except as
expressly set forth herein or therein.
B. NO RESPONSIBILITY FOR CERTAIN MATTERS. No Agent shall be responsible
to any Lender for the execution, effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement or any other
Loan Document or for any representations, warranties, recitals or statements
made herein or therein or made in any written or oral statements or in any
financial or other statements, instruments, reports or certificates or any other
documents furnished or made by any of Agent to Lenders or by or on behalf of
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Company to any Agent or any Lender in connection with the Revolving Loan
Documents and the transactions contemplated thereby or for the financial
condition or business affairs of Company or any other Person liable for the
payment of any Obligations, nor shall any Agent be required to ascertain or
inquire as to the performance or observance of any of the terms, conditions,
provisions, covenants or agreements contained in any of the Revolving Loan
Documents or as to the use of the proceeds of the Revolving Loans or as to the
existence or possible existence of any Event of Default or Potential Event of
Default. Anything contained in this Agreement to the contrary notwithstanding,
Administrative Agent shall not have any liability arising from confirmations of
the amount of outstanding Revolving Loans or the Letter of Credit Usage or the
component amounts thereof.
C. EXCULPATORY PROVISIONS. None of Agents nor any of their respective
officers, partners, directors, employees or agents shall be liable to Lenders
for any action taken or omitted by any Agent under or in connection with any of
the Revolving Loan Documents except to the extent caused by such Agent's gross
negligence or willful misconduct. Each Agent shall be entitled to refrain from
any act or the taking of any action (including the failure to take an action) in
connection with this Agreement or any of the other Revolving Loan Documents or
from the exercise of any power, discretion or authority vested in it hereunder
or thereunder unless and until such Agent shall have received instructions in
respect thereof from Requisite Lenders (or such other Lenders as may be required
to give such instructions under subsection 10.6) and, upon receipt of such
instructions from Requisite Lenders (or such other Lenders, as the case may be),
such Agent shall be entitled to act or (where so instructed) refrain from
acting, or to exercise such power, discretion or authority, in accordance with
such instructions. Without prejudice to the generality of the foregoing, (i)
each Agent shall be entitled to rely, and shall be fully protected in relying,
upon any communication, instrument or document believed by it to be genuine and
correct and to have been signed or sent by the proper person or persons, and
shall be entitled to rely and shall be protected in relying on opinions and
judgments of attorneys (who may be attorneys for Company and its Subsidiaries),
accountants, experts and other professional advisors selected by it; and (ii) no
Lender shall have any right of action whatsoever against any Agent as a result
of such Agent acting or (where so instructed) refraining from acting under this
Agreement or any of the other Revolving Loan Documents in accordance with the
instructions of Requisite Lenders (or such other Lenders as may be required to
give such instructions under subsection 10.6).
D. AGENT ENTITLED TO ACT AS LENDER. The agency hereby created shall in
no way impair or affect any of the rights and powers of, or impose any duties or
obligations upon, any Agent in its individual capacity as a Lender hereunder.
With respect to its participation in the Revolving Loans and the Letters of
Credit, each Agent shall have the same rights and powers hereunder as any other
Lender and may exercise the same as though it were not performing the duties and
functions delegated to it hereunder, and the term "Lender" or "Lenders" or any
similar term shall, unless the context clearly otherwise indicates, include each
Agent in its individual capacity. Any Agent and its Affiliates may accept
deposits from, lend money to and generally engage in any kind of banking, trust,
financial advisory or other
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business with Company or any of its Affiliates as if it were not performing the
duties specified herein, and may accept fees and other consideration from
Company for services in connection with this Agreement and otherwise without
having to account for the same to Lenders.
9.3 REPRESENTATIONS AND WARRANTIES; NO RESPONSIBILITY FOR APPRAISAL OF
CREDITWORTHINESS.
Each Lender represents and warrants that it has made its own
independent investigation of the financial condition and affairs of Company and
its Subsidiaries in connection with the making of the Revolving Loans and the
issuance of Letters of Credit hereunder and that it has made and shall continue
to make its own appraisal of the creditworthiness of Company and its
Subsidiaries. No Agent shall have any duty or responsibility, either initially
or on a continuing basis, to make any such investigation or any such appraisal
on behalf of Lenders or to provide any Lender with any credit or other
information with respect thereto, whether coming into its possession before the
making of the Revolving Loans or at any time or times thereafter, and no Agent
shall have any responsibility with respect to the accuracy of or the
completeness of any information provided to Lenders.
9.4 RIGHT TO INDEMNITY.
Each Lender, in proportion to its Pro Rata Share, severally agrees to
indemnify each Agent, to the extent that such Agent shall not have been
reimbursed by Company, for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including counsel fees and disbursements) or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against such
Agent in exercising its powers, rights and remedies or performing its duties
hereunder or under the other Revolving Loan Documents or otherwise in its
capacity as such Agent in any way relating to or arising out of this Agreement
or the other Revolving Loan Documents; provided that no Lender shall be liable
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from such
Agent's gross negligence or willful misconduct and provided further that any
such indemnification of the Collateral Agent shall be on the terms described in
section 6(c) of the Intercreditor Agreement. If any indemnity furnished to any
Agent for any purpose shall, in the opinion of such Agent, be insufficient or
become impaired, such Agent may call for additional indemnity and cease, or not
commence, to do the acts indemnified against until such additional indemnity is
furnished.
9.5 SUCCESSOR AGENT.
SUCCESSOR ADMINISTRATIVE AGENT. Administrative Agent may resign at any
time by giving 30 days' prior written notice thereof to Lenders and Company, and
Administrative Agent may be removed at any time with or without cause by an
instrument or concurrent
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instruments in writing delivered to Company and Administrative Agent and signed
by Requisite Lenders. Upon any such notice of resignation or any such removal,
Requisite Lenders shall have the right, upon five Business Days' notice to
Company, to appoint a successor Administrative Agent. If no successor
Administrative Agent shall have been so appointed by Requisite Lenders and shall
have accepted such appointment within 30 days after the notice of the intent of
the Administrative Agent to resign, then the retiring Administrative Agent may,
on behalf of the Lenders, appoint a successor Administrative Agent. Upon the
acceptance of any appointment as Administrative Agent hereunder by a successor
Administrative Agent, that successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring or removed Administrative Agent and the retiring or removed
Administrative Agent shall be discharged from its duties and obligations under
this Agreement. After any retiring or removed Administrative Agent's resignation
or removal hereunder as Administrative Agent, the provisions of this Section 9
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement.
9.6 COLLATERAL DOCUMENTS AND GUARANTIES.
Each Lender hereby further authorizes Administrative Agent, on behalf
of and for the benefit of Lenders, to enter into the Intercreditor Agreement and
to appoint the Collateral Agent thereunder as agent for and representative of
Lenders. Under the terms of the Intercreditor Agreement the Collateral Agent is
authorized to enter into each Collateral Document as secured party and to be the
agent for and representative of Secured Parties under the Subsidiary Guaranty,
and each Lender agrees to be bound by the terms of the Intercreditor Agreement,
each Collateral Document and the Subsidiary Guaranty. Administrative Agent shall
not enter into or consent to any material amendment, modification or termination
of the Intercreditor Agreement without the prior consent of Requisite Lenders.
Each Lender acknowledges that under the terms of the Intercreditor Agreement
without further written consent or authorization from Lenders, Collateral Agent
may execute any documents or instruments necessary to (a) release any Lien
encumbering any item of Collateral that is the subject of a sale or other
disposition of assets permitted by this Agreement or to which Requisite Lenders
have otherwise consented or (b) release any Subsidiary Guarantor from the
Subsidiary Guaranty if all of the capital stock of such Subsidiary Guarantor is
sold to any Person (other than an Affiliate of Company) pursuant to a sale or
other disposition permitted hereunder or to which Requisite Lenders or Lenders
(as applicable) have otherwise consented. Anything contained in any of the
Revolving Loan Documents to the contrary notwithstanding, Company,
Administrative Agent and each Lender hereby agree that (X) no Lender shall have
any right individually to realize upon any of the Collateral under any
Collateral Document or to enforce the Subsidiary Guaranty, it being understood
and agreed that all powers, rights and remedies under the Collateral Documents
and the Subsidiary Guaranty may be exercised solely by Collateral Agent for the
benefit of Secured Parties in accordance with the terms thereof, and (Y) in the
event of a foreclosure by Collateral Agent on any of the Collateral pursuant to
a public or private sale, Collateral Agent or any Secured Party may be the
purchaser of any or all of such Collateral
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at any such sale and Collateral Agent, as agent for and representative of
Secured Parties (but not any Secured Party or Secured Parties in its or their
respective individual capacities unless Requisite Lenders shall otherwise agree
in writing) shall be entitled, for the purpose of bidding and making settlement
or payment of the purchase price for all or any portion of the Collateral sold
at any such public sale, to use and apply any of the Obligations as a credit on
account of the purchase price for any collateral payable by Collateral Agent at
such sale. The Lenders each further acknowledge and agree that pursuant to the
Intercreditor Agreement and the Collateral Documents, Collateral Agent will act
as the fonde de pouvoir (holder of the power of attorney) of the holders from
time to time of Notes issued pursuant hereto to the extent necessary or
desirable for the purposes of creating, maintaining or enforcing any Liens or
guarantees created or established under any Collateral Documents contemplated
hereby to be executed under the laws of the Province of Quebec, Canada
including, without limiting the generality of the foregoing, entering into any
such Collateral Documents and exercising all or any of the rights, powers,
trusts or duties conferred upon the Collateral Agent therein and in the
Intercreditor Agreement and each holder of Notes by receiving and holding same
accepts and confirms the appointment of the Collateral Agent as fonde de pouvoir
(holder of the power of attorney) of such holder for such purposes.
SECTION 10.
MISCELLANEOUS
10.1 ASSIGNMENTS AND PARTICIPATIONS IN LOANS AND LETTERS OF CREDIT.
A. GENERAL. Subject to subsection 10.1B, each Lender shall have the
right at any time to (i) sell, assign or transfer to any Eligible Assignee, or
(ii) sell participations to any Person in, all or any part of its Revolving Loan
Commitments or any Revolving Loan or Revolving Loans made by it or its Letters
of Credit or participations therein or any other interest herein or in any other
Obligations owed to it; provided that no such sale, assignment, transfer or
participation shall, without the consent of Company, require Company to file a
registration statement with the Securities and Exchange Commission or apply to
qualify such sale, assignment, transfer or participation under the securities
laws of any state; provided, further that no such sale, assignment or transfer
described in clause (i) above shall be effective unless and until an Assignment
Agreement effecting such sale, assignment or transfer shall have been accepted
by Administrative Agent and recorded in the Register as provided in subsection
10.1B(ii); provided, further that no such sale, assignment, transfer or
participation of any Letter of Credit or any participation therein may be made
separately from a sale, assignment, transfer or participation of a corresponding
interest in the Revolving Loan Commitment and the Revolving Loans of the Lender
effecting such sale, assignment, transfer or participation. Except as otherwise
provided in this subsection 10.1, no Lender shall, as between Company and such
Lender, be relieved of any of its obligations hereunder as a result of any sale,
assignment or transfer of, or any granting of participations in, all or any part
of its Revolving Loan Commitments or the
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Revolving Loans, the Letters of Credit or participations therein, or the other
Obligations owed to such Lender.
B. ASSIGNMENTS.
(i) Amounts and Terms of Assignments. Each Revolving Loan
Commitment, Revolving Loan, Letter of Credit or participation therein,
or other Obligation may (a) be assigned in any amount to another
Lender, or to a Related Fund or an Affiliate of the assigning Lender or
another Lender, with the giving of notice to Company, Administrative
Agent and Syndication Agent or (b) be assigned in an aggregate amount
of not less than $5,000,000 (or such lesser amount as shall constitute
the aggregate amount of the Revolving Loan Commitments, Revolving
Loans, Letters of Credit and participations therein, and other
Obligations of the assigning Lender) to any other Eligible Assignee
with the giving of notice to Company and with the consent of
Administrative Agent and Syndication Agent (which consent shall not be
unreasonably withheld or delayed). To the extent of any such assignment
in accordance with either clause (a) or (b) above, the assigning Lender
shall be relieved of its obligations with respect to its Revolving Loan
Commitments, Revolving Loans, Letters of Credit or participations
therein, or other Obligations or the portion thereof so assigned. The
parties to each such assignment shall execute and deliver to
Administrative Agent, for its acceptance and recording in the Register,
an Assignment Agreement, together with a processing and recordation fee
of $500, if such assignment is to another Lender or an Affiliate or
Related Fund of the assigning Lender, or $2000, if such assignment is
to any other Eligible Assignee, and such forms, certificates or other
evidence, if any, with respect to United States federal income tax
withholding matters as the assignee under such Assignment Agreement may
be required to deliver to Administrative Agent pursuant to subsection
2.7B(iii)(a). Upon such execution, delivery, acceptance and
recordation, from and after the effective date specified in such
Assignment Agreement, (y) the assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder have
been assigned to it pursuant to such Assignment Agreement, shall have
the rights and obligations of a Lender hereunder and (z) the assigning
Lender thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment
Agreement, relinquish its rights (other than any rights which survive
the termination of this Agreement under subsection 10.9B) and be
released from its obligations under this Agreement (and, in the case of
an Assignment Agreement covering all or the remaining portion of an
assigning Lender's rights and obligations under this Agreement, such
Lender shall cease to be a party hereto; provided that, anything
contained in any of the Revolving Loan Documents to the contrary
notwithstanding, if such Lender is the Issuing Lender with respect to
any outstanding Letters of Credit such Lender shall continue to have
all rights and obligations of an Issuing Lender with respect to such
Letters of Credit until the cancellation or expiration of such Letters
of Credit and the reimbursement of any amounts drawn thereunder). The
Revolving Loan
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Commitments hereunder shall be modified to reflect the Revolving Loan
Commitment of such assignee and any remaining Revolving Loan Commitment
of such assigning Lender and, if any such assignment occurs after the
issuance of the Revolving Notes hereunder, the assigning Lender shall,
upon the effectiveness of such assignment or as promptly thereafter as
practicable, surrender its applicable Revolving Notes to Administrative
Agent for cancellation, and thereupon new Revolving Notes shall be
issued to the assignee and/or to the assigning Lender, substantially in
the form of Exhibit V annexed hereto, as the case may be, with
appropriate insertions, to reflect the new Revolving Loan Commitments
of the assignee and/or the assigning Lender.
(ii) Acceptance by Administrative Agent; Recordation in
Register. Upon its receipt of an Assignment Agreement executed by an
assigning Lender and an assignee representing that it is an Eligible
Assignee, together with the processing and recordation fee referred to
in subsection 10.1B(i) and any forms, certificates or other evidence
with respect to United States federal income tax withholding matters
that such assignee may be required to deliver to Administrative Agent
pursuant to subsection 2.7B(iii)(a), Administrative Agent shall, if
Administrative Agent has consented to the assignment evidenced thereby
(to the extent such consent is required pursuant to subsection
10.1B(i)), (a) accept such Assignment Agreement by executing a
counterpart thereof as provided therein (which acceptance shall
evidence any required consent of Administrative Agent to such
assignment), (b) record the information contained therein in the
Register, and (c) give prompt notice thereof to Company. Administrative
Agent shall maintain a copy of each Assignment Agreement delivered to
and accepted by it as provided in this subsection 10.1B(ii).
C. PARTICIPATIONS. The holder of any participation, other than an
Affiliate of the Lender granting such participation, shall not be entitled to
require such Lender to take or omit to take any action hereunder except action
directly affecting (i) the extension of the regularly scheduled maturity of any
portion of the principal amount of or interest on any Revolving Loan allocated
to such participation or (ii) a reduction of the principal amount of or the rate
of interest payable on any Revolving Loan allocated to such participation, and
all amounts payable by Company hereunder (including amounts payable to such
Lender pursuant to subsections 2.6D, 2.7 and 3.6) shall be determined as if such
Lender had not sold such participation. Company and each Lender hereby
acknowledge and agree that, solely for purposes of subsections 10.4 and 10.5,
(a) any participation will give rise to a direct obligation of Company to the
participant and (b) the participant shall be considered to be a "Lender".
D. ASSIGNMENTS TO FEDERAL RESERVE BANKS. In addition to the assignments
and participations permitted under the foregoing provisions of this subsection
10.1, any Lender may assign and pledge all or any portion of its Revolving
Loans, the other Obligations owed to such Lender, and its Revolving Notes to any
Federal Reserve Bank as collateral security pursuant to Regulation A of the
Board of Governors of the Federal Reserve System and any
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operating circular issued by such Federal Reserve Bank; provided that (i) no
Lender shall, as between Company and such Lender, be relieved of any of its
obligations hereunder as a result of any such assignment and pledge and (ii) in
no event shall such Federal Reserve Bank be considered to be a "Lender" or be
entitled to require the assigning Lender to take or omit to take any action
hereunder.
E. INFORMATION. Each Lender may furnish any information concerning
Company and its Subsidiaries in the possession of that Lender from time to time
to assignees and participants (including prospective assignees and
participants), subject to subsection 10.19.
F. REPRESENTATIONS OF LENDERS. Each Lender listed on the signature
pages hereof hereby represents and warrants (i) that it is an Eligible Assignee
described in clause (A) of the definition thereof; (ii) that it has experience
and expertise in the making of or investing in loans such as the Revolving
Loans; and (iii) that it will make its Revolving Loans for its own account in
the ordinary course of its business and without a view to distribution of such
Revolving Loans within the meaning of the Securities Act or the Exchange Act or
other federal securities laws (it being understood that, subject to the
provisions of this subsection 10.1, the disposition of such Revolving Loans or
any interests therein shall at all times remain within its exclusive control).
Each Lender that becomes a party hereto pursuant to an Assignment Agreement
shall be deemed to agree that the representations and warranties of such Lender
contained in Section 2(c) of such Assignment Agreement are incorporated herein
by this reference.
10.2 EXPENSES.
Whether or not the transactions contemplated hereby shall be
consummated, Company agrees to pay promptly (i) all the actual and reasonable
costs and expenses of preparation of the Revolving Loan Documents and any
consents, amendments, waivers or other modifications thereto; (ii) all the costs
of furnishing all opinions by counsel for Company (including any opinions
requested by Lenders as to any legal matters arising hereunder) and of Company's
performance of and compliance with all agreements and conditions on its part to
be performed or complied with under this Agreement and the other Revolving Loan
Documents including with respect to confirming compliance with environmental,
insurance and solvency requirements; (iii) the reasonable fees, expenses and
disbursements of counsel to Arranger and counsel to Administrative Agent (in
each case including allocated costs of internal counsel) in connection with the
negotiation, preparation, execution and administration of the Revolving Loan
Documents and any consents, amendments, waivers or other modifications thereto
and any other documents or matters requested by Company; (iv) all the actual
costs and reasonable expenses of creating and perfecting Liens in favor of
Collateral Agent on behalf of Secured Parties pursuant to any Collateral
Document, including filing and recording fees, expenses and taxes, stamp or
documentary taxes, search fees, title insurance premiums, and reasonable fees,
expenses and disbursements of counsel to Arranger and counsel to Administrative
Agent and of counsel providing any opinions that Arranger, Administrative Agent
or Requisite Lenders may
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request in respect of the Collateral Documents or the Liens created pursuant
thereto; (v) all the actual costs and reasonable expenses (including the
reasonable fees, expenses and disbursements of any auditors, accountants or
appraisers and any environmental or other consultants, advisors and agents
employed or retained by Administrative Agent or Arranger and its counsel) of
obtaining and reviewing any appraisals provided for under subsection 4.1J or
6.9C, any environmental audits or reports provided for under subsection 4.1K or
6.9B(viii) and any audits or reports provided for under subsection 4.1L or 6.5B
with respect to Inventory and accounts receivable of Company and its
Subsidiaries; (vi) all the actual costs and reasonable expenses (including the
reasonable fees, expenses and disbursements of any consultants, advisors and
agents employed or retained by Administrative Agent and its counsel) in
connection with the custody or preservation of any of the Collateral; (vii) all
other actual and reasonable costs and expenses incurred by Syndication Agent,
Arranger or Administrative Agent in connection with the syndication of the
Revolving Loan Commitments and the negotiation, preparation and execution of the
Revolving Loan Documents and any consents, amendments, waivers or other
modifications thereto and the transactions contemplated thereby; and (viii)
after the occurrence of an Event of Default, all costs and expenses, including
reasonable attorneys' fees (including allocated costs of internal counsel) and
costs of settlement, incurred by Arranger, Administrative Agent and Lenders in
enforcing any Obligations of or in collecting any payments due from any Loan
Party hereunder or under the other Revolving Loan Documents by reason of such
Event of Default (including in connection with the sale of, collection from, or
other realization upon any of the Collateral or the enforcement of the
Subsidiary Guaranty) or in connection with any refinancing or restructuring of
the credit arrangements provided under this Agreement in the nature of a
"work-out" or pursuant to any insolvency or bankruptcy proceedings.
10.3 INDEMNITY.
In addition to the payment of expenses pursuant to subsection 10.2,
whether or not the transactions contemplated hereby shall be consummated,
Company agrees to defend (subject to Indemnitees' selection of counsel),
indemnify, pay and hold harmless Agents and Lenders, and the officers, partners,
directors, employees, agents and affiliates of any of Agents and Lenders
(collectively called the "INDEMNITEES"), from and against any and all
Indemnified Liabilities (as hereinafter defined); provided that Company shall
not have any obligation to any Indemnitee hereunder with respect to any
Indemnified Liabilities to the extent such Indemnified Liabilities arise solely
from the gross negligence or willful misconduct of that Indemnitee as determined
by a final, non-appealable judgment of a court of competent jurisdiction.
As used herein, "INDEMNIFIED LIABILITIES" means, collectively, any and
all liabilities, obligations, losses, damages (including natural resource
damages), penalties, actions, judgments, suits, claims (including Environmental
Claims), costs (including the costs of any investigation, study, sampling,
testing, abatement, cleanup, removal, remediation or other response action
necessary to remove, remediate, clean up or abate any Hazardous Materials
Activity), expenses and disbursements of any kind or nature whatsoever
(including the
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reasonable fees and disbursements of counsel for Indemnitees in connection with
any investigative, administrative or judicial proceeding commenced or threatened
by any Person, whether or not any such Indemnitee shall be designated as a party
or a potential party thereto, and any fees or expenses incurred by Indemnitees
in enforcing this indemnity), whether direct, indirect or consequential and
whether based on any federal, state or foreign laws, statutes, rules or
regulations (including securities and commercial laws, statutes, rules or
regulations and Environmental Laws), on common law or equitable cause or on
contract or otherwise, that may be imposed on, incurred by, or asserted against
any such Indemnitee, in any manner relating to or arising out of (i) this
Agreement or the other Revolving Loan Documents or the Related Agreements or the
transactions contemplated hereby or thereby (including Lenders' agreement to
make the Revolving Loans hereunder or the use or intended use of the proceeds
thereof or the issuance of Letters of Credit hereunder or the use or intended
use of any thereof, or any enforcement of any of the Revolving Loan Documents
(including any sale of, collection from, or other realization upon any of the
Collateral or the enforcement of the Subsidiary Guaranty)), (ii) the statements
contained in the commitment letter delivered by any Lender to Company with
respect thereto, or (iii) any Environmental Claim or any Hazardous Materials
Activity relating to or arising from, directly or indirectly, any past or
present activity, operation, land ownership, or practice of Company or any of
its Subsidiaries.
To the extent that the undertakings to defend, indemnify, pay and hold
harmless set forth in this subsection 10.3 may be unenforceable in whole or in
part because they are violative of any law or public policy, Company shall
contribute the maximum portion that it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all Indemnified Liabilities
incurred by Indemnitees or any of them.
10.4 SET-OFF; SECURITY INTEREST IN DEPOSIT ACCOUNTS.
In addition to any rights now or hereafter granted under applicable law
and not by way of limitation of any such rights, upon the occurrence of any
Event of Default each Lender is hereby authorized by Company at any time or from
time to time, subject to the consent of Administrative Agent, without notice to
Company or to any other Person (other than Administrative Agent), any such
notice being hereby expressly waived, to set off and to appropriate and to apply
any and all deposits (general or special, including Indebtedness evidenced by
certificates of deposit, whether matured or unmatured, but not including trust
accounts) and any other Indebtedness at any time held or owing by that Lender to
or for the credit or the account of Company against and on account of the
obligations and liabilities of Company to that Lender under this Agreement, the
Letters of Credit and participations therein and the other Revolving Loan
Documents, including all claims of any nature or description arising out of or
connected with this Agreement, the Letters of Credit and participations therein
or any other Revolving Loan Document, irrespective of whether or not (i) that
Lender shall have made any demand hereunder or (ii) the principal of or the
interest on the Revolving Loans or any amounts in respect of the Letters of
Credit or any other amounts due hereunder shall have become due and payable
pursuant to Section 8 and
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although said obligations and liabilities, or any of them, may be contingent or
unmatured. Company hereby further grants to Collateral Agent and each Lender a
security interest in all deposits and accounts maintained with Administrative
Agent or such Lender as security for the Obligations.
10.5 RATABLE SHARING.
Lenders hereby agree among themselves that if any of them shall,
whether by voluntary payment (other than a voluntary prepayment of Revolving
Loans made and applied in accordance with the terms of this Agreement), by
realization upon security, through the exercise of any right of set-off or
banker's lien, by counterclaim or cross action or by the enforcement of any
right under the Revolving Loan Documents or otherwise, or as adequate protection
of a deposit treated as cash collateral under the Bankruptcy Code, receive
payment or reduction of a proportion of the aggregate amount of principal,
interest, amounts payable in respect of Letters of Credit, fees and other
amounts then due and owing to that Lender hereunder or under the other Revolving
Loan Documents (collectively, the "AGGREGATE AMOUNTS DUE" to such Lender) which
is greater than the proportion received by any other Lender in respect of the
Aggregate Amounts Due to such other Lender, then the Lender receiving such
proportionately greater payment shall (i) notify Administrative Agent and each
other Lender of the receipt of such payment and (ii) apply a portion of such
payment to purchase participations (which it shall be deemed to have purchased
from each seller of a participation simultaneously upon the receipt by such
seller of its portion of such payment) in the Aggregate Amounts Due to the other
Lenders so that all such recoveries of Aggregate Amounts Due shall be shared by
all Lenders in proportion to the Aggregate Amounts Due to them; provided that if
all or part of such proportionately greater payment received by such purchasing
Lender is thereafter recovered from such Lender upon the bankruptcy or
reorganization of Company or otherwise, those purchases shall be rescinded and
the purchase prices paid for such participations shall be returned to such
purchasing Lender ratably to the extent of such recovery, but without interest.
Company expressly consents to the foregoing arrangement and agrees that any
holder of a participation so purchased may exercise any and all rights of
banker's lien, set-off or counterclaim with respect to any and all monies owing
by Company to that holder with respect thereto as fully as if that holder were
owed the amount of the participation held by that holder.
10.6 AMENDMENTS AND WAIVERS.
A. No amendment, modification, termination or waiver of any provision
of the Revolving Loan Documents, or consent to any departure by the Company
therefrom, shall in any event be effective without the written concurrence of
Requisite Lenders; provided that no such amendment, modification, termination,
waiver or consent shall, without the consent of each Lender (with Obligations
directly affected in the case of the following clause (i)): (i) extend the
scheduled final maturity of any Revolving Loan or Revolving Note, or extend the
stated expiration date of any Letter of Credit beyond the Revolving Loan
Commitment Termination Date, or reduce the rate of interest on any Revolving
Loan (other
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than any waiver of any increase in the interest rate applicable to any Revolving
Loan pursuant to subsection 2.2E) or any commitment fees or letter of credit
fees payable hereunder, or extend the time for payment of any such interest or
fees, or reduce the principal amount of any Revolving Loan or any reimbursement
obligation in respect of any Letter of Credit, (ii) amend, modify, terminate or
waive any provision of this subsection 10.6, (iii) reduce the percentage
specified in the definition of "Requisite Lenders" (it being understood that,
with the consent of Requisite Lenders, additional extensions of credit pursuant
to this Agreement may be included in the determination of "Requisite Lenders" on
substantially the same basis as the Revolving Loan Commitments and the Revolving
Loans are included on the Closing Date), (iv) consent to the assignment or
transfer by the Company of any of its rights and obligations under this
Agreement or (v) release all or substantially all the Liens granted pursuant to
the Collateral Documents (including Liens on real property) or to release any
Subsidiary from the Subsidiary Guaranty if such release would constitute a
release of all or substantially all of the Collateral; provided, further that no
such amendment, modification, termination or waiver shall (1) increase the
Revolving Loan Commitments of any Lender over the amount thereof then in effect
without the consent of such Lender (it being understood that no amendment,
modification or waiver of any condition precedent, covenant, Potential Event of
Default or Event of Default shall constitute an increase in the Revolving Loan
Commitment of any Lender, and that no increase in the available portion of any
Revolving Loan Commitment of any Lender shall constitute an increase in such
Revolving Loan Commitment of such Lender); (2) amend, modify, terminate or waive
any obligation of Lenders relating to the purchase of participations in Letters
of Credit as provided in subsection 3.1C without the written concurrence of
Administrative Agent and of each Issuing Lender which has a Letter of Credit
then outstanding or which has not been reimbursed for a drawing under a Letter
of Credit issued it; or (3) amend, modify, terminate or waive any provision of
Section 9 as the same applies to any Agent, or any other provision of this
Agreement as the same applies to the rights or obligations of any Agent, in each
case without the consent of such Agent.
B. Administrative Agent may, but shall have no obligation to, with the
concurrence of any Lender, execute amendments, modifications, waivers or
consents on behalf of that Lender. Any waiver or consent shall be effective only
in the specific instance and for the specific purpose for which it was given. No
notice to or demand on the Company in any case shall entitle Company to any
other or further notice or demand in similar or other circumstances. Any
amendment, modification, termination, waiver or consent effected in accordance
with this subsection 10.6 shall be binding upon each Lender at the time
outstanding, each future Lender and, if signed by Company, the Company.
10.7 INDEPENDENCE OF COVENANTS.
All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or would otherwise be within
the limitations of, another
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covenant shall not avoid the occurrence of an Event of Default or Potential
Event of Default if such action is taken or condition exists.
10.8 NOTICES.
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telexed or sent by telefacsimile or United States mail
or courier service and shall be deemed to have been given when delivered in
person or by courier service, upon receipt of telefacsimile or telex, or three
Business Days after depositing it in the United States mail with postage prepaid
and properly addressed; provided that notices to Arranger, Syndication Agent or
Administrative Agent shall not be effective until received. For the purposes
hereof, the address of each party hereto shall be as set forth under such
party's name on the signature pages hereof or (i) as to Company and
Administrative Agent, such other address as shall be designated by such Person
in a written notice delivered to the other parties hereto and (ii) as to each
other party, such other address as shall be designated by such party in a
written notice delivered to Administrative Agent and Company.
10.9 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
A. All representations, warranties and agreements made herein shall
survive the execution and delivery of this Agreement and the making of the
Revolving Loans and the issuance of the Letters of Credit hereunder.
B. Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements of Company set forth in subsections 2.6D, 2.7, 3.5A,
3.6, 10.2, 10.3 and 10.4 and the agreements of Lenders set forth in subsections
9.2C, 9.4 and 10.5 shall survive the payment of the Revolving Loans, the
cancellation or expiration of the Letters of Credit and the reimbursement of any
amounts drawn thereunder, and the termination of this Agreement.
10.10 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of Administrative Agent or any Lender
in the exercise of any power, right or privilege hereunder or under any other
Revolving Loan Document shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other power, right or privilege. All
rights and remedies existing under this Agreement and the other Revolving Loan
Documents are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
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10.11 MARSHALLING; PAYMENTS SET ASIDE.
Neither Administrative Agent nor any Lender shall be under any
obligation to marshal any assets in favor of Company or any other party or
against or in payment of any or all of the Obligations. To the extent that
Company makes a payment or payments to Administrative Agent or Lenders (or to
Administrative Agent for the benefit of Lenders), or Administrative Agent or
Lenders enforce any security interests or exercise their rights of setoff, and
such payment or payments or the proceeds of such enforcement or setoff or any
part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver or
any other party under any bankruptcy law, any other state or federal law, common
law or any equitable cause, then, to the extent of such recovery, the obligation
or part thereof originally intended to be satisfied, and all Liens, rights and
remedies therefor or related thereto, shall be revived and continued in full
force and effect as if such payment or payments had not been made or such
enforcement or setoff had not occurred.
10.12 SEVERABILITY.
In case any provision in or obligation under this Agreement or the
Revolving Notes shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
10.13 OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS' RIGHTS.
The obligations of Lenders hereunder are several and no Lender shall be
responsible for the obligations or Revolving Loan Commitments of any other
Lender hereunder. Nothing contained herein or in any other Loan Document, and no
action taken by Lenders pursuant hereto or thereto, shall be deemed to
constitute Lenders as a partnership, an association, a joint venture or any
other kind of entity. The amounts payable at any time hereunder to each Lender
shall be a separate and independent debt, and each Lender shall be entitled to
protect and enforce its rights arising out of this Agreement and it shall not be
necessary for any other Lender to be joined as an additional party in any
proceeding for such purpose.
10.14 HEADINGS.
Section and subsection headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
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10.15 APPLICABLE LAW.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES.
10.16 SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns of Lenders (it being understood that
Lenders' rights of assignment are subject to subsection 10.1). Neither Company's
rights or obligations hereunder nor any interest therein may be assigned or
delegated by Company without the prior written consent of all Lenders.
10.17 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST COMPANY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY OBLIGATIONS
THEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING AND
DELIVERING THIS AGREEMENT, COMPANY, FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE
JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, TO COMPANY AT ITS ADDRESS PROVIDED IN
ACCORDANCE WITH SUBSECTION 10.8;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS
SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER COMPANY IN ANY SUCH
PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT;
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(V) AGREES THAT LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST
COMPANY IN THE COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 10.17
RELATING TO JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO
THE FULLEST EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW
SECTION 5-1402 OR OTHERWISE.
10.18 WAIVER OF JURY TRIAL.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER REVOLVING LOAN DOCUMENTS OR
ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN
TRANSACTION OR THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The
scope of this waiver is intended to be all-encompassing of any and all disputes
that may be filed in any court and that relate to the subject matter of this
transaction, including contract claims, tort claims, breach of duty claims and
all other common law and statutory claims. Each party hereto acknowledges that
this waiver is a material inducement to enter into a business relationship, that
each has already relied on this waiver in entering into this Agreement, and that
each will continue to rely on this waiver in their related future dealings. Each
party hereto further warrants and represents that it has reviewed this waiver
with its legal counsel and that it knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SUBSECTION
10.18 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY
TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT OR ANY OF THE OTHER REVOLVING LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS
OR AGREEMENTS RELATING TO THE OBLIGATIONS MADE HEREUNDER. In the event of
litigation, this Agreement may be filed as a written consent to a trial by the
court.
10.19 CONFIDENTIALITY.
Each Lender shall hold all non-public information obtained pursuant to
the requirements of this Agreement in accordance with such Lender's customary
procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices (and any Lender without such
customary procedures agrees to keep such information confidential), it being
understood and agreed by Company that in any event a Lender may make disclosures
to Affiliates or Related Funds of such Lender or disclosures
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reasonably required by any bona fide assignee, transferee or participant in
connection with the contemplated assignment or transfer by such Lender of any
Revolving Loans or any participations therein (so long as such Persons agree in
advance in writing to keep such information confidential) or disclosures
required or requested by any governmental agency or representative thereof or
pursuant to legal process; provided that, unless specifically prohibited by
applicable law or court order, each Lender shall notify Company of any request
by any governmental agency or representative thereof (other than any such
request in connection with any examination of the financial condition of such
Lender by such governmental agency) for disclosure of any such non-public
information prior to disclosure of such information; and provided, further that
in no event shall any Lender be obligated or required to return any materials
furnished by Company or any of its Subsidiaries.
10.20 COUNTERPARTS; EFFECTIVENESS.
This Agreement and any amendments, waivers, consents or supplements
hereto or in connection herewith may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto and receipt by Company and
Administrative Agent of written or telephonic authorization of delivery thereof.
It is the intention of each of the parties hereto that the Existing
Revolving Loan Credit Agreement be amended and restated so as to preserve the
perfection and priority of all security interests securing indebtedness and
obligations under the Existing Revolving Loan Credit Agreement and the other
Loan Documents and that all indebtedness and obligations of Company and its
Subsidiaries hereunder and thereunder shall be secured by the Collateral
Documents and that this Agreement shall not constitute a novation of the
obligations and liabilities existing under the Existing Revolving Loan Credit
Agreement or be deemed to evidence or constitute repayment of all or any portion
of any such obligations or liabilities. The parties hereto further acknowledge
and agree that this Agreement constitutes an amendment of the Existing Revolving
Loan Credit Agreement made under the terms of subsection 10.6 thereof.
This Agreement shall become effective upon the execution of a
counterpart hereof by Company, Administrative Agent, Arranger and Requisite
Lenders (as such term is defined in the Existing Revolving Loan Credit
Agreement) and receipt by Company and Administrative Agent of written or
telephonic notification of such execution and authorization of delivery thereof;
provided that, unless and until all of the conditions set forth in subsections
4.1 and 4.2 have been satisfied or waived in accordance with subsection 10.6 of
the Existing Revolving Loan Credit Agreement, the Existing Revolving Loan Credit
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Agreement shall remain in full force and effect without giving effect to the
amendments set forth herein, all as if this Agreement had never been executed
and delivered.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
COMPANY:
AMSCAN HOLDINGS, INC.
By:/s/ James Harrison
---------------------------------
Name: James Harrison
Title: President
Notice Address:
Amscan Holdings, Inc.
80 Grasslands Road
Elmsford, New York 10523
Attention: James M. Harrison
Telecopy: (914) 345-2056
S-1
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AGENTS AND LENDERS:
GOLDMAN SACHS CREDIT PARTNERS L.P.,
as Arranger and Syndication Agent
By:/s/
--------------------------------
Authorized Signatory
Notice Address:
Goldman Sachs Credit Partners L.P.
16th Floor
85 Broad Street
New York, New York 10004
Attention: Stephen King (Credit)
Telecopy: (212) 902-2417
With a copy to:
Goldman Sachs Credit Partners L.P.
27th Floor
85 Broad Street
New York, New York 10004
Attention: Kathy King (Operations)
Telecopy: (212) 902-3757
S-2
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FLEET NATIONAL BANK,
individually and as Administrative Agent
By:/s/ Stephen Curran
---------------------------------
Name: Stephen Curran
Title: AVP
Notice Address:
Fleet National Bank
One Federal Street, 5th Floor
Mail Stop MAOFD05P
Boston, Massachusetts 02110
Attention: John Mann
Telecopy: (617) 346-4682
with a copy to:
Fleet National Bank
One Federal Street, 3rd Floor
Mail Stop MAOFD03C
Boston, Massachusetts 02110
Attention: Steve Curran
Telecopy: (617) 346-5093
S-3
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GENERAL ELECTRIC CAPITAL CORPORATION
By:/s/ Murry Stegelmann
---------------------------------
Name: Murry Stegelmann
Title: Duly Auhtorized Signatory
Notice Address:
General Electric Capital Corporation
201 High Ridge Road
Stamford, CT 06927-5200
Attention: Joseph Badini,
Associate
Telecopy: (203) 316-7978
With a copy to:
General Electric Capital Corporation
201 High Ridge Road
Stamford, CT 06927-5200
Attention: Janet K. Williams,
Senior Vice President
Telecopy: (203) 316-7978
S-4
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SOUTHERN PACIFIC BANK
By:/s/ Cheryl A Wasilewski
---------------------------------
Name: Cheryl A. Wasilewski
Title: Vice President
Notice Address:
Southern Pacific Bank
150 South Rodeo Drive, Suite 230
Beverly Hills, CA 90212
Attention: Cheryl Wasilewski
Telecopy: (310) 246-3666
S-5
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TRANSAMERICA BUSINESS CREDIT CORPORATION
By:/s/ Perry Vavoules
---------------------------------
Name: Perry Vavoules
Title: Senior Vice President
Notice Address:
Transamerica Business Credit Corporation
555 Theodore Fremd Avenue, Suite C-301
Rye, New York 10580
Attention: Perry Vavoules
S-6
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================================================================================
AMENDED AND RESTATED AXEL CREDIT AGREEMENT
DATED AS OF SEPTEMBER 17, 1998
AMONG
AMSCAN HOLDINGS, INC.,
AS BORROWER,
THE LENDERS LISTED HEREIN,
AS LENDERS,
GOLDMAN SACHS CREDIT PARTNERS L.P.,
AS ARRANGER AND SYNDICATION AGENT,
AND
FLEET NATIONAL BANK,
AS ADMINISTRATIVE AGENT
================================================================================
<PAGE>
AMSCAN HOLDINGS, INC.
AMENDED AND RESTATED AXEL CREDIT AGREEMENT
TABLE OF CONTENTS
PAGE
SECTION 1.
DEFINITIONS............................... 3
1.1 Certain Defined Terms...................................... 3
1.2 Accounting Terms; Utilization of GAAP for Purposes of
Calculations Under Agreement............................... 39
1.3 Other Definitional Provisions and Rules of Construction.... 39
SECTION 2.
AMOUNTS AND TERMS OF COMMITMENTS AND LOANS............... 40
2.1 Commitments; Making of Loans; the Register; Notes.......... 40
2.2 Interest on the Loans...................................... 44
2.3 Fees....................................................... 47
2.4 Repayments, Prepayments; General Provisions
Regarding Payments; Application of Proceeds of Collateral
and Payments Under Subsidiary Guaranty.................... 47
2.5 Use of Proceeds............................................ 53
2.6 Special Provisions Governing Eurodollar Rate AXELs......... 54
2.7 Increased Costs; Taxes; Capital Adequacy................... 56
2.8 Obligation of Lenders to Mitigate.......................... 60
2.9 Removal or Replacement of a Lender......................... 61
SECTION 3.
CONDITIONS TO EFFECTIVENESS; CONDITIONS TO ADDITIONAL AXELS...... 62
3.1 Conditions to Effectiveness................................ 62
3.2 Additional Conditions to AXELs............................. 71
SECTION 4.
COMPANY'S REPRESENTATIONS AND WARRANTIES................ 72
4.1 Organization, Powers, Qualification, Good Standing,
Business and Subsidiaries.................................. 72
4.2 Authorization of Borrowing, etc............................ 73
4.3 Financial Condition........................................ 75
4.4 No Material Adverse Change................................. 76
4.5 Title to Properties; Liens; Real Property.................. 76
4.6 Litigation; Adverse Facts.................................. 77
4.7 Payment of Taxes........................................... 77
(i)
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Page
4.8 Performance of Agreements; Materially Adverse Agreements;
Material Contracts......................................... 77
4.9 Governmental Regulation.................................... 78
4.10 Securities Activities...................................... 78
4.11 Employee Benefit Plans..................................... 78
4.12 Certain Fees............................................... 79
4.13 Environmental Protection................................... 79
4.14 Employee Matters........................................... 80
4.15 Solvency................................................... 80
4.16 Matters Relating to Collateral............................. 80
4.17 Related Agreements......................................... 81
4.18 Disclosure................................................. 82
4.19 Revolving Credit Agreement.................................... 82
SECTION 5.
COMPANY'S AFFIRMATIVE COVENANTS................... 83
5.1 Financial Statements and Other Reports..................... 83
5.2 Corporate Existence, etc................................... 89
5.3 Payment of Taxes and Claims; Tax Consolidation............. 89
5.4 Maintenance of Properties; Insurance; Application of Net
Insurance/CondemnationProceeds............................. 89
5.5 Inspection Rights; Lender Meeting.......................... 91
5.6 Compliance with Laws, etc.................................. 91
5.7 Environmental Review and Investigation, Disclosure, Etc.;
Company's Actions Regarding Hazardous Materials Activities,
Environmental Claims and Violations of Environmental
Laws....................................................... 92
5.8 Execution of Subsidiary Guaranty and Personal Property
Collateral Documents by Certain Subsidiaries and
Future Subsidiaries........................................ 94
5.9 Conforming Leasehold Interests; Matters Relating to
Additional Real Property Collateral........................ 96
5.10 Interest Rate Protection................................... 99
5.11 Cash Management System.....................................100
5.12 Trademarks and Patents.....................................100
SECTION 6.
COMPANY'S NEGATIVE COVENANTS.......................100
6.1 Iindebtedness and Issuance of Disqualified Stock ..........100
6.2 Liens and Related Matters .................................103
6.3 Restricted Payments .......................................103
6.4 Dividends and Other Payment Restrictions Affecting
Subsidiaries...............................................106
6.5 Restrictions on Fundamental Changes; Asset Sales...........107
6.6 Transactions with Affiliates...............................108
(ii)
<PAGE>
Page
6.7 Asset Sales................................................109
6.8 Amendments of Documents Relating to Subordinated
Indebtedness...............................................109
SECTION 7.
EVENTS OF DEFAULT...........................110
7.1 Failure to Make Payments When Due..........................110
7.2 Default in Other Agreements................................110
7.3 Breach of Certain Covenants................................110
7.5 Other Defaults under AXEL Loan Documents...................111
7.6 Judgments..................................................111
7.7 Bankruptcy; Appointment of Custodian.......................111
7.8 Invalidity of Subsidiary Guaranty..........................112
7.9 Change in Control..........................................112
SECTION 8.
AGENTS..................................114
8.1 Appointment................................................114
8.2 Powers and Duties; General Immunity........................115
8.3 Representations and Warranties; No Responsibility For
Appraisal of Creditworthiness..............................117
8.4 Right to Indemnity.........................................117
8.5 Successor Administrative Agent.............................117
8.6 Collateral Documents and Guaranties........................118
SECTION 9.
MISCELLANEOUS..............................119
9.1 Assignments and Participations in AXELs....................119
9.2 Expenses...................................................122
9.3 Indemnity..................................................123
9.4 Set-Off; Security Interest in Deposit Accounts.............124
9.5 Ratable Sharing............................................124
9.6 Amendments and Waivers.....................................125
9.7 Independence of Covenants..................................126
9.8 Notices....................................................126
9.9 Survival of Representations, Warranties and Agreements.....126
9.10 Failure or Indulgence Not Waiver; Remedies Cumulative......127
9.11 Marshalling; Payments Set Aside............................127
9.12 Severability...............................................127
9.13 Obligations Several; Independent Nature of Lenders'
Rights.....................................................127
9.14 Headings...................................................128
9.15 Applicable Law.............................................128
9.16 Successors and Assigns.....................................128
(iii)
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Page
9.17 Consent to Jurisdiction and Service of Process.............128
9.18 Waiver of Jury Trial.......................................129
9.19 Confidentiality............................................130
9.20 Counterparts; Effectiveness................................130
Signature pages S-1
(iv)
<PAGE>
EXHIBITS
I FORM OF NOTICE OF BORROWING
II FORM OF NOTICE OF CONVERSION/CONTINUATION
III FORM OF AXEL NOTE
IV FORM OF COMPLIANCE CERTIFICATE
V-A FORM OF OPINION OF WACHTELL, LIPTON ROSEN & KATZ
V-B FORM OF OPINION OF KURZMAN & EISENBERG
VI FORM OF OPINION OF O'MELVENY & MYERS LLP
VII FORM OF ASSIGNMENT AGREEMENT
VIII FORM OF CERTIFICATE RE NON-BANK STATUS
IX FORM OF FINANCIAL CONDITION CERTIFICATE
X FORM OF COMPANY PLEDGE AGREEMENT
XI FORM OF COMPANY SECURITY AGREEMENT
XII FORM OF SUBSIDIARY GUARANTY
XIII FORM OF SUBSIDIARY PLEDGE AGREEMENT
XIV FORM OF SUBSIDIARY SECURITY AGREEMENT
XV FORM OF MORTGAGE
XVI FORM OF COLLATERAL ACCESS AGREEMENT
XVII FORM OF SUBSIDIARY PATENT AND TRADEMARK SECURITY AGREEMENT
(v)
<PAGE>
SCHEDULES
2.1 LENDERS' COMMITMENTS AND PRO RATA SHARES
3.1C CORPORATE AND CAPITAL STRUCTURE; OWNERSHIP; MANAGEMENT
3.1E-I INDEBTEDNESS TO BE REPAID UNDER EXISTING AMSCAN CREDIT
AGREEMENTS
3.1E-II INDEBTEDNESS TO BE REPAID UNDER EXISTING ANAGRAM CREDIT
AGREEMENTS
4.1 SUBSIDIARIES OF COMPANY
4.5 REAL PROPERTY
4.6 LITIGATION
4.8 MATERIAL CONTRACTS
4.13 ENVIRONMENTAL MATTERS
5.11 CASH MANAGEMENT SYSTEM
6.1 CERTAIN EXISTING INDEBTEDNESS
(vi)
<PAGE>
AMSCAN HOLDINGS, INC.
AMENDED AND RESTATED AXEL CREDIT AGREEMENT
This AMENDED AND RESTATED AXEL CREDIT AGREEMENT is dated as of
September 17, 1998 and entered into by and among AMSCAN HOLDINGS, INC., a
Delaware corporation ("COMPANY"), GOLDMAN SACHS CREDIT PARTNERS L.P., ("GSCP")
as arranger (in such capacity, "ARRANGER"), and as syndication agent (in such
capacity, "SYNDICATION AGENT"), THE FINANCIAL INSTITUTIONS LISTED ON THE
SIGNATURE PAGES HEREOF (each, including GSCP and Fleet (as hereinafter defined),
individually referred to herein as a "LENDER" and collectively as "LENDERS"),
and FLEET NATIONAL BANK ("FLEET"), as administrative agent for Lenders (in such
capacity, "ADMINISTRATIVE AGENT").
R E C I T A L S
- - - - - - - -
WHEREAS, Company, Arranger, Syndication Agent, Administrative Agent and
certain financial institutions ("EXISTING LENDERS") are parties to that certain
AXEL Credit Agreement dated as of December 19, 1997 (as heretofore amended,
supplemented or otherwise modified, the "EXISTING AXEL CREDIT AGREEMENT")
pursuant to which Existing Lenders have extended certain credit facilities to
Company, the proceeds of which were applied on the Closing Date (this and other
capitalized terms used in these recitals without definition being used as
defined in subsection 1.1) to fund a portion of the Recapitalization Financing
Requirements;
WHEREAS, Company is party to a separate Revolving Loan Credit Agreement
dated as of December 19, 1997 (as heretofore or hereafter amended, supplemented,
refinanced, renewed or extended or otherwise modified from time to time, the
"REVOLVING CREDIT AGREEMENT") with Fleet National Bank, as administrative agent
("REVOLVING CREDIT FACILITY AGENT"), Goldman Sachs Credit Partners L.P., as
arranger and syndication agent, and the financial institutions party thereto as
lenders ("REVOLVING CREDIT LENDERS"), pursuant to which Revolving Credit Lenders
have extended certain credit facilities to Company to fund a portion of the
Recapitalization Financing Requirements and to provide financing for working
capital, the completion of Permitted Business Acquisitions, and other general
corporate purposes of Company and its Subsidiaries;
WHEREAS, on the Closing Date, Administrative Agent and Revolving Credit
Facility Agent entered into the Intercreditor Agreement pursuant to which
Administrative Agent and Revolving Credit Facility Agent appointed Fleet to
serve as collateral agent and representative (in such capacity, "COLLATERAL
AGENT") for Existing Lenders, Revolving Credit Lenders, Administrative Agent,
Revolving Credit Facility Agent and the other agents under
<PAGE>
the Existing AXEL Credit Agreement and the Revolving Credit Agreement
(collectively, "SECURED PARTIES") and agreed to the terms on which Collateral,
the benefits of guarantees and the proceeds thereof are to be shared between the
credit facilities;
WHEREAS, Company has secured all of the Obligations under the Existing
AXEL Credit Agreement and under the other Loan Documents by granting to
Collateral Agent, on behalf of Secured Parties, a first priority Lien on
substantially all of its real, personal and mixed property, including a pledge
of all of the capital stock of each of its Domestic Subsidiaries and 66% of the
capital stock of each of its Foreign Subsidiaries;
WHEREAS, all of the Domestic Subsidiaries of Company have guarantied
the Obligations under the Existing AXEL Credit Agreement and under the other
Loan Documents and secured their guaranties by granting to Collateral Agent, on
behalf of Secured Parties, a first priority Lien on substantially all of their
respective personal and mixed property, including a pledge of all of the capital
stock of each of their respective Domestic Subsidiaries and 66% of the capital
stock of each of their respective Foreign Subsidiaries:
WHEREAS, on the Restatement Effective Date, Company intends to acquire
(the "ANAGRAM ACQUISITION") all of the outstanding Capital Stock (the "ANAGRAM
SHARES") of Anagram International, Inc. and certain related companies
(collectively, "ANAGRAM") from Garry Kieves, certain members of his family and
certain trusts (collectively, the "ANAGRAM SELLERS") pursuant to the Anagram
Acquisition Agreement in exchange for aggregate consideration consisting of
$74,500,000 in cash plus 120 shares of newly-issued Company Common Stock (the
"NEW COMPANY SHARES") plus warrants to purchase 10 shares of Company Common
Stock.
WHEREAS, Company desires that Existing Lenders and New Lenders amend
and restate the Existing AXEL Credit Agreement in its entirety to provide for
Additional AXELs in an aggregate principal amount of $40,000,000 to be added to
the Existing AXELs and made a part of the AXELs, the proceeds of which
Additional AXELs, together with (i) cash on hand at the Company and (ii)
proceeds of incremental borrowings under the Revolving Credit Agreement in an
amount up to $23,500,000 plus the excess, if any, of $15,000,000 over the amount
of cash on hand at the Company on the Restatement Effective Date, will be used
(1) to fund the cash portion of the consideration for the Anagram Acquisition,
(2) to refinance certain existing indebtedness of Anagram and its Subsidiaries,
and (3) to pay Anagram Transaction Costs;
WHEREAS, concurrently with the amendment and restatement of the
Existing AXEL Credit Agreement, Company and Revolving Credit Lenders will amend
and restate the Revolving Credit Agreement in its entirety in order to permit
the Additional AXELs and the Anagram Acquisition and to make certain other
changes in connection therewith;
2
<PAGE>
WHEREAS, it is the intent of the parties hereto that this Agreement not
constitute a novation of the obligations and liabilities of the parties under
the Existing AXEL Credit Agreement or be deemed to evidence or constitute
repayment of all or any portion of such obligations and liabilities and that
this Agreement amend and restate in its entirety the Existing AXEL Credit
Agreement and re-evidence the Obligations of Company outstanding thereunder; and
WHEREAS, it is the intent of Loan Parties to confirm that all
Obligations of Loan Parties under the other Loan Documents shall continue in
full force and effect and that, from and after the Restatement Effective Date
all references to the "AXEL CREDIT AGREEMENT" contained therein shall be deemed
to refer to this Agreement.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Company, Lenders and Agents agree
that on the Restatement Effective Date the Existing AXEL Credit Agreement shall
be amended and restated in its entirety as follows:
SECTION 1.
DEFINITIONS
1.1 CERTAIN DEFINED TERMS.
The following terms used in this Agreement shall have the following
meanings:
"ACQUIRED DEBT" means, with respect to any specified Person,
(i) indebtedness of any other Person existing at the time such other
Person is merged with or into or became a Restricted Subsidiary of such
specified Person, including, without limitation, Indebtedness incurred
in connection with, or in contemplation of, such other Person merging
with or into or becoming a Restricted Subsidiary of such specified
Person, and (ii) Indebtedness secured by a Lien encumbering any asset
acquired by such specified Person.
"ADDITIONAL AXEL[Trademark]" or "ADDITIONAL AXELS[Trademark]"
means a loan made by a Lender to Company as an amortization extended
loan pursuant to subsection 2.1A(ii). The term AXEL is a registered
trademark of Goldman, Sachs & Co.
"ADDITIONAL AXEL COMMITMENT" means a commitment of a Lender to
make an Additional AXEL as set forth in subsection 2.1A(ii), and
"ADDITIONAL AXEL COMMITMENTS" means such commitments of all Lenders in
the aggregate.
"ADDITIONAL AXEL NOTES" means the promissory notes of Company
issued pursuant to subsection 2.1E on the Restatement Effective Date,
substantially in the
3
<PAGE>
form of Exhibit III annexed hereto, as they may be amended,
supplemented or otherwise modified from time to time.
"ADJUSTED EURODOLLAR RATE" means, for any Interest Rate
Determination Date with respect to an Interest Period for a Eurodollar
Rate AXEL, the interest rate per annum (rounded upward, if necessary,
to the nearest 1/32 of one percent) as determined on the basis of the
offered rates for deposits in U.S. dollars, for a period of time
comparable to such Interest Period which appears on the Telerate Page
3750 as of 11:00 a.m. (New York time) two Business Days before the
first day of such Interest Period; provided, however, that if the rate
described above does not appear on the Telerate System on any
applicable interest determination date, the Adjusted Eurodollar Rate
shall be the rate (rounded upward as described above, if necessary for
deposits in U.S. dollars for a period substantially equal to the
interest period on the Reuters Page "LIBO" or such other page as may
replace the LIBO page on that service for the purpose of displaying
such rates), as of 11:00 a.m. (London time) two Business Days before
the first day of such Interest Period.
If both the Telerate and Reuters system are unavailable, then
the rate for that date will be determined on the basis of the offered
rates for deposits in U.S. dollars for a period of time comparable to
such Interest Period which are offered by four major banks in the
London interbank market at approximately 11:00 a.m. (New York time) two
Business Days before the first day of such Interest Period as selected
by the Administrative Agent. The principal London office of each of the
four major London banks will be requested to provide a quotation of its
U.S. dollar deposit offered rate. If at least two such quotations are
provided, the rate for that date will be the arithmetic mean of the
quotations. If fewer than two quotations are provided as requested, the
rate for the date will be determined on the basis of the rates quoted
for loans in U.S. dollars to leading European banks for a period of
time comparable to such Interest Period offered by major banks in New
York City at approximately 11:00 a.m. (New York time) two Business Days
before the first day of such Interest Period. In the event that
Administrative Agent is unable to obtain any such quotation as provided
above, it will be deemed that the Adjusted Eurodollar Rate for such
Interest Rate cannot be determined.
In the event that the Board of Governors of the Federal
Reserve System shall impose a Eurodollar Rate Reserve Percentage with
respect to Eurocurrency Liabilities, the Adjusted Eurodollar Rate for
an Interest Period shall be equal to the amount determined above for
such Interest Period divided by a percentage equal to 100% minus the
Eurodollar Rate Reserve Percentage for such Interest Period.
"ADMINISTRATIVE AGENT" has the meaning assigned to that term
in the introduction to this Agreement and also means and includes any
successor Administrative Agent appointed pursuant to subsection 8.5A.
4
<PAGE>
"AFFECTED LENDER" has the meaning assigned to that term in
subsection 2.6C.
"AFFILIATE" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For purposes of
this definition, "control" (including, with correlative meanings, the
terms "controlling", "controlled by" and "under common control with"),
as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the
management or policies of such Person, whether through the ownership of
voting securities, by agreement or otherwise; provided that beneficial
ownership of 10% or more of the voting securities of a Person shall be
deemed to be control.
"AFFILIATE TRANSACTION" has the meaning assigned to that term
in subsection 6.6.
"AGENT" means, individually, each of Arranger, Syndication
Agent, Collateral Agent and Administrative Agent and "AGENTS" means
Arranger, Syndication Agent, Collateral Agent and Administrative Agent,
collectively.
"AGREEMENT" means this Amended and Restated AXEL Credit
Agreement dated as of September 17, 1998, as it may be amended,
supplemented or otherwise modified from time to time.
"ANAGRAM" has the meaning assigned to such term in the
recitals to this Agreement.
"ANAGRAM ACQUISITION" has the meaning assigned to such term in
the recitals to this Agreement.
"ANAGRAM ACQUISITION AGREEMENT" means the Stock Purchase
Agreement dated as of August 6, 1998 by and among Company and the
Anagram Sellers and all exhibits and schedules thereto.
"ANAGRAM HEADQUARTERS FACILITY" means, as of the Restatement
Effective Date, the real property in Minnesota owned in fee simple by
Eden Prairie Holdings where Anagram's headquarters and manufacturing
site are located.
"ANAGRAM INTERNATIONAL" means Anagram International, Inc., a
Minnesota corporation.
"ANAGRAM SELLERS" has the meaning assigned to such term in the
recitals to this Agreement.
5
<PAGE>
"ANAGRAM SHARES" has the meaning assigned to such term in the
recitals to this Agreement.
"ANAGRAM TRANSACTION COSTS" means the fees, costs and expenses
payable by Company in connection with the transactions contemplated by
the Anagram Acquisition Agreement, including without limitation any
fees payable to Agents and Lenders on or before the Restatement
Effective Date in connection therewith.
"ARRANGER" has the meaning assigned to that term in the
introduction to this Agreement.
"ASSET SALE" means the sale by Company or any of its
Subsidiaries to any Person other than Company or any of its
wholly-owned Subsidiaries of (i) any of the stock of any of Company's
Subsidiaries, (ii) substantially all of the assets of any division or
line of business of Company or any of its Subsidiaries, or (iii) any
other assets (whether tangible or intangible) of Company or any of its
Subsidiaries (other than (a) inventory sold in the ordinary course of
business (b) sales of Cash Equivalents (as defined in the Revolving
Credit Agreement) for the fair market value thereof, and (c) any such
other assets to the extent that the aggregate value of such assets sold
in any single transaction or related series of transactions is equal to
$500,000 or less).
"ASSIGNMENT AGREEMENT" means (i) with respect to the period
ending on the Restatement Effective Date, an Assignment Agreement in
substantially the form of Exhibit VII annexed to the Existing AXEL
Credit Agreement, and (ii) thereafter, an Assignment Agreement in
substantially the form of Exhibit VII annexed hereto.
"AUXILIARY PLEDGE AGREEMENT" means each pledge agreement or
similar instrument governed by the laws of a country other than the
United States, executed on the Closing Date pursuant to subsection
3.1I(vii) of the Existing AXEL Credit Agreement or on the Restatement
Effective Date pursuant to subsection 3.1H(v) or from time to time
thereafter in accordance with subsection 5.8 by Company or any Domestic
Subsidiary that owns capital stock of one or more Foreign Subsidiaries
organized in such country, in form and substance satisfactory to
Collateral Agent, as such Auxiliary Pledge Agreement may hereafter be
amended, supplemented or otherwise modified from time to time, and
"AUXILIARY PLEDGE AGREEMENTS" means all such pledge agreements or
instruments, collectively.
"AXEL" or "AXELS" means the Existing AXELs and the Additional
AXELs, collectively.
"AXEL EXPOSURE" means, with respect to any Lender as of any
date of determination (i) prior to the funding of the Additional AXELs,
the sum of that Lender's Additional AXEL Commitment plus the
outstanding principal amount of
6
<PAGE>
the Existing AXELs of that Lender, and (ii) after the funding of the
Additional AXELs, the outstanding principal amount of the AXELs of that
Lender.
"AXEL LOAN DOCUMENTS" means this Agreement, the AXEL Notes,
the Subsidiary Guaranty, the Collateral Documents any Hedging
Agreements with Lenders, and the Intercreditor Agreement.
"AXEL NOTES" means (i) the Existing AXEL Notes, (ii) the
Additional AXEL Notes, and (iii) any promissory notes issued by Company
pursuant to the last sentence of subsection 9.1B(i) in connection with
assignments of the AXELs of any Lenders, in each case substantially in
the form of Exhibit III annexed hereto, as they may be amended,
supplemented or otherwise modified from time to time.
"BANKRUPTCY CODE" means Title 11 of the United States Code
entitled "Bankruptcy", as now and hereafter in effect, or any successor
statute.
"BANKRUPTCY LAW" means title 11, U.S. Code or any similar
Federal or state law for the relief of debtors.
"BASE RATE" means, at any time, the higher of (x) the Prime
Rate or (y) the rate which is 1/2 of 1% in excess of the Federal Funds
Effective Rate.
"BASE RATE AXELS" means AXELs bearing interest at rates
determined by reference to the Base Rate as provided in subsection
2.2A.
"BUSINESS DAY" means any day excluding Saturday, Sunday and
any day which is a legal holiday under the laws of the State of New
York or is a day on which banking institutions located in such state
are authorized or required by law or other governmental action to
close.
"CAPITAL LEASE", means, at any time any determination thereof
is to be made, the amount of the liability in respect of a capital
lease that would at such time be required to be capitalized on a
balance sheet in accordance with GAAP.
"CAPITAL STOCK" means (i) in the case of a corporation,
corporate stock, (ii) in the case of an association or business entity,
any and all shares, interests, participation, rights or other
equivalents (however designated) of corporate stock, (iii) in the case
of a partnership, partnership interests (whether of general or limited)
and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person (but excluding customary
employee incentive or bonus arrangements, and customary earn-out
provisions granted in connection with acquisition transactions and
providing for aggregate payouts not in excess of $5,000,000 per year).
7
<PAGE>
"CASH" means money, currency or a credit balance in a Deposit
Account.
"CASH EQUIVALENTS" means, (i) United States dollars, (ii)
securities issued or directly and fully guaranteed or insured by the
United States government or any agency or instrumentality thereof,
(iii) certificates of deposit and eurodollar time deposits with
maturities of one year or less from the date of acquisition, bankers'
acceptances with maturities not exceeding one year and overnight bank
deposits, in each case with any domestic bank having capital and
surplus in excess of $500 million and a Keefe Bank Watch Rating of "B"
(or the equivalent rating under a substantially similar ratings system
if Keefe Bank Watch Ratings are no longer published) or better, (iv)
repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (ii) and (iii)
above entered into with any financial institution meeting the
qualifications specified in clause (iii) above and (v) commercial paper
having the highest rating obtainable from Moody's Investors Service,
Inc. or Standard & Poor's Corporation (or in their absence, an
equivalent rating from another nationally recognized securities rating
agency) and in each case maturing within one year after the date of
acquisition.
"CERTIFICATE OF MERGER" means the Certificate of Merger dated
as of December 19, 1997 for the Merger of Newco with and into Company,
as in effect on the Closing Date.
"CERTIFICATE RE NON-BANK STATUS" means a certificate
substantially in the form of Exhibit VIII annexed hereto delivered by a
Lender to Administrative Agent pursuant to subsection 2.7B(iii).
"CLOSING DATE" means December 19, 1997, the date on which the
initial AXELs were made under the Existing AXEL Credit Agreement.
"COLLATERAL" means, collectively, all of the real, personal
and mixed property (including capital stock) in which Liens are
purported to be granted pursuant to the Collateral Documents as
security for the Obligations.
"COLLATERAL ACCESS AGREEMENT" means any landlord waiver,
mortgagee waiver, bailee letter or any similar acknowledgement or
agreement of any landlord in respect of any Leased Property, or
mortgagee in respect of any real property, in which Company or any of
its Subsidiaries owns or holds a fee interest and which is subject to a
mortgage, held by such mortgagee, in either case where any Collateral
is located, or any warehouseman or processor in possession of any
Inventory of any Loan Party, substantially in the form of Exhibit XVI
annexed hereto with such changes thereto as may be agreed to by
Collateral Agent in the reasonable exercise of its discretion.
"COLLATERAL ACCOUNTS" has the meaning assigned to that term in
the Intercreditor Agreement.
8
<PAGE>
"COLLATERAL AGENT" has the meaning assigned to that term in
the introduction to this Agreement.
"COLLATERAL DOCUMENTS" means the Company Pledge Agreement, the
Company Security Agreement, the Subsidiary Pledge Agreements, the
Subsidiary Security Agreements, the Subsidiary Patent and Trademark
Security Agreements, the Mortgages, the Auxiliary Pledge Agreements and
all other instruments or documents delivered by any Loan Party pursuant
to this Agreement or any of the other Loan Documents in order to grant
to Collateral Agent, on behalf of Secured Parties, a Lien on any real,
personal or mixed property of that Loan Party as security for the
Obligations.
"COMPANY" means Company as the surviving corporation in the
Merger.
"COMPANY COMMON STOCK" means the shares of common stock of
Company par value $0.10 per share.
"COMPANY PLEDGE AGREEMENT" means the Company Pledge Agreement
executed and delivered by Company on the Closing Date, substantially in
the form of Exhibit X annexed hereto, as such Company Pledge Agreement
may hereafter be amended, supplemented or otherwise modified from time
to time.
"COMPANY SECURITY AGREEMENT" means the Company Security
Agreement executed and delivered by Company on the Closing Date,
substantially in the form of Exhibit XI annexed hereto, as such Company
Security Agreement may hereafter be amended, supplemented or otherwise
modified from time to time.
"COMPLIANCE CERTIFICATE" means a certificate substantially in
the form of Exhibit IV annexed hereto delivered to Administrative Agent
and Lenders by Company pursuant to subsection 5.1(iv).
"CONFIDENTIAL INFORMATION MEMORANDUM" means that certain
Confidential Information Memorandum prepared by GSCP relating to the
Existing AXELs and Revolving Loans dated November 1997.
"CONFORMING LEASEHOLD INTEREST" means any Recorded Leasehold
Interest as to which the lessor has agreed in writing for the benefit
of Collateral Agent (which writing has been delivered to Collateral
Agent), whether under the terms of the applicable lease, under the
terms of a Landlord Consent and Estoppel, or otherwise, to the matters
described in the definition of "Landlord Consent and Estoppel," which
interest, if a sub-leasehold or sub-sub-leasehold interest, is not
subject to any contrary restrictions contained in a superior lease or
sublease.
9
<PAGE>
"CONSOLIDATED CASH FLOW" means, with respect to any Person for
any period, the Consolidated Net Income of such Person for such period
plus (i) an amount equal to any extraordinary loss plus any net loss
realized in connection with an Asset Sale (to the extent such losses
were deducted in computing such Consolidated Net Income), plus (ii)
provision for taxes based on income or profits of such Person and its
Restricted Subsidiaries for such period, to the extent that such
provision for taxes was deducted in computing such Consolidated Net
Income, plus (iii) consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued and
whether or not capitalized (including, without limitation, amortization
of original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component
of all payments associated with Capital Leases, commissions, discounts
and other fees and charges incurred in respect of letter of credit or
bankers' acceptance financings, and net payments (if any) pursuant to
Hedging Obligations), to the extent that any such expense was deducted
in computing such Consolidated Net Income, plus (iv) depreciation,
amortization (including amortization of goodwill and other intangibles
but excluding amortization of prepaid cash operating expenses that were
paid in a prior period) and other non-cash charges of prepaid cash
operating expenses that were paid in a prior period) and other non-cash
charges of such Person and its Restricted Subsidiaries for such period
to the extent that such depreciation, amortization and other non-cash
charges were deducted in computing such Consolidated Net Income, minus
(v) cash outlays that were made by such Person or any of its Restricted
Subsidiaries during such period in respect of any item that was
reflected as a non-cash charge in a prior period, provided that such
non-cash charge was added to Consolidated Net Income in determining
Consolidated Cash Flow for such prior period.
"CONSOLIDATED EXCESS CASH FLOW" has the meaning assigned to
that term under the Revolving Credit Agreement as in effect as of the
Restatement Effective Date.
"CONSOLIDATED FIXED CHARGES" means with respect to any Person
for any period, the sum of (i) the consolidated interest expense of
such Person and its Restricted Subsidiaries for such period, whether
paid or accrued (including, without limitation, amortization of
original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component
of all payments associated with Capital Leases, commissions, discounts
and other fees and charges incurred in respect of letter of credit or
bankers' acceptance financings, and net payments (if any) pursuant to
Hedging Obligations) and (ii) the consolidated interest expense of such
Person and its Restricted Subsidiaries that was capitalized during such
period, and (iii) any interest expense on Indebtedness of another
Person that is Guaranteed by such Person or one of its Restricted
Subsidiaries or secured by a Lien on assets of such Person or one of
its Restricted Subsidiaries (whether or not such Guarantee or Lien is
called upon) and (iv) the product of (a) all cash
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dividend payments (and non-cash dividend payments in the case of a
Person that is a Restricted Subsidiary) paid to any Person other than
Company or a Restricted Subsidiary on any series of Preferred Stock of
such Person, times (b) a fraction, the numerator of which is one and
the denominator of which is one minus the then current combined annual
federal, state and local statutory tax rate of such Person paying the
dividend, expressed as a decimal, in each case, on a consolidated basis
and in accordance with GAAP.
"CONSOLIDATED LEVERAGE RATIO" has the meaning assigned to that
term in the Revolving Credit Agreement as of the Restatement Effective
Date.
"CONSOLIDATED NET INCOME" means, with respect to any Person
for any period, the aggregate of the Net Income of such Person and its
Restricted Subsidiaries for such period, on a consolidated basis,
determined in accordance with GAAP; provided that (i) the Net Income
(but not loss) for such period of any Person that is not a Restricted
Subsidiary or that is accounted for by the equity method of accounting
shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Wholly Owned
Restricted Subsidiary thereof, (ii) the Net Income of any Restricted
Subsidiary shall be excluded to the extent that the declaration or
payment of dividends or similar distributions by that Restricted
Subsidiary of that Net Income is not at the date of determination
permitted without any prior governmental approval (that has not been
obtained) or, directly or indirectly, by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to that Restricted
Subsidiary or its stockholders, (iii) the Net Income of any Person
acquired in a pooling of interests transaction for any period prior to
the date of such acquisition shall be excluded, (iv) the cumulative
effect of a change in accounting principles shall be excluded and (v)
the Net Income of any Unrestricted Subsidiary shall be excluded,
whether or not distributed to Company or one of its Restricted
Subsidiaries.
"CONTRACTUAL OBLIGATION", as applied to any Person, means any
provision of any Security issued by that Person or of any material
indenture, mortgage, deed of trust, contract, undertaking, agreement or
other instrument to which that Person is a party or by which it or any
of its properties is bound or to which it or any of its properties is
subject.
"CURRENCY AGREEMENT" means any foreign exchange contract,
currency swap agreement, futures contract, option contract, synthetic
cap or other similar agreement or arrangement to which Company or any
of its Subsidiaries is a party.
"DEPOSIT ACCOUNT" means a demand, time, savings, passbook or
like account with a bank, savings and loan association, credit union or
like organization, other than an account evidenced by a negotiable
certificate of deposit.
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"DISQUALIFIED STOCK" means any Capital Stock that, by its
terms (or by the terms of any security into which it is convertible or
for which it is exchangeable), or upon the happening of any event,
matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, on or prior to the date on which the
AXELs mature.
"DOLLARS" and the sign "$" mean the lawful money of the United
States of America.
"DOMESTIC SUBSIDIARY" means a Subsidiary of Company that is
organized under the laws of a state of the United States or the
District of Columbia.
"EDEN PRAIRIE HOLDINGS" means Anagram Eden Prairie Property
Holdings LLC, a Delaware limited liability company.
"ELIGIBLE ASSIGNEE" means (A) (i) a commercial bank organized
under the laws of the United States or any state thereof; (ii) a
savings and loan association or savings bank organized under the laws
of the United States or any state thereof; (iii) a commercial bank
organized under the laws of any other country or a political
subdivision thereof; provided that (x) such bank is acting through a
branch or agency located in the United States or (y) such bank is
organized under the laws of a country that is a member of the
Organization for Economic Cooperation and Development or a political
subdivision of such country; and (iv) any other entity which is an
"accredited investor" (as defined in Regulation D under the Securities
Act) which extends credit or buys loans as one of its businesses
including insurance companies, mutual funds and lease financing
companies; and (B) any Lender, and any Related Fund or any Affiliate of
any Lender; provided that no Loan Party or any Subsidiary of any Loan
Party shall be an Eligible Assignee.
"EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" as
defined in Section 3(3) of ERISA which is or was maintained or
contributed to by Company, any of its Subsidiaries or any of their
respective ERISA Affiliates.
"EMPLOYMENT AGREEMENTS" means, collectively, the employment
agreements and stock and option agreements between the Company and
certain employees of the Company as set forth on Schedule 3.1C annexed
hereto, in certain cases providing for the exclusive employment of such
Persons by Company, in the form provided to Arranger and Administrative
Agent pursuant to subsection 3.1C of the Existing AXEL Credit Agreement
on or prior to the Closing Date or pursuant to subsection 3.1C of this
Agreement on or prior to the Restatement Effective Date.
"ENVIRONMENTAL CLAIM" means any investigation, notice, notice
of violation, claim, action, suit, proceeding, demand, abatement order
or other order or directive (conditional or otherwise), by any
governmental authority or any other Person, arising
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(i) pursuant to or in connection with any actual or alleged violation
of any Environmental Law, (ii) in connection with any Hazardous
Materials or any actual or alleged Hazardous Materials Activity, or
(iii) in connection with any actual or alleged damage, injury, threat
or harm to natural resources or the environment.
"ENVIRONMENTAL LAWS" means any and all current or future
statutes, ordinances, orders, rules, regulations, guidance documents,
judgments, Governmental Authorizations, or any other requirements of
governmental authorities relating to (i) environmental matters,
including those relating to any Hazardous Materials Activity, (ii) the
generation, use, storage, transportation or disposal of Hazardous
Materials, or (iii) occupational safety and health, industrial hygiene,
land use or the protection of human, plant or animal health or welfare,
in any manner applicable to Company or any of its Subsidiaries or any
Facility, including the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. [Section] 9601 et seq.), the
Hazardous Materials Transportation Act (49 U.S.C. [Section] 1801 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C. [Section]
6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C.
[Section] 1251 et seq.), the Clean Air Act (42 U.S.C. [Section] 7401 et
seq.), the Toxic Substances Control Act (15 U.S.C. [Section] 2601 et
seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C.
[Section] 136 et seq.), the Occupational Safety and Health Act (29
U.S.C. [Section] 651 et seq.), the Oil Pollution Act (33 U.S.C.
[Section] 2701 et seq) and the Emergency Planning and Community
Right-to-Know Act (42 U.S.C. [Section] 11001 et seq.), each as amended
or supplemented, any analogous present or future state or local
statutes or laws, and any regulations promulgated pursuant to any of
the foregoing.
"EQUITY INTERESTS" means Capital Stock and all warrants,
options or other rights to acquire Capital Stock (but excluding any
debt security that is convertible into, or exchangeable for, Capital
Stock).
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor thereto.
"ERISA AFFILIATE" means, as applied to any Person, (i) any
corporation which is a member of a controlled group of corporations
within the meaning of Section 414(b) of the Internal Revenue Code of
which that Person is a member; (ii) any trade or business (whether or
not incorporated) which is a member of a group of trades or businesses
under common control within the meaning of Section 414(c) of the
Internal Revenue Code of which that Person is a member; and (iii) any
member of an affiliated service group within the meaning of Section
414(m) or (o) of the Internal Revenue Code of which that Person, any
corporation described in clause (i) above or any trade or business
described in clause (ii) above is a member. Any former ERISA Affiliate
of Company or any of its Subsidiaries shall continue to be considered
an ERISA Affiliate of Company or such Subsidiary within the meaning of
this definition with respect to the period such entity was an ERISA
Affiliate of
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Company or such Subsidiary and with respect to liabilities arising
after such period for which Company or such Subsidiary could be liable
under the Internal Revenue Code or ERISA.
"ERISA EVENT" means (i) a "reportable event" within the
meaning of Section 4043 of ERISA and the regulations issued thereunder
with respect to any Pension Plan (excluding those for which the
provision for 30-day notice to the PBGC has been waived by regulation);
(ii) the failure to meet the minimum funding standard of Section 412 of
the Internal Revenue Code with respect to any Pension Plan (whether or
not waived in accordance with Section 412(d) of the Internal Revenue
Code) or the failure to make by its due date a required installment
under Section 412(m) of the Internal Revenue Code with respect to any
Pension Plan or the failure to make any required contribution to a
Multiemployer Plan; (iii) the provision by the administrator of any
Pension Plan pursuant to Section 4041(a)(2) of ERISA of a notice of
intent to terminate such plan in a distress termination described in
Section 4041(c) of ERISA; (iv) the withdrawal by Company, any of its
Subsidiaries or any of their respective ERISA Affiliates from any
Pension Plan with two or more contributing sponsors or the termination
of any such Pension Plan resulting in liability pursuant to Section
4063 or 4064 of ERISA; (v) the institution by the PBGC of proceedings
to terminate any Pension Plan, or the occurrence of any event or
condition which could reasonably be expected to constitute grounds
under ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan; (vi) the imposition of liability on
Company, any of its Subsidiaries or any of their respective ERISA
Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of
the application of Section 4212(c) of ERISA; (vii) the withdrawal of
Company, any of its Subsidiaries or any of their respective ERISA
Affiliates in a complete or partial withdrawal (within the meaning of
Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if there
is any potential liability therefor, or the receipt by Company, any of
its Subsidiaries or any of their respective ERISA Affiliates of notice
from any Multiemployer Plan that it is in reorganization or insolvency
pursuant to Section 4241 or 4245 of ERISA, or that it intends to
terminate or has terminated under Section 4041A or 4042 of ERISA;
(viii) the occurrence of an act or omission which could reasonably be
expected to give rise to the imposition on Company, any of its
Subsidiaries or any of their respective ERISA Affiliates of fines,
penalties, taxes or related charges under Chapter 43 of the Internal
Revenue Code or under Section 409, Section 502(c), (i) or (l), or
Section 4071 of ERISA in respect of any Employee Benefit Plan; (ix) the
assertion of a material claim (other than routine claims for benefits)
against any Employee Benefit Plan other than a Multiemployer Plan or
the assets thereof, or against Company, any of its Subsidiaries or any
of their respective ERISA Affiliates in connection with any Employee
Benefit Plan; (x) receipt from the Internal Revenue Service of notice
of the failure of any Pension Plan (or any other Employee Benefit Plan
intended to be qualified under Section 401(a) of the Internal Revenue
Code) to qualify under Section 401(a) of the Internal Revenue Code, or
the failure of any trust forming part of any Pension Plan
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to qualify for exemption from taxation under Section 501(a) of the
Internal Revenue Code; or (xi) the imposition of a Lien pursuant to
Section 401(a)(29) or 412(n) of the Internal Revenue Code or pursuant
to ERISA with respect to any Pension Plan.
"EUROCURRENCY LIABILITIES" has the meaning specified in
Regulation D of the Board of Governors of the Federal Reserve System,
as in effect from time to time.
"EURODOLLAR RATE AXELS" means AXELs bearing interest at rates
determined by reference to the Adjusted Eurodollar Rate as provided in
subsection 2.2A.
"EURODOLLAR RATE RESERVE PERCENTAGE" means, for any Interest
Period for all Eurodollar Rate AXELs comprising part of the same
Borrowing, the reserve percentage applicable two Business Days before
the first day of such Interest Period under regulations issued from
time to time by the Board of Governors of the Federal Reserve System
(or any successor) for determining the maximum reserve requirement
(including, without limitation, any emergency, supplemental or other
marginal reserve requirement) for a member bank of the Federal Reserve
System in New York City with respect to liabilities or assets
consisting of or including Eurocurrency Liabilities (or with respect to
any other category of liabilities that includes deposits by reference
to which the interest rate on Eurodollar Rate AXELs is determined)
having a term equal to such Interest Period.
"EVENT OF DEFAULT" means each of the events set forth in
Section 7.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute.
"EXCLUDABLE CURRENT LIABILITIES" means, with respect to the
consideration received by the Company in connection with any Asset
Sale, (i) each trade payable incurred in the ordinary course of
business of the Company or any Restricted Subsidiary, (ii) each current
liability that is in an amount less than $50,000 on an individual
basis, and (iii) each liability due within 90 days of the date of
consummation of such Asset Sale, in the case of each of clauses (i)
through (iii), that is assumed by the transferee of the assets the
subject to such Asset Sale pursuant to customary assumption provisions.
"EXISTING AMSCAN CREDIT AGREEMENTS" means any and all credit
agreements entered into by Company prior to the Closing Date, in each
case as amended prior to the Closing Date, as set forth on Schedule
3.1E-I.
"EXISTING ANAGRAM CREDIT AGREEMENTS" means any and all credit
agreements entered into by Anagram and its Subsidiaries, in each case
as amended prior to the Restatement Effective Date, as set forth on
Schedule 3.1E-II.
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"EXISTING AXELS" means, with respect to any Existing Lender,
the AXELs under the Existing AXEL Credit Agreement held by such
Existing Lender, in the principal amount of such AXELs outstanding
immediately prior to the Restatement Effective Date, and "EXISTING
AXELS" means such AXELs of all Existing Lenders, collectively.
"EXISTING AXEL CREDIT AGREEMENT" has the meaning assigned to
that term in the recitals to this Agreement.
"EXISTING AXEL NOTES" means (i) the promissory notes of
Company issued pursuant to subsection 2.1E of the Existing AXEL Credit
Agreement on the Closing Date and (ii) any promissory notes issued by
Company pursuant to the last sentence of subsection 9.1B(i) of the
Existing AXEL Credit Agreement in connection with assignments of the
Existing AXELs of any Existing Lenders, in each case substantially in
the form of Exhibit III annexed to the Existing AXEL Credit Agreement.
"EXISTING INDEBTEDNESS" means Indebtedness of Company and its
Restricted Subsidiaries (other than Indebtedness under this Agreement
and the Revolving Credit Agreement) in existence on the date of the
Senior Subordinated Note Indenture, until such amounts are repaid.
"EXISTING LENDER" has the meaning assigned to such term in the
recitals to this Agreement.
"FACILITIES" means any and all real property (including all
buildings, fixtures or other improvements located thereon) now,
hereafter or heretofore owned, leased, operated or used by Company or
any of its Subsidiaries or any of their respective predecessors or
Affiliates.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any period, a
fluctuating interest rate equal for each day during such period to the
weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds
brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding 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 such day on such
transactions received by Administrative Agent from three Federal funds
brokers of recognized standing selected by Administrative Agent.
"FEE PROPERTY" means any real property owned in fee simple by
any Loan Party, other than any such real property designated from time
to time by Collateral Agent in its sole discretion as not being
required to be included in the Collateral.
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"FINANCIAL PLAN" has the meaning assigned to that term in
subsection 5.1(xiii).
"FIRST PRIORITY" means, with respect to any Lien purported to
be created in any Collateral pursuant to any Collateral Document, that
(i) such Lien has priority over any other Lien on such Collateral
(other than Liens permitted pursuant to subsection 6.2A) and (ii) such
Lien is the only Lien (other than Permitted Encumbrances and Liens
permitted pursuant to subsection 6.2) to which such Collateral is
subject.
"FISCAL QUARTER" means a fiscal quarter of any Fiscal Year.
"FISCAL YEAR" means the fiscal year of Company and its
Subsidiaries ending on December 31 of each calendar year. For purposes
of this Agreement, any particular Fiscal Year shall be designated by
reference to the calendar year in which such Fiscal Year ends.
"FIXED CHARGE COVERAGE RATIO means with respect to any Person
for any period, the ratio of the Consolidated Cash Flow of such Person
and its Restricted Subsidiaries for such period to the Consolidated
Fixed Charges of such Person and its Restricted Subsidiaries for such
period. In the event that Company or any of its Restricted Subsidiaries
incurs, assumes, Guarantees or redeems any Indebtedness (other than
revolving credit borrowings) or issues Preferred Stock subsequent to
the commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated but on or prior to the date on which the
event for which the calculation of the Fixed Charge Coverage Ratio is
made (the "Calculation Date"), then the Fixed Charge Coverage Ratio
shall be calculated giving pro forma effect to such incurrence,
assumption, Guarantee or redemption or Indebtedness, or such issuance
or redemption of Preferred Stock, as if the same had occurred at the
beginning of the applicable four-quarter reference period.
Notwithstanding anything else in this Agreement (including
clause (iii) of the definition of Consolidated Net Income) to the
contrary, in calculating the Fixed Charge Coverage Ratio, acquisitions
will be given pro forma effect as follows:
(i) (a) acquisitions that have been made or are being
made by Company or any of its Restricted Subsidiaries during
the four-quarter reference period or subsequent to such
reference period and on or prior to the Calculation Date
(including through mergers or consolidations and including any
related financing transactions) shall be deemed to have
occurred on the first day of the four-quarter reference
period, and
(b) for purposes of determining the pro
forma effects of any such acquisition, Consolidated Cash Flow
shall be increased to reflect the annualized amount of any
cost savings expected by Company to be realized
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in connection with such acquisition (from steps to be taken
not later than the first anniversary of such acquisition, and
without reduction for any non-recurring charges expected in
connection with such acquisition), as set forth in an
Officers' Certificate signed by Company's chief executive and
chief financial officers (which shall be determinative of such
matters) which states (x) the amount of such increase, (y)
that such increase is based on the reasonable beliefs of the
officers executing such Officers' Certificate at the time of
such execution (and that estimates of cost savings from prior
acquisitions have been reevaluated and updated) and (z) that
any related incurrence of Indebtedness is permitted pursuant
to the this Agreement.
(ii) Consolidated Cash Flow shall be further increased to
reflect the annualized amount of any cost savings expected by
Company but not yet realized in respect of any acquisition
made by Company during the four fiscal quarters immediately
preceding the four quarter reference period prior to the
Calculation Date, to the extent such cost savings are (x)
expected to result from steps taken not later than the first
anniversary of the relevant acquisition and (y) determined and
certified as set forth in clause (i) above.
In addition, in calculating the Fixed Charge Coverage Ratio,
discontinued operations will be given pro forma effect as follows:
(i) the Consolidated Cash Flow attributable to
discontinued operations, as determined in accordance
with GAAP, and operations or businesses disposed of
on or prior to the Calculation Date, shall be
excluded, and
(ii) the Consolidated Fixed Charges attributable to
discontinued operations, as determined in accordance
with GAAP, and operations or businesses disposed of
on or prior to the Calculation Date, shall be
excluded, but only to the extent that the obligations
giving rise to such Consolidated Fixed Charges will
not be obligations of Company or any of its
Restricted Subsidiaries following the Calculation
Date.
"FLEET" has the meaning assigned to that term in the
introduction to this Agreement.
"FLOOD HAZARD PROPERTY" means a Mortgaged Property located in
an area designated by the Federal Emergency Management Agency as having
special flood or mud slide hazards.
"FOREIGN SUBSIDIARY" means a Subsidiary of Company other than
a Domestic Subsidiary.
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"FUNDING AND PAYMENT OFFICE" means (i) the office of
Administrative Agent located at Fleet National Bank, 1 Federal Street,
Boston, Massachusetts 02110, or (ii) such other office of
Administrative Agent as may from time to time hereafter be designated
as such in a written notice delivered by Administrative Agent to
Company and each Lender.
"FUNDING DEFAULT" has the meaning assigned to that term in
subsection 2.9.
"GAAP" means, subject to the limitations on the application
thereof set forth in subsection 1.2, generally accepted accounting
principles set forth in opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other
entity as may be approved by a significant segment of the accounting
profession, in each case as the same are applicable to the
circumstances as of the date of determination.
"GOVERNMENTAL AUTHORIZATION" means any permit, license,
authorization, plan, directive, consent order or consent decree of or
from any federal, state or local governmental authority, agency or
court.
"GSCP" has the meaning assigned to that term in the
introduction to this Agreement.
"GSII" means, collectively, GS Capital Partners II, L.P., GS
Capital Partners II Offshore, L.P., Goldman, Sachs & Co. Verwaltungs
GmbH, Stone Street Fund 1997, L.P. and Bridge Street Fund 1997, L.P.
"GUARANTEE" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of
business), direct or indirect, in any manner (including, without
limitation, letters of credit and reimbursement agreements in respect
thereof), of all of any part of any Indebtedness.
"HAZARDOUS MATERIALS" means (i) any chemical, material or
substance at any time defined as or included in the definition of
"hazardous substances", "hazardous wastes", "hazardous materials",
"extremely hazardous waste", "acutely hazardous waste", "radioactive
waste", "biohazardous waste", "pollutant", "toxic pollutant",
"contaminant", "restricted hazardous waste", "infectious waste", "toxic
substances", or any other term or expression intended to define, list
or classify substances by reason of properties harmful to health,
safety or the indoor or outdoor environment (including harmful
properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity, reproductive toxicity, "TCLP toxicity" or
"EP toxicity" or words of similar import under any applicable
Environmental Laws); (ii) any oil, petroleum, petroleum fraction or
petroleum derived substance; (iii) any drilling fluids, produced waters
and other wastes associated with the exploration, development or
production of crude oil,
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natural gas or geothermal resources; (iv) any flammable substances or
explosives; (v) any radioactive materials; (vi) any asbestos-containing
materials; (vii) urea formaldehyde foam insulation; (viii) electrical
equipment which contains any oil or dielectric fluid containing
polychlorinated biphenyls; (ix) pesticides; and (x) any other chemical,
material or substance, exposure to which is prohibited, limited or
regulated by any governmental authority or which may or could pose a
hazard to the health and safety of the owners, occupants or any Persons
in the vicinity of any Facility or to the indoor or outdoor
environment.
"HAZARDOUS MATERIALS ACTIVITY" means any past, current or
future activity, event or occurrence involving any Hazardous Materials,
including the use, manufacture, possession, storage, holding, presence,
existence, location, Release, threatened Release, discharge, placement,
generation, transportation, processing, construction, treatment,
abatement, removal, remediation, disposal, disposition or handling of
any Hazardous Materials, and any corrective action or response action
with respect to any of the foregoing.
"HEDGE AGREEMENT" means an Interest Rate Agreement or a
Currency Agreement designed to hedge against fluctuations in interest
rates or currency values, respectively.
"HEDGING OBLIGATIONS" means, with respect to any Person, the
obligations of such Person under (i) currency exchange or interest rate
swap agreements, currency exchange or interest rate cap agreements and
currency exchange or interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against
fluctuations in currency exchange or interest rates.
"INCREASED COST LENDER" has the meaning assigned to that term
in subsection 2.10.
"INDEBTEDNESS" means, with respect to any Person, any
indebtedness of such Person, whether or not contingent, in respect of
borrowed money or evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement agreements in
respect thereof) or bankers' acceptances or representing Capital Leases
or the balance deferred and unpaid of the purchase price of any
property or representing any Hedging Obligations, except any such
balance that constitutes an accrued expense or trade payable, if and to
the extent any of the foregoing indebtedness (other than letters of
credit and Hedging Obligations) would appear as liability upon a
balance sheet of such Person prepared in accordance with GAAP, as well
as all indebtedness of others secured by a Lien on any asset of such
Person (whether or not such indebtedness is assumed by such Person)
and, to the extent not otherwise included, the Guarantee by such Person
of any indebtedness of any other Person.
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"INDEMNITEE" has the meaning assigned to that term in
subsection 9.3.
"INSOLVENCY LAWS" means the Bankruptcy Code or any other
applicable bankruptcy, insolvency or similar law now or hereafter in
effect in the United States of America or any state thereof.
"INTELLECTUAL PROPERTY" means all patents, trademarks,
tradenames, copyrights, technology, know-how and processes used in or
necessary for the conduct of the business of Company and its
Subsidiaries as currently conducted that are material to the condition
(financial or otherwise), business or operations of Company and its
Subsidiaries, taken as a whole.
"INTERCREDITOR AGREEMENT" means the Intercreditor Agreement
dated as of December 19, 1997 among the Administrative Agent, the
Revolving Credit Facility Agent, the Collateral Agent, the Company and
the Subsidiary Guarantors, as such agreement may hereafter be amended,
supplemented or otherwise modified from time to time.
"INTEREST PAYMENT DATE" means (i) with respect to any Base
Rate AXEL, each March 15, June 15, September 15 and December 15 of each
year, commencing on the first such date to occur after the Closing
Date, and (ii) with respect to any Eurodollar Rate AXEL, the last day
of each Interest Period applicable to such Eurodollar Rate AXEL;
provided that in the case of each Interest Period of longer than three
months "Interest Payment Date" shall also include each date that is
three months, or an integral multiple thereof, after the commencement
of such Interest Period.
"INTEREST PERIOD" has the meaning assigned to that term in
subsection 2.2B.
"INTEREST RATE AGREEMENT" means any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement
or other similar agreement or arrangement to which Company or any of
its Subsidiaries is a party.
"INTEREST RATE DETERMINATION DATE" means, with respect to any
Interest Period, the second Business Day prior to the first day of such
Interest Period.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of
1986, as amended to the date hereof and from time to time hereafter,
and any successor statute.
"INVESTMENT" means, with respect to any Person, all
investments by such Person in other Persons (including Affiliates) in
the forms of direct or indirect loans (including guarantees of
indebtedness or other obligations), advances (other than cash advances
made to suppliers with respect to current or anticipated purchases of
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inventory in the ordinary course of business) or capital contributions
(excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business), purchases or other
acquisitions of Indebtedness, Equity Interests or other securities
(directly from the issuer thereof or from third parties) together with
all items that are or would be classified as investments on a balance
sheet prepared in accordance with GAAP; provided that an acquisition of
Equity Interests or other securities by the Company for consideration
consisting of common equity securities of Company shall not be deemed
to be an Investment. If Company or any Subsidiary of Company sells or
otherwise disposes of any Equity Interests of any direct or indirect
Subsidiary of Company such that, after giving effect to any such sale
or disposition, Company no longer owns, directly or indirectly greater
than 50% of the outstanding Equity Interest of such Subsidiary, Company
shall be deemed to have made an Investment on the date of any such sale
or disposition equal to the fair market value of the Equity Interests
of such Subsidiary not sold or disposed of.
"IP COLLATERAL" means the Collateral under the Subsidiary
Patent and Trademark Security Agreements.
"JOINT VENTURE" means all corporations, partnerships,
associations or other business entities (i) that are engaged in a
Principal Business and (ii) of which 50% of the total voting power of
shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or
indirectly, by the Company or one or more Restricted Subsidiaries of
the Company (or a combination thereof).
"LANDLORD CONSENT AND ESTOPPEL" means, with respect to any
Leasehold Property, a letter, certificate or other instrument in
writing from the lessor under the related lease, satisfactory in form
and substance to Collateral Agent, pursuant to which such lessor
agrees, for the benefit of Collateral Agent, (i) to the matters
contained in the form of Collateral Access Agreement applicable to a
Leasehold Property, and (ii) to such other matters relating to such
Leasehold Property as Collateral Agent may reasonably request,
including, without limitation, that without any further consent of such
lessor or any further action on the part of the Loan Party holding such
Leasehold Property, such Leasehold Property may be encumbered pursuant
to a Mortgage and may be assigned to the purchaser at a foreclosure
sale or in a transfer in lieu of such a sale (and to a subsequent third
party assignee if Collateral Agent, any Lender, or an Affiliate of
either so acquires such Leasehold Property).
"LEASEHOLD PROPERTY" means any leasehold interest of any Loan
Party as lessee under any lease of real property, other than any such
leasehold interest designated from time to time by Collateral Agent in
its sole discretion as not being required to be included in the
Collateral.
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"LENDER" and "LENDERS" means the persons identified as
"Lenders" and listed on the signature pages of this Agreement, together
with their successors and permitted assigns pursuant to subsection 9.1.
To the extent the context so requires, the terms "LENDER" and "LENDERS"
shall include "Lenders" under, and as defined in, the Existing AXEL
Credit Agreement.
"LIEN" means any lien, mortgage, pledge, assignment, security
interest, charge or encumbrance of any kind (including any conditional
sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any security interest) and any
option, trust or other preferential arrangement having the practical
effect of any of the foregoing.
"LOAN DOCUMENTS" means the Revolving Loan Documents and the
AXEL Loan Documents.
"LOAN PARTY" means each of Company and any of Company's
Subsidiaries from time to time executing a Loan Document, and "LOAN
PARTIES" means all such Persons, collectively.
"MANAGEMENT INVESTORS" means the management officers and
employees of Company and its Subsidiaries identified as Management
Investors on Schedule 3.1C annexed hereto.
"MARGIN STOCK" has the meaning assigned to that term in
Regulation U of the Board of Governors of the Federal Reserve System as
in effect from time to time.
"MATERIAL ADVERSE EFFECT" means (i) a material adverse effect
upon the business, operations, properties, assets, condition (financial
or otherwise) or prospects of Company or any of its Subsidiaries or
(ii) the impairment in any material respect of the ability of the Loan
Parties, taken as a whole, to perform, or of Administrative Agent or
Lenders to enforce, the Obligations.
"MATERIAL CONTRACT" means any contract or other arrangement to
which Company or any of its Subsidiaries is a party (other than the
Loan Documents) for which breach, nonperformance, cancellation or
failure to renew could reasonably be expected to have a Material
Adverse Effect.
"MATERIAL DOMESTIC SUBSIDIARY" means (a) each Restricted
Subsidiary and (b) each other Domestic Subsidiary of Company now
existing or hereafter acquired or formed by Company which, on a
consolidated basis for such Subsidiary and its Subsidiaries, (i) for
the most recent Fiscal Year account for more than 5% of the
consolidated revenues of Company and its Subsidiaries or (ii) as at the
end of such Fiscal Year, was the owner of more than 5% of the
consolidated assets of Company and its Subsidiaries; provided that, for
purposes of the calculations contemplated by
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the foregoing clauses (b)(i) and (ii), any Subsidiary of Company that
was acquired by Company or any of its Subsidiaries after the first day
of the most recent Fiscal Year (whether such acquisition was
consummated during such most recent Fiscal Year or the current Fiscal
Year) shall be deemed to have been acquired on and as of the first day
of such most recent Fiscal Year.
"MATERIAL LEASEHOLD PROPERTY" means a Leasehold Property
reasonably determined by Administrative Agent to be of material value
as Collateral or of material importance to the operations of Company or
any of its Subsidiaries; provided, however that no Leasehold Property
with respect to which the aggregate amount of all rents payable during
any one Fiscal Year is not expected to exceed $500,000 shall be a
"Material Leasehold Property".
"MERGER" means the merger of Newco with and into Company in
accordance with the terms of the Recapitalization Agreement, with
Company being the surviving corporation in such Merger.
"MORTGAGE" means a security instrument (whether designated as
a deed of trust or a mortgage or by any similar title) executed and
delivered by any Loan Party, substantially in the form of Exhibit XV
annexed hereto or in such other form as may be approved by Collateral
Agent in its sole discretion, in each case with such changes thereto as
may be recommended by Collateral Agent's local counsel based on local
laws or customary local mortgage or deed of trust practices.
"MORTGAGES" means all such instruments collectively.
"MORTGAGE FINANCING" means the incurrence by the Company or a
Restricted Subsidiary of the Company of any Indebtedness secured by a
mortgage or other Lien on real property acquired or improved by the
Company or any Restricted Subsidiary of the Company after the Closing
Date.
"MORTGAGE REFINANCING" means the incurrence by the Company or
a Restricted Subsidiary of the Company of any Indebtedness secured by a
mortgage or other Lien on real property subject to a mortgage or other
Lien existing on the Closing Date or created or incurred subsequent to
the Closing Date and owned by the Company or any Restricted Subsidiary
of the Company.
"MORTGAGED PROPERTY" has the meaning assigned to that term in
subsection 5.9.
"MORTGAGE POLICY" has the meaning assigned to that term in
subsection 5.9.
"MULTIEMPLOYER PLAN" means any Employee Benefit Plan which is
a "multiemployer plan" as defined in Section 3(37) of ERISA.
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"NET ASSET SALE PROCEEDS" means, with respect to any Asset
Sale, Cash payments (including any Cash received by way of deferred
payment pursuant to, or by monetization of, a note receivable or
otherwise, but only as and when so received) received from such Asset
Sale, net of any bona fide direct costs, including, without limitation,
all transaction costs, incurred in connection with such Asset Sale,
including (i) income taxes reasonably estimated to be actually payable
within two years of the date of such Asset Sale as a result of any gain
recognized in connection with such Asset Sale and (ii) payment of the
outstanding principal amount of, premium or penalty, if any, and
interest on any Indebtedness that is secured by a Lien on the stock or
assets in question and that prior to the Lien securing the AXELs on
such stock or assets and is required to be repaid under the terms
thereof as a result of such Asset Sale.
"NET INCOME" means, with respect to any Person, the net income
(loss) of such Person, determined in accordance with GAAP and before
any reduction in respect of Preferred Stock dividends, excluding,
however, (i) any gain (but not loss), together with any related
provision for taxes on such gain (but not loss) realized in connection
with (a) any Asset Sale (including, without limitation, dispositions
pursuant to sale and leaseback transactions) or (b) the disposition of
any securities by such Person or any of its Restricted Subsidiaries or
the extinguishment of any Indebtedness of such Person or any of its
Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain
(but not loss) together with any related provision for taxes on such
extraordinary or nonrecurring gain (but not loss).
"NET INSURANCE/CONDEMNATION PROCEEDS" means any Cash payments
or proceeds received by Company or any of its Subsidiaries (i) under
any business interruption or casualty insurance policy in respect of a
covered loss thereunder or (ii) as a result of the taking of any assets
of Company or any of its Subsidiaries by any Person pursuant to the
power of eminent domain, condemnation or otherwise, or pursuant to a
sale of any such assets to a purchaser with such power under threat of
such a taking, in each case net of (x) any actual and reasonable
documented costs incurred by Company or any of its Subsidiaries in
connection with the adjustment or settlement of any claims of Company
or such Subsidiary in respect thereof and (y) any amounts required to
be applied to the repayment of any Indebtedness secured by a Lien which
is prior to any Liens of the Lenders on the asset or assets that are
subject to the taking, condemnation or casualty but excluding, however,
in each case any payments or proceeds relating to assets having a value
of $500,000 or less in any single transaction or related series of
transactions.
"NEW LENDER" means any Lender which is a party to this
Agreement on the Restatement Effective Date which is not an Existing
Lender.
"NEWCO" means Confetti Acquisition, Inc., a Delaware
corporation existing prior to the Merger.
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"NON-CONSENTING LENDER" has the meaning assigned to that term
in subsection 2.10.
"NON-RECOURSE DEBT" means Indebtedness of any Unrestricted
Subsidiary (i) as to which neither Company nor any of its Restricted
Subsidiaries (a) provides credit support of any kind (including any
undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable (as a guarantor or
otherwise), or (c) constitutes the lender; and (ii) no default with
respect to which (including any rights that the holders thereof may
have to take enforcement action against an Unrestricted Subsidiary)
would permit (upon notice, lapse of time or both) any holder of any
other Indebtedness of Company or any of its Restricted Subsidiaries to
declare a default on such other Indebtedness of Company or any of its
Restricted Subsidiaries or cause the payment thereof to be accelerated
or payable prior to its stated maturity; and (iii) as to which the
lenders, have been notified in writing that they will not have any
recourse to the stock or assets of Company or any of its Restricted
Subsidiaries.
"NOTICE OF BORROWING" means a notice substantially in the form
of Exhibit I annexed hereto delivered by Company to Administrative
Agent pursuant to subsection 2.1B with respect to a proposed borrowing
of the Additional AXELs.
"NOTICE OF CONVERSION/CONTINUATION" means a notice
substantially in the form of Exhibit II annexed hereto delivered by
Company to Administrative Agent pursuant to subsection 2.2D with
respect to a proposed conversion or continuation of the applicable
basis for determining the interest rate with respect to the AXELs
specified therein.
"OBLIGATIONS" means all obligations of every nature of each
Loan Party from time to time owed to Agents, Lenders or their
respective Affiliates or any of them under the AXEL Loan Documents,
whether for principal, interest, fees, expenses, indemnification or
otherwise.
"OFFICERS' CERTIFICATE" means, as applied to any corporation,
a certificate executed on behalf of such corporation by its chairman of
the board (if an officer) or its president or one of its vice
presidents and by its chief financial officer or its treasurer;
provided that every Officers' Certificate with respect to the
compliance with a condition precedent to the making of any AXELs
hereunder shall include (i) a statement that the officer or officers
making or giving such Officers' Certificate have read such condition
and any definitions or other provisions contained in this Agreement
relating thereto, (ii) a statement that, in the opinion of the signers,
they have made or have caused to be made such examination or
investigation as is necessary to enable them to express an informed
opinion as to whether or not such condition has been complied with, and
(iii) a statement as to whether, in the opinion of the signers, such
condition has been complied with.
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"PBGC" means the Pension Benefit Guaranty Corporation or any
successor thereto.
"PENSION PLAN" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to Section 412 of the Internal
Revenue Code or Section 302 of ERISA.
"PERMITTED ENCUMBRANCES" means the following types of Liens
(excluding any such Lien imposed pursuant to Section 401(a)(29) or
412(n) of the Internal Revenue Code or by ERISA, any such Lien relating
to or imposed in connection with any Environmental Claim, and any such
Lien expressly prohibited by any applicable terms of any of the
Collateral Documents):
(i) Liens for taxes, assessments or governmental
charges or claims the payment of which is not, at the time,
required by subsection 5.3;
(ii) statutory Liens of landlords, statutory Liens of
banks and rights of set-off, statutory Liens of carriers,
warehousemen, mechanics, repairmen, workmen and materialmen,
and other Liens imposed by law, in each case incurred in the
ordinary course of business (a) for amounts not yet overdue or
(b) for amounts that are overdue and that (in the case of any
such amounts overdue for a period in excess of 15 days) are
being contested in good faith by appropriate proceedings, so
long as (1) such reserves or other appropriate provisions, if
any, as shall be required by GAAP shall have been made for any
such contested amounts, and (2) in the case of a Lien with
respect to any portion of the Collateral, such contest
proceedings conclusively operate to stay the sale of any
portion of the Collateral on account of such Lien;
(iii) Liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation,
unemployment insurance and other types of social security, or
to secure the performance of tenders, statutory obligations,
surety and appeal bonds, bids, leases, government contracts,
trade contracts, performance and return-of-money bonds and
other similar obligations (exclusive of obligations for the
payment of borrowed money), so long as no foreclosure, sale or
similar proceedings have been commenced with respect to any
portion of the Collateral on account thereof;
(iv) any attachment or judgment Lien not constituting
an Event of Default under subsection 7.6;
(v) leases or subleases granted to third parties in
accordance with any applicable terms of the Collateral
Documents and not interfering in any material respect with the
ordinary conduct of the business of Company or any
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of its Subsidiaries or resulting in a material diminution in
the value of any Collateral as security for the Obligations;
(vi) easements, rights-of-way, covenants, conditions,
restrictions, encroachments, and other defects or
irregularities in title, in each case which do not and will
not interfere in any material respect with the ordinary
conduct of the business of Company or any of its Subsidiaries
or result in a material diminution in the value of any
Collateral as security for the Obligations;
(vii) any (a) interest or title of a lessor or
sublessor under any lease permitted hereunder, (b) restriction
or encumbrance that the interest or title of such lessor or
sublessor may be subject to, or (c) subordination of the
interest of the lessee or sublessee under such lease to any
restriction or encumbrance referred to in the preceding clause
(b), so long as the holder of such restriction or encumbrance
agrees to recognize the rights of such lessee or sublessee
under such lease;
(viii) Liens arising from filing UCC financing
statements relating solely to leases permitted by this
Agreement;
(ix) Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of
customs duties in connection with the importation of goods;
(x) any zoning or similar law or right reserved to or
vested in any governmental office or agency to control or
regulate the use of any real property;
(xi) Liens securing obligations (other than
obligations representing Indebtedness for borrowed money)
under operating, reciprocal easement or similar agreements
entered into in the ordinary course of business of Company and
its Subsidiaries; and
(xii) licenses of patents, trademarks and other
intellectual property rights granted by Company or any of its
Subsidiaries in the ordinary course of business and not
interfering in any material respect with the ordinary conduct
of the business of Company or such Subsidiary.
" PERMITTED HOLDERS" means Goldman, Sachs & Co.. and any of
its Affiliates.
"PERMITTED INVESTMENTS" means (i) any Investment in Company or
in a Restricted Subsidiary of Company (including the acquisition of any
Equity Interest in a Restricted Subsidiary); (ii) any investment in
cash and Cash Equivalents; (iii)
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any Investment by the Company or any Restricted Subsidiary of Company
in a Person, if as a result of such Investment (a) such Person becomes
a Restricted Subsidiary of Company or (b) such Person, in one
transaction or a series of related transactions, is merged,
consolidated or amalgamated with or into, or transfer or conveys
substantially all of its assets to, or is liquidated into, Company or a
Restricted Subsidiary of Company; (iv) any Investment made as a result
of the receipt of consideration not constituting cash or Cash
Equivalents from an Asset Sale; (v) any Investment existing on the date
of the Indenture; (vi) any Investment by Restricted Subsidiaries in
other Restricted Subsidiaries and Investments by Subsidiaries that are
not Restricted Subsidiaries in other Subsidiaries that are not
Restricted Subsidiaries; (vii) advances to employees not in excess of
$2,500,000 outstanding at any one time; (viii) any Investment acquired
by Company or any of its Restricted Subsidiaries (a) in exchange for
any other Investment or accounts receivable held by Company or any such
Restricted Subsidiary in connection with or as a result of a
bankruptcy, workout, reorganization or recapitalization of the issuer
of such other Investment or accounts receivable or (b) as a result of a
foreclosure by Company or any of its Restricted Subsidiaries with
respect to any secured Investment or other transfer of title with
respect to any secured Investment in default; (ix) Hedging Obligations;
(x) loans and advances to officers, directors and employees for
business-related travel expenses, moving expenses and other similar
expenses, in each case incurred in the ordinary course of business;
(xi) Investments the payment for which consists exclusively of Equity
Interests (exclusive of Disqualified Stock) of Company; and (xii)
additional Investments having an aggregate fair market value, taken
together with all other Investments made pursuant to this clause (xii)
that are at that time outstanding, not to exceed $15,000,000 plus 5% of
the increase in Total Assets of Company since the Closing Date at the
time of such Investment (with the fair market value of each Investment
being measured at the time made and without giving effect to subsequent
changes in value).
"PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of
Company or any of its Restricted Subsidiaries issued in exchange for,
or the net proceeds of which are used to extend, refinance, renew,
replace, defease or refund other Indebtedness of Company or any of its
Restricted Subsidiaries in whole or in part; provided that: (i) the
principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the principal amount (or
accreted value, if applicable) of the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded (plus the amount of
reasonable expenses incurred in connection therewith); (ii) such
Permitted Refinancing Indebtedness has a final maturity date on or
later than the final maturity date of, and has a Weighted Average Life
to Maturity equal to or greater than the Weighted Average Life to
Maturity of, the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; (iii) if the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded is
subordinated in right of payment to the Obligations, such Permitted
Refinancing Indebtedness has a final maturity date later
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than the final maturity date of the AXELs, and is subordinated in right
of payment to the AXELs, on terms at least as favorable to the Lenders
as those contained in the documentation governing the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded;
and (iv) such Indebtedness is incurred either by Company or by the
Restricted Subsidiary who is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded.
"PERSON" means and includes natural persons, corporations,
limited partnerships, general partnerships, limited liability
companies, limited liability partnerships, joint stock companies, Joint
Ventures, associations, companies, trusts, banks, trust companies, land
trusts, business trusts or other organizations, whether or not legal
entities, and governments (whether federal, state or local, domestic or
foreign, and including political subdivisions thereof) and agencies or
other administrative or regulatory bodies thereof.
"PLEDGED COLLATERAL" means, collectively, the "Pledged
Collateral" as defined in the Company Pledge Agreement and the
Subsidiary Pledge Agreements.
"POTENTIAL EVENT OF DEFAULT" means a condition or event that,
after notice or lapse of time or both, would constitute an Event of
Default.
"PREFERRED STOCK" means any Equity Interest with preferential
right of payment of dividends or upon liquidation, dissolution, or
winding up.
"PRIME RATE" means the rate that Fleet announces from time to
time as its prime lending rate, as in effect from time to time. The
Prime Rate is a reference rate and does not necessarily represent the
lowest or best rate actually charged to any customer. Fleet or any
other Lender may make commercial loans or other loans at rates of
interest at, above or below the Prime Rate.
"PRO RATA SHARE" means (i) with respect to all payments,
computations and other matters relating to the Additional AXEL
Commitment of any Lender on or before the Restatement Effective Date,
the percentage obtained by dividing (x) the Additional AXEL Commitment
of that Lender by (y) the aggregate Additional AXEL Commitments of all
Lenders, (ii) with respect to all payments, computations and other
matters relating to the Existing AXELs of any Lender on or before the
Restatement Effective Date (including any such matters with respect to
any interest, fees and other amounts accrued or otherwise payable to
Existing Lenders in respect of the period from the Closing Date through
and including the Restatement Effective Date), the percentage obtained
by dividing (x) the Existing AXELs of that Lender by (y) the aggregate
Existing AXELs of all Lenders, and (iii) with respect to all other
purposes (including voting rights under subsection 9.6, whether prior
to or after the Restatement Effective Date), the percentage obtained by
dividing (x) the AXEL Exposure of that Lender by (y) the aggregate AXEL
Exposure of all Lenders.
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"PTO" means the United States Patent and Trademark Office or
any successor or substitute office in which filings are necessary or,
in the opinion of Administrative Agent, desirable in order to create or
perfect Liens on any IP Collateral.
"QUALIFIED PUBLIC OFFERING" means any sale of capital stock of
Company to the public pursuant to an offering registered under the
Securities Act of 1933 pursuant to which Company receives cash proceeds
(net of all fees and expenses (including underwriting discounts and
legal, investment banking and accounting and other professional fees)
and disbursements actually incurred in connection therewith) in an
amount not less than $50,000,000.
"REAL PROPERTY ASSET" means, at any time of determination, any
interest then owned by any Loan Party in any real property.
"RECAPITALIZATION AGREEMENT" means that certain Agreement and
Plan of Merger between Company and Newco dated as of August 10, 1997,
in the form delivered to Arranger, Administrative Agent and Lenders
prior to their execution of the Existing AXEL Credit Agreement and as
such agreement may hereafter be amended from time to time.
"RECAPITALIZATION CONSIDERATION" means payments required under
Article II of the Recapitalization Agreement.
"RECAPITALIZATION DOCUMENTS" means the Recapitalization
Agreement and all other instruments or documents relating to the
Recapitalization Agreement.
"RECAPITALIZATION FINANCING REQUIREMENTS" means the aggregate
of all amounts necessary (i) to pay the Recapitalization Consideration,
(ii) to refinance all Indebtedness outstanding under the Existing
Amscan Credit Agreements, and (iii) to pay Recapitalization Transaction
Costs.
"RECAPITALIZATION TRANSACTION COSTS" means the fees, costs and
expenses payable by Company in connection with the transactions
contemplated by the Loan Documents and the Related Agreements, in each
case as in effect on the Closing Date.
"RECORDED LEASEHOLD INTEREST" means a Leasehold Property with
respect to which a Record Document (as hereinafter defined) has been
recorded in all places necessary or desirable, in Collateral Agent's
reasonable judgment, to give constructive notice of such Leasehold
Property to third-party purchasers and encumbrancers of the affected
real property. For purposes of this definition, the term "RECORD
DOCUMENT" means, with respect to any Leasehold Property, (a) the lease
evidencing such Leasehold Property or a memorandum thereof, executed
and
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acknowledged by the owner of the affected real property, as lessor, or
(b) if such Leasehold Property was acquired or subleased from the
holder of a Recorded Leasehold Interest, the applicable assignment or
sublease document, executed and acknowledged by such holder, in each
case in form sufficient to give such constructive notice upon
recordation and otherwise in form reasonably satisfactory to
Administrative Agent.
"REFUNDING CAPITAL STOCK" has the meaning assigned to that
term in subsection 6.3A.
"REGISTER" has the meaning assigned to that term in subsection
2.1D.
"REGULATION D" means Regulation D of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
"RELATED AGREEMENTS" means, collectively, the Certificate of
Merger, the Stockholders Agreement, the Employment Agreements, the Tax
Indemnification Agreement, the Recapitalization Agreement and the
Senior Subordinated Note Indenture.
"RELATED FUND" means, with respect to any Lender that is a
fund that invests in commercial loans, any other fund that invests in
commercial loans and is managed by the same investment advisor as such
Lender or by any Affiliate of such investment advisor.
"RELATED PARTIES" means any Person controlled by the Permitted
Holders, including any partnership of which any of the Permitted
Holders or their Affiliates is a general partner.
"RELEASE" means any release, spill, emission, leaking,
pumping, pouring, injection, escaping, deposit, disposal, discharge,
dispersal, dumping, leaching or migration of Hazardous Materials into
the indoor or outdoor environment (including the abandonment or
disposal of any barrels, containers or other closed receptacles
containing any Hazardous Materials), including the movement of any
Hazardous Materials through the air, soil, surface water or
groundwater.
"REQUIREMENT OF LAW" means, with respect to any Person, (i)
the certificate or articles of incorporation, by-laws and other
organizational or governing documents of such Person, (ii) any law,
treaty, rule, regulation or determination of an arbitrator, court or
other governmental authority binding on such Person or any of its
property, or (iii) any franchise, license, lease, permit, certificate,
authorization, qualification, easement, right of way, or right of
approval binding on such Person or any of its property.
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"REQUIRED PREPAYMENT DATE" has the meaning assigned to that
term in subsection 2.4.
"REQUISITE LENDERS" means Lenders having or holding more than
50% of the sum of the aggregate AXEL Exposure of all Lenders.
"RESTATEMENT EFFECTIVE DATE" means the date on or before
October 31, 1998 on which (i) the conditions precedent to the
effectiveness of this Agreement set forth in subsection 3.1 shall be
satisfied and (ii) the conditions precedent set forth in subsection 3.2
shall be satisfied or waived in accordance with the terms hereof.
"RESTRICTED INVESTMENT" means an Investment other than a
Permitted Investment.
"RESTRICTED PAYMENTS" has the meaning assigned to that team in
subsection 6.3.
"RESTRICTED SUBSIDIARY" of a Person means any Subsidiary of a
Person that is not (i) an Unrestricted Subsidiary or (ii) a direct or
indirect Subsidiary of an Unrestricted Subsidiary; provided, however,
that upon the occurrence of any Unrestricted Subsidiary ceasing to be
an Unrestricted Subsidiary, such Subsidiary shall be included in the
definition of Restricted Subsidiary.
"RETIRED CAPITAL STOCK" has the meaning assigned to that term
in subsection 6.3A.
"REVOLVING CREDIT AGREEMENT" has the meaning assigned to that
term in the recitals to this Agreement.
"REVOLVING CREDIT FACILITY AGENT" has the meaning assigned to
that term in the recitals of this Agreement.
"REVOLVING CREDIT LENDER" means a lender under the Revolving
Credit Agreement holding an outstanding Revolving Loan or having a
Revolving Loan Commitment (as defined in the Revolving Credit
Agreement), and "Revolving Lenders" means any such lenders or lenders
under the Revolving Credit Agreement, collectively.
"REVOLVING LOANS" means the loans made by a Revolving Credit
Lender to Company pursuant to the Revolving Credit Agreement.
"REVOLVING LOAN DOCUMENTS" means the Revolving Credit
Agreement, the Revolving Loan Notes, the Subsidiary Guaranty, the
Collateral Documents and the Intercreditor Agreement.
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"SECURED PARTIES" has the meaning assigned to that term in the
introduction to this Agreement.
"SECURITIES" means any stock, shares, partnership interests,
voting trust certificates, certificates of interest or participation in
any profit-sharing agreement or arrangement, options, warrants, bonds,
debentures, notes, or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise, or in general any
instruments commonly known as "securities" or any certificates of
interest, shares or participations in temporary or interim certificates
for the purchase or acquisition of, or any right to subscribe to,
purchase or acquire, any of the foregoing; provided that "Securities"
shall not include any earnout agreement or obligation or any employee
bonus or other incentive compensation plan or agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended
from time to time, and any successor statute.
"SENIOR SUBORDINATED NOTE INDENTURE" means the indenture
pursuant to which the Senior Subordinated Notes are issued, as such
indenture may hereafter be amended from time to time.
"SENIOR SUBORDINATED GUARANTEES" means the Guarantees by the
guarantors of the Obligations under the Senior Subordinated Notes
Indenture and the Senior Subordinated Notes;
"SENIOR SUBORDINATED NOTES" means the $110,000,000 in
aggregate principal amount of 9.875% Senior Subordinated Notes due 2007
of Company issued pursuant to the Senior Subordinated Note Indenture.
"SOLVENT" means, with respect to any Person, that as of the
date of determination both (A) (i) the then fair saleable value of the
property of such Person is (y) greater than the total amount of
liabilities (including contingent liabilities) of such Person and (z)
not less than the amount that will be required to pay the probable
liabilities on such Person's then existing debts as they become
absolute and matured considering all financing alternatives and
potential asset sales reasonably available to such Person; (ii) such
Person's capital is not unreasonably small in relation to its business
or any contemplated or undertaken transaction; and (iii) such Person
does not intend to incur, or believe (nor should it reasonably believe)
that it will incur, debts beyond its ability to pay such debts as they
become due; and (B) such Person is "solvent" within the meaning given
that term and similar terms under applicable laws relating to
fraudulent transfers and conveyances. For purposes of this definition,
the amount of any contingent liability at any time shall be computed as
the amount that, in light of all of the facts and circumstances
existing at such time, represents the amount that can reasonably be
expected to become an actual or matured liability.
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"STATED MATURITY" means, with respect to any installment of
interest or principal on, or any other payments with respect to, any
series of Indebtedness, the date on which such payment of interest or
principal or other payment (including any sinking fund payment) was
scheduled or required to be paid, but shall not include any
acceleration of such payment or any contingent obligations to repay,
redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"STOCKHOLDERS AGREEMENT" means the Stockholders Agreement
dated as of December 19, 1997 by and among Company, GSII, the Estate of
John A. Svenningsen and certain other individuals and as such agreement
may heretofore have been or hereafter may be amended from time to time
thereafter.
"SUBORDINATED INDEBTEDNESS" means any Indebtedness of the
Company or any of its Restricted Subsidiaries which is expressly by its
terms subordinated in right of payment to the Obligations.
"SUBSIDIARY" means, with respect to any Person, (i) any
corporation, association or other business entity of which more than
50% of the total voting power of shares of Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by such Person or one or
more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the
managing general partner of which is such Person or a Subsidiary of
such Person or (b) the only general partners of which are such Person
or one or more Subsidiaries of such Person (or any combination
thereof).
"SUBSIDIARY GUARANTOR" means, collectively, (i) any Subsidiary
of Company that executed and delivered a counterpart of the Subsidiary
Guaranty on the Closing Date or from time to time thereafter pursuant
to subsection 5.8 of the Existing AXEL Credit Agreement and (ii) any
Subsidiary of Company that executes and delivers a counterpart of the
Subsidiary Guaranty on the Restatement Effective Date or from time to
time thereafter pursuant to subsection 5.8.
"SUBSIDIARY GUARANTY" means the Subsidiary Guaranty (i)
heretofore executed and delivered by certain existing Domestic
Subsidiaries of Company on the Closing Date or from time to time
thereafter in accordance with subsection 5.8 of the Existing AXEL
Credit Agreement and (ii) to be executed and delivered by additional
Domestic Subsidiaries of Company on the Restatement Effective Date and
from time to time thereafter in accordance with subsection 5.8,
substantially in the form of Exhibit XII annexed hereto, as such
Subsidiary Guaranty may heretofore have been or hereafter may be
amended, supplemented or otherwise modified from time to time.
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"SUBSIDIARY PATENT AND TRADEMARK SECURITY AGREEMENT" means (i)
each Subsidiary Patent and Trademark Security Agreement executed and
delivered by any Subsidiary Guarantor on the Restatement Effective Date
and (ii) each Subsidiary Patent and Trademark Security Agreement
executed and delivered by any additional Subsidiary Guarantor from time
to time thereafter in accordance with subsection 5.8, in each case
substantially in the form of Exhibit XVII annexed hereto, as such
Subsidiary Patent and Trademark Security Agreement may hereafter be
amended, supplemented or otherwise modified from time to time, and
"SUBSIDIARY PATENT AND TRADEMARK SECURITY AGREEMENTS" means all such
Subsidiary Patent and Trademark Security Agreements, collectively.
"SUBSIDIARY PLEDGE AGREEMENT" means (i) each Subsidiary Pledge
Agreement executed and delivered by an existing Subsidiary Guarantor on
the Closing Date or from time to time thereafter in accordance with
subsection 5.8 of the Existing AXEL Credit Agreement, (ii) each
Subsidiary Pledge Agreement executed and delivered by a new Subsidiary
Guarantor on the Restatement Effective Date, and (iii) each Subsidiary
Pledge Agreement executed and delivered by any additional Subsidiary
Guarantor from time to time thereafter in accordance with subsection
5.8, in each case substantially in the form of Exhibit XIII annexed to
the Existing AXEL Credit Agreement or Exhibit XIII annexed hereto, as
the case may be, as such Subsidiary Pledge Agreement may heretofore
have been or hereafter may be amended, supplemented or otherwise
modified from time to time, and "SUBSIDIARY PLEDGE AGREEMENTS" means
all such Subsidiary Pledge Agreements, collectively.
"SUBSIDIARY SECURITY AGREEMENT" means (i) each Subsidiary
Security Agreement executed and delivered by an existing Subsidiary
Guarantor on the Closing Date or from time to time thereafter in
accordance with subsection 5.8 of the Existing AXEL Credit Agreement,
(ii) each Subsidiary Security Agreement executed and delivered by a new
Subsidiary Guarantor on the Restatement Effective Date, and (iii) each
Subsidiary Security Agreement executed and delivered by any additional
Subsidiary Guarantor from time to time thereafter in accordance with
subsection 5.8, in each case substantially in the form of Exhibit XIV
annexed hereto, as such Subsidiary Security Agreement may heretofore
have been or hereafter may be amended, supplemented or otherwise
modified from time to time, and "SUBSIDIARY SECURITY AGREEMENTS" means
all such Subsidiary Security Agreements, collectively.
"SUPPLEMENTAL COLLATERAL AGENT" has the meaning assigned to
that term in subsection 8.1B.
"SYNDICATION AGENT" has the meaning assigned to that term in
the introduction to this Agreement.
"TAX" or "TAXES" means any present or future tax, levy,
impost, duty, charge, fee, deduction or withholding of any nature and
whatever called, by whomsoever, on
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whomsoever and wherever imposed, levied, collected, withheld or
assessed; provided that "TAX ON THE OVERALL NET INCOME" of a Person
shall be construed as a reference to a tax imposed by the jurisdiction
in which that Person is organized or in which that Person's principal
office (and/or, in the case of a Lender, its lending office) is located
or in which that Person (and/or, in the case of a Lender, its lending
office) is deemed to be doing business on all or part of the net
income, profits or gains (whether worldwide, or only insofar as such
income, profits or gains are considered to arise in or to relate to a
particular jurisdiction, or otherwise) of that Person (and/or, in the
case of a Lender, its lending office).
"TAX INDEMNIFICATION AGREEMENT" means the Tax Indemnification
Agreement dated as of August 10, 1997 by and between Company, Christine
Svenningsen and the Estate of John A. Svenningsen and as such agreement
may heretofore have been or hereafter may be amended from time to time
thereafter.
"TERMINATED LENDER" has the meaning assigned to that term in
subsection 2.10.
"TITLE COMPANY" means, collectively one or more title
insurance companies that are members of ALTA and are reasonably
satisfactory to Arranger and Administrative Agent.
"TOTAL ASSETS" means, with respect to any Person, the total
consolidated assets of such Person and its Restricted Subsidiaries, as
shown on the most recent balance sheet of such Person.
"UCC" means the Uniform Commercial Code (or any similar or
equivalent legislation) as in effect in any applicable jurisdiction.
"UNREINVESTED ASSET SALE PROCEEDS" means that portion, if any,
of any Net Asset Sale Proceeds that shall not have been reinvested by
Company and its Subsidiaries in the business of Company and its
Subsidiaries within six months after the date of receipt by Company or
any of its Subsidiaries of such Net Asset Sale Proceeds or in the case
of Net Asset Sale Proceeds from the sale of the Chester, New York,
Montreal, Quebec or Melbourne, Australia properties, (i) that portion
of Net Asset Sale Proceeds that is not subject to a binding agreement
with a third party to reinvest such net Asset Sale Proceeds entered
into within six months after the date of receipt of such Net Asset Sale
Proceeds or (ii) if subject to such a binding agreement, that portion
of such Net Asset Sale Proceeds that shall not have been reinvested
within nine months of such binding agreement, such reinvestment to be
evidenced by an Officers' Certificate, satisfactory in form and
substance to Administrative Agent, delivered by Company to
Administrative Agent prior to the expiration of such six-month period
and demonstrating in reasonable detail the reinvestment of such Net
Asset Sale Proceeds as aforesaid.
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"UNRESTRICTED SUBSIDIARY" means any Subsidiary (other than the
Subsidiary Guarantors or any successor to any of them) that is
designated by the Board of Directors as an Unrestricted Subsidiary
pursuant to a Board Resolution, but only to the extent that such
Subsidiary: (a) has no Indebtedness other than Non-Recourse Debt; (b)
is not party to any agreement, contract, arrangement or understanding
with Company or any Restricted Subsidiary of Company unless the terms
of any such agreement, contract, arrangement or understanding are no
less favorable to Company or such Restricted Subsidiary than those that
might be obtained at the time from Persons who are not Affiliates of
Company; (c) is a Person with respect to which neither Company nor any
of its Restricted Subsidiaries has any direct or indirect obligation
(x) to subscribe for additional Equity Interests or (y) to maintain or
preserve such Person's financial condition or to cause such Person to
achieve any specified levels of operating results; (d) has not
guaranteed and does not otherwise directly or indirectly provide credit
support for any Indebtedness of Company or any of its Restricted
Subsidiaries; and (e) has at least one director on its board of
directors that is not a director or executive officer of Company or any
of its Restricted Subsidiaries and has at least one executive officer
that is not a director or executive officer of Company or any of its
Restricted Subsidiaries. If, at any time, any Unrestricted Subsidiary
would fail to meet the foregoing requirements as an Unrestricted
Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary
for purposes hereof and, so long as such Unrestricted Subsidiary
remains a Subsidiary, any Indebtedness of such Subsidiary shall be
deemed to be incurred by a Restricted Subsidiary of Company as of such
date (and, if such Indebtedness is not permitted to be incurred as of
such date under the covenant described under subsection 6.1, Company
shall be in default of such covenant). The Board of Directors of
Company may at any time designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided that such designation shall be deemed
to be an incurrence of Indebtedness by a Restricted Subsidiary of
Company of any outstanding Indebtedness of such Unrestricted Subsidiary
and such designation shall only be permitted if (i) such Indebtedness
is permitted under the covenant described under subsection 6.1, and
(ii) no Potential Event of Default or Event of Default would be in
existence following such designation.
"VOTING STOCK" means, with respect to any Person, any class or
series of capital stock of such Person that is ordinarily entitled to
vote in the election of directors thereof at a meeting of stockholders
called for such purpose, without the occurrence of any additional event
or contingency.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i)
the sum of the products obtained by multiplying (a) the amount of each
then remaining installment, sinking fund, serial maturity or other
required payments of principal, including payment at final maturity, in
respect thereof, by (b) the number of years (calculated
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to the nearest one-twelfth) that will elapse between such date and the
making of such payment, by (ii) the then outstanding principal amount
of such Indebtedness.
"WHOLLY OWNED RESTRICTED SUBSIDIARY" is any Wholly Owned
Subsidiary that is a Restricted Subsidiary.
"WHOLLY OWNED SUBSIDIARY" of any Person means a Subsidiary of
such Person all of the outstanding Capital Stock or other ownership
interests of which (other than directors' qualifying shares) shall at
the time be owned by such person or by one or more Wholly Owned
Subsidiaries of such Person or by such Person and one or more Wholly
Owned Subsidiaries of such Person.
1.2 ACCOUNTING TERMS;UTILIZATION OF GAAP FOR PURPOSES OF CALCULATIONS UNDER
AGREEMENT
Except as otherwise expressly provided in this Agreement, all
accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP. Financial statements and other information
required to be delivered by Company to Lenders pursuant to clauses (i), (ii),
(iii) and (xiii) of subsection 5.1 shall be prepared in accordance with GAAP as
in effect at the time of such preparation (and delivered together with the
reconciliation statements provided for in subsection 5.1(v)). Calculations in
connection with the definitions, covenants and other provisions of this
Agreement shall utilize accounting principles and policies in conformity with
those used to prepare the financial statements referred to in subsection 4.3.
1.3 OTHER DEFINITIONAL PROVISIONS AND RULES OF CONSTRUCTION.
A. Any of the terms defined herein may, unless the context otherwise
requires, be used in the singular or the plural, depending on the reference.
B. References to "Sections" and "subsections" shall be to Sections and
subsections, respectively, of this Agreement unless otherwise specifically
provided.
C. The use herein of the word "include" or "including", when following
any general statement, term or matter, shall not be construed to limit such
statement, term or matter to the specific items or matters set forth immediately
following such word or to similar items or matters, whether or not nonlimiting
language (such as "without limitation" or "but not limited to" or words of
similar import) is used with reference thereto, but rather shall be deemed to
refer to all other items or matters that fall within the broadest possible scope
of such general statement, term or matter.
D. Any term incorporated herein from the Revolving Credit Agreement (as
amended, supplemented or otherwise modified from time to time) shall continue to
have the meaning assigned thereto whether or not the Revolving Agreement is
still in effect.
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SECTION 2.
AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 COMMITMENTS; MAKING OF LOANS; THE REGISTER; NOTES.
A. COMMITMENTS. Subject to the terms and conditions of this Agreement
and in reliance upon the representations and warranties of Company herein set
forth, each Lender hereby severally agrees to maintain or to lend to Company, as
the case may be, the AXELs described in subsections 2.1A(i) and 2.1A(ii) for the
purposes identified in subsection 2.5A.
(i) Existing AXELs. Company acknowledges and confirms that
each Existing Lender holds Existing AXELs outstanding as of the
Restatement Effective Date. Company hereby represents, warrants,
agrees, covenants and (1) reaffirms that it has no defense, set off,
claim or counterclaim against any Agent or Lender in regard to its
Obligations in respect of such Existing AXELs and (2) reaffirms its
obligation to pay such Existing AXELs in accordance with the terms and
conditions of this Agreement and the other Loan Documents. Based on the
foregoing, (A) Company and each Lender agree that the Existing AXELs
and any amounts owed (whether or not presently due and payable, and
including all interest accrued to the Restatement Effective Date (which
shall be payable on the next Interest Payment Date with respect to the
AXELs to which such interest relates)) by Company to Lenders thereunder
or in respect thereof shall, as of the Restatement Effective Date, be
converted to, maintained as, and owed by Company under and in respect
of AXELS hereunder. Amounts repaid or prepaid in respect of Existing
AXELs may not be reborrowed.
(ii) Additional AXELs. Each Lender severally agrees to lend to
Company on the Restatement Effective Date an amount not exceeding its
Pro Rata Share of the aggregate amount of the Additional AXEL
Commitments, to be used for the purposes identified in subsection 2.5.
The amount of each Lender's Additional AXEL Commitment is set forth
opposite its name on Schedule 2.1 annexed hereto and the aggregate
amount of the Additional AXEL Commitment is $40,000,000; provided that
the Additional AXEL Commitments of Lenders shall be adjusted to give
effect to any assignments of the Additional AXEL Commitments pursuant
to subsection 9.1B. Each Lender's Additional AXEL Commitment shall
expire immediately and without further action on October 31, 1998 if
the Additional AXELs are not funded on or before that date. Company may
make only one borrowing under the Additional AXEL Commitments. Amounts
borrowed under this subsection 2.1A(ii) and subsequently repaid or
prepaid may not be reborrowed.
B. BORROWING MECHANICS. Additional AXELs that are Eurodollar Rate AXELs
with a particular Interest Period shall be in an aggregate minimum amount of
$1,000,000 and integral multiples of $100,000 in excess of that amount. When
Company desires that
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Lenders make Additional AXELs it shall deliver to Administrative Agent a Notice
of Borrowing no later than 10:00 A.M. (New York City time) at least three
Business Days in advance of the proposed Restatement Effective Date (in the case
of Additional AXELs that are Eurodollar Rate AXELs) or at least one Business Day
in advance of the proposed Closing Date (in the case of Additional AXELs that
are Base Rate AXELs). The Notice of Borrowing shall specify (i) the proposed
Restatement Effective Date (which shall be a Business Day), (ii) the amount
requested, (iii) whether such Additional AXELS shall be Base Rate AXELs or
Eurodollar Rate AXELs and (iv) in the case of any Additional AXELS requested to
be made as Eurodollar Rate AXELs, the initial Interest Period requested
therefor. Additional AXELs may be continued as or converted into Base Rate AXELs
and Eurodollar Rate AXELs in the manner provided in subsection 2.2D. In lieu of
delivering the above-described Notice of Borrowing, Company may give
Administrative Agent telephonic notice by the required time of any proposed
borrowing under this subsection 2.1B; provided that such notice shall be
promptly confirmed in writing by delivery of a Notice of Borrowing to
Administrative Agent on or before the Restatement Effective Date.
Neither Administrative Agent nor any Lender shall incur any liability
to Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to borrow on behalf of Company or
for otherwise acting in good faith under this subsection 2.1B, and upon funding
of Additional AXELs by Lenders in accordance with this Agreement pursuant to any
such telephonic notice Company shall have effected Additional AXELs hereunder.
Company shall notify Administrative Agent prior to the Restatement
Effective Date in the event that any of the matters to which Company is required
to certify in the Notice of Borrowing is no longer true and correct as of the
Restatement Effective Date, and the acceptance by Company of the proceeds of any
Additional AXELs shall constitute a re-certification by Company, as of the
Restatement Effective Date, as to the matters to which Company is required to
certify in the applicable Notice of Borrowing.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a
Notice of Borrowing for Additional AXELs that are Eurodollar Rate AXELs (or
telephonic notice in lieu thereof) shall be irrevocable on and after the related
Interest Rate Determination Date, and Company shall be bound to make a borrowing
in accordance therewith.
C. DISBURSEMENT OF FUNDS. All Additional AXELs under this Agreement
shall be made by Lenders simultaneously and proportionately to their respective
Pro Rata Shares, it being understood that no Lender shall be responsible for any
default by any other Lender in that other Lender's obligation to make an
Additional AXEL requested hereunder nor shall the Additional AXEL Commitment of
any Lender to make the Additional AXEL requested be increased or decreased as a
result of a default by any other Lender in that other Lender's obligation to
make an Additional AXEL requested hereunder. Promptly
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after receipt by Administrative Agent of a Notice of Borrowing pursuant to
subsection 2.1B (or telephonic notice in lieu thereof), Administrative Agent
shall notify each Lender of the proposed borrowing. Each Lender shall make the
amount of its Additional AXEL available to Administrative Agent not later than
12:00 Noon (New York City time) on the Restatement Effective Date, in same day
funds in Dollars, at the Funding and Payment Office. Upon satisfaction or waiver
of the conditions precedent specified in subsections 3.1 and 3.2, Administrative
Agent shall make the proceeds of such Additional AXELs available to Company on
the Restatement Effective Date by causing an amount of same day funds in Dollars
equal to the proceeds of all such Additional AXELs received by Administrative
Agent from Lenders to be credited to the account of Company at the Funding and
Payment Office.
Unless Administrative Agent shall have been notified by any Lender
prior to the Restatement Effective Date that such Lender does not intend to make
available to Administrative Agent the amount of such Lender's Additional AXEL
requested on the Restatement Effective Date, Administrative Agent may assume
that such Lender has made such amount available to Administrative Agent on the
Restatement Effective Date and Administrative Agent may, in its sole discretion,
but shall not be obligated to, make available to Company a corresponding amount
on the Restatement Effective Date. If such corresponding amount is not in fact
made available to Administrative Agent by such Lender, Administrative Agent
shall be entitled to recover such corresponding amount on demand from such
Lender together with interest thereon, for each day from the Restatement
Effective Date until the date such amount is paid to Administrative Agent, at
the customary rate set by Administrative Agent for the correction of errors
among banks for three Business Days and thereafter at the Base Rate. If such
Lender does not pay such corresponding amount forthwith upon Administrative
Agent's demand therefor, Administrative Agent shall promptly notify Company and
Company shall immediately pay such corresponding amount to Administrative Agent
together with interest thereon, for each day from the Closing Date until the
date such amount is paid to Administrative Agent, at the rate payable under this
Agreement for Base Rate AXELs. Nothing in this subsection 2.1C shall be deemed
to relieve any Lender from its obligation to fulfill its Additional AXEL
Commitments hereunder or to prejudice any rights that Company may have against
any Lender as a result of any default by such Lender hereunder.
D. THE REGISTER.
(i) Administrative Agent shall maintain, at its address
referred to in subsection 9.8, a register for the recordation of the
names and addresses of Lenders and the Additional AXEL Commitments and
AXELs of each Lender from time to time (the "REGISTER"). The Register
shall be available for inspection by Company or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
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(ii) Administrative Agent shall record in the Register the
Additional AXEL Commitment and the AXELs from time to time of each
Lender and each repayment or prepayment in respect of the principal
amount of the AXEL of each Lender. Any such recordation shall be
conclusive and binding on Company and each Lender, absent manifest
error; provided that failure to make any such recordation, or any error
in such recordation, shall not affect any Lender's Additional AXEL
Commitment or Company's Obligations in respect of any AXELs.
(iii) Each Lender shall record on its internal records
(including the AXEL Notes held by such Lender) the amount of the AXELs
made by it and each payment in respect thereof. Any such recordation
shall be conclusive and binding on Company, absent manifest error;
provided that failure to make any such recordation, or any error in
such recordation, shall not affect any Lender's Additional AXEL
Commitment or Company's Obligations in respect of any AXELs and
provided, further that in the event of any inconsistency between the
Register and any Lender's records, the recordations in the Register
shall govern.
(iv) Company, Administrative Agent and Lenders shall deem and
treat the Persons listed as Lenders in the Register as the holders and
owners of the corresponding Additional AXEL Commitments and AXELs
listed therein for all purposes hereof, and no assignment or transfer
of any such Additional AXEL Commitment or AXEL shall be effective, in
each case unless and until an Assignment Agreement effecting the
assignment or transfer thereof shall have been accepted by
Administrative Agent and recorded in the Register as provided in
subsection 9.1B(ii). Prior to such recordation, all amounts owed with
respect to the applicable Additional AXEL Commitment or AXEL shall be
owed to the Lender listed in the Register as the owner thereof, and any
request, authority or consent of any Person who, at the time of making
such request or giving such authority or consent, is listed in the
Register as a Lender shall be conclusive and binding on any subsequent
holder, assignee or transferee of the corresponding Additional AXEL
Commitments or AXELs.
(v) Company hereby designates Fleet to serve as Company's
agent solely for purposes of maintaining the Register as provided in
this subsection 2.1D, and Company hereby agrees that, to the extent
Fleet serves in such capacity, Fleet and its officers, directors,
employees, agents and affiliates shall constitute Indemnitees for all
purposes under subsection 9.3.
E. ADDITIONAL AXEL NOTES. Company shall execute and deliver on the
Restatement Effective Date to each Lender having an Additional AXEL Commitment
(or to Administrative Agent for that Lender) an Additional AXEL Note
substantially in the form of Exhibit III annexed hereto to evidence that
Lender's Additional AXEL, in the principal amount of that Lender's Additional
AXEL and with other appropriate insertions.
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2.2 INTEREST ON THE LOANS.
A. RATE OF INTEREST. Subject to the provisions of subsections 2.6 and
2.7, each AXEL shall bear interest on the unpaid principal amount thereof from
the date made through maturity (whether by acceleration or otherwise) at a rate
determined by reference to the Base Rate or the Adjusted Eurodollar Rate. The
applicable basis for determining the rate of interest with respect to any AXEL
shall be selected by Company initially at the time a Notice of Borrowing is
given with respect to such AXEL pursuant to subsection 2.1B. The basis for
determining the interest rate with respect to any AXEL may be changed from time
to time pursuant to subsection 2.2D. If on any day an AXEL is outstanding with
respect to which notice has not been delivered to Administrative Agent in
accordance with the terms of this Agreement specifying the applicable basis for
determining the rate of interest, then for that day that AXEL shall bear
interest determined by reference to the Base Rate.
Subject to the provisions of subsections 2.2E and 2.7, the AXELs shall
bear interest through maturity as follows:
(i) if a Base Rate AXEL, then at the sum of the Base Rate plus
1-3/8% per annum; or
(ii) if a Eurodollar Rate AXEL, then at the sum of the
Adjusted Eurodollar Rate plus 2-3/8% per annum.
B. INTEREST PERIODS. In connection with each Eurodollar Rate AXEL,
Company may, pursuant to the applicable Notice of Borrowing or Notice of
Conversion/Continuation, as the case may be, select an interest period (each an
"INTEREST PERIOD") to be applicable to such Eurodollar Rate AXEL, which Interest
Period shall be, at Company's option, either a one-, two-, three-or six-month
period; provided that:
(i) the initial Interest Period for any Eurodollar Rate AXEL
shall commence (i) on the Closing Date in respect of such Eurodollar
Rate AXEL, in the case of an Existing AXEL initially made as a
Eurodollar Rate AXEL, (ii) on the Restatement Effective Date in respect
of such Eurodollar Rate AXEL, in the case of an Additional AXEL
initially made as a Eurodollar Rate AXEL, or (iii) on the date
specified in the applicable Notice of Conversion/Continuation, in the
case of an AXEL converted to a Eurodollar Rate AXEL;
(ii) in the case of immediately successive Interest Periods
applicable to a Eurodollar Rate AXEL continued as such pursuant to a
Notice of Conversion/Continuation, each successive Interest Period
shall commence on the day on which the next preceding Interest Period
expires;
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(iii) if an Interest Period would otherwise expire on a day
that is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day; provided that, if any Interest Period
would otherwise expire on a day that is not a Business Day but is a day
of the month after which no further Business Day occurs in such month,
such Interest Period shall expire on the next preceding Business Day;
(iv) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall, subject to clause (v) of this subsection 2.2B, end on
the last Business Day of a calendar month;
(v) no Interest Period with respect to any portion of the
AXELs shall extend beyond December 31, 2004;
(vi) no Interest Period with respect to any portion of the
AXELs shall extend beyond a date on which Company is required to make a
scheduled payment of principal of the AXELs unless the sum of (a) the
aggregate principal amount of AXELs that are Base Rate AXELs plus (b)
the aggregate principal amount of AXELs that are Eurodollar Rate AXELs
with Interest Periods expiring on or before such date equals or exceeds
the principal amount required to be paid on the AXELs on such date;
(vii) there shall be no more than seven (7) Interest Periods
outstanding at any time under this Agreement and the Revolving Credit
Agreement; and
(viii) in the event Company fails to specify an Interest
Period for any Eurodollar Rate AXEL in the applicable Notice of
Borrowing or Notice of Conversion/Continuation, Company shall be deemed
to have selected an Interest Period of one month.
C. INTEREST PAYMENTS. Subject to the provisions of subsection 2.2E,
interest on each AXEL shall be payable in arrears on and to each Interest
Payment Date applicable to that AXEL, upon any prepayment of that AXEL (to the
extent accrued on the amount being prepaid) and at maturity (including final
maturity).
D. CONVERSION OR CONTINUATION. Subject to the provisions of subsection
2.6, Company shall have the option (i) to convert at any time all or any part of
its outstanding AXELs equal to $1,000,000 and integral multiples of $100,000 in
excess of that amount from Base Rate AXELs to Eurodollar Rate AXELs or (ii) to
convert at any time all or any part of its outstanding AXELs equal to $100,000
and integral multiples of $100,000 in excess of that amount from Eurodollar Rate
AXELs to Base Rate AXELs upon the expiration of any Interest Period applicable
to a Eurodollar Rate AXEL, to continue all or any portion of such Eurodollar
Rate AXEL equal to $1,000,000 and integral multiples of $100,000 in excess of
that amount as a Eurodollar Rate AXEL; provided, however, that a Eurodollar Rate
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AXEL may only be converted into a Base Rate AXEL on the expiration date of an
Interest Period applicable thereto.
Company shall deliver a Notice of Conversion/Continuation to
Administrative Agent no later than 10:00 A.M. (New York City time) at least one
Business Day in advance of the proposed conversion date (in the case of a
conversion to a Base Rate AXEL) and at least three Business Days in advance of
the proposed conversion/continuation date (in the case of a conversion to, or a
continuation of, a Eurodollar Rate AXEL). A Notice of Conversion/Continuation
shall specify (i) the proposed conversion/continuation date (which shall be a
Business Day), (ii) the amount to be converted/continued, (iii) the nature of
the proposed conversion/continuation, (iv) in the case of a conversion to, or a
continuation of, a Eurodollar Rate AXEL, the requested Interest Period, and (v)
in the case of a conversion to, or a continuation of, a Eurodollar Rate AXEL,
that no Potential Event of Default or Event of Default has occurred and is
continuing. In lieu of delivering the above-described Notice of
Conversion/Continuation, Company may give Administrative Agent telephonic notice
by the required time of any proposed conversion/continuation under this
subsection 2.2D; provided that such notice shall be promptly confirmed in
writing by delivery of a Notice of Conversion/Continuation to Administrative
Agent on or before the proposed conversion/continuation date. Upon receipt of
written or telephonic notice of any proposed conversion/continuation under this
subsection 2.2D, Administrative Agent shall promptly transmit such notice by
telefacsimile or telephone to each Lender.
Neither Administrative Agent nor any Lender shall incur any liability
to Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to act on behalf of Company or for
otherwise acting in good faith under this subsection 2.2D, and upon conversion
or continuation of the applicable basis for determining the interest rate with
respect to any AXELs in accordance with this Agreement pursuant to any such
telephonic notice Company shall have effected a conversion or continuation, as
the case may be, hereunder.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a
Notice of Conversion/Continuation for conversion to, or continuation of, a
Eurodollar Rate AXEL (or telephonic notice in lieu thereof) shall be irrevocable
on and after the related Interest Rate Determination Date, and Company shall be
bound to effect a conversion or continuation in accordance therewith.
E. DEFAULT RATE. Upon the occurrence and during the continuation of any
Event of Default, the outstanding principal amount of all AXELs and, to the
extent permitted by applicable law, any interest payments thereon not paid when
due and any fees and other amounts then due and payable hereunder, shall
thereafter bear interest (including post-petition interest in any proceeding
under the Bankruptcy Code or other applicable bankruptcy laws) payable upon
demand at a rate that is 2% per annum in excess of the interest rate otherwise
payable under this Agreement with respect to the applicable AXELs
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(or, in the case of any such fees and other amounts, at a rate which is 2% per
annum in excess of the interest rate otherwise payable under this Agreement for
Base Rate AXELs); provided that, in the case of Eurodollar Rate AXELs, upon the
expiration of the Interest Period in effect at the time any such increase in
interest rate is effective such Eurodollar Rate AXELs shall thereupon become
Base Rate AXELs and shall thereafter bear interest payable upon demand at a rate
which is 2% per annum in excess of the interest rate otherwise payable under
this Agreement for Base Rate AXELs. Payment or acceptance of the increased rates
of interest provided for in this subsection 2.2E is not a permitted alternative
to timely payment and shall not constitute a waiver of any Event of Default or
otherwise prejudice or limit any rights or remedies of Administrative Agent or
any Lender.
F. COMPUTATION OF INTEREST. Interest on the AXELs shall be computed on
the basis of a 360-day year, in each case for the actual number of days elapsed
in the period during which it accrues. In computing interest on any AXEL, the
date of the making of such AXEL or the first day of an Interest Period
applicable to such AXEL or, with respect to a Base Rate AXEL being converted
from a Eurodollar Rate AXEL, the date of conversion of such Eurodollar Rate AXEL
to such Base Rate AXEL, as the case may be, shall be included, and the date of
payment of such AXEL or the expiration date of an Interest Period applicable to
such AXEL or, with respect to a Base Rate AXEL being converted to a Eurodollar
Rate AXEL, the date of conversion of such Base Rate AXEL to such Eurodollar Rate
AXEL, as the case may be, shall be excluded; provided that if a AXEL is repaid
on the same day on which it is made, one day's interest shall be paid on that
AXEL.
2.3 FEES.
Company agrees to pay to Arranger and Administrative Agent (including
fees payable to Administrative Agent for distribution to Existing Lenders) such
fees in the amounts and at the times separately agreed upon between Company,
Arranger and Administrative Agent.
2.4 REPAYMENTS, PREPAYMENTS; GENERAL PROVISIONS REGARDING PAYMENTS;
APPLICATION OF PROCEEDS OF COLLATERAL AND PAYMENTS UNDER SUBSIDIARY
GUARANTY.
A. SCHEDULED PAYMENTS OF AXELS. Company shall make principal payments
on the AXELs in installments on the dates and in the amounts set forth below (it
being understood and agreed that the amounts set forth below reflect the
borrowing of the full amount of Additional AXELs on the Restatement Effective
Date):
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======================================= ==========================
SCHEDULED
PAYMENT REPAYMENT
DATE OF AXELS
======================================= ==========================
September 30, 1998 $393,002
======================================= ==========================
December 31, 1998 $393,002
======================================= ==========================
March 31, 1999 $393,002
======================================= ==========================
June 30, 1999 $393,002
======================================= ==========================
September 30, 1999 $393,002
======================================= ==========================
December 31, 1999 $393,002
======================================= ==========================
March 31, 2000 $393,002
======================================= ==========================
June 30, 2000 $393,002
======================================= ==========================
September 30, 2000 $393,002
======================================= ==========================
December 31, 2000 $393,002
======================================= ==========================
March 31, 2001 $393,002
======================================= ==========================
June 30, 2001 $393,002
======================================= ==========================
September 30, 2001 $393,002
======================================= ==========================
December 31, 2001 $393,002
======================================= ==========================
March 31, 2002 $393,002
======================================= ==========================
June 30, 2002 $393,002
======================================= ==========================
September 30, 2002 $393,002
======================================= ==========================
December 31, 2002 $393,002
======================================= ==========================
March 31, 2003 $6,717,992
======================================= ==========================
June 30, 2003 $6,717,992
======================================= ==========================
September 30, 2003 $18,667,620
======================================= ==========================
December 31, 2003 $18,667,620
======================================= ==========================
March 31, 2004 $18,667,620
======================================= ==========================
June 30, 2004 $18,667,620
======================================= ==========================
September 30, 2004 $30,617,250
======================================= ==========================
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======================================= ==========================
SCHEDULED
PAYMENT REPAYMENT
DATE OF AXELS
======================================= ==========================
December 31, 2004 $30,617,250
======================================= ==========================
TOTAL $157,000,000
======================================= ==========================
; provided that the scheduled installments of principal of the AXELs
set forth above shall be reduced in connection with any voluntary or
mandatory prepayments of the AXELs in accordance with subsection
2.4B(iii); and provided, further that the AXELs and all other amounts
owed hereunder with respect to the AXELs shall be paid in full no later
than December 31, 2004, and the final installment payable by Company in
respect of the AXELs on such date shall be in an amount, if such amount
is different from that specified above, sufficient to repay all amounts
owing by Company under this Agreement with respect to the AXELs.
B. PREPAYMENTS.
(i) Voluntary Prepayments.
(a) Notice of Prepayment. Company may, upon not less
than one Business Day's prior written or telephonic notice, in
the case of Base Rate AXELs, and three Business Days' prior
written or telephonic notice, in the case of Eurodollar Rate
AXELs, in each case given to Administrative Agent by 12:00
Noon (New York City time) on the date required and, if given
by telephone, promptly confirmed in writing to Administrative
Agent (which original written or telephonic notice
Administrative Agent will promptly transmit by telefacsimile
or telephone to each Lender), at any time and from time to
time prepay any AXELs on any Business Day in whole or in part
in an aggregate minimum amount of $1,000,000 and integral
multiples of $500,000 in excess of that amount. Notice of
prepayment having been given as aforesaid, the principal
amount of the AXELs specified in such notice shall become due
and payable on the prepayment date specified therein. Any such
voluntary prepayment shall be applied as specified in
subsection 2.4B(iii).
(b) Prepayment Fees. If any portion of the AXELs is
prepaid (1) pursuant to clause (a) of subsection 2.4B(i) or
(2) pursuant to clause (a), (b) or (c) of subsection 2.4B(ii),
in each case on or prior to the date that is 18 months after
the Closing Date, Company shall pay to Administrative Agent,
for distribution to the holders of the AXELs so prepaid in
accordance with their Pro Rata Shares, a fee equal to (x) 1.5%
of the principal amount of AXELs so prepaid during the period
commencing on the Closing Date and
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ending on the day prior to the first anniversary of the
Closing Date and (y) 0.75% of the principal amount of AXELs so
prepaid during the period commencing on the first anniversary
of the Closing Date and ending 18 months after the Closing
Date.
(ii) Mandatory Prepayments. The AXELs shall be prepaid in the
amounts and under the circumstances set forth below, all such
prepayments to be applied as set forth below or as more specifically
provided in subsection 2.4B(iii):
(a) Prepayments From Unreinvested Asset Sale
Proceeds. No later than the first Business Day following the
date on which any Net Asset Sale Proceeds become Unreinvested
Asset Sale Proceeds, Company shall prepay the AXELs in an
aggregate amount equal to such Unreinvested Asset Sale
Proceeds; provided, further that, with respect to an Asset
Sale of any asset owned by a Foreign Subsidiary, the
Unreinvested Asset Sale Proceeds in respect thereof shall be
applied (i) first, to the extent such Unreinvested Net Asset
Sale Proceeds may be repatriated to the United States without
in the reasonable judgment of the Company resulting in a
material tax liability to Company in relation to the amount of
proceeds to be repatriated, to prepay the AXELs as set forth
above in this subsection 2.4B(ii)(a), (ii) second, to the
extent of any remaining portion of such Unreinvested Asset
Sale Proceeds, to finance the general corporate purposes of
such Foreign Subsidiary so long as the aggregate of all such
amounts so applied by all Foreign Subsidiaries with respect to
Asset Sales consummated after the Closing Date does not exceed
$5,000,000, and (iii) third, to the extent of any remaining
portion of such Unreinvested Asset Sale Proceeds, to prepay
the AXELs as set forth above in this subsection 2.4B(ii)(a).
Concurrently with any determination by Company that any
portion of any Unreinvested Asset Sale Proceeds of any Foreign
Subsidiary will be applied as described in clause (ii) of the
immediately preceding proviso, Company shall deliver to Agent
an Officers' Certificate (w) certifying that such Unreinvested
Asset Sale Proceeds cannot be repatriated to the United States
without resulting in a material tax liability to Company and
the reasons therefor, (y) specifying the amount of
Unreinvested Asset Sale Proceeds to be retained by such
Foreign Subsidiary as described in said clause (ii) and the
cumulative aggregate amount of all such Unreinvested Asset
Sale Proceeds so retained by all Foreign Subsidiaries since
the date of this Agreement and (z) demonstrating the
derivation of the Unreinvested Asset Sale Proceeds of the
correlative Asset Sale from the gross sales price thereof.
(b) Prepayments from Net Insurance/Condemnation
Proceeds. No later than the first Business Day following the
date of receipt by Administrative Agent or by Company or any
of its Subsidiaries of any Net Insurance/Condemnation Proceeds
that are required to be applied to prepay
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the AXELs pursuant to the provisions of subsection 5.4C,
Company shall prepay the AXELs in an aggregate amount equal to
the amount of such Net Insurance/Condemnation Proceeds.
(c) Prepayments Due to Issuance of Debt or Equity
Securities. On the date of receipt by Company or any of its
Subsidiaries of the Cash proceeds (any such proceeds, net of
underwriting discounts and commissions and other reasonable
costs and expenses associated therewith, including reasonable
legal fees and expenses, being "NET SECURITIES PROCEEDS") from
the issuance of any debt (other than debt permitted by Section
6.1) or equity Securities of Company or any of its
Subsidiaries to any Person other than Company or any of its
Subsidiaries (and excluding any private issuances of Company
Common Stock after the Closing Date to the extent such funds
would not be required to prepay any other Indebtedness of the
Company and its Subsidiaries) after the Closing Date, Company
shall prepay the AXELs in an aggregate amount equal to such
Net Securities Proceeds.
(d) Prepayments and Reductions from Consolidated
Excess Cash Flow. In the event that there shall be
Consolidated Excess Cash Flow for any Fiscal Year (commencing
with Fiscal Year 1998), Company shall, no later than 90 days
after the end of such Fiscal Year, prepay the AXELs in an
aggregate amount equal to 75% of such Consolidated Excess Cash
Flow; provided that for any Fiscal Year in which the
Consolidated Leverage Ratio as of the end of any such Fiscal
Year is less than 3.75:1, such percentage of Consolidated
Excess Cash Flow applied to prepay the AXELs shall be reduced
to 50%.
(e) Calculations of Net Proceeds Amounts; Additional
Prepayments Based on Subsequent Calculations. Concurrently
with any prepayment of the AXELs pursuant to subsections
2.4B(ii)(a)-(e), Company shall deliver to Administrative Agent
an Officers' Certificate demonstrating the calculation of the
amount (the "NET PROCEEDS AMOUNT") of the applicable
Unreinvested Asset Sale Proceeds or Net Insurance/Condemnation
Proceeds, the applicable Net Securities Proceeds (as such term
is defined in subsection 2.4B(ii)(c)) or the applicable
Consolidated Excess Cash Flow, as the case may be, that gave
rise to such prepayment. In the event that Company shall
subsequently determine that the actual Net Proceeds Amount was
greater than the amount set forth in such Officers'
Certificate, Company shall promptly make an additional
prepayment of the AXELs in an amount equal to the amount of
such excess, and Company shall concurrently therewith deliver
to Administrative Agent an Officers' Certificate demonstrating
the derivation of the additional Net Proceeds Amount resulting
in such excess.
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(iii) Application of Prepayments.
(a) Application of Voluntary Prepayments. Any
voluntary prepayments pursuant to subsection 2.4B(i) shall be
applied to reduce the scheduled installments of principal of
the AXELs set forth in subsections 2.4A on a pro rata basis.
(b) Application of Mandatory Prepayments. Any
mandatory prepayments of the AXELs pursuant to subsection
2.4B(ii) shall be applied to reduce the scheduled installments
of principal of the AXELs set forth in subsection 2.4A on a
pro rata basis.
(c) Application of Prepayments to Base Rate AXELs and
Eurodollar Rate AXELs. Subject to the requirement that any
prepayment of the AXELs shall be applied to the outstanding
AXELs of all Lenders in proportion to their respective Pro
Rata Shares, any such prepayment of the AXELs shall be applied
first to Base Rate AXELs to the full extent thereof before
application to Eurodollar Rate AXELs, in a manner which
minimizes the amount of any payments required to be made by
Company pursuant to subsection 2.6D.
C. GENERAL PROVISIONS REGARDING PAYMENTS.
(i) Manner and Time of Payment. All payments by Company of
principal, interest, fees and other Obligations hereunder and under the
AXEL Notes shall be made in Dollars in same day funds, without defense,
setoff or counterclaim, free of any restriction or condition, and
delivered to Administrative Agent not later than 12:00 Noon (New York
City time) on the date due at the Funding and Payment Office for the
account of Lenders; funds received by Administrative Agent after that
time on such due date shall be deemed to have been paid by Company on
the next succeeding Business Day. Company hereby authorizes
Administrative Agent to charge its accounts with Administrative Agent
in order to cause timely payment to be made to Administrative Agent of
all principal, interest, fees and expenses due hereunder (subject to
sufficient funds being available in its accounts for that purpose).
(ii) Application of Payments to Principal and Interest. All
payments in respect of the principal amount of any AXEL shall include
payment of accrued interest on the principal amount being repaid or
prepaid, and all such payments shall be applied to the payment of
interest before application to principal.
(iii) Apportionment of Payments. Aggregate principal and
interest payments shall be apportioned among all outstanding AXELs to
which such payments relate, in each case proportionately to Lenders'
respective Pro Rata Shares.
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Administrative Agent shall promptly distribute to each Lender, at its
primary address set forth below its name on the appropriate signature
page hereof or at such other address as such Lender may request, its
Pro Rata Share of all such payments received by Administrative Agent.
Notwithstanding the foregoing provisions of this subsection 2.4C(iii),
if, pursuant to the provisions of subsection 2.6C, any Notice of
Conversion/Continuation is withdrawn as to any Affected Lender or if
any Affected Lender makes Base Rate AXELs in lieu of its Pro Rata Share
of any Eurodollar Rate AXELs, Administrative Agent shall give effect
thereto in apportioning payments received thereafter.
(iv) Payments on Business Days. Whenever any payment to be
made hereunder shall be stated to be due on a day that is not a
Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the
computation of the payment of interest hereunder or of the commitment
fees hereunder, as the case may be.
(v) Notation of Payment. Each AXEL Lender agrees that before
disposing of any AXEL Note held by it, or any part thereof (other than
by granting participations therein), that Lender will make a notation
thereon of all AXELs evidenced by that AXEL Note and all principal
payments previously made thereon and of the date to which interest
thereon has been paid; provided that the failure to make (or any error
in the making of) a notation of any AXEL made under such AXEL Note
shall not limit or otherwise affect the obligations of Company
hereunder or under such AXEL Note with respect to any AXEL or any
payments of principal or interest on such AXEL Note.
2.5 USE OF PROCEEDS.
A. AXELS. The proceeds of the Existing AXELs were applied by Company to
fund a portion of the Recapitalization Financing Requirements. The proceeds of
the Additional AXELs, together with (i) cash on hand at the Company and (ii)
proceeds of incremental borrowings under the Revolving Credit Agreement in an
amount up to $23,500,000 plus the excess, if any, of $15,000,000 over the amount
of cash on hand at the Company on the Restatement Effective Date, will be used
to pay the cash portion of the consideration for the Anagram Shares and to pay
Anagram Transaction Costs.
B. MARGIN REGULATIONS. No portion of the proceeds of any borrowing
under this Agreement shall be used by Company or any of its Subsidiaries in any
manner that might cause the borrowing or the application of such proceeds to
violate Regulation G, Regulation U, Regulation T or Regulation X of the Board of
Governors of the Federal Reserve System or any other regulation of such Board or
to violate the Exchange Act, in each case as in effect on the date or dates of
such borrowing and such use of proceeds.
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2.6 SPECIAL PROVISIONS GOVERNING EURODOLLAR RATE AXELS.
Notwithstanding any other provision of this Agreement to the contrary,
the following provisions shall govern with respect to Eurodollar Rate AXELs as
to the matters covered:
A. DETERMINATION OF APPLICABLE INTEREST RATE. As soon as practicable
after 10:00 A.M. (New York City time) on each Interest Rate Determination Date,
Administrative Agent shall determine (which determination shall, absent manifest
error, be final, conclusive and binding upon all parties) the interest rate that
shall apply to the Eurodollar Rate AXELs for which an interest rate is then
being determined for the applicable Interest Period and shall promptly give
notice thereof (in writing or by telephone confirmed in writing) to Company and
each Lender.
B. INABILITY TO DETERMINE APPLICABLE INTEREST RATE. In the event that
Administrative Agent shall have determined (which determination shall be final
and conclusive and binding upon all parties hereto), on any Interest Rate
Determination Date with respect to any Eurodollar Rate AXELs, that by reason of
circumstances affecting the Eurodollar market adequate and fair means do not
exist for ascertaining the interest rate applicable to such Eurodollar Rate
AXELs on the basis provided for in the definition of Adjusted Eurodollar Rate,
Administrative Agent shall on such date give notice (by telefacsimile or by
telephone confirmed in writing) to Company and each Lender of such
determination, whereupon (i) no AXELs may be converted to Eurodollar Rate AXELs
until such time as Administrative Agent notifies Company and Lenders that the
circumstances giving rise to such notice no longer exist and (ii) any Notice of
Conversion/Continuation given by Company with respect to the AXELs in respect of
which such determination was made shall be deemed to be rescinded by Company.
C. ILLEGALITY OR IMPRACTICABILITY OF EURODOLLAR RATE AXELS. In the
event that on any date any Lender shall have determined (which determination
shall be final and conclusive and binding upon all parties hereto but shall be
made only after consultation with Company and Administrative Agent) that the
making, maintaining or continuation of its Eurodollar Rate AXELs (i) has become
unlawful as a result of compliance by such Lender in good faith with any law,
treaty, governmental rule, regulation, guideline or order (or would conflict
with any such treaty, governmental rule, regulation, guideline or order not
having the force of law even though the failure to comply therewith would not be
unlawful) or (ii) has become impracticable, or would cause such Lender material
hardship, as a result of contingencies occurring after the date of this
Agreement which materially and adversely affect the Eurodollar market or the
position of such Lender in that market, then, and in any such event, such Lender
shall be an "AFFECTED LENDER" and it shall on that day give notice (by
telefacsimile or by telephone confirmed in writing) to Company and
Administrative Agent of such determination (which notice Administrative Agent
shall promptly transmit to each other Lender). Thereafter (a) the obligation of
the Affected Lender to convert AXELs to Eurodollar Rate AXELs shall be suspended
until such notice shall be withdrawn by the Affected Lender, (b) to the extent
such determination by the Affected Lender relates to a
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Eurodollar Rate AXEL then being requested by Company pursuant to a Notice of
Conversion/Continuation, the Affected Lender shall convert such AXEL to a Base
Rate AXEL, (c) the Affected Lender's obligation to maintain its outstanding
Eurodollar Rate AXELs (the "AFFECTED LOANS") shall be terminated at the earlier
to occur of the expiration of the Interest Period then in effect with respect to
the Affected Loans or when required by law, and (d) the Affected Loans shall
automatically convert into Base Rate AXELs on the date of such termination.
Notwithstanding the foregoing, to the extent a determination by an Affected
Lender as described above relates to a Eurodollar Rate AXEL then being requested
by Company pursuant to a Notice of Conversion/Continuation, Company shall have
the option, subject to the provisions of subsection 2.6D, to rescind such Notice
of Conversion/Continuation as to all Lenders by giving notice (by telefacsimile
or by telephone confirmed in writing) to Administrative Agent of such rescission
on the date on which the Affected Lender gives notice of its determination as
described above (which notice of rescission Administrative Agent shall promptly
transmit to each other Lender). Except as provided in the immediately preceding
sentence, nothing in this subsection 2.6C shall affect the obligation of any
Lender other than an Affected Lender to maintain AXELs as, or to convert AXELs
to, Eurodollar Rate AXELs in accordance with the terms of this Agreement.
D. COMPENSATION FOR BREAKAGE OR NON-COMMENCEMENT OF INTEREST PERIODS.
Company shall compensate each Lender, upon written request by that Lender (which
request shall set forth the basis for requesting such amounts), for all
reasonable losses, expenses and liabilities (including any interest paid by that
Lender to lenders of funds borrowed by it to make or carry its Eurodollar Rate
AXELs and any loss, expense or liability sustained by that Lender in connection
with the liquidation or re-employment of such funds) which that Lender may
sustain: (i) if for any reason (other than a default by that Lender) a borrowing
of any Eurodollar Rate AXEL does not occur on a date specified therefor in a
Notice of Borrowing or a telephonic request for borrowing, or a conversion to or
continuation of any Eurodollar Rate AXEL does not occur on a date specified
therefor in a Notice of Conversion/Continuation or a telephonic request for
conversion or continuation, (ii) if any prepayment (including any prepayment
pursuant to subsection 2.4B(i)) or other principal payment or any conversion of
any of its Eurodollar Rate AXELs occurs on a date prior to the last day of an
Interest Period applicable to that AXEL, (iii) if any prepayment of any of its
Eurodollar Rate AXELs is not made on any date specified in a notice of
prepayment given by Company, or (iv) as a consequence of any other default by
Company in the repayment of its Eurodollar Rate AXELs when required by the terms
of this Agreement.
E. BOOKING OF EURODOLLAR RATE AXELS. Any Lender may make, carry or
transfer Eurodollar Rate AXELs at, to, or for the account of any of its branch
offices or the office of an Affiliate of that Lender.
F. ASSUMPTIONS CONCERNING FUNDING OF EURODOLLAR RATE AXELS. Calculation
of all amounts payable to a Lender under this subsection 2.6 and under
subsection 2.7A shall be made as though that Lender had actually funded each of
its relevant Eurodollar Rate
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AXELs through the purchase of a Eurodollar deposit bearing interest at the rate
obtained pursuant to clause (i) of the definition of Adjusted Eurodollar Rate in
an amount equal to the amount of such Eurodollar Rate AXEL and having a maturity
comparable to the relevant Interest Period and through the transfer of such
Eurodollar deposit from an offshore office of that Lender to a domestic office
of that Lender in the United States of America; provided, however, that each
Lender may fund each of its Eurodollar Rate AXELs in any manner it sees fit and
the foregoing assumptions shall be utilized only for the purposes of calculating
amounts payable under this subsection 2.6 and under subsection 2.7A.
G. EURODOLLAR RATE AXELS AFTER DEFAULT. After the occurrence of and
during the continuation of a Potential Event of Default or an Event of Default,
(i) Company may not elect to have an AXEL be maintained as, or converted to, a
Eurodollar Rate AXEL after the expiration of any Interest Period then in effect
for that AXEL and (ii) subject to the provisions of subsection 2.6D, any Notice
of Conversion/Continuation given by Company with respect to a requested
conversion/continuation that has not yet occurred shall be deemed to be
rescinded by Company.
2.7 INCREASED COSTS; TAXES; CAPITAL ADEQUACY.
A. COMPENSATION FOR INCREASED COSTS AND TAXES. Subject to the
provisions of subsection 2.7B (which shall be controlling with respect to the
matters covered thereby and to the extent a Lender is not entitled to payment
under the terms of Section 2.7B, it shall not be entitled to such payment
pursuant to this subsection 2.7A), in the event that any Lender shall determine
(which determination shall, absent manifest error, be final and conclusive and
binding upon all parties hereto) that any law, treaty or governmental rule,
regulation or order, or any change therein or in the interpretation,
administration or application thereof (including the introduction of any new
law, treaty or governmental rule, regulation or order), or any determination of
a court or governmental authority, in each case that becomes effective after the
Closing Date (in the case of an Existing Lender) or the Restatement Effective
Date (in the case of each New Lender), or compliance by such Lender with any
guideline, request or directive issued or made after the Closing Date by any
central bank or other governmental or quasi-governmental authority (whether or
not having the force of law):
(i) subjects such Lender (or its applicable lending office) to
any additional Tax (other than any Tax on the overall net income of
such Lender) with respect to this Agreement or any of its obligations
hereunder or any payments to such Lender (or its applicable lending
office) of principal, interest, fees or any other amount payable
hereunder;
(ii) imposes, modifies or holds applicable any reserve
(including any marginal, emergency, supplemental, special or other
reserve), special deposit, compulsory loan, FDIC insurance or similar
requirement against assets held by, or
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deposits or other liabilities in or for the account of, or advances or
loans by, or other credit extended by, or any other acquisition of
funds by, any office of such Lender (other than any such reserve or
other requirements with respect to Eurodollar Rate AXELs that are
reflected in the definition of Adjusted Eurodollar Rate); or
(iii) imposes any other condition (other than with respect to
a Tax matter) on or affecting such Lender (or its applicable lending
office) or its obligations hereunder or the Eurodollar market;
and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining AXELs hereunder or to reduce any amount
received or receivable by such Lender (or its applicable lending office) with
respect thereto by an amount considered by the Lender to be material; then, in
any such case, Company shall promptly pay to such Lender, upon receipt of the
statement referred to in the next sentence, such additional amount or amounts
(in the form of an increased rate of, or a different method of calculating,
interest or otherwise as such Lender in its sole discretion shall determine) as
may be necessary to compensate such Lender for any such increased cost or
reduction in amounts received or receivable hereunder. Such Lender shall deliver
to Company (with a copy to Administrative Agent) a written statement, setting
forth in reasonable detail the basis for calculating the additional amounts owed
to such Lender under this subsection 2.7A, which statement shall be conclusive
and binding upon all parties hereto absent manifest error.
B. WITHHOLDING OF TAXES.
(i) Payments to Be Free and Clear. All sums payable by Company
under this Agreement and the other AXEL Loan Documents shall (except to
the extent required by law) be paid free and clear of, and without any
deduction or withholding on account of, any Tax (other than a Tax on
the overall net income of any Lender) imposed, levied, collected,
withheld or assessed by or within the United States of America or any
political subdivision in or of the United States of America or any
other jurisdiction from or to which a payment is made by or on behalf
of Company or by any federation or organization of which the United
States of America or any such jurisdiction is a member at the time of
payment.
(ii) Grossing-up of Payments. If Company or any other Person
is required by law to make any deduction or withholding on account of
any such Tax from any sum paid or payable by Company to Administrative
Agent or any Lender under any of the AXEL Loan Documents:
(a) Company shall notify Administrative Agent of any
such requirement or any change in any such requirement as soon
as Company becomes aware of it;
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(b) Company shall pay any such Tax before the date on
which penalties attach thereto, such payment to be made (if
the liability to pay is imposed on Company) for its own
account or (if that liability is imposed on Administrative
Agent or such Lender, as the case may be) on behalf of and in
the name of Administrative Agent or such Lender;
(c) the sum payable by Company in respect of which
the relevant deduction, withholding or payment is required
shall be increased to the extent necessary to ensure that,
after the making of that deduction, withholding or payment,
Administrative Agent or such Lender, as the case may be,
receives on the due date a net sum equal to what it would have
received had no such deduction, withholding or payment been
required or made; and
(d) within 30 days after paying any sum from which it
is required by law to make any deduction or withholding, and
within 30 days after the due date of payment of any Tax which
it is required by clause (b) above to pay, Company shall
deliver to Administrative Agent evidence satisfactory to the
other affected parties of such deduction, withholding or
payment and of the remittance thereof to the relevant taxing
or other authority;
provided that no such additional amount shall be required to be paid to
any Lender under clause (c) above except to the extent that any change
after the Closing Date (in the case of each Existing Lender), after the
Restatement Effective Date (in the case of each New Lender) or after
the date of the Assignment Agreement pursuant to which such Lender
became a Lender (in the case of each other Lender) in any such
requirement for a deduction, withholding or payment as is mentioned
therein shall result in an increase in the rate of such deduction,
withholding or payment from that in effect on the Closing Date, at the
date of this Agreement or at the date of such Assignment Agreement, as
the case may be, in respect of payments to such Lender.
(iii) Evidence of Exemption from U.S. Withholding Tax.
(a) Each Lender that is organized under the laws of
any jurisdiction other than the United States or any state or
other political subdivision thereof (for purposes of this
subsection 2.7B(iii), a "NON-US LENDER") shall deliver to
Administrative Agent for transmission to Company, on or prior
to the Closing Date (in the case of each Existing Lender), on
or prior to the Restatement Effective Date (in the case of
each New Lender) or on or prior to the date of the Assignment
Agreement pursuant to which it becomes a Lender (in the case
of each other Lender), and at such other times as may be
necessary in the determination of Company or Administrative
Agent (each in the reasonable exercise of its discretion), (1)
two original copies of Internal Revenue Service Form 1001 or
4224 (or any successor forms), properly
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completed and duly executed by such Lender, together with any
other certificate or statement of exemption required under the
Internal Revenue Code or the regulations issued thereunder to
establish that such Lender is not subject to deduction or
withholding of United States federal income tax with respect
to any payments to such Lender of principal, interest, fees or
other amounts payable under any of the AXEL Loan Documents or
(2) if such Lender is not a "bank" or other Person described
in Section 881(c)(3) of the Internal Revenue Code and cannot
deliver either Internal Revenue Service Form 1001 or 4224
pursuant to clause (1) above, a Certificate re Non-Bank Status
together with two original copies of Internal Revenue Service
Form W-8 (or any successor form), properly completed and duly
executed by such Lender, together with any other certificate
or statement of exemption required under the Internal Revenue
Code or the regulations issued thereunder to establish that
such Lender is not subject to deduction or withholding of
United States federal income tax with respect to any payments
to such Lender of interest payable under any of the AXEL Loan
Documents.
(b) Each Lender required to deliver any forms,
certificates or other evidence with respect to United States
federal income tax withholding matters pursuant to subsection
2.7B(iii)(a) hereby agrees, from time to time after the
initial delivery by such Lender of such forms, certificates or
other evidence, whenever a lapse in time or change in
circumstances renders such forms, certificates or other
evidence obsolete or inaccurate in any material respect, that
such Lender shall promptly (1) deliver to Administrative Agent
for transmission to Company two new original copies of
Internal Revenue Service Form 1001 or 4224, or a Certificate
re Non-Bank Status and two original copies of Internal Revenue
Service Form W-8, as the case may be, properly completed and
duly executed by such Lender, together with any other
certificate or statement of exemption required in order to
confirm or establish that such Lender is not subject to
deduction or withholding of United States federal income tax
with respect to payments to such Lender under the AXEL Loan
Documents or (2) notify Administrative Agent and Company of
its inability to deliver any such forms, certificates or other
evidence.
(c) Company shall not be required to pay any
additional amount to any Non-US Lender under clause (c) of
subsection 2.7B(ii) if such Lender shall have failed to
satisfy the requirements of clause (a) or (b)(1) of this
subsection 2.7B(iii); provided that if such Lender shall have
satisfied the requirements of subsection 2.7B(iii)(a) on the
Closing Date (in the case of each Existing Lender), on the
Restatement Effective Date (in the case of each New Lender) or
on the date of the Assignment Agreement pursuant to which it
became a Lender (in the case of each other Lender), nothing in
this subsection 2.7B(iii)(c) shall relieve Company of its
obligation to pay any additional amounts pursuant to clause
(c) of subsection 2.7B(ii) in the event
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that, as a result of any change in any applicable law, treaty
or governmental rule, regulation or order, or any change in
the interpretation, administration or application thereof,
such Lender is no longer properly entitled to deliver forms,
certificates or other evidence at a subsequent date
establishing the fact that such Lender is not subject to
withholding as described in subsection 2.7B(iii)(a).
C. CAPITAL ADEQUACY ADJUSTMENT. If any Lender shall have determined
that the adoption, effectiveness, phase-in or applicability after the Closing
Date (in the case of an Existing Lender) or the Restatement Effective Date (in
the case of each New Lender) of any law, rule or regulation (or any provision
thereof) regarding capital adequacy, or any change therein or in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or its applicable lending office) with any
guideline, request or directive regarding capital adequacy (whether or not
having the force of law) of any such governmental authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on the capital of such Lender or any corporation controlling such Lender as a
consequence of, or with reference to, such Lender's AXELS or AXEL Commitments or
other obligations hereunder with respect to the AXELs to a level below that
which such Lender or such controlling corporation could have achieved but for
such adoption, effectiveness, phase-in, applicability, change or compliance
(taking into consideration the policies of such Lender or such controlling
corporation with regard to capital adequacy) by an amount considered by the
Lender to be material, then from time to time, within five Business Days after
receipt by Company from such Lender of the statement referred to in the next
sentence, Company shall pay to such Lender such additional amount or amounts as
will compensate such Lender or such controlling corporation on an after-tax
basis for such reduction. Such Lender shall deliver to Company (with a copy to
Administrative Agent) a written statement, setting forth in reasonable detail
the basis of the calculation of such additional amounts, which statement shall
be conclusive and binding upon all parties hereto absent manifest error.
2.8 OBLIGATION OF LENDERS TO MITIGATE.
Each Lender agrees that, as promptly as practicable after the officer
of such Lender responsible for administering the AXELs of such Lender becomes
aware of the occurrence of an event or the existence of a condition that would
cause such Lender to become an Affected Lender or that would entitle such Lender
to receive payments under subsection 2.7, it will, to the extent not
inconsistent with the internal policies of such Lender and any applicable legal
or regulatory restrictions, use reasonable efforts (i) to make, fund or maintain
the AXEL Commitments of such Lender or the affected AXELs of such Lender through
another lending of such Lender, or (ii) take such other measures as such Lender
may deem reasonable, if as a result thereof the circumstances which would cause
such Lender to be an Affected Lender would cease to exist or the additional
amounts which would otherwise be required to be paid to such Lender pursuant to
subsection 2.7 would
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be materially reduced and if, as determined by such Lender in its sole
discretion, the making, funding or maintaining of such AXEL Commitments or AXELs
through such other lending or in accordance with such other measures, as the
case may be, would not otherwise materially adversely affect such AXEL
Commitments or AXELs or the interests of such Lender; provided that such Lender
will not be obligated to utilize such other lending pursuant to this subsection
2.8 unless Company agrees to pay all incremental expenses incurred by such
Lender as a result of utilizing such other lending office as described in clause
(i) above. A certificate as to the amount of any such expenses payable by
Company pursuant to this subsection 2.8 (setting forth in reasonable detail the
basis for requesting such amount) submitted by such Lender to Company (with a
copy to Administrative Agent) shall be conclusive absent manifest error.
2.9 REMOVAL OR REPLACEMENT OF A LENDER.
A. Anything contained in this Agreement to the contrary
notwithstanding, in the event that:
(i) (a) any Lender (an "INCREASED-COST LENDER") shall give
notice to Company that such Lender is an Affected Lender or that such
Lender is entitled to receive payments under subsection 2.7, (b) the
circumstances which have caused such Lender to be an Affected Lender or
which entitle such Lender to receive such payments shall remain in
effect, and (c) such Lender shall fail to withdraw such notice within
five Business Days after Company's request for such withdrawal; or
(ii) (a) in connection with any proposed amendment,
modification, termination, waiver or consent with respect to any of the
provisions of this Agreement as contemplated by clauses (i) through (v)
of the first proviso to subsection 9.6A, the consent of Requisite
Lenders shall have been obtained but the consent of one or more of such
other Lenders (each a "NON-CONSENTING LENDER") whose consent is
required shall not have been obtained, and (b) the failure to obtain
Non-Consenting Lenders' consents does not result solely from the
exercise of Non-Consenting Lenders' rights (and the withholding of any
required consents by Non-Consenting Lenders) pursuant to the second
proviso to subsection 9.6A;
then, and in each such case, Company shall have the right, at its option, to
remove or replace the applicable Increased-Cost Lender or Non-Consenting Lender
(the "TERMINATED LENDER") to the extent permitted by subsection 2.9B.
B. Company may, by giving written notice to Administrative Agent and
any Terminated Lender of its election to do so:
(i) elect to prepay on the date of such termination any
outstanding AXELs made by such Terminated Lender, together with accrued
and unpaid interest thereon and any other amounts payable to such
Terminated Lender hereunder pursuant to
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subsection 2.6 or subsection 2.7 or otherwise; provided that, in the
event such Terminated Lender has any AXELs outstanding at the time of
such termination, the written consent of Administrative Agent and
Requisite Lenders (which consent shall not be unreasonably withheld or
delayed) shall be required in order for Company to make the election
set forth in this clause (i); or
(ii) elect to cause such Terminated Lender (and such
Terminated Lender hereby irrevocably agrees) to assign its outstanding
AXELs in full at par to one or more Eligible Assignees (each a
"REPLACEMENT LENDER") in accordance with the provisions of subsection
9.1B; provided that (a) on the date of such assignment, Company shall
pay any amounts payable to such Terminated Lender pursuant to
subsection 2.6 or subsection 2.7 or otherwise as if it were a
prepayment and (b) in the event such Terminated Lender is a
Non-Consenting Lender, each Replacement Lender shall consent, at the
time of such assignment, to each matter in respect of which such
Terminated Lender was a Non-Consenting Lender;
provided that Company may not make either of the elections set forth in clauses
(i) or (ii) above with respect to any Non-Consenting Lender unless Company also
makes one of such elections with respect to each other Terminated Lender which
is a Non-Consenting Lender.
C. Upon the prepayment of all amounts owing to any Terminated Lender
pursuant to clause (i) of subsection 2.9B, such Terminated Lender shall no
longer constitute a "Lender" for purposes of this Agreement; provided that any
rights of such Terminated Lender to indemnification under this Agreement
(including under subsections 2.6D, 2.7, 9.2 and 9.3) shall survive as to such
Terminated Lender.
SECTION 3.
CONDITIONS TO EFFECTIVENESS; CONDITIONS TO ADDITIONAL AXELS
The effectiveness of this Agreement and the obligations of Lenders to
make (or maintain, as the case may be) AXELs hereunder are subject to the
satisfaction of the following conditions.
3.1 CONDITIONS TO EFFECTIVENESS.
The effectiveness of this Agreement is subject to prior or concurrent
satisfaction of the following conditions:
A. LOAN PARTY DOCUMENTS. On or before the Restatement Effective Date,
Company shall, and shall cause each other Loan Party to, deliver to Lenders (or
to Administrative Agent for Lenders with sufficient originally executed copies,
where appropriate, for each Lender and its counsel) the following with respect
to Company or such
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Loan Party, as the case may be, each, unless otherwise noted, dated the
Restatement Effective Date:
(i) Certified copies of the Certificate or Articles of
Incorporation of such Person (or, in lieu thereof, a certificate of the
corporate secretary of such Person certifying as of the Restatement
Effective Date that its Certificate of Incorporation delivered on the
Closing Date pursuant to subsection 3.1 of the Existing AXEL Credit
Agreement is in full force and effect without modification or
amendment), together with a good standing certificate from the
Secretary of State of its jurisdiction of incorporation and each other
state in which such Person is qualified as a foreign corporation to do
business and, to the extent generally available, a certificate or other
evidence of good standing as to payment of any applicable franchise or
similar taxes from the appropriate taxing authority of each of such
jurisdictions, each dated a recent date prior to the Restatement
Effective Date;
(ii) Copies of the Bylaws of such Person, certified as of the
Closing Date by such Person's corporate secretary or an assistant
secretary (or, in lieu thereof, a certificate of the corporate
secretary of such Person certifying as of the Restatement Effective
Date that its Bylaws delivered on the Closing Date pursuant to
subsection 3.1 of the Existing AXEL Credit Agreement is in full force
and effect without modification or amendment);
(iii) Resolutions of the Board of Directors of such Person
approving and authorizing the execution, delivery and performance of
the AXEL Loan Documents and the Anagram Acquisition Agreement to which
it is a party, certified as of the Restatement Effective Date by the
corporate secretary or an assistant secretary of such Person as being
in full force and effect without modification or amendment;
(iv) Signature and incumbency certificates of the officers of
such Person executing the AXEL Loan Documents to which it is a party;
(v) Executed originals of this Agreement and (to the extent
not previously executed and delivered to Lenders) the other Loan
Documents to which such Person is a party; and
(vi) Such other documents as Arranger or Administrative Agent
may reasonably request.
B. NO MATERIAL ADVERSE EFFECT. Since December 31, 1997, no Material
Adverse Effect (in the opinions of Arranger and Administrative Agent) shall have
occurred. Since December 31, 1997, there shall not have been an adverse change,
or any development involving a prospective adverse change, in or affecting
Anagram or any of its Subsidiaries or the general affairs, management, financial
position, shareholders' equity or results of
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operation of Anagram and its Subsidiaries which is, in the reasonable judgment
of Arranger, Administrative Agent or Requisite Lenders, material.
C. CORPORATE AND CAPITAL STRUCTURE, OWNERSHIP, MANAGEMENT, ETC.
(i) Corporate Structure. The corporate organizational
structure of Company and its Subsidiaries, both before and after giving
effect to the Anagram Acquisition, shall be as set forth on Schedule
3.1C annexed hereto.
(ii) Capital Structure and Ownership. The capital structure
and ownership of Company, both before and after giving effect to the
Anagram Acquisition, shall be as set forth on Schedule 3.1C annexed
hereto.
(iii) Management; Employment Agreements. The management
structure of Company after giving effect to the Anagram Acquisition
shall be as set forth on Schedule 3.1C annexed hereto. Arranger and
Administrative Agent shall have received duly executed copies of, and
shall be satisfied with the form and substance of, the Employment
Agreements as set forth on Schedule 3.1C annexed hereto.
D. ANAGRAM ACQUISITION AGREEMENT.
(i) The Anagram Acquisition Agreement shall be satisfactory in
form and substance to Arranger and Administrative Agent;
(ii) On or prior to the Restatement Effective Date, Arranger
and Administrative Agent shall each have received a fully executed or
conformed copy of the Anagram Acquisition Agreement (including all
schedules and exhibits thereto) and any material documents executed in
connection therewith;
(iii) the Anagram Acquisition Agreement shall be in full force
and effect and no provision thereof shall have been modified or waived
in any respect determined by Arranger or Administrative Agent to be
material, in each case without the consent of Arranger and
Administrative Agent;
(iv) the parties thereto shall not have failed in any material
respect to perform any material obligation or covenant required by the
Anagram Acquisition Agreement to be performed or complied with by any
of them on or before the Restatement Effective Date; and
(v) Arranger and Administrative Agent shall have received an
Officer's Certificate from Company to the effect set forth in clauses
(ii)-(iv) above.
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E. MATTERS RELATING TO EXISTING INDEBTEDNESS OF COMPANY AND ITS
SUBSIDIARIES
(i) Termination of Existing Anagram Credit Agreements and
Related Liens; Existing Anagram Letters of Credit. On or prior to the
Restatement Effective Date, Anagram and its Subsidiaries shall have (a)
repaid in full all Indebtedness outstanding under the Existing Anagram
Credit Agreements as set forth on Schedule 3.1E-II (the aggregate
principal amount of which Indebtedness shall not exceed $19,000,000),
(b) terminated any commitments to lend or make other extensions of
credit thereunder, (c) delivered to Arranger and Administrative Agent
all documents or instruments necessary to release all Liens securing
Indebtedness or other obligations of Anagram and its Subsidiaries
thereunder, and (d) made arrangements satisfactory to Arranger and
Administrative Agent with respect to the cancellation of any letters of
credit outstanding thereunder or the issuance of Letters of Credit
under the Revolving Credit Agreement to support the obligations of
Company and its Subsidiaries (after giving effect to the Anagram
Acquisition) with respect thereto.
(ii) Existing Indebtedness to Remain Outstanding. On the
Restatement Effective Date, Arranger and Administrative Agent shall
have received an Officers' Certificate of Company stating that, after
giving effect to the transactions described in this subsection 3.1E,
the Indebtedness of Loan Parties (other than Indebtedness under the
Loan Documents and the Senior Subordinated Notes) shall consist of (a)
approximately $5,809,255 in aggregate principal amount of outstanding
Indebtedness described in Part I of Schedule 6.1 annexed hereto and (b)
Indebtedness in an aggregate amount not to exceed $4,123,512 in respect
of Capital Leases described in Part II of Schedule 6.1 annexed hereto.
The terms and conditions of all such Indebtedness shall be in form and
in substance satisfactory to Arranger, Administrative Agent and
Requisite Lenders.
F. NECESSARY GOVERNMENTAL AUTHORIZATIONS AND CONSENTS; EXPIRATION OF
WAITING PERIODS, ETC. Company shall have obtained all Governmental
Authorizations and all consents of other Persons, in each case that are
necessary or advisable in connection with the Anagram Acquisition and the other
transactions contemplated by the Loan Documents and the Anagram Acquisition
Agreement and the continued operation of the business conducted by Company and
its Subsidiaries (including Anagram and its Subsidiaries) in substantially the
same manner as conducted prior to the consummation of the Anagram Acquisition,
and each of the foregoing shall be in full force and effect, in each case other
than those the failure to obtain or maintain which, either individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect. All applicable waiting periods shall have expired without any action
being taken or threatened by any competent authority which would restrain,
prevent or otherwise impose adverse conditions on the Anagram Acquisition or the
financing thereof. No action, request for stay, petition for review or
rehearing, reconsideration, or appeal with respect to any of the foregoing shall
be pending, and the time for any applicable agency to take action to set aside
its consent on its own motion shall have expired.
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G. CONSUMMATION OF ANAGRAM ACQUISITION.
(i) All conditions to the Anagram Acquisition set forth in the
Anagram Acquisition Agreement shall have been satisfied or the
fulfillment of any such conditions shall have been waived; provided
that Arranger, Administrative Agent and Requisite Lenders shall have
consented to any such waiver of any such condition that Arranger or
Administrative Agent reasonably deems material;
(ii) The Anagram Acquisition shall have become effective in
accordance with the terms of the Anagram Acquisition Agreement at or
immediately prior to the time of funding of the Additional AXELs;
(iii) Anagram Transaction Costs shall not exceed $4,000,000,
and Arranger shall have received evidence to its satisfaction to such
effect; and
(iv) Arranger and Administrative Agent shall have received an
Officers' Certificate of Company to the effect set forth in clauses
(i)-(iii) above.
H. SECURITY INTERESTS IN PERSONAL AND MIXED PROPERTY. Collateral Agent
shall have received evidence satisfactory to it that Company and Subsidiary
Guarantors shall have taken or caused to be taken (to the extent not previously
taken pursuant to the terms of the Existing AXEL Credit Agreement and the other
Loan Documents executed in connection therewith) all such actions, executed and
delivered or caused to be executed and delivered all such agreements, documents
and instruments, and made or caused to be made all such filings and recordings
(other than the filing or recording of items described in clauses (iii), (iv)
and (v) below) that may be necessary or, in the opinion of Collateral Agent
desirable in order to create in favor of Collateral Agent, for the benefit of
Secured Parties, a valid and (upon such filing and recording) perfected First
Priority security interest in the entire personal and mixed property Collateral.
Such actions shall include the following:
(i) Schedules to Collateral Documents. Delivery to Collateral
Agent of accurate and complete schedules to all of the applicable
Collateral Documents.
(ii) Stock Certificates and Instruments. Delivery to
Collateral Agent of (a) certificates (which certificates shall be
accompanied by irrevocable undated stock powers, duly endorsed in blank
and otherwise satisfactory in form and substance to Collateral Agent)
representing all capital stock pledged pursuant to the Company Pledge
Agreement and the Subsidiary Pledge Agreements and (b) all promissory
notes or other instruments (duly endorsed, where appropriate, in a
manner satisfactory to Collateral Agent) evidencing any Collateral;
(iii) Lien Searches and UCC Termination Statements. Delivery
to Arranger and Administrative Agent of (a) the results of a recent
search, by a Person satisfactory to Arranger and Administrative Agent,
of all effective UCC financing
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statements and fixture filings and all judgment and tax lien filings
which may have been made with respect to any personal or mixed property
of Anagram or any of its Subsidiaries, together with copies of all such
filings disclosed by such search, and (b) UCC termination statements
duly executed by all applicable Persons for filing in all applicable
jurisdictions as may be necessary to terminate any effective UCC
financing statements or fixture filings disclosed in such search (other
than any such financing statements or fixture filings in respect of
Liens permitted to remain outstanding pursuant to the terms of this
Agreement).
(iv) UCC Financing Statements and Fixture Filings; PTO
Filings. (a) Delivery to Collateral Agent of UCC financing statements
and, where appropriate, fixture filings, duly executed by each
applicable Loan Party with respect to all personal and mixed property
Collateral of such Loan Party, for filing in all jurisdictions as may
be necessary or, in the reasonable opinion of Collateral Agent,
desirable to perfect the security interests created in such Collateral
pursuant to the Collateral Documents and (b) delivery to Administrative
Agent of all cover sheets or other documents or instruments required to
be filed with the PTO or the United States Copyright Office in order to
create or perfect Liens in respect of any IP Collateral;
(v) Auxiliary Pledge Agreements. Execution and delivery to
Collateral Agent of Auxiliary Pledge Agreements with respect to the
stock of all Foreign Subsidiaries organized under the laws of all
jurisdictions with respect to which Collateral Agent deems an Auxiliary
Pledge Agreement necessary or advisable to perfect or otherwise protect
the First Priority Liens granted to Collateral Agent on behalf of
Secured Parties in such stock, and the taking of all such other actions
under the laws of such jurisdictions as Collateral Agent may deem
necessary or advisable to perfect or otherwise protect such Liens; and
(vi) Opinions of Local Counsel. Delivery to Arranger and
Administrative Agent of an opinion of counsel (which counsel shall be
reasonably satisfactory to Arranger and Administrative Agent) under the
laws of each state in the United States in which any personal or mixed
property Collateral with an aggregate value in excess of $500,000 is
located with respect to the creation and perfection of the security
interests in favor of Collateral Agent in such Collateral and such
other matters governed by the laws of such jurisdiction regarding such
security interests as Arranger and Administrative Agent may reasonably
request, in each case in form and substance reasonably satisfactory to
Arranger and Administrative Agent.
I. EDEN PRAIRIE HOLDINGS. On or before the Restatement Effective
Date, Collateral Agent shall have received from Anagram:
(i) Certified copy of the Certificate of Formation of Eden
Prairie Holdings, together with a good standing certificate from the
Secretary of State of
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Delaware and each other state in which Eden Prairie Holdings is
qualified to do business, each dated a recent date prior to the
Restatement Effective Date;
(ii) Evidence in form and substance satisfactory to Arranger
and Administrative Agent that Anagram International has transferred all
its right, title and interest in and to the Anagram Headquarters
Facility to Eden Prairie Holdings;
(iii) Evidence in form and substance satisfactory to Arranger
and Administrative Agent that Company has assigned all its membership
interest in Eden Prairie Holdings to Anagram International;
(iv) Copy of a lease relating to the Anagram Headquarters
Facility entered into by and between Eden Prairie Holdings and Anagram
International, in form and substance satisfactory to Arranger and
Administrative Agent; and
(v) Evidence satisfactory to Arranger and Administrative Agent
that Anagram International has appointed an independent manager for
Eden Prairie Holdings in accordance with paragraph Seventh of the
Certificate of Formation of Eden Prairie Holdings; provided that, to
the extent such independent manager is not so appointed on or before
the Restatement Effective Date, Company shall cause Anagram
International to appoint an independent manager for Eden Prairie
Holdings in accordance with paragraph Seventh of the Certificate of
Formation of Eden Prairie Holdings as promptly as practicable after
being requested to do so by Collateral Agent in accordance with said
paragraph Seventh.
J. ENVIRONMENTAL REPORTS. Arranger and Administrative Agent shall have
received such reports and other information, in form, scope and substance
satisfactory to Arranger and Administrative Agent, as Arranger and
Administrative Agent may reasonably require regarding environmental matters
relating to Anagram and its Subsidiaries and any of their respective Facilities.
K. FINANCIAL STATEMENTS; PRO FORMA BALANCE SHEET. On or before the
Restatement Effective Date, Lenders shall have received from Company (i) audited
financial statements of Anagram International, Inc. and its Subsidiaries for its
fiscal years ended December 31, 1996 and 1997, consisting of balance sheets and
the consolidated statements of income, stockholders' equity and cash flows for
such fiscal years, (ii) unaudited combined and combining financial statements of
Anagram and its Subsidiaries as at June 30, 1998, consisting of an unaudited
combined and combining balance sheet and the combined and combining statements
of income for the six-month period ending on such date, all in reasonable detail
and certified by the chief financial officer of Anagram that they fairly present
the financial condition of Anagram and its Subsidiaries as at the dates
indicated and the results of their operations for the periods indicated, subject
to changes resulting from audit and normal year-end adjustments, (iii) unaudited
financial statements of Company and its Subsidiaries as at June 30, 1998,
consisting of a balance sheet and the related
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consolidated statements of income, stockholders' equity and cash flows for the
six-month period ending on such date, all in reasonable detail and certified by
the chief financial officer of Company that they fairly present the financial
condition of Company and its Subsidiaries as at the dates indicated and the
results of their operations and their cash flows for the periods indicated,
subject to changes resulting from audit and normal year-end adjustments, (iv)
pro forma consolidated balance sheets of Company and its Subsidiaries as of July
31, 1998, prepared in accordance with GAAP and reflecting the consummation of
the Anagram Acquisition, the related financings and the other transactions
contemplated by the Loan Documents and the Anagram Acquisition Agreement, which
pro forma financial statements shall be in form and substance satisfactory to
Lenders, and (v) pro forma financial statements (including consolidated balance
sheets, statements of operations, stockholders' equity and cash flows) of
Company and its Subsidiaries (after giving effect to the Anagram Acquisition)
for the 10-year period commencing on the Restatement Effective Date, which pro
forma financial statements shall be in form and substance satisfactory to
Lenders.
L. EVIDENCE OF INSURANCE. Collateral Agent shall have received a
certificate from Company's insurance broker or other evidence satisfactory to it
that all insurance required to be maintained pursuant to subsection 5.4 is in
full force and effect and that Collateral Agent on behalf of Secured Parties has
been named as additional insured and/or loss payee thereunder to the extent
required under subsection 5.4.
M. OPINIONS OF COUNSEL TO LOAN PARTIES. Lenders and their respective
counsel shall have received (i) originally executed copies of one or more
favorable written opinions of (a) Wachtell, Lipton, Rosen & Katz, special
counsel for Loan Parties, in form and substance reasonably satisfactory to
Administrative Agent and Arranger and its counsel, dated as of the Restatement
Effective Date and setting forth substantially the matters in the opinions
designated in Exhibit V-A annexed hereto and as to such other matters as
Administrative Agent or Arranger and acting on behalf of Lenders may reasonably
request and (b) Kurzman & Eisenberg, counsel for Loan Parties, in form and
substance reasonably satisfactory to Administrative Agent and Arranger and its
counsel, dated as of the Restatement Effective Date and setting forth
substantially the matters in the opinions designated in Exhibit V-B annexed
hereto and as to such other matters as Administrative Agent or Arranger and
acting on behalf of Lenders may reasonably request, and (ii) evidence
satisfactory to Arranger and Administrative Agent that Company has requested
such counsel to deliver such opinions to Lenders.
N. OPINIONS OF ARRANGER AND ADMINISTRATIVE AGENT'S COUNSEL. Lenders
shall have received originally executed copies of one or more favorable written
opinions of O'Melveny & Myers LLP, counsel to Arranger and Administrative Agent,
dated as of the Restatement Effective Date, substantially in the form of Exhibit
VI annexed hereto and as to such other matters as Arranger and Administrative
Agent may reasonably request.
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O. OPINIONS OF COUNSEL RELATING TO THE ANAGRAM ACQUISITION AGREEMENT.
On or prior to the Effective Date, Arranger and Administrative Agent shall each
have received executed copies of all opinions by counsel delivered in connection
with the Anagram Acquisition Agreement to Company or any of its Subsidiaries.
All such opinions shall be, to the extent agreed to by the person delivering
such opinion, addressed to Arranger, Administrative Agent and Lenders or
accompanied by written authorization from each person delivering such an opinion
stating that Arranger, Administrative Agent and Lenders may rely on such opinion
as though it were addressed to them.
P. FEES. Company shall have paid to Arranger and Administrative Agent,
for distribution (as appropriate) to Arranger, Administrative Agent and Lenders,
the fees payable on the Restatement Effective Date referred to in subsection
2.3.
Q. REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF AGREEMENTS. Company
shall have delivered to Arranger and Administrative Agent an Officers'
Certificate, in form and substance satisfactory to Arranger and Administrative
Agent, to the effect that the representations and warranties in Section 4 hereof
are true, correct and complete in all material respects on and as of the
Restatement Effective Date to the same extent as though made on and as of that
date (or, to the extent such representations and warranties specifically relate
to an earlier date, that such representations and warranties were true, correct
and complete in all material respects on and as of such earlier date) and that
Company shall have performed in all material respects all agreements and
satisfied all conditions which this Agreement provides shall be performed or
satisfied by it on or before the Restatement Effective Date except as otherwise
disclosed to and agreed to in writing by Arranger, Administrative Agent and
Requisite Lenders.
R. COMPLETION OF PROCEEDINGS. All corporate and other proceedings taken
or to be taken in connection with the transactions contemplated hereby and all
documents incidental thereto not previously found acceptable by Administrative
Agent, acting on behalf of Lenders, or Arranger and its counsel shall be
satisfactory in form and substance to Administrative Agent and Arranger and such
counsel, and Administrative Agent, Arranger and such counsel shall have received
all such counterpart originals or certified copies of such documents as
Administrative Agent or Arranger may reasonably request.
S. COLLATERAL ACCESS AGREEMENTS. On or prior to the Restatement
Effective Date, Anagram and each applicable Subsidiary Guarantor shall have used
its reasonable good faith efforts to obtain, in the case of any Leasehold
Property or any real property in which Anagram or any of its Subsidiaries owns
or holds a fee interest and which is subject to a mortgage held by a third-party
mortgagee holding inventory or equipment with an aggregate fair market value
exceeding $500,000, a Collateral Access Agreement with respect thereto, in each
case in form and substance reasonably satisfactory to Arranger and
Administrative Agent; provided that, to the extent any such Collateral Access
Agreement is not so obtained on or before the Restatement Effective Date, upon
the reasonable request of Collateral Agent, Company hereby covenants and agrees
to cause the applicable Subsidiary Guarantor
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to continue to use its reasonable good faith efforts to obtain such Collateral
Access Agreement as promptly as practicable after the Restatement Effective
Date.
T. REVOLVING CREDIT AGREEMENT. Arranger and Administrative Agent shall
each have received a fully executed or conformed copy of the Revolving Credit
Agreement, as amended and restated in connection with the Anagram Acquisition,
satisfactory in form and substance to Arranger and Administrative Agent. The
Revolving Credit Agreement shall be in full force and effect and the conditions
to advances of the Revolving Loans thereunder shall have been satisfied or
waived by the Revolving Credit Lenders.
U. NO EVENT OF DEFAULT. Company shall have delivered to Administrative
Agent an Officer's Certificate, in form and substance satisfactory to
Administrative Agent, to the effect that, immediately prior to the Restatement
Effective Date, no event has occurred and is continuing that would constitute an
Event of Default or Potential Event of Default under the Existing AXEL Credit
Agreement or the Revolving Credit Agreement.
3.2 ADDITIONAL CONDITIONS TO AXELS.
The obligations of Lenders to make Additional AXELs on the Restatement
Effective Date are subject to the following further conditions precedent:
A. Administrative Agent shall have received before the Restatement
Effective Date, in accordance with the provisions of subsection 2.1B, an
originally executed Notice of Borrowing, in each case signed by the chief
executive officer, the chief financial officer or the treasurer or corporate
controller of Company or by any executive officer of Company designated by any
of the above-described officers on behalf of Company in a writing delivered to
Administrative Agent.
B. As of the Restatement Effective Date:
(i) The representations and warranties contained herein and in
the other AXEL Loan Documents shall be true, correct and complete in
all material respects on and as of the Restatement Effective Date to
the same extent as though made on and as of that date, except to the
extent such representations and warranties specifically relate to an
earlier date, in which case such representations and warranties shall
have been true, correct and complete in all material respects on and as
of such earlier date;
(ii) No event shall have occurred and be continuing or would
result from the consummation of the borrowing contemplated by such
Notice of Borrowing that would constitute an Event of Default or a
Potential Event of Default;
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(iii) Each Loan Party shall have performed in all material
respects all agreements and satisfied all conditions which this
Agreement provides shall be performed or satisfied by it on or before
the Restatement Effective Date;
(iv) No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain any Lender
from making the Additional AXELs to be made by it on the Restatement
Effective Date;
(v) The making of the Additional AXELs requested on the
Restatement Effective Date shall not violate any law including
Regulation G, Regulation T, Regulation U or Regulation X of the Board
of Governors of the Federal Reserve System; and
(vi) There shall not be pending or, to the knowledge of
Company, threatened, any action, suit, proceeding, governmental
investigation or arbitration against or affecting Company or any of its
Subsidiaries or any property of Company or any of its Subsidiaries that
has not been disclosed by Company in writing prior to the execution of
this Agreement), and there shall have occurred no development not so
disclosed in any such action, suit, proceeding, governmental
investigation or arbitration so disclosed, that, in either event, in
the opinion of Administrative Agent or of Requisite Lenders, would be
expected to have a Material Adverse Effect; and no injunction or other
restraining order shall have been issued and no hearing to cause an
injunction or other restraining order to be issued shall be pending or
noticed with respect to any action, suit or proceeding seeking to
enjoin or otherwise prevent the consummation of, or to recover any
damages or obtain relief as a result of, the transactions contemplated
by this Agreement or the making of AXELs hereunder.
SECTION 4.
COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement and to make (or
maintain, as the case may be) the AXELs, Company represents and warrants to each
Lender, on the date of this Agreement and on the Restatement Effective Date,
that the following statements are true, correct and complete:
4.1 ORGANIZATION, POWERS, QUALIFICATION, GOOD STANDING, BUSINESS AND
SUBSIDIARIES.
A. ORGANIZATION AND POWERS. Each Loan Party is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation as specified in Schedule 4.1 annexed hereto as it
may be supplemented pursuant to subsection 5.1(xvi). Each Loan Party has all
requisite corporate power and authority to own and operate its properties, to
carry on its business as now conducted and as proposed to be
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conducted, to enter into the AXEL Loan Documents, the Related Agreements and the
Anagram Acquisition Agreement to which it is a party and to carry out the
transactions contemplated thereby.
B. QUALIFICATION AND GOOD STANDING. Each Loan Party is qualified to do
business and in good standing in every jurisdiction where its assets are located
and wherever necessary to carry out its business and operations, except in
jurisdictions where the failure to be so qualified or in good standing has not
had and could not reasonably be expected to have a Material Adverse Effect.
C. CONDUCT OF BUSINESS. Company and its Subsidiaries are engaged only
in (i) the businesses engaged in by Company and its Subsidiaries on the
Restatement Effective Date and similar or related businesses and (ii) such other
lines of business as may be consented to be Requisite Lenders.
D. SUBSIDIARIES. All of the Subsidiaries of Company as of the
Restatement Effective Date (after giving effect to the Anagram Acquisition) are
identified in Schedule 4.1 annexed hereto, as said Schedule 4.1 may be
supplemented from time to time pursuant to the provisions of subsection
5.1(xvi). The capital stock of each of the Subsidiaries of Company identified in
Schedule 4.1 annexed hereto (as so supplemented) is duly authorized, validly
issued, fully paid and nonassessable and none of such capital stock constitutes
Margin Stock. Each of the Subsidiaries of Company identified in Schedule 4.1
annexed hereto (as so supplemented) is a corporation duly organized, validly
existing and in good standing under the laws of its respective jurisdiction of
incorporation set forth therein, has all requisite corporate power and authority
to own and operate its properties and to carry on its business as now conducted
and as proposed to be conducted, and is qualified to do business and in good
standing in every jurisdiction where its assets are located and wherever
necessary to carry out its business and operations, in each case except where
failure to be so qualified or in good standing or a lack of such corporate power
and authority has not had and could not reasonably be expected to have a
Material Adverse Effect. Schedule 4.1 annexed hereto (as so supplemented)
correctly sets forth, as of the Closing Date, the ownership interest of Company
and each of its Subsidiaries in each of the Subsidiaries of Company identified
therein.
4.2 AUTHORIZATION OF BORROWING, ETC.
A. AUTHORIZATION OF BORROWING. The execution, delivery and performance
of the Loan Documents, the Related Agreements and the Anagram Acquisition
Agreement have been duly authorized by all necessary corporate action on the
part of each Loan Party that is a party thereto.
B. NO CONFLICT. The execution, delivery and performance by Loan Parties
of the AXEL Loan Documents, the Related Agreements and the Anagram Acquisition
Agreement to which they are parties and the consummation of the transactions
contemplated by the
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AXEL Loan Documents, the Related Agreements and the Anagram Acquisition
Agreement do not and will not (i) violate any provision of any law or any
governmental rule or regulation applicable to Company or any of its
Subsidiaries, the Certificate or Articles of Incorporation or Bylaws of Company
or any of its Subsidiaries or any order, judgment or decree of any court or
other agency of government binding on Company or any of its Subsidiaries, (ii)
conflict with, result in a breach of or constitute (with due notice or lapse of
time or both) a default under any Contractual Obligation of Company or any of
its Subsidiaries, except for any breach or default which could not reasonably be
expected to have a Material Adverse Effect, (iii) result in or require the
creation or imposition of any Lien upon any of the properties or assets of
Company or any of its Subsidiaries (other than any Liens created under any of
the AXEL Loan Documents in favor of Administrative Agent on behalf of Lenders),
or (iv) require any approval of stockholders or any approval or consent of any
Person under any Contractual Obligation of Company or any of its Subsidiaries,
except for such approvals or consents which will be obtained on or before the
Restatement Effective Date and disclosed in writing to Lenders and such consents
the failure of which to receive could not reasonably be expected to have a
Material Adverse Effect.
C. GOVERNMENTAL CONSENTS. Except as specified in Schedule 3.9(b) to the
Anagram Acquisition Agreement, the execution, delivery and performance by Loan
Parties of the AXEL Loan Documents, the Related Agreements and the Anagram
Acquisition Agreement to which they are parties and the consummation of the
transactions contemplated by the AXEL Loan Documents, such Related Agreements
and the Anagram Acquisition Agreement do not and will not require any
registration with, consent or approval of, or notice to, or other action to,
with or by, any federal, state or other governmental authority or regulatory
body the failure of which to receive could not reasonably be expected to cause a
Material Adverse Effect. Any such required consents, approvals, notices or other
actions shall have been received, given or performed, as the case may be, on or
prior to the Restatement Effective Date.
D. BINDING OBLIGATION. Each of the AXEL Loan Documents, the Related
Agreements and the Anagram Acquisition Agreement has been duly executed and
delivered by each Loan Party that is a party thereto and is the legally valid
and binding obligation of such Loan Party, enforceable against such Loan Party
in accordance with its respective terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or limiting
creditors' rights generally or by equitable principles relating to
enforceability.
E. VALID ISSUANCE OF COMPANY COMMON STOCK AND SENIOR SUBORDINATED
NOTES.
(i) Company Common Stock. The Company Common Stock issued in
the Merger on the Closing Date has been duly and validly issued and is
fully paid and nonassessable. The New Company Shares to be issued in
partial consideration for the Anagram Acquisition on or before the
Restatement Effective Date, when issued
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and delivered, will be duly and validly issued, fully paid and
nonassessable. No stockholder of Company has or will have any
preemptive rights to subscribe for any additional equity Securities of
Company. The issuance and sale of such Company Common Stock or New
Company Shares, upon such issuance and sale, either (a) have been or
will have been registered or qualified under applicable federal and
state securities laws or (b) have been or will be exempt therefrom.
(ii) Senior Subordinated Notes. The Senior Subordinated Notes
are the legally valid and binding obligations of Company, enforceable
against Company in accordance with their respective terms, except as
may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to or limiting creditors' rights generally or by
equitable principles relating to enforceability. The subordination
provisions of the Senior Subordinated Notes will be enforceable against
the holders thereof and the AXELs and all other monetary Obligations
hereunder are and will be within the definition of "Senior Debt"
included in such provisions. The Senior Subordinated Notes either (a)
have been registered or qualified under applicable federal and state
securities laws or (b) are exempt therefrom.
4.3 FINANCIAL CONDITION.
Company has heretofore delivered to Lenders, at Lenders' request, the
following financial statements and information: (i) the audited consolidated
balance sheets of Company and its Subsidiaries as at December 31, 1997 and the
related consolidated statements of income, stockholders' equity and cash flows
of Company and its Subsidiaries for the Fiscal Year then ended, (ii) the
unaudited consolidated balance sheets of Company and its Subsidiaries as at June
30, 1998 and the related unaudited consolidated statements of income,
stockholders' equity and cash flows of Company and its Subsidiaries for the
six-months then ended, (iii) the audited consolidated balance sheets of Anagram
and its Subsidiaries as at December 31, 1997 and the consolidated statements of
income, stockholders' equity and cash flows of Anagram and its Subsidiaries for
its fiscal year then ended and (iv) the unaudited combined and combining balance
sheets of Anagram and its Subsidiaries as at June 30, 1998 and the unaudited
combined and combining statements of income of Anagram and its Subsidiaries for
the six-months then ended. All such statements were prepared in accordance with
GAAP applied on a consistent basis throughout the periods covered thereby
(except as otherwise indicated therein or in the Anagram Acquisition Agreements)
and fairly present, in all material respects, the financial position of the
entities described in such financial statements as of such respective dates and
the results of operations of the entities described therein for each of the
periods then ended, subject, in the case of any such unaudited financial
statements, to changes resulting from audit and normal year-end adjustments.
Company does not (and did not immediately following the funding of the Existing
AXELs) and Anagram does not (and will not immediately following the funding of
the Additional AXELs) have any Guarantee, contingent liability or liability for
taxes, long-term lease or unusual forward or long-term
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commitment that is not reflected in the foregoing financial statements or the
notes thereto and which in any such case is material in relation to the
business, operations, properties, assets, condition (financial or otherwise) or
prospects of Company or any of its Subsidiaries (after giving effect to the
Anagram Acquisition).
4.4 NO MATERIAL ADVERSE CHANGE.
Since December 31, 1997, no event or change has occurred that has
caused or evidences, either in any case or in the aggregate, a Material Adverse
Effect.
4.5 TITLE TO PROPERTIES; LIENS; REAL PROPERTY.
A. TITLE TO PROPERTIES; LIENS. After giving effect to the transactions
contemplated by this Agreement and the Anagram Acquisition Agreement to occur on
the Restatement Effective Date, except for Permitted Encumbrances and Liens
permitted under subsection 6.2, Company and its Subsidiaries have (i) good,
sufficient and legal title to (in the case of fee interests in real property),
(ii) valid leasehold interests in (in the case of leasehold interests in real or
personal property), or (iii) good title to (in the case of all other personal
property), all of their respective properties and assets reflected in the
financial statements referred to in subsection 4.3 or in the most recent
financial statements delivered pursuant to subsection 5.1 of the Existing AXEL
Credit Agreement or this Agreement, in each case except for assets disposed of
since the date of such financial statements in the ordinary course of business
or as otherwise permitted under subsection 6.5. All such properties and assets
are free and clear of Liens other than Permitted Encumbrances and other Liens
permitted under this Agreement.
B. REAL PROPERTY. After giving effect to the transactions contemplated
by this Agreement and the Anagram Acquisition Agreement, as of the Restatement
Effective Date, Schedule 4.5 annexed hereto contains a true, accurate and
complete list of (i) all Fee Properties and (ii) all leases, subleases or
assignments of leases (together with all amendments, modifications, supplements,
renewals or extensions of any thereof) affecting each Real Property Asset of any
Loan Party, regardless of whether such Loan Party is the landlord or tenant
(whether directly or as an assignee or successor in interest) under such lease,
sublease or assignment. As of the Restatement Effective Date, except as
specified in Schedule 4.5 annexed hereto, each agreement listed in clause (ii)
of the immediately preceding sentence is in full force and effect and Company
does not have knowledge of any material default that has occurred and is
continuing thereunder, and each such agreement constitutes the legally valid and
binding obligation of each applicable Loan Party, enforceable against such Loan
Party in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or limiting
creditors' rights generally or by equitable principles.
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4.6 LITIGATION; ADVERSE FACTS.
Except as set forth in Schedule 4.6 annexed hereto, there are no
actions, suits, proceedings, arbitrations or governmental investigations
(whether or not purportedly on behalf of Company or any of its Subsidiaries) at
law or in equity, or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign (including any Environmental Claims) that are pending or, to
the knowledge of Company, threatened against or affecting Company or any of its
Subsidiaries or any property of Company or any of its Subsidiaries and that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. Neither Company nor any of its Subsidiaries (i) is in
violation of any applicable laws (including Environmental Laws) that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect, or (ii) is subject to or in default with respect to any
final judgments, writs, injunctions, decrees, rules or regulations of any court
or any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect.
4.7 PAYMENT OF TAXES.
Except to the extent permitted by subsection 5.3, all material tax
returns and reports of Company and its Subsidiaries required to be filed by any
of them have been timely filed, and all taxes shown on such tax returns to be
due and payable and all assessments, fees and other governmental charges upon
Company and its Subsidiaries and upon their respective properties, assets,
income, businesses and franchises which are due and payable have been paid when
due and payable. Company knows of no proposed material tax assessment against
Company or any of its Subsidiaries which is not being actively contested by
Company or such Subsidiary in good faith and by appropriate proceedings;
provided that such reserves or other appropriate provisions, if any, as shall be
required in conformity with GAAP shall have been made or provided therefor.
4.8 PERFORMANCE OF AGREEMENTS; MATERIALLY ADVERSE AGREEMENTS; MATERIAL
CONTRACTS.
A. Neither Company nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any of its Contractual Obligations, and no condition
exists that, with the giving of notice or the lapse of time or both, would
constitute such a default, except where the consequences, direct or indirect, of
such default or defaults, if any, would not have a Material Adverse Effect.
B. Neither Company nor any of its Subsidiaries is a party to or is
otherwise subject to any agreements or instruments or any charter or other
internal restrictions which, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect.
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C. Schedule 4.8 contains a true, correct and complete list of all the
Material Contracts in effect on the Restatement Effective Date. Except as
described on Schedule 4.8, all such Material Contracts are in full force and
effect and no defaults currently exist thereunder other than any such defaults
or failure to be in force and effect which could not reasonably be expected to
result in a Material Adverse Effect.
4.9 GOVERNMENTAL REGULATION.
Neither Company nor any of its Subsidiaries is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act or the Investment Company Act of 1940 or under any other
federal or state statute or regulation which may limit its ability to incur
Indebtedness or which may otherwise render all or any portion of the Obligations
unenforceable.
4.10 SECURITIES ACTIVITIES.
A. Neither Company nor any of its Subsidiaries is engaged principally,
or as one of its important activities, in the business of extending credit for
the purpose of purchasing or carrying any Margin Stock.
B. Following application of the proceeds of each AXEL and each
Revolving Loan under the Revolving Credit Agreement, not more than 25% of the
value of the assets (either of Company only or of Company and its Subsidiaries
on a consolidated basis) subject to the provisions of subsection 6.2 or 6.5 or
subject to any restriction contained in any agreement or instrument, between
Company and any Lender or any Affiliate of any Lender, relating to Indebtedness
and within the scope of subsection 7.2, will be Margin Stock.
4.11 EMPLOYEE BENEFIT PLANS.
A. Company, each of its Subsidiaries and each of their respective ERISA
Affiliates are in compliance with all applicable provisions and requirements of
ERISA and the regulations and published interpretations thereunder with respect
to each Employee Benefit Plan, and have performed all their obligations under
each Employee Benefit Plan. Each Employee Benefit Plan which is intended to
qualify under Section 401(a) of the Internal Revenue Code is so qualified.
B. No ERISA Events have occurred or are reasonably expected to occur
which could reasonably be expected to result in liabilities to the Company or
any of its Subsidiaries in excess of $1,000,000 in the aggregate.
C. As of the most recent valuation date for any Pension Plan, the
excess of (1) the actuarial present value (determined on the basis of reasonable
assumptions employed by the independent actuary for each Pension Plan for
purposes of Section 412 of the Internal Revenue Code or Section 302 of ERISA) of
benefit liabilities (as defined in Section
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4001(a)(16) of ERISA), over (2) the fair market value of the assets of such
Pension Plan, individually or in the aggregate for all Pension Plans (excluding
for purposes of such computation any Pension Plans with respect to which assets
exceed benefit liabilities), does not exceed $5,000,000.
D. As of the most recent valuation date for each Multiemployer Plan for
which the actuarial report is available, the potential liability of Company, its
Subsidiaries and their respective ERISA Affiliates for a complete withdrawal
from such Multiemployer Plan (within the meaning of Section 4203 of ERISA), when
aggregated with such potential liability for a complete withdrawal from all
Multiemployer Plans, based on information available pursuant to Section 4221(e)
of ERISA, does not exceed $5,000,000.
4.12 CERTAIN FEES.
Except as described in the Confidential Information Memorandum and the
advisory fee payable by Company to Piper Jaffray in an amount not to exceed
$700,000, no broker's or finder's fee or commission has been or will be payable
by Company with respect to this Agreement or any of the transactions
contemplated hereby, and Company hereby indemnifies Lenders against, and agrees
that it will hold Lenders harmless from, any claim, demand or liability for any
such broker's or finder's fees alleged to have been incurred in connection
herewith or therewith and any expenses (including reasonable fees, expenses and
disbursements of counsel) arising in connection with any such claim, demand or
liability.
4.13 ENVIRONMENTAL PROTECTION.
Except as set forth in Schedule 4.13 annexed hereto:
(i) neither Company nor any of its Subsidiaries nor any of
their respective Facilities or operations are subject to any
outstanding written order, consent decree or settlement agreement with
any Person relating to (a) any Environmental Law, (b) any Environmental
Claim, or (c) any Hazardous Materials Activity;
(ii) neither Company nor any of its Subsidiaries has received
any letter or request for information under Section 104 of the
Comprehensive Environmental Response, Compensation, and Liability Act
(42 U.S.C. [Section] 9604) or any comparable state law;
(iii) there are and, to Company's knowledge, have been no
conditions, occurrences, or Hazardous Materials Activities which could
reasonably be expected to form the basis of an Environmental Claim
against Company or any of its Subsidiaries;
(iv) neither Company nor any of its Subsidiaries nor, to
Company's knowledge, any predecessor of Company or any of its
Subsidiaries has filed any
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notice under any Environmental Law indicating past or present treatment
of Hazardous Materials at any Facility, and none of Company's or any of
its Subsidiaries' operations involves the generation, transportation,
treatment, storage or disposal of hazardous waste, as defined under 40
C.F.R. Parts 260-270 or any state equivalent;
(v) compliance with all current or reasonably foreseeable
future requirements pursuant to or under Environmental Laws will not,
individually or in the aggregate, have a reasonable possibility of
giving rise to a Material Adverse Effect.
Notwithstanding anything in this subsection 4.13 to the contrary, no
event or condition has occurred or is occurring with respect to Company or any
of its Subsidiaries relating to any Environmental Law, any Release of Hazardous
Materials, or any Hazardous Materials Activity, including any matter disclosed
on Schedule 4.13 annexed hereto, which individually or in the aggregate has had
or could reasonably be expected to have a Material Adverse Effect.
4.14 EMPLOYEE MATTERS.
There is no strike or work stoppage in existence or threatened
involving Company or any of its Subsidiaries that could reasonably be expected
to have a Material Adverse Effect.
4.15 SOLVENCY.
Each Loan Party is and, upon the incurrence of any Obligations by such
Loan Party on any date on which this representation is made, will be, Solvent.
4.16 MATTERS RELATING TO COLLATERAL.
A. CREATION, PERFECTION AND PRIORITY OF LIENS. The execution and
delivery of the Collateral Documents by Loan Parties, together with (i) the
actions taken on or prior to the date hereof pursuant to subsections 3.1I, 5.8
and 5.9 of the Existing AXEL Credit Agreement and subsections 3.1H, 5.8 and 5.9
of this Agreement and (ii) the delivery to Collateral Agent of any Pledged
Collateral not delivered to Collateral Agent at the time of execution and
delivery of the applicable Collateral Document (all of which Pledged Collateral
has been so delivered) are effective to create in favor of Collateral Agent for
the benefit of Secured Parties, as security for the respective Secured
Obligations (as defined in the applicable Collateral Document in respect of any
Collateral), a valid and perfected First Priority Lien on all of the Collateral,
and all filings and other actions necessary or desirable to perfect and maintain
the perfection and First Priority status of such Liens have been duly made or
taken and remain in full force and effect, other than the filing of any UCC
financing statements delivered to Collateral Agent for filing (but not yet
filed) and the
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periodic filing of UCC continuation statements in respect of UCC financing
statements filed by or on behalf of Collateral Agent.
B. GOVERNMENTAL AUTHORIZATIONS. No authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (i) the pledge or grant by any Loan Party
of the Liens purported to be created in favor of Collateral Agent pursuant to
any of the Collateral Documents or (ii) the exercise by Collateral Agent of any
rights or remedies in respect of any Collateral (whether specifically granted or
created pursuant to any of the Collateral Documents or created or provided for
by applicable law), except for filings or recordings contemplated by subsection
4.16A and except as may be required, in connection with the disposition of any
Pledged Collateral, by laws generally affecting the offering and sale of
securities.
C. ABSENCE OF THIRD-PARTY FILINGS. Except such as may have been filed
in favor of Collateral Agent as contemplated by subsection 4.16A, no effective
UCC financing statement, fixture filing or other instrument similar in effect
covering all or any part of the Collateral is on file in any filing or recording
office.
D. MARGIN REGULATIONS. The pledge of the Pledged Collateral pursuant to
the Collateral Documents does not violate Regulation G, T, U or X of the Board
of Governors of the Federal Reserve System.
E. INFORMATION REGARDING COLLATERAL. All information supplied to
Collateral Agent by or on behalf of any Loan Party with respect to any of the
Collateral (in each case taken as a whole with respect to any particular
Collateral) is accurate and complete in all material respects.
4.17 RELATED AGREEMENTS.
A. DELIVERY OF RELATED AGREEMENTS. Company has delivered to
Lenders complete and correct copies of each Related Agreement and the Anagram
Acquisition Agreement and of all exhibits and schedules thereto.
B. WARRANTIES OF COMPANY.
(i) Except to the extent otherwise set forth herein or in the
schedules hereto, each of the representations and warranties given by
Company in the Recapitalization Agreement is true and correct in all
material respects as of the Closing Date (or as of any earlier date to
which such representation and warranty specifically relates) and will
be true and correct in all material respects as of the Closing Date (or
as of such earlier date, as the case may be), in each case subject to
the qualifications set forth in the schedules to the Recapitalization
Agreement.
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(ii) Except to the extent otherwise set forth herein or in the
schedules hereto, each of the representations and warranties given by
Company in the Anagram Acquisition Agreement is true and correct in all
material respects as of the date hereof (or as of any earlier date to
which such representation and warranty specifically relates) and will
be true and correct in all material respects as of the Restatement
Effective Date (or as of such earlier date, as the case may be), in
each case subject to the qualifications set forth in the schedules to
the Anagram Acquisition Agreement.
C. SURVIVAL. Notwithstanding anything in the Recapitalization Agreement
or the Anagram Acquisition Agreement to the contrary, (i) the representations
and warranties of Company set forth in subsection 4.17B(i) shall, solely for
purposes of this Agreement, survive the Closing Date for the benefit of Lenders
and (ii) the representations and warranties of Company set forth in subsection
4.17B(ii) shall, solely for purposes of this Agreement, survive the Restatement
Effective Date for the benefit of Lenders.
4.18 DISCLOSURE.
No representation or warranty of Company or any of its Subsidiaries
contained in the Confidential Information Memorandum or in any Loan Document or
in any other document, certificate or written statement furnished to Lenders by
or on behalf of Company or any of its Subsidiaries for use in connection with
the transactions contemplated by this Agreement contains any untrue statement of
a material fact or omits to state a material fact (known to Company, in the case
of any document not furnished by it) necessary in order to make the statements
contained herein or therein not misleading in light of the circumstances in
which the same were made. Any projections and pro forma financial information
contained in such materials are based upon good faith estimates and assumptions
believed by Company to be reasonable at the time made, it being recognized by
Lenders that such projections as to future events are not to be viewed as facts
and that actual results during the period or periods covered by any such
projections may differ from the projected results. There are no facts known (or
which should upon the reasonable exercise of diligence be known) to Company
(other than matters of a general economic nature) that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect
and that have not been disclosed herein or in such other documents, certificates
and statements furnished to Lenders for use in connection with the transactions
contemplated hereby.
4.19 REVOLVING CREDIT AGREEMENT.
A. DELIVERY OF REVOLVING CREDIT AGREEMENT. Company has delivered to
Lenders complete and correct copies of the Revolving Credit Agreement, as
amended and restated as of the Restatement Effective Date, and of all exhibits
and schedules thereto.
B. WARRANTIES OF COMPANY. Except to the extent otherwise set forth
herein or in the schedule hereto, each of the representations and warranties
given by Company in the
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Revolving Credit Agreement, as amended and restated as of the Restatement
Effective Date, is true and correct in all material respects as of the date
hereof (or as of any earlier date to which such representation and warranty
specifically relates) and will be true and correct in all material respects as
of the Restatement Effective Date (or as of such earlier date, as the case may
be), in each case subject to the qualifications set forth in the schedules to
the Revolving Credit Agreement, as amended and restated.
SECTION 5.
COMPANY'S AFFIRMATIVE COVENANTS
Company covenants and agrees that, so long as any of the Additional
AXEL Commitments hereunder shall remain in effect and until payment in full of
all of the AXELs and other Obligations unless Requisite Lenders shall otherwise
give prior written consent, Company shall perform, and shall cause each of its
Subsidiaries to perform, all covenants in this Section 5.
5.1 FINANCIAL STATEMENTS AND OTHER REPORTS.
Company will maintain, and cause each of its Subsidiaries to maintain,
a system of accounting established and administered in accordance with sound
business practices to permit preparation of financial statements in conformity
with GAAP. Company will deliver to Administrative Agent and Lenders:
(i) Monthly Financials: as soon as available and in any event
within 30 days after the end of each month ending after the Restatement
Effective Date, commencing with the calendar month of August 1998 (or
within 45 days after the end of each month which ends a Fiscal
Quarter), the consolidated balance sheets of Company and its
Subsidiaries as at the end of such month and the related consolidated
statements of income, stockholders' equity and cash flows of Company
and its Subsidiaries for such month and for the period from the
beginning of the then current Fiscal Year to the end of such month,
setting forth in each case in comparative form the corresponding
figures for the corresponding periods of the previous Fiscal Year and
the corresponding figures from the Financial Plan for the current
Fiscal Year, to the extent prepared on a monthly basis, all in
reasonable detail and certified by the chief financial officer of
Company that they fairly present, in all material respects, the
financial condition of Company and its Subsidiaries as at the dates
indicated and the results of their operations and their cash flows for
the periods indicated, subject to changes resulting from audit and
normal year-end adjustments, for such month and for the period from the
beginning of the then current Fiscal Year to the end of such month;
(ii) Quarterly Financials: as soon as available and in any
event within 45 days after the end of each of first three Fiscal
Quarters of each year, (a) the consolidated balance sheets of Company
and its Subsidiaries as at the end of such
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Fiscal Quarter and the related consolidated statements of income,
stockholders' equity and cash flows of Company and its Subsidiaries for
such Fiscal Quarter and for the period from the beginning of the then
current Fiscal Year to the end of such Fiscal Quarter, setting forth in
each case in comparative form the corresponding figures for the
corresponding periods of the previous Fiscal Year and the corresponding
figures from the Financial Plan for the current Fiscal Year, all in
reasonable detail and certified by the chief financial officer of
Company that they fairly present, in all material respects, the
financial condition of Company and its Subsidiaries as at the dates
indicated and the results of their operations and their cash flows for
the periods indicated, subject to changes resulting from audit and
normal year-end adjustments, and (b) a narrative report describing the
operations of Company and its Subsidiaries in the form of the MD&A,
which is prepared by the Company for public filing for such Fiscal
Quarter and for the period from the beginning of the then current
Fiscal Year to the end of such Fiscal Quarter;
(iii) Year-End Financials: as soon as available and in any
event within 90 days after the end of each Fiscal Year, (a) the
consolidated balance sheets of Company and its Subsidiaries as at the
end of such Fiscal Year and the related consolidated statements of
income, stockholders' equity and cash flows of Company and its
Subsidiaries for such Fiscal Year, setting forth in each case in
comparative form the corresponding figures for the previous Fiscal Year
and the corresponding figures from the Financial Plan for the Fiscal
Year covered by such financial statements, all in reasonable detail and
certified by the chief financial officer of Company that they fairly
present, in all material respects, the financial condition of Company
and its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated, (b) a
narrative report describing the operations of Company and its
Subsidiaries in the form prepared for presentation to senior management
for such Fiscal Year, and (c) a report thereon of independent certified
public accountants of recognized national standing selected by Company
and satisfactory to Administrative Agent, which report shall be
unqualified, shall express no doubts about the ability of Company and
its Subsidiaries to continue as a going concern, and shall state that
such consolidated financial statements fairly present, in all material
respects, the consolidated financial position of Company and its
Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated in conformity
with GAAP applied on a basis consistent with prior years (except as
otherwise disclosed in such financial statements) and that the
examination by such accountants in connection with such consolidated
financial statements has been made in accordance with generally
accepted auditing standards;
(iv) Officers' and Compliance Certificates: together with each
delivery of financial statements of Company and its Subsidiaries
pursuant to subdivisions (ii) and (iii) above, (a) an Officers'
Certificate of Company stating that the signers have reviewed the terms
of this Agreement and have made, or caused to be made under
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their supervision, a review in reasonable detail of the transactions
and condition of Company and its Subsidiaries during the accounting
period covered by such financial statements and that such review has
not disclosed the existence during or at the end of such accounting
period, and that the signers do not have knowledge of the existence as
at the date of such Officers' Certificate, of any condition or event
that constitutes an Event of Default or Potential Event of Default, or,
if any such condition or event existed or exists, specifying the nature
and period of existence thereof and what action Company has taken, is
taking and proposes to take with respect thereto; and (b) a Compliance
Certificate demonstrating in reasonable detail (1) compliance during
and at the end of the applicable accounting periods with the
restrictions contained in Section 6, in each case to the extent
compliance with such restrictions is required to be tested at the end
of the applicable accounting period and (2) with respect to any Net
Asset Sale Proceeds received by Company or any of its Subsidiaries
during the second Fiscal Quarter immediately preceding the Fiscal
Quarter in which the applicable accounting period ends, whether or not
all or any portion of such Net Asset Sale Proceeds shall have become
Unreinvested Asset Sale Proceeds;
(v) Reconciliation Statements: if, as a result of any change
in accounting principles and policies from those used in the
preparation of the audited financial statements referred to in
subsection 4.3, the consolidated financial statements of Company and
its Subsidiaries delivered pursuant to subdivisions (ii), (iii) or
(xiii) of this subsection 5.1 will differ in any material respect from
the consolidated financial statements that would have been delivered
pursuant to such subdivisions had no such change in accounting
principles and policies been made, then (a) together with the first
delivery of financial statements pursuant to subdivision (ii), (iii) or
(xiii) of this subsection 5.1 following such change, consolidated
financial statements of Company and its Subsidiaries for (y) the
current Fiscal Year to the effective date of such change and (z) the
two full Fiscal Years immediately preceding the Fiscal Year in which
such change is made, in each case prepared on a pro forma basis as if
such change had been in effect during such periods, and (b) together
with each delivery of financial statements pursuant to subdivision
(ii), (iii) or (xiii) of this subsection 5.1 following such change, a
written statement of the chief accounting officer or chief financial
officer of Company setting forth the differences which would have
resulted if such financial statements had been prepared without giving
effect to such change;
(vi) Accountants' Certification: together with each delivery
of consolidated financial statements of Company and its Subsidiaries
pursuant to subdivision (iii) above, a written statement by the
independent certified public accountants giving the report thereon (a)
stating that their audit examination has included a review of the terms
of this Agreement and the other AXEL Loan Documents as they relate to
accounting matters, (b) stating whether, in connection with their audit
examination, any condition or event that constitutes an Event of
Default or Potential Event of Default has come to their attention and,
if such a condition or event has come to
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their attention, specifying the nature and period of existence thereof;
provided that such accountants shall not be liable by reason of any
failure to obtain knowledge of any such Event of Default or Potential
Event of Default that would not be disclosed in the course of their
audit examination, and (c) stating that based on their audit
examination nothing has come to their attention that causes them to
believe either or both that the information contained in the
certificates delivered therewith pursuant to subdivision (iv) above is
not correct or that the matters set forth in the Compliance
Certificates delivered therewith pursuant to clause (b) of subdivision
(iv) above for the applicable Fiscal Year are not stated in accordance
with the terms of this Agreement;
(vii) Accountants' Reports: promptly upon receipt thereof
(unless restricted by applicable professional standards), copies of all
reports submitted to Company by independent certified public
accountants in connection with each annual, interim or special audit of
the financial statements of Company and its Subsidiaries made by such
accountants, including any comment letter submitted by such accountants
to management in connection with their annual audit;
(viii) SEC Filings and Press Releases: promptly upon their
becoming available, copies of (a) all financial statements, reports,
notices and proxy statements sent or made available generally by
Company to its security holders or by any Subsidiary of Company to its
security holders other than Company or another Subsidiary of Company,
(b) all regular and periodic reports and all registration statements
(other than on Form S-8 or a similar form) and prospectuses, if any,
filed by Company or any of its Subsidiaries with any securities
exchange or with the Securities and Exchange Commission or any
governmental or private regulatory authority, and (c) all press
releases and other statements made available generally by Company or
any of its Subsidiaries to the public concerning material developments
in the business of Company or any of its Subsidiaries;
(ix) Events of Default, etc.: promptly upon any officer of
Company obtaining knowledge (a) of any condition or event that
constitutes an Event of Default or Potential Event of Default, or
becoming aware that any Lender has given any notice (other than to
Administrative Agent) or taken any other action with respect to a
claimed Event of Default or Potential Event of Default, (b) that any
Person has given any notice to Company or any of its Subsidiaries or
taken any other action with respect to a claimed default or event or
condition of the type referred to in subsection 7.2, (c) of any
condition or event that would be required to be disclosed in a current
report filed by Company with the Securities and Exchange Commission on
Form 8-K (Items 1, 2, 4, 5 and 6 of such Form as in effect on the date
hereof) if Company were required to file such reports under the
Exchange Act, or (d) of the occurrence of any event or change that has
caused or evidences, either in any case or in the aggregate, a Material
Adverse Effect, an Officers' Certificate specifying the nature and
period of existence of such condition, event or change, or specifying
the
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notice given or action taken by any such Person and the nature of such
claimed Event of Default, Potential Event of Default, default, event or
condition, and what action Company has taken, is taking and proposes to
take with respect thereto;
(x) Litigation or Other Proceedings: (a) promptly upon any
officer of Company obtaining knowledge of (X) the institution of, or
non-frivolous threat of, any action, suit, proceeding (whether
administrative, judicial or otherwise), governmental investigation or
arbitration against or affecting Company or any of its Subsidiaries or
any property of Company or any of its Subsidiaries (collectively,
"PROCEEDINGS") not previously disclosed in writing by Company to
Lenders or (Y) any material development in any Proceeding that, in any
case:
(1) if adversely determined, has a reasonable
possibility of giving rise to a Material Adverse Effect; or
(2) seeks to enjoin or otherwise prevent the
consummation of, or to recover any damages or obtain relief as
a result of, the transactions contemplated hereby;
written notice thereof together with such other information as may be
reasonably available to Company to enable Lenders and their counsel to
evaluate such matters; and (b) within twenty days after the end of each
Fiscal Quarter, a schedule of all Proceedings involving an alleged
liability of, or claims against or affecting, Company or any of its
Subsidiaries equal to or greater than $500,000, and promptly after
request by Administrative Agent such other information as may be
reasonably requested by Administrative Agent to enable Administrative
Agent and its counsel to evaluate any of such Proceedings;
(xi) ERISA Events: promptly upon becoming aware of the
occurrence of or forthcoming occurrence of any ERISA Event, a written
notice specifying the nature thereof, what action Company, any of its
Subsidiaries or any of their respective ERISA Affiliates has taken, is
taking or proposes to take with respect thereto and, when known, any
action taken or threatened by the Internal Revenue Service, the
Department of Labor or the PBGC with respect thereto;
(xii) ERISA Notices: with reasonable promptness, copies of (a)
each Schedule B (Actuarial Information) to the annual report (Form 5500
Series) filed by Company, any of its Subsidiaries or any of their
respective ERISA Affiliates with the Internal Revenue Service with
respect to each Pension Plan; (b) all notices received by Company or
any of its Subsidiaries from a Multiemployer Plan sponsor concerning an
ERISA Event; and (c) copies of such other documents or governmental
reports or filings relating to any Employee Benefit Plan as
Administrative Agent shall reasonably request;
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(xiii) Financial Plans: as soon as practicable and in any
event no later than 30 days prior to the beginning of each Fiscal Year,
a consolidated plan and financial forecast for such Fiscal Year and
each succeeding Fiscal Year through the date of the last scheduled
payment relating to the AXELs (the "FINANCIAL PLAN" for such Fiscal
Years), including (a) forecasted consolidated balance sheets and
forecasted consolidated statements of income and cash flows of Company
and its Subsidiaries for each such Fiscal Year, together with pro forma
Compliance Certificates for each such Fiscal Year and an explanation of
the assumptions on which such forecasts are based, (b) forecasted
consolidated statements of income and cash flows of Company and its
Subsidiaries for each month of the first such Fiscal Year, together
with an explanation of the assumptions on which such forecasts are
based, and (c) such other information and projections as any Lender may
reasonably request;
(xiv) Insurance: as soon as practicable and in any event by
the last day of each Fiscal Year, a report in form and substance
satisfactory to Administrative Agent outlining all material insurance
coverage maintained as of the date of such report by Company and its
Subsidiaries and all material insurance coverage planned to be
maintained by Company and its Subsidiaries in the immediately
succeeding Fiscal Year;
(xv) Board of Directors: with reasonable promptness, written
notice of any change in the Board of Directors of Company;
(xvi) New Subsidiaries: promptly upon any Person becoming a
Subsidiary of Company, a written notice setting forth with respect to
such Person (a) the date on which such Person became a Subsidiary of
Company and (b) all of the data required to be set forth in Schedule
4.1 annexed hereto with respect to all Subsidiaries of Company (it
being understood that such written notice shall be deemed to supplement
Schedule 4.1 annexed hereto for all purposes of this Agreement);
(xvii) Material Contracts: promptly, and in any event within
ten Business Days after any Material Contract of Company or any of its
Subsidiaries is terminated or amended in a manner that is materially
adverse to Company or such Subsidiary, as the case may be, or any new
Material Contract is entered into, a written statement describing such
event with copies of such material amendments or new contracts, and an
explanation of any actions being taken with respect thereto; and
(xviii) Other Information: with reasonable promptness, such
other information and data with respect to Company or any of its
Subsidiaries as from time to time may be reasonably requested by any
Lender.
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5.2 CORPORATE EXISTENCE, ETC.
Except as permitted under subsection 6.5, Company will, and will cause
each of its Subsidiaries to, at all times preserve and keep in full force and
effect its corporate existence and all rights and franchises material to its
business; provided, however that neither Company nor any of its Subsidiaries
shall be required to preserve any such right or franchise if the Board of
Directors of Company or such Subsidiary shall determine that the preservation
thereof is no longer desirable in the conduct of the business of Company or such
Subsidiary, as the case may be, and that the loss thereof is not disadvantageous
in any material respect to Company, such Subsidiary or Lenders.
5.3 PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION.
A. Company will, and will cause each of its Subsidiaries to, pay all
material taxes, assessments and other governmental charges imposed upon it or
any of its properties or assets or in respect of any of its income, businesses
or franchises before any penalty accrues thereon, and all claims (including
claims for labor, services, materials and supplies) for sums that have become
due and payable and that by law have or may become a Lien upon any of its
properties or assets, prior to the time when any penalty or fine shall be
incurred with respect thereto; provided that no such charge or claim need be
paid if it is being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted, so long as (1) such reserve or other
appropriate provision, if any, as shall be required in conformity with GAAP
shall have been made therefor and (2) in the case of a charge or claim which has
or may become a Lien against any of the Collateral, such contest proceedings
conclusively operate to stay the sale of any portion of the Collateral to
satisfy such charge or claim.
B. Company will not, nor will it permit any of its Subsidiaries to,
file or consent to the filing of any consolidated income tax return with any
Person (other than Company or any of its Subsidiaries).
5.4 MAINTENANCE OF PROPERTIES; INSURANCE; APPLICATION OF NET INSURANCE/
CONDEMNATION PROCEEDS.
A. MAINTENANCE OF PROPERTIES. Company will, and will cause each of its
Subsidiaries to, maintain or cause to be maintained in good repair, working
order and condition, ordinary wear and tear excepted, all material properties
used or useful in the business of Company and its Subsidiaries (including all
Intellectual Property) and from time to time will make or cause to be made all
appropriate repairs, renewals and replacements thereof except where the failure
to maintain such properties could not reasonably be expected in any individual
case or in the aggregate to have a Material Adverse Effect.
B. INSURANCE. Company will maintain or cause to be maintained, with
financially sound and reputable insurers, such public liability insurance, third
party property damage
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insurance, business interruption insurance and casualty insurance with respect
to liabilities, losses or damage in respect of the assets, properties and
businesses of Company and its Subsidiaries as may customarily be carried or
maintained under similar circumstances by corporations of established reputation
engaged in similar businesses, in each case in such amounts (giving effect to
self-insurance), with such deductibles, covering such risks and otherwise on
such terms and conditions as shall be customary for corporations similarly
situated in the industry. Without limiting the generality of the foregoing,
Company will maintain or cause to be maintained (i) flood insurance with respect
to each Flood Hazard Property that is located in a community that participates
in the National Flood Insurance Program, in each case in compliance with any
applicable regulations of the Board of Governors of the Federal Reserve System,
and (ii) replacement value casualty insurance on the Collateral under such
policies of insurance, with such insurance companies, in such amounts, with such
deductibles, and covering such risks as are at all times satisfactory to
Administrative Agent in its commercially reasonable judgment. Each such policy
of insurance shall (a) name Collateral Agent for the benefit of Secured Parties
as an additional insured thereunder as its interests may appear and (b) in the
case of each business interruption and casualty insurance policy, contain a loss
payable clause or endorsement, satisfactory in form and substance to Collateral
Agent, that names Collateral Agent for the benefit of Secured Parties as the
loss payee thereunder for any covered loss in excess of $1,500,000 and provides
for at least 30 days prior written notice to Administrative Agent of any
modification or cancellation of such policy.
C. APPLICATION OF NET INSURANCE/CONDEMNATION PROCEEDS.
(i) Business Interruption Insurance. Upon receipt by Company
or any of its Subsidiaries of any business interruption insurance
proceeds constituting Net Insurance/Condemnation Proceeds, (a) so long
as no Event of Default shall have occurred and be continuing, Company
or such Subsidiary may retain and apply such Net Insurance/Condemnation
Proceeds for working capital purposes, and (b) if an Event of Default
shall have occurred and be continuing, Company shall apply an amount
equal to such Net Insurance/Condemnation Proceeds to prepay the AXELs
as provided in subsection 2.4B(ii)(b);
(ii) Casualty Insurance/Condemnation Proceeds. Upon receipt by
Company or any of its Subsidiaries of any Net Insurance/Condemnation
Proceeds other than from business interruption insurance, (a) so long
as no Event of Default shall have occurred and be continuing, Company
shall, or shall cause one or more of its Subsidiaries to, (1) subject
to clause (iv) below, promptly and diligently and in any event within
six months of receipt apply such Net Insurance/Condemnation Proceeds to
pay or reimburse the costs of repairing, restoring or replacing the
assets in respect of which such Net Insurance/Condemnation Proceeds
were received or, (2) to the extent not so applied, or applied pursuant
to clause (iv) below within six months of receipt by Company or any of
its Subsidiaries to prepay the AXELs as provided in subsection
2.4B(ii)(b), and (b) if an Event of Default shall have occurred
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and be continuing, Company shall apply an amount equal to such Net
Insurance/Condemnation Proceeds to prepay the AXELs as provided in
subsection 2.4B(ii)(b).
(iii) Net Insurance/Condemnation Proceeds Received by
Collateral Agent. Upon receipt by Collateral Agent of any Net
Insurance/Condemnation Proceeds as loss payee, such loss proceeds shall
be held and applied in accordance with the terms of the Intercreditor
Agreement.
(iv) Reinvestment of Insurance Proceeds. So long as no Event
of Default or Potential Event of Default shall have occurred and be
continuing Company and its Subsidiaries may reinvest in the business of
Company and its Subsidiaries up to $1,000,000 per year of Net
Insurance/Condemnation Proceeds recovered by the Company or any of its
Subsidiaries provided that such funds are reinvested within six months
of receipt by Company or any of its Subsidiaries.
5.5 INSPECTION RIGHTS; LENDER MEETING.
A. INSPECTION RIGHTS. Company shall, and shall cause each of its
Subsidiaries to, permit any authorized representatives designated by any Lender
to visit and inspect any of the properties of Company or of any of its
Subsidiaries, to inspect, copy and take extracts from its and their financial
and accounting records, and to discuss its and their affairs, finances and
accounts with its and their officers and independent public accountants
(provided that Company may, if it so chooses, be present at or participate in
any such discussion), all upon reasonable notice and at such reasonable times
during normal business hours and as often as may reasonably be requested.
B. LENDER MEETING. Company will, upon the request of Arranger,
Administrative Agent or Requisite Lenders, participate in a meeting of
Administrative Agent and Lenders once during each Fiscal Year to be held at
Company's corporate offices (or at such other location as may be agreed to by
Company and Administrative Agent) at such time as may be agreed to by Company
and Administrative Agent.
5.6 COMPLIANCE WITH LAWS, ETC.
Company shall comply, and shall cause each of its Subsidiaries and all
other Persons on or occupying any Facilities to comply, with the requirements of
all applicable laws, rules, regulations and orders of any governmental authority
(including all Environmental Laws), noncompliance with which could reasonably be
expected to cause, individually or in the aggregate, a Material Adverse Effect.
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5.7 ENVIRONMENTAL REVIEW AND INVESTIGATION, DISCLOSURE, ETC.; COMPANY'S
ACTIONS REGARDING HAZARDOUS MATERIALS ACTIVITIES, ENVIRONMENTAL CLAIMS
AND VIOLATIONS OF ENVIRONMENTAL LAWS.
A. ENVIRONMENTAL REVIEW AND INVESTIGATION. Company agrees that
Administrative Agent may, from time to time and in its reasonable discretion,
(i) retain, at Company's expense, an independent professional consultant to
review any environmental audits, investigations, analyses and reports relating
to Hazardous Materials prepared by or for Company and (ii) conduct its own
investigation of any Facility; provided that, in the case of any Facility no
longer owned, leased, operated or used by Company or any of its Subsidiaries,
Company shall only be obligated to use its good faith and reasonable efforts to
obtain permission for Administrative Agent's professional consultant to conduct
an investigation of such Facility. For purposes of conducting such a review
and/or investigation, Company hereby grants to Administrative Agent and its
agents, employees, consultants and contractors the right to enter into or onto
any Facilities currently owned, leased, operated or used by Company or any of
its Subsidiaries and to perform such tests on such property (including taking
samples of soil, groundwater and suspected asbestos-containing materials) as are
reasonably necessary in connection therewith. Any such investigation of any
Facility shall be conducted, unless otherwise agreed to by Company and
Administrative Agent, during normal business hours and, to the extent reasonably
practicable, shall be conducted so as not to interfere with the ongoing
operations at such Facility or to cause any damage or loss to any property at
such Facility. Company and Administrative Agent hereby acknowledge and agree
that any report of any investigation conducted at the request of Administrative
Agent pursuant to this subsection 5.7A will be obtained and shall be used by
Administrative Agent and Lenders for the purposes of Lenders' internal credit
decisions, to monitor and police the AXELs and to protect Lenders' security
interests, if any, created by the AXEL Loan Documents. Administrative Agent
agrees to deliver a copy of any such report to Company with the understanding
that Company acknowledges and agrees that (x) it will indemnify and hold
harmless Administrative Agent and each Lender from any costs, losses or
liabilities relating to Company's use of or reliance on such report, (y) neither
Administrative Agent nor any Lender makes any representation or warranty with
respect to such report, and (z) by delivering such report to Company, neither
Administrative Agent nor any Lender is requiring or recommending the
implementation of any suggestions or recommendations contained in such report.
B. ENVIRONMENTAL DISCLOSURE. Company will deliver to Administrative
Agent and Lenders:
(i) Environmental Audits and Reports. As soon as practicable
following receipt thereof, copies of all environmental audits,
investigations, analyses and reports of any kind or character, whether
prepared by personnel of Company or any of its Subsidiaries or by
independent consultants, governmental authorities or any
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other Persons, with respect to significant environmental matters at any
Facility or with respect to any Environmental Claims;
(ii) Notice of Certain Releases, Remedial Actions, Etc.
Promptly upon the occurrence thereof, written notice describing in
reasonable detail (a) any Release required to be reported by Company or
any of its Subsidiaries to any federal, state or local governmental or
regulatory agency under any applicable Environmental Laws, (b) any
remedial action taken by Company or any of its Subsidiaries or any
other Person of which Company has knowledge in response to (1) any
Hazardous Materials Activities the existence of which has a reasonable
possibility of resulting in one or more Environmental Claims having,
individually or in the aggregate, a Material Adverse Effect, or (2) any
Environmental Claims that, individually or in the aggregate, have a
reasonable possibility of resulting in a Material Adverse Effect, and
(c) Company's discovery of any occurrence or condition on any real
property adjoining or in the vicinity of any Facility that could
reasonably be expected to cause such Facility or any part thereof to be
subject to any material restrictions on the ownership, occupancy,
transferability or use thereof under any Environmental Laws.
(iii) Written Communications Regarding Environmental Claims,
Releases, Etc. As soon as practicable following the sending or receipt
thereof,by Company or any of its Subsidiaries, a copy of any and all
written communications with respect to (a) any Environmental Claims
that, individually or in the aggregate, are reasonably expected to have
a Material Adverse Effect, (b) any Release required to be reported by
Company or any of its Subsidiaries to any federal, state or local
governmental or regulatory agency, and (c) any request made to Company
or any of its Subsidiaries for information from any governmental agency
that suggests such agency is investigating whether Company or any of
its Subsidiaries may be potentially responsible for any Hazardous
Materials Activity.
(iv) Notice of Certain Proposed Actions Having Environmental
Impact. Prompt written notice describing in reasonable detail (a) any
proposed acquisition of stock, assets, or property by Company or any of
its Subsidiaries that could reasonably be expected to (1) expose
Company or any of its Subsidiaries to, or result in, Environmental
Claims that would have, individually or in the aggregate, a Material
Adverse Effect or (2) result in Company or any of its Subsidiaries
failing to maintain in full force and effect all material Governmental
Authorizations required under any Environmental Laws for their
respective operations and (b) any proposed action to be taken by
Company or any of its Subsidiaries to modify current operations in a
manner that could reasonably be expected to subject Company or any of
its Subsidiaries to any additional obligations or requirements under
any Environmental Laws.
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(v) Other Information. With reasonable promptness, such other
documents and information as from time to time may be reasonably
requested by Administrative Agent in relation to any matters disclosed
pursuant to this subsection 5.7.
C. COMPANY'S ACTIONS REGARDING HAZARDOUS MATERIALS ACTIVITIES,
ENVIRONMENTAL CLAIMS AND VIOLATIONS OF ENVIRONMENTAL LAWS.
(i) Remedial Actions Relating to Hazardous Materials
Activities. Company shall promptly undertake, and shall cause each of
its Subsidiaries promptly to undertake, any and all investigations,
studies, sampling, testing, abatement, cleanup, removal, remediation or
other response actions necessary to remove, remediate, clean up or
abate any Hazardous Materials Activity on, under or about any Facility
that is in violation of any Environmental Laws or that presents a
material risk of giving rise to an Environmental Claim. In the event
Company or any of its Subsidiaries undertakes any such action with
respect to any Hazardous Materials, Company or such Subsidiary shall
conduct and complete such action in compliance with all applicable
Environmental Laws and in accordance with the policies, orders and
directives of all federal, state and local governmental authorities
except when, and only to the extent that, Company's or such
Subsidiary's liability with respect to such Hazardous Materials
Activity is being contested in good faith by Company or such
Subsidiary.
(ii) Actions with Respect to Environmental Claims and
Violations of Environmental Laws. Company shall promptly take, and
shall cause each of its Subsidiaries promptly to take, any and all
actions necessary to (i) cure any violation of applicable Environmental
Laws by Company or its Subsidiaries and (ii) make an appropriate
response to any Environmental Claim against Company or any of its
Subsidiaries and discharge any obligations it may have to any Person
thereunder.
5.8 EXECUTION OF SUBSIDIARY GUARANTY AND PERSONAL PROPERTY COLLATERAL
DOCUMENTS BY CERTAIN SUBSIDIARIES AND FUTURE SUBSIDIARIES.
A. EXECUTION OF SUBSIDIARY GUARANTY AND PERSONAL PROPERTY COLLATERAL
DOCUMENTS. In the event that any Domestic Subsidiary existing on the Restatement
Effective Date that has not previously executed the Subsidiary Guaranty
hereafter owns or acquires assets with an aggregate fair market value (without
netting such fair market value against any liability of such Subsidiary)
exceeding $500,000, or in the event that any Person becomes a Material Domestic
Subsidiary after the date hereof, Company will promptly notify Collateral Agent
of that fact and cause such Subsidiary to execute and deliver to Collateral
Agent a counterpart of the Subsidiary Guaranty and a Subsidiary Pledge Agreement
and a Subsidiary Security Agreement and to take all such further actions and
execute all such further documents and instruments (including actions, documents
and instruments comparable to those described in subsection 3.1H) as may be
necessary or, in the opinion of Collateral Agent, desirable to create in favor
of Collateral Agent, for the
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benefit of Secured Parties, a valid and perfected First Priority Lien on all of
the personal and mixed property assets of such Subsidiary described in the
applicable forms of Collateral Documents.
B. SUBSIDIARY CHARTER DOCUMENTS, LEGAL OPINIONS, ETC. Company shall
deliver to Collateral Agent, together with such AXEL Loan Documents, (i)
certified copies of such Subsidiary's Certificate or Articles of Incorporation,
together with a good standing certificate from the Secretary of State of the
jurisdiction of its incorporation and each other state in which such Person is
qualified as a foreign corporation to do business and, to the extent generally
available, a certificate or other evidence of good standing as to payment of any
applicable franchise or similar taxes from the appropriate taxing authority of
each of such jurisdictions, each to be dated a recent date prior to their
delivery to Collateral Agent, (ii) a copy of such Subsidiary's Bylaws, certified
by its corporate secretary or an assistant secretary as of a recent date prior
to their delivery to Collateral Agent, (iii) a certificate executed by the
secretary or an assistant secretary of such Subsidiary as to (a) the fact that
the attached resolutions of the Board of Directors of such Subsidiary approving
and authorizing the execution, delivery and performance of such AXEL Loan
Documents are in full force and effect and have not been modified or amended and
(b) the incumbency and signatures of the officers of such Subsidiary executing
such AXEL Loan Documents, and (iv) a favorable opinion of counsel to such
Subsidiary, in form and substance satisfactory to Collateral Agent and its
counsel, as to (a) the due organization and good standing of such Subsidiary,
(b) the due authorization, execution and delivery by such Subsidiary of such
AXEL Loan Documents, (c) the enforceability of such AXEL Loan Documents against
such Subsidiary, (d) such other matters (including matters relating to the
creation and perfection of Liens in any Collateral pursuant to such AXEL Loan
Documents) as Collateral Agent may reasonably request, all of the foregoing to
be satisfactory in form and substance to Administrative Agent and its counsel.
C. FOREIGN SUBSIDIARY LOAN DOCUMENTS. In the event that any
Foreign Subsidiary existing on the Restatement Effective Date whose shares have
not been pledged pursuant to an Auxiliary Pledge Agreement owns or acquires
assets with an aggregate fair market value (without netting such fair market
value against any liability of such Subsidiary) exceeding $1,500,000, or in the
event that any person becomes a Foreign Subsidiary which owns assets with an
aggregate fair market value (without netting such fair market value against any
liability of such Subsidiary) exceeding $1,500,000, Company will promptly notify
Collateral Agent of that fact and shall or cause the applicable subsidiary which
owns equity in such Foreign Subsidiary to execute and deliver to Collateral
Agent an Auxiliary Pledge Agreement in form and substance satisfactory to
Collateral Agent; to take all such further actions and execute such further
documents and instruments as may be necessary or, in the opinion of Collateral
Agent reasonably desirable, to perfect a Lien on the equity interests of such
Foreign Subsidiary for the benefit of Secured Parties and to deliver to
Collateral Agent an opinion of counsel (which counsel shall be reasonably
acceptable to Collateral Agent) as to the enforceability of the Auxiliary Pledge
Agreement under the laws of such
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Foreign Subsidiary's jurisdiction of organization and such other matters as
Collateral Agent may reasonably request (including as to the perfection of liens
on such equity interests)
D. If at any time JCS Realty acquires any personal property
assets with an aggregate fair market value (without netting such fair market
value against any liability of JCS Realty) in excess of $500,000, Company will
promptly notify Collateral Agent of that fact and cause JCS Realty to execute
and deliver all documents and to take all such further actions as may be
necessary or, in the opinion of Collateral Agent, desirable to create in favor
of Collateral Agent, for the benefit of Secured Parties, a valid and perfected
First Priority Lien on such property in all relevant jurisdictions.
5.9 CONFORMING LEASEHOLD INTERESTS; MATTERS RELATING TO ADDITIONAL REAL
PROPERTY COLLATERAL
A. CONFORMING LEASEHOLD INTERESTS. From and after the Restatement
Effective Date, if Company or any of its Subsidiaries acquires any Leasehold
Property, Company shall, or shall cause such Subsidiary to, use its reasonable
and good faith efforts (without requiring Company or such Subsidiary to
relinquish any material rights or incur any material obligations or to expend
more than a nominal amount of money over and above the reimbursement, if
required, of the Landlord's reasonable out-of-pocket costs, including attorneys'
fees) to cause such Leasehold Property to be a Conforming Leasehold Interest.
B. MORTGAGES, ETC. From and after the Restatement Effective Date, in
the event that (i) Company or any Subsidiary Guarantor acquires any fee interest
in real property or any Material Leasehold Property, (ii) with respect to any
Material Leasehold Property or any real property in which Company has a fee
interest in on or prior to the Restatement Effective Date, any first priority
mortgage existing on or prior to the Restatement Effective Date on such property
is removed or (iii) at the time any Person (including Eden Prairie Holdings)
becomes a Subsidiary Guarantor, such Person owns or holds any fee interest in
real property or any Material Leasehold Property, in all cases excluding (A) any
such Real Property Asset the encumbrancing of which requires the consent of any
applicable lessor or (in the case of clause (iii) above) then-existing senior
lienholder, where Company and its Subsidiaries are unable to obtain such
lessor's or senior lienholder's consent and (B) the Anagram Headquarters
Facility in the event (a) the mortgage recording tax payable in respect of a
Mortgage thereon would be based on an amount greater than the amount of Eden
Prairie Holdings' Additional Guarantor's Obligations under and as defined in the
Subsidiary Guaranty, or (b) in the opinion of counsel (which counsel shall be
reasonably satisfactory to Collateral Agent) in the state in which the Anagram
Headquarters Facility is located, there is a reasonable likelihood that a
mortgage to secure Eden Prairie Holdings' obligations under the Subsidiary
Guaranty in the form requested by the Collateral Agent would not be valid and
enforceable in the applicable jurisdictions of such state (any such non-excluded
Real Property Asset described in the foregoing clause (i), (ii) or (iii) a
"MORTGAGED PROPERTY") Company or such Subsidiary Guarantor shall promptly notify
Collateral Agent, and shall deliver upon Collateral Agent's written request, as
soon as
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practicable after such Person acquires such Mortgaged Property or becomes a
Subsidiary Guarantor, as the case may be, the following:
(i) Mortgage. A fully executed and notarized Mortgage duly
recorded in all appropriate places in all applicable jurisdictions,
encumbering the interest of such Loan Party in such Mortgaged Property;
(ii) Opinions of Counsel. (a) A favorable opinion of counsel
to such Loan Party, in form and substance satisfactory to Collateral
Agent and its counsel, as to the due authorization, execution and
delivery by such Loan Party of such Mortgage and such other matters as
Collateral Agent may reasonably request, and (b) if required by
Collateral Agent, an opinion of counsel (which counsel shall be
reasonably satisfactory to Collateral Agent) in the state in which such
Mortgaged Property is located with respect to the enforceability of
such Mortgage and such other matters (including any matters governed by
the laws of such state regarding personal property security interests
in respect of any Collateral) as Collateral Agent may reasonably
request, in each case in form and substance reasonably satisfactory to
Collateral Agent;
(iii) Landlord Consent and Estoppel; Recorded Leasehold
Interest. In the case of a Mortgaged Property consisting of a Leasehold
Property, (a) if such Leasehold Property is holding or will hold
inventory or equipment with an aggregate fair market value exceeding
$500,000, a Landlord Consent and Estoppel provided that Company shall
only be required to use reasonable and good faith efforts to obtain
such Landlord Consent and Estoppel and in no event shall Company be
obligated to pay any fee, charge or other consideration to any landlord
in order to obtain such Landlord Consent and Estoppel, other than, if
required, the landlord's reasonable out-of-pocket costs, including
attorneys' fees and (b) if such Leasehold Property is a Recorded
Leasehold Interest, evidence to that effect
(iv) Title Insurance. (a) If reasonably requested by
Collateral Agent, an ALTA mortgagee title insurance policy or an
unconditional commitment therefor (a "MORTGAGE POLICY") issued by the
Title Company with respect to such Mortgaged Property, in an amount
satisfactory to Collateral Agent, insuring fee simple title to, or a
valid leasehold interest in, such Mortgaged Property vested in such
Loan Party and assuring Collateral Agent that such Mortgage creates a
valid and enforceable First Priority mortgage Lien on such Mortgaged
Property, subject only to, if available in the state in which such
Mortgaged Property is located, a standard survey exception and to
Permitted Encumbrances, which Mortgage Policy (1) shall include, if
available in the state in which such Mortgaged Property is located, an
endorsement for mechanics' liens, for future advances under this
Agreement and for any other matters reasonably requested by Collateral
Agent and (2) shall provide for such affirmative insurance and such
reinsurance as Collateral Agent may reasonably request, all of the
foregoing in form and substance reasonably satisfactory to Collateral
Agent; and
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(b) evidence satisfactory to Collateral Agent that such Loan Party has
(i) delivered to the Title Company all certificates and affidavits
customarily required by the Title Company in connection with the
issuance of the Mortgage Policy and (ii) paid to the Title Company or
to the appropriate governmental authorities all expenses and premiums
of the Title Company in connection with the issuance of the Mortgage
Policy and all recording and stamp taxes (including mortgage recording
and intangible taxes) payable in connection with recording the Mortgage
in the appropriate real estate records; provided however, that
Administrative Agent shall allow for such reasonable revisions to the
applicable mortgage and shall otherwise take such steps as are
reasonable and customary to minimize recording, mortgage recording,
stamp, documentary and intangible taxes, at Company's cost; provided,
further, that in no event shall such Loan Party be required to pay any
additional mortgage recording tax after the initial recording of any
such Mortgage which may be required in order to maintain the secured or
priority status of such Mortgage.
(v) Title Report. If no Mortgage Policy is required with
respect to such Mortgaged Property, a title report issued by the Title
Company with respect thereto, dated not more than 30 days prior to the
date such Mortgage is to be recorded and satisfactory in form and
substance to Collateral Agent;
(vi) Copies of Documents Relating to Title Exceptions. Copies
of all recorded documents listed as exceptions to title or otherwise
referred to in the Mortgage Policy or title report delivered pursuant
to clause (iv) or (v) above;
(vii) Matters Relating to Flood Hazard Properties. (a)
Evidence, which may be in the form of a letter from an insurance broker
or a municipal engineer, as to (1) whether such Mortgaged Property is a
Flood Hazard Property and (2) if so, whether the community in which
such Flood Hazard Property is located is participating in the National
Flood Insurance Program, (b) if such Mortgaged Property is a Flood
Hazard Property, such Loan Party's written acknowledgement of receipt
of written notification from Collateral Agent (1) that such Mortgaged
Property is a Flood Hazard Property and (2) as to whether the community
in which such Flood Hazard Property is located is participating in the
National Flood Insurance Program, and (c) in the event such Mortgaged
Property is a Flood Hazard Property that is located in a community that
participates in the National Flood Insurance Program, evidence that
Company has obtained flood insurance in respect of such Flood Hazard
Property to the extent required under the applicable regulations of the
Board of Governors of the Federal Reserve System; and
(viii) Environmental Audit. If required by Collateral Agent,
reports and other information, in form, scope and substance
satisfactory to Collateral Agent and prepared by environmental
consultants satisfactory to Collateral Agent, concerning any
environmental hazards or liabilities to which Company or any of its
Subsidiaries may be subject with respect to such Mortgaged Property.
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C. REAL ESTATE APPRAISALS. Company shall, and shall cause each of its
Subsidiaries to, permit an independent real estate appraiser satisfactory to
Collateral Agent, upon reasonable notice, to visit and inspect any Additional
Mortgaged Property for the purpose of preparing an appraisal of such Mortgaged
Property satisfying the requirements of any applicable laws and regulations (in
each case to the extent required under such laws and regulations as determined
by Collateral Agent in its discretion).
5.10 INTEREST RATE PROTECTION.
A. EXISTING AXELS. Company shall at all times maintain in effect one or
more Interest Rate Agreements with respect to the Existing AXELs and the
Revolving Loans, each such Interest Rate Agreement to be for a term of not less
than three years from the Closing Date and in form and substance reasonably
satisfactory to Administrative Agent, which Interest Rate Agreements shall
effectively limit the Unadjusted Eurodollar Rate Component (as hereinafter
defined) of the interest costs to Company (i) with respect to an aggregate
notional principal amount of not less than 25% of the aggregate principal amount
of the Existing AXELs outstanding on the Closing Date (based on the assumption
that such notional principal amount was a Eurodollar Rate AXEL with an Interest
Period of three months) to a rate equal to not more than 9% per annum and (ii)
with respect to an aggregate notional principal amount of not less than 25% of
the aggregate principal amount of the Existing AXELs outstanding on the Closing
Date (based on the assumption that such notional principal amount was a
Eurodollar Rate AXEL with an Interest Period of three months) to a rate equal to
not more than 10% per annum. For purposes of this subsection 5.10, the term
"UNADJUSTED EURODOLLAR RATE COMPONENT" means that component of the interest
costs to Company in respect of a Eurodollar Rate AXEL that is based upon the
rate obtained pursuant to the definition of Adjusted Eurodollar Rate (without
giving effect to the last paragraph thereof).
B. ADDITIONAL AXELS. At all times after the date which is 45 days after
the Restatement Effective Date, Company shall maintain in effect one or more
Interest Rate Agreements with respect to the Additional AXELs, each such
Interest Rate Agreement to be for a term of not less than three years from the
Restatement Effective Date and in form and substance reasonably satisfactory to
Administrative Agent, which Interest Rate Agreements shall effectively limit the
Unadjusted Eurodollar Rate Component of the interest costs to Company (i) with
respect to an aggregate notional principal amount of not less than 25% of the
aggregate principal amount of the Additional AXELs outstanding on the
Restatement Effective Date (based on the assumption that such notional principal
amount was a Eurodollar Rate AXEL with an Interest Period of three months) to a
rate equal to not more than 9% per annum and (ii) with respect to an aggregate
notional principal amount of not less than 25% of the aggregate principal amount
of the Additional AXELs outstanding on the Restatement Effective Date (based on
the assumption that such notional principal amount was a Eurodollar Rate AXEL
with an Interest Period of three months) to a rate equal to not more than 10%
per annum.
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5.11 CASH MANAGEMENT SYSTEM.
Company shall at all times maintain a cash management system for the
Loan Parties in form and substance reasonably satisfactory to the Arranger and
the Administrative Agent. The terms and conditions of such cash management
system shall be as set forth in Schedule 5.11 annexed hereto.
5.12 TRADEMARKS AND PATENTS.
If Company or any of its Subsidiaries acquires any material patents,
trademarks or copyrights, Company shall promptly notify the Collateral Agent of
that fact and, if requested by Administrative Agent, Company shall, or cause the
applicable Subsidiary to, execute and deliver to Collateral Agent supplemental
security agreements and take such other actions as the Collateral Agent may
reasonably request to create in favor of Collateral Agent, for the benefit of
Secured Parties a valid and perfected First Priority Lien on such patents,
trademarks or copyrights.
SECTION 6.
COMPANY'S NEGATIVE COVENANTS
Company covenants and agrees that, so long as any of the Additional
AXEL Commitments hereunder shall remain in effect and until payment in full of
all of the AXELs and other Obligations unless Requisite Lenders shall otherwise
give prior written consent, Company shall perform, and shall cause each of its
Subsidiaries to perform, all covenants in this Section 6.
6.1 INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED STOCK .
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume or guaranty, or otherwise become
or remain directly or indirectly liable with respect to, (collectively, "incur"
and correlatively, an "incurrence" of) any Indebtedness (including Acquired
Debt) and that the Company will not issue any Disqualified Stock; provided,
however, that the Company may incur Indebtedness (including Acquired Debt) or
issue shares of Disqualified Stock if the Fixed Charge Coverage Ratio for the
Company for the most recent four full fiscal quarters for which internal
financial statements are available at the time of such incurrence would have
been at least 2.0 to 1.0, determined on a pro forma basis (including a pro forma
application of the net proceeds therefrom), as if the additional Indebtedness
had been incurred or the Disqualified Stock had been issued, as the case may be,
and the application of the proceeds therefrom had occurred at the beginning of
such four-quarter period.
The foregoing provision will not apply to:
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(i) the incurrence by the Company (and the Guarantee
thereof by the Guarantors) of Obligations under this
Agreement;
(ii) the incurrence by Company (and the Guarantee
thereof by the Guarantors) of Indebtedness under the Revolving
Credit Agreement and the issuance of letters of credit under
the Revolving Credit Agreement (with letters of credit being
deemed to have a principal amount equal to the aggregate
maximum amount available to be drawn thereunder, assuming
compliance with all conditions for drawing) up to an aggregate
principal amount of $50,000,000 outstanding at any one time,
less permanent commitment reductions with respect to Revolving
Loans and letters of credit under the Revolving Credit
Agreement (in each case, other than in connection with an
amendment, refinancing, refunding, replacement, renewal or
modification) made after the Closing Date;
(iii) the incurrence by the Company or any of its
Restricted Subsidiaries of any Existing Indebtedness;
(iv) the incurrence by the Company or any of its
Restricted Subsidiaries of Indebtedness represented by the
Senior Subordinated Notes (but, with respect to this clause
(iv), only up to the aggregate principal amount thereof issued
on the Closing Date);
(v) Indebtedness (including Acquired Debt) incurred
by the Company or any of its Restricted Subsidiaries to
finance the purchase, lease or improvement of property (real
or personal), assets or equipment (whether through the direct
purchase of assets or the Capital Stock of any Person owning
such assets), in an aggregate principal amount not to exceed
$15,000,000 plus 5% of the increase in Total Assets since the
Closing Date;
(vi) Indebtedness incurred by the Company or any of
its Restricted Subsidiaries constituting reimbursement
obligations with respect to letters of credit issued in the
ordinary course of business, including, without limitation,
letters of credit in respect of workers' compensation claims
or self-insurance, or other Indebtedness with respect to
reimbursement type obligations regarding workers' compensation
claims;
(vii) intercompany Indebtedness between or among the
Company and any of its Restricted Subsidiaries and Guarantees
by the Company of Indebtedness of any Restricted Subsidiary of
the Company or by a Restricted Subsidiary of the Company of
Indebtedness of any other Restricted Subsidiary of the Company
or the Company; provided that (a) all such intercompany
Indebtedness shall be evidenced by promissory notes subject to
a first priority perfected pledge in favor of Lenders, (b) all
such intercompany Indebtedness
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owed by Company to or in respect of any of its Subsidiaries
and all such Guarantees shall be subordinated in right of
payment to the payment in full of the Obligations pursuant to
the terms of the applicable promissory notes or an
intercompany subordination agreement and (c) any payment by
any Subsidiary of Company under any guaranty of the
Obligations shall result in a pro tanto reduction of the
amount of any intercompany Indebtedness owed by such
Subsidiary to Company or to any of its Subsidiaries for whose
benefit such payment is made;
(viii) Hedging Obligations that are incurred (1) for
the purpose of fixing or hedging interest rate or currency
exchange rate risk with respect to any Indebtedness that is
permitted by the terms of this Agreement to be outstanding or
(2) for the purpose of fixing or hedging currency exchange
rate risk with respect to any purchases or sales of goods or
other transactions or expenditures made or to be made in the
ordinary course of business and consistent with past practices
as to which the payment therefor or proceeds therefrom, as the
case may be, are denominated in a currency other than U.S.
dollars;
(ix) obligations in respect of performance and surety
bonds and completion guarantees provided by the Company or any
Restricted Subsidiary in the ordinary course of business;
(x) the incurrence by the Company or any of its
Restricted Subsidiaries of Permitted Refinancing Indebtedness
in exchange for, or the net proceeds of which are used to
extend, refinance, renew, replace, defease or refund,
Indebtedness that was permitted by this Agreement to be
incurred;
(xi) the incurrence by the Company's Unrestricted
Subsidiaries of Non-Recourse Debt, provided, however, that if
any such Indebtedness ceases to be Non-Recourse Debt of an
Unrestricted Subsidiary, such event shall be deemed to
constitute an incurrence of Indebtedness by a Restricted
Subsidiary of the Company; and
(xii) the incurrence by the Company of additional
Indebtedness (including any increase in the AXEL Commitment
under this Agreement or any increase in the Revolving Loan
Commitment under the Revolving Credit Agreement) not otherwise
permitted hereunder in an amount under this clause (xii) not
to exceed $25,000,000 in aggregate principal amount (or
accreted value, as applicable) outstanding at any one time.
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6.2 LIENS AND RELATED MATTERS.
A. Company shall not and shall not permit any of its Subsidiaries to
directly or indirectly, create, incur, assume or suffer to exist any Lien that
secures obligations under any Indebtedness on any asset or property now owned or
hereafter acquired by the Company or any of its Subsidiaries, or on any income
or profits therefrom, or assign or convey any right to receive income therefrom
to secure any Indebtedness other than (i) Permitted Encumbrances, (ii) Liens
securing (a) purchase money Indebtedness incurred to finance the purchase price
of specific assets and Capital Leases, so long as, upon default, the holder of
such Indebtedness may seek recourse or payment against Company and its
Subsidiaries only through the return or sale of the assets financed thereby or
(b) Indebtedness assumed or acquired in connection with any acquisition to the
extent attaching only to assets acquired and so long as the Indebtedness secured
thereby is recourse only to the Person acquired or acquiring such assets
provided in each case that the aggregate amount of Indebtedness secured by such
Liens does not exceed $10,000,000 in the aggregate and (iii) any other Liens
permitted under subsection 7.2A of the Revolving Credit Agreement (as in effect
on the Closing Date) other than clause (iv) thereof.
B. If the Company or any of its Subsidiaries shall create or assume any
Lien upon any of its properties or assets, whether now owned or hereafter
acquired, other than as permitted under subsection 6.2A, it shall make or cause
to be made effective provision whereby the obligations of the Company and the
Subsidiaries under the AXEL Loan Documents will be secured by such Lien equally
and ratably with any and all other Indebtedness secured thereby as long as any
such Indebtedness shall be so secured; provided that, notwithstanding the
foregoing, this provision shall not be construed as a consent by the Lenders to
the creation or assumption of any Lien other than Liens permitted under
subsection 6.2A.
6.3 RESTRICTED PAYMENTS.
A. Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make
any other payment or distribution on account of the Company's or any of its
Restricted Subsidiaries' Equity Interests (other than dividends or distributions
payable in Equity Interests (other than Disqualified Stock) of the Company or
dividends or distributions payable to the Company or any Restricted Subsidiary
of the Company); (ii) purchase, redeem, defease or otherwise acquire or retire
for value any Equity Interests of the Company; (iii) make any payment on or with
respect to, or purchase, redeem, defease or otherwise acquire or retire for
value any Subordinated Indebtedness, except for a payment of principal or
interest at Stated Maturity; or (iv) make any Restricted Investment (all such
payments and other actions set forth in clauses (i) through (iv) above being
collectively referred to as "RESTRICTED PAYMENTS"), unless, at the time of and
after giving effect to such Restricted Payment:
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(a) no Potential Event of Default or Event of Default shall
have occurred and be continuing or would occur as a consequence
thereof;
(b) the Company would, at the time of such Restricted Payment
and immediately after giving pro forma effect thereto as if such
Restricted Payment had been made at the beginning of the applicable
four-quarter period, have been permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in subsection 6.1; and
(c) such Restricted Payment, together with the aggregate of
all other Restricted Payments made by the Company and its Restricted
Subsidiaries permitted by clause (i) of the next succeeding paragraph,
but excluding all other Restricted Payments permitted by the next
succeeding paragraph, is less than the sum of (i) 50% of the
Consolidated Net Income of the Company for the period (taken as one
accounting period) from the beginning of the first fiscal quarter
commencing after the Closing Date to the end of the Company's most
recently ended fiscal quarter for which internal financial statements
are available at the time of such Restricted Payment (or, if such
Consolidated Net Income for such period is a deficit, less 100% of such
deficit), plus (ii) 100% of the aggregate net cash proceeds and the
fair market value, as determined in good faith by the Board of
Directors, of marketable securities received by the Company from the
issue or sale since the Closing Date of Equity Interests (including
Retired Capital Stock (as defined below)) of the Company (except in
connection with the Merger) or of debt securities of the Company that
have been converted into such Equity Interests (other than Refunding
Capital Stock (as defined below) or Equity Interests or convertible
debt securities of the Company sold to a Restricted Subsidiary of the
Company and other than Disqualified Stock or debt securities that have
been converted into Disqualified Stock), plus (iii) 100% of the
aggregate amounts contributed to the common equity capital of the
Company since the Closing Date, (except amounts contributed to finance
the Merger), plus (iv) 100% of the aggregate amounts received in cash
and the fair market value of marketable securities (other than
Restricted Investments) received from (x) the sale or other disposition
of Restricted Investments made by the Company and its Restricted
Subsidiaries since the Closing Date or (y) the sale of the stock of an
Unrestricted Subsidiary or the sale of all or substantially all of the
assets of an Unrestricted Subsidiary to the extent that a liquidating
dividend is paid to the Company or any Subsidiary from the proceeds of
such sale, plus (v) 100% of any dividends received by the Company or a
Wholly Owned Restricted Subsidiary of the Company after the Closing
Date from an Unrestricted Subsidiary of the Company, plus (vi)
$10,000,000.
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The foregoing provisions will not prohibit:
(i) the payment of any dividend within 60 days after the date
of declaration thereof, if at the date of declaration such payment
would have complied with the provisions of this Agreement;
(ii) the redemption, repurchase, retirement or other
acquisition of any Equity Interests of the Company or any Restricted
Subsidiary (the "Retired Capital Stock") or any Subordinated
Indebtedness, in each case, in exchange for, or out of the proceeds of
the substantially concurrent sale (other than to a Restricted
Subsidiary of the Company) of Equity Interests of the Company (other
than any Disqualified Stock) (the "REFUNDING CAPITAL STOCK"); provided
that the amount of any such net cash proceeds that are utilized for any
such redemption, repurchase, retirement or other acquisition shall be
excluded from clause (c)(ii) of the immediately preceding paragraph;
(iii) the defeasance, redemption or repurchase of Subordinated
Indebtedness with the net cash proceeds from an incurrence of Permitted
Refinancing Indebtedness;
(iv) the redemption, repurchase or other acquisition or
retirement for value of any Equity Interests of the Company or any
Restricted Subsidiary of the Company held by any member of the
Company's (or any of its Subsidiaries') management pursuant to any
management equity subscription agreement or stock option or similar
agreement; provided that the aggregate price paid for all such
repurchased, redeemed, acquired or retired Equity Interests shall not
exceed the sum of $5,000,000 in any twelve-month period plus the
aggregate cash proceeds received by the Company during such
twelve-month period from any issuance of Equity Interests by the
Company to members of management of the Company and its Subsidiaries;
provided that the amount of any such net cash proceeds that are
utilized for any such redemption, repurchase, retirement or other
acquisition shall be excluded from clause (c)(ii) of the immediately
preceding paragraph;
(v) Investments in Unrestricted Subsidiaries or in Joint
Ventures having an aggregate fair market value, taken together with all
other Investments made pursuant to this clause (v) that are at that
time outstanding, not to exceed $15,000,000 plus 5% of the increase in
Total Assets of Company since the Closing Date at the time of such
Investment (with the fair market value of each Investment being
measured at the time made and without giving effect to subsequent
changes in value);
(vi) repurchase of Equity Interests deemed to occur upon
exercise or conversion of stock options, warrants, convertible
securities or other similar Equity Interests if such Equity Interests
represent a portion of the exercise or conversion
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price of such options, warrants, convertible securities or other
similar Equity Interests;
(vii) any dividend or distribution payable on or in respect of
any class of Equity Interests issued by a Restricted Subsidiary of the
Company; provided that such dividend or distribution is paid on a pro
rata basis to all of the holders of such Equity Interests in accordance
with their respective holdings of such Equity Interests;
provided, further, that at the time of, and after giving effect to, any
Restricted Payment permitted under clauses (iv) or (v) above, no Potential Event
of Default or Event of Default shall have occurred and be continuing or would
occur as a consequence thereof. The amount of all Restricted Payments (other
than cash) shall be the fair market value on the date of the Restricted Payment
of the asset(s) proposed to be transferred by the Company or such Restricted
Subsidiary, as the case may be, pursuant to the Restricted Payment.
6.4 DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.
Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (i) (a) pay dividends or make any other distributions
to the Company or any of its Restricted Subsidiaries (1) on its Capital Stock or
(2) with respect to any other interest or participation in, or measured by, its
profits, or (b) pay any Indebtedness owed to the Company or any of its
Restricted Subsidiaries, (ii) make loans or advances to the Company or any of
its Restricted Subsidiaries or (iii) sell, lease or transfer any of its
properties or assets to the Company or any of its Restricted Subsidiaries,
except for such encumbrances or restrictions existing under or by reason of (a)
Existing Indebtedness as in effect on the Closing Date, (b) this Agreement or
the Revolving Credit Agreement and any amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or refinancings
thereof, provided that this Agreement and the Revolving Credit Agreement and any
amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacement or refinancings thereof are no more restrictive taken as
a whole with respect to such dividend and other payment restrictions than those
terms included in this Agreement and the Revolving Credit Agreement, as
applicable, on the Closing Date, (c) the Senior Subordinated Note Indenture and
the Senior Subordinated Notes, (d) applicable law, (e) any instrument governing
Indebtedness or Capital Stock of a Person acquired by the Company or any of its
Restricted Subsidiaries as in effect at the time of such acquisition (except to
the extent such Indebtedness was incurred in connection with or in contemplation
of such acquisition), which encumbrance or restriction is not applicable to any
Person, or the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired, provided that, in the case of
Indebtedness, such Indebtedness was permitted by the terms of this Agreement to
be incurred, (f) customary non-assignment or net worth provisions in leases and
other agreements entered into in the ordinary course of
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business and consistent with past practices, (g) purchase money obligations for
property acquired in the ordinary course of business that impose restrictions of
the nature described in clause (iii) above on the property so acquired, (h)
Permitted Refinancing Indebtedness, provided that the restrictions contained in
the agreements governing such Permitted Refinancing Indebtedness are no more
restrictive than those contained in the agreements governing the Indebtedness
being refinanced, (i) any Mortgage Financing or Mortgage Refinancing that
imposes restrictions on the real property securing such Indebtedness, (j) any
Permitted Investment, (k) contracts for the sale of assets, including, without
limitation customary restrictions with respect to a Restricted Subsidiary of the
Company pursuant to an agreement that has been entered into for the sale or
disposition of all or substantially all of the Capital Stock or assets of such
Restricted Subsidiary or (l) customary provisions in joint venture agreements
and other similar agreements.
6.5 RESTRICTIONS ON FUNDAMENTAL CHANGES; ASSET SALES.
Company shall not consolidate or merge with or into (whether or not the
Company is the surviving corporation), or sell, assign, transfer,lease, convey
or otherwise dispose of all or substantially all of its properties or assets in
one or more related transactions, to another Person unless (i) the Company is
the surviving corporation or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a corporation organized or existing under the laws of the United States,
any state thereof or the District of Columbia; (ii) the Person formed by or
surviving any such consolidation or merger (if other than the Company) or Person
to which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made assumes all the obligations of the Company under this
Agreement pursuant to documentation in form and substance satisfactory to
Administrative Agent; (iii) immediately after such transaction no Potential
Event of Default or Event of Default exists; and (iv) except in the case of a
merger of the Company with or into a Wholly Owned Restricted Subsidiary of the
Company, the Company or the Person formed by or surviving any such consolidation
or merger (if other than the Company), or to which such sale, assignment,
transfer, lease, conveyance or other disposition shall have been made will, at
the time of such transaction and after giving pro forma effect thereto as if
such transaction had occurred at the beginning of the applicable four-quarter
period, be permitted to incur at least $1.00 of additional Indebtedness pursuant
to the Fixed Charge Coverage Ratio test set forth in subsection 6.1.
Notwithstanding the foregoing clauses (iii) and (iv), (a) any Restricted
Subsidiary may consolidate with, merge into or transfer all or part of its
properties and assets to the Company and (b) the Company may merge with an
Affiliate incorporated solely for the purpose of reincorporating the Company in
another jurisdiction.
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6.6 TRANSACTIONS WITH AFFILIATES.
Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of, any
Affiliate (each of the foregoing, an "AFFILIATE TRANSACTION"), unless (i) such
Affiliate Transaction is on terms that are no less favorable to the Company or
the relevant Restricted Subsidiary than those that would have been obtained in a
comparable transaction by the Company or such Restricted Subsidiary with an
unrelated Person and (ii) the Company delivers to the Administrative Agent (a)
with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $5,000,000, a
resolution of the Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (i) above and
(if there are any disinterested members of the Board of Directors) that such
Affiliate Transaction has been approved by a majority of the disinterested
members of the Board of Directors and (b) with respect to any Affiliate
Transaction or series of related Affiliate Transactions involving aggregate
consideration in excess of $10,000,000, or with respect to any Affiliate
Transaction or series of related Affiliate Transactions involving aggregate
consideration in excess of $5,000,000 as to which there are no disinterested
members of the Board of Directors, an opinion as to the fairness of such
Affiliate Transaction (as required by the Senior Subordinated Note Indenture)
from a financial point of view issued by an accounting, appraisal or investment
banking firm of national standing.
The foregoing provisions will not apply to the following: (i)
transactions between or among the Company and/or any of its Restricted
Subsidiaries; (ii) Restricted Payments or Permitted Investments permitted under
subsection 6.3; (iii) the payment of all fees, expenses and other amounts as
disclosed in the Offering Circular relating to the Merger; (iv) the payment of
reasonable and customary regular fees to, and indemnity provided on behalf of,
officer, directors, employees or consultants of the Company or any Restricted
Subsidiary of the Company; (v) the transfer or provision of inventory, goods or
services by the Company or any Restricted Subsidiary of the Company in the
ordinary course of business to any Affiliate of the Company on terms that are
customary in the industry or consistent with past practices, including with
respect to price and volume discounts; (vi) the execution of, or the performance
by the Company or any of its Restricted Subsidiaries of its obligations under
the terms of, any financial advisory, financing, underwriting or placement
agreement or any other agreement relating to investment banking or financing
activities with Goldman, Sachs & Co. or any of its Affiliates including, without
limitation, in connection with acquisitions or divestitures, in each case to the
extent that such agreement was approved by a majority of the disinterested
members of the Board of Directors in good faith; (vii) payments, advances or
loans to employees that are approved by a majority of the disinterested members
of the Board of Directors of the Company in good faith; (viii) the performance
of any agreement as in effect as of the Closing Date or any transaction
contemplated thereby (including pursuant to any amendment thereto so long as any
such amendment is
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not disadvantageous to the Lenders in any material respect); (ix) the existence
of, or the performance by the Company or any of its Restricted Subsidiaries of
its obligations under the terms of, any stockholders agreement (including any
registration rights agreement or purchase agreement related thereto) to which it
is a party as of the Closing Date and any similar agreements which it may enter
into thereafter, provided, however, that the existence of, or the performance by
the Company or any of its Restricted Subsidiaries of obligations under, any
future amendment to any such existing agreement or under any similar agreement
entered into after the Closing Date shall only be permitted by this clause (ix)
to the extent that the terms of any such amendment or new agreement are not
otherwise disadvantageous to the Lenders in any material respect; (x)
transactions permitted by, and complying with, the provisions of the covenant
described under subsection 6.5; and (xi) transactions with suppliers or other
purchases or sales of goods or services, in each case in the ordinary course of
business (including, without limitation, pursuant to joint venture agreements)
and otherwise in compliance with the terms of this Agreement which are fair to
the Company or its Restricted Subsidiaries, in the reasonable determination of a
majority of the disinterested members of the Board of Directors of the Company
or an executive officer thereof, or are on terms at least as favorable as might
reasonably have been obtained at such time from an unaffiliated party.
6.7 ASSET SALES. Company shall not, and shall not permit any of its
Restricted Subsidiaries to, cause, make or suffer to exist an Asset Sale unless
(i) the Company (or the Restricted Subsidiary, as the case may be) received
consideration at the time of such Asset Sale at least equal to the fair market
value (evidenced by a resolution of the Board of Directors set forth in an
Officers' Certificate delivered to the Trustee (as defined in the Indenture as
in effect as of the Closing Date)) of the assets or Equity Interests issued or
sold or otherwise disposed of and (ii) at least 80% of the consideration
therefor received by Company or such Restricted Subsidiary is in the form of
cash or Cash Equivalents; provided that the amount of (x) any liabilities (as
shown on Company's or such Restricted Subsidiary's most recent balance sheet) of
Company or any Restricted Subsidiary (other than contingent liabilities and
liabilities that are by their terms subordinated to the Senior Subordinated
Notes or any guarantee thereof) that are assumed by the transferee of any such
assets pursuant to a customary novation agreement that releases Company or such
Restricted Subsidiary from further liability, (y) any Excludable Current
Liabilities and (z) any notes or other obligations received by the Company or
any such Restricted Subsidiary from such transferee that are immediately
converted by the Company or such Restricted Subsidiary into cash (to the extent
of the cash received), shall be deemed to be cash for purposes of this
provision.
6.8 AMENDMENTS OF DOCUMENTS RELATING TO SUBORDINATED INDEBTEDNESS.
Company shall not, and shall not permit any of its Subsidiaries to,
amend or otherwise change the terms of any Subordinated Indebtedness, or make
any payment consistent with an amendment thereof or change thereto, if the
effect of such amendment or change is to increase the interest rate on such
Subordinated Indebtedness, change (to
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earlier dates) any dates upon which payments of principal or interest are due
thereon, change any event of default or condition to an event of default with
respect thereto (other than to eliminate any such event of default or increase
any grace period related thereto), change the redemption, prepayment or
defeasance provisions thereof, change the subordination provisions of such
Subordinated Indebtedness (or of any guaranty thereof), or change any collateral
therefor (other than to release such collateral), or if the effect of such
amendment or change, together with all other amendments or changes made, is to
increase materially the obligations of the obligor thereunder or to confer any
additional rights on the holders of such Subordinated Indebtedness (or a trustee
or other representative on their behalf) which would be adverse to Company or
Lenders.
SECTION 7.
EVENTS OF DEFAULT
If any of the following conditions or events ("EVENTS OF DEFAULT")
shall occur:
7.1 FAILURE TO MAKE PAYMENTS WHEN DUE.
Failure by Company to pay any installment of principal of any AXEL when
due, and payable whether at stated maturity, by acceleration, by notice of
voluntary prepayment, by mandatory prepayment or otherwise; or failure by
Company to pay any interest on any fee or any other amount due under this
Agreement within three days after the date due; or
7.2 DEFAULT IN OTHER AGREEMENTS.
Failure of Company or any of its Subsidiaries to pay when due any
principal of or interest on or any other amount payable in respect of one or
more items of Indebtedness (other than Indebtedness referred to in subsection
7.1) or Guarantees with an aggregate principal amount of $5,000,000 or more, in
each case beyond the end of any grace period provided therefor; or (ii) breach
or default by Company or any of its Subsidiaries with respect to any other
material term of (a) one or more items of Indebtedness or Guarantees in the
individual or aggregate principal amounts referred to in clause (i) above or (b)
any loan agreement (including the Revolving Credit Agreement), mortgage,
indenture or other agreement relating to such item(s) of Indebtedness or
Guarantee(s), if the effect of such breach or default is to cause, or to permit
the holder or holders of that Indebtedness or Guarantee(s) (or a trustee on
behalf of such holder or holders) to cause, that Indebtedness or Guarantee(s) to
become or be declared due and payable prior to its stated maturity or the stated
maturity of any underlying obligation, as the case may be (upon the giving or
receiving of notice, lapse of time, both, or otherwise) and in either case such
breach or default shall continue for 20 days beyond any applicable grace period;
or
7.3 BREACH OF CERTAIN COVENANTS.
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The Company fails, and such failure continues for 30 days after notice
from the Administrative Agent or Lenders holding at least 25% in principal
amount of the then outstanding AXELs, to observe or perform any covenant,
condition or agreement on the part of the Company to be observed or performed
pursuant to Sections 6.1, 6.3 and 6.5 hereof; or
7.4 BREACH OF WARRANTY.
Any representation, warranty, certification or other statement made by
Company or any of its Subsidiaries in any AXEL Loan Document or in any statement
or certificate at any time given by Company or any of its Subsidiaries in
writing pursuant hereto or thereto or in connection herewith or therewith shall
be false in any material respect on the date as of which made; or
7.5 OTHER DEFAULTS UNDER AXEL LOAN DOCUMENTS.
The Company fails, and such failure continues for 60 days after notice
from the Administrative Agent or Lenders holding at least 25% in principal
amount of the then outstanding AXELs, to comply with any of its other agreements
or covenants in, or provisions of, this Agreement or any other AXEL Loan
Document; or
7.6 JUDGMENTS.
The Company or any of its Restricted Subsidiaries fails to pay final
judgments aggregating in excess of $15,000,000, which judgments are not paid,
discharged or stayed for a period of 60 days; or
7.7 BANKRUPTCY; APPOINTMENT OF CUSTODIAN.
A. The Company or any of its Restricted Subsidiaries pursuant
to or within the meaning of any Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it
in an involuntary case,
(iii) consents to the appointment of a receiver, trustee,
assignee, liquidator or similar official under any Bankruptcy Law
(each, a "Custodian"),
(iv) makes a general assignment for the benefit of its
creditors, or
(v) admits in writing its inability to pay is debts as they
become due.
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B. A court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(i) is for relief against the Company or any Restricted
Subsidiary in an involuntary case,
(ii) appoints a Custodian of the Company or any Restricted
Subsidiary or for all or substantially all of the property of the
Company or any Restricted Subsidiary, or
(iii) orders the liquidation of the Company or any Restricted
Subsidiary,
and the order or decree remains unstayed and in effect for 60 consecutive days;
or
7.8 INVALIDITY OF SUBSIDIARY GUARANTY.
Except as otherwise permitted under the provisions of this Agreement or
the Intercreditor Agreement, the Subsidiary Guaranty is held in any judicial
proceeding to be unenforceable or invalid or ceases for any reason to be in full
force and effect (except by its terms) or any Subsidiary Guarantor, or any
Person acting on behalf of any Subsidiary Guarantor, denies or disaffirms such
Subsidiary Guarantor's obligations under the Subsidiary Guaranty; or
7.9 CHANGE IN CONTROL.
If (i) prior to a Qualified Public Offering GSII together with any
Affiliates of GSII shall cease to beneficially own and control 51% or more of
the combined voting power of all Securities of the Company, (ii) following
consummation of a Qualified Public Offering any Person or any two or more
Persons acting in concert shall have acquired beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission under the
Exchange Act), directly or indirectly, of Securities of Company (or other
Securities convertible into such Securities) representing more of the combined
voting power of all Securities of Company than is owned by GSII and its
Affiliates at such time or (iii) a "Change of Control" as defined in the Senior
Subordinated Notes Indenture occurs;
THEN (i) upon the occurrence of any Event of Default described in subsection
7.7, each of (a) the unpaid principal amount of and accrued interest on the
AXELs, and (b) all other Obligations shall automatically become immediately due
and payable, without presentment, demand, protest or other requirements of any
kind, all of which are hereby expressly waived by Company, and (ii) upon the
occurrence and during the continuation of any other Event of Default,
Administrative Agent shall, upon the written request or with the written consent
of Requisite Lenders, by written notice to Company, declare all or any portion
of the
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amounts described in clauses (a) and (b) above to be, and the same shall
forthwith become, immediately due and payable.
Notwithstanding anything contained in the preceding paragraph, if at
any time within 60 days after an acceleration of the AXELs pursuant to clause
(ii) of such paragraph Company shall pay all arrears of interest and all
payments on account of principal which shall have become due otherwise than as a
result of such acceleration (with interest on principal and, to the extent
permitted by law, on overdue interest, at the rates specified in this Agreement)
and all Events of Default and Potential Events of Default (other than
non-payment of the principal of and accrued interest on the AXELS, in each case
which is due and payable solely by virtue of acceleration) shall be remedied or
waived pursuant to subsection 9.6, then Requisite Lenders, by written notice to
Company, may at their option rescind and annul such acceleration and its
consequences; but such action shall not affect any subsequent Event of Default
or Potential Event of Default or impair any right consequent thereon. The
provisions of this paragraph are intended merely to bind Lenders to a decision
which may be made at the election of Requisite Lenders and are not intended,
directly or indirectly, to benefit Company, and such provisions shall not at any
time be construed so as to grant Company the right to require Lenders to rescind
or annul any acceleration hereunder or to preclude Administrative Agent or
Lenders from exercising any of the rights or remedies available to them under
any of the AXEL Loan Documents, even if the conditions set forth in this
paragraph are met.
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SECTION 8.
AGENTS
8.1 APPOINTMENT.
A. APPOINTMENT OF AGENTS. GSCP is hereby appointed Arranger and
Syndication Agent hereunder, and each Lender hereby authorizes Arranger and
Syndication Agent to act as its agent in accordance with the terms of this
Agreement and the other AXEL Loan Documents. Fleet is hereby appointed
Administrative Agent hereunder and under the other AXEL Loan Documents and each
Lender hereby authorizes Administrative Agent to act as its agent in accordance
with the terms of this Agreement and the other Loan Documents. Fleet is also
being appointed Collateral Agent under the Intercreditor Agreement and each
Lender hereby authorizes Collateral Agent to act as its agent in accordance with
the terms of the Intercreditor Agreement and the other AXEL Loan Documents. Each
Agent hereby agrees to act upon the express conditions contained in this
Agreement and the other AXEL Loan Documents, as applicable. The provisions of
this Section 8 are solely for the benefit of Agents and Lenders and Company
shall have no rights as a third party beneficiary of any of the provisions
thereof. In performing its functions and duties under this Agreement, each Agent
shall act solely as an agent of Lenders and does not assume and shall not be
deemed to have assumed any obligation towards or relationship of agency or trust
with or for Company or any of its Subsidiaries. Each of Arranger and Syndication
Agent, without consent of or notice to any party hereto, may assign any and all
of its rights or obligations hereunder to any of its Affiliates. As of the
Restatement Effective Date, all obligations of Arranger and Syndication Agent
hereunder shall terminate.
B. APPOINTMENT OF SUPPLEMENTAL COLLATERAL AGENTS. It is the purpose of
this Agreement and the other AXEL Loan Documents that there shall be no
violation of any law of any jurisdiction denying or restricting the right of
banking corporations or associations to transact business as agent or trustee in
such jurisdiction. It is recognized that in case of litigation under this
Agreement or any of the other AXEL Loan Documents, and in particular in case of
the enforcement of any of the AXEL Loan Documents, or in case Administrative
Agent deems that by reason of any present or future law of any jurisdiction it
may not exercise any of the rights, powers or remedies granted herein or in any
of the other AXEL Loan Documents or take any other action which may be desirable
or necessary in connection therewith, it may be necessary that Administrative
Agent appoint an additional individual or institution as a separate trustee,
co-trustee, collateral agent or collateral co-agent (any such additional
individual or institution being referred to herein individually as a
"SUPPLEMENTAL COLLATERAL AGENT" and collectively as "SUPPLEMENTAL COLLATERAL
AGENTS").
In the event that Administrative Agent appoints a Supplemental
Collateral Agent with respect to any Collateral, (i) each and every right,
power, privilege or duty expressed or intended by this Agreement or any of the
other AXEL Loan Documents to be exercised by or vested in or conveyed to
Administrative Agent with respect to such Collateral shall
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be exercisable by and vest in such Supplemental Collateral Agent to the extent,
and only to the extent, necessary to enable such Supplemental Collateral Agent
to exercise such rights, powers and privileges with respect to such Collateral
and to perform such duties with respect to such Collateral, and every covenant
and obligation contained in the AXEL Loan Documents and necessary to the
exercise or performance thereof by such Supplemental Collateral Agent shall run
to and be enforceable by either Agent or such Supplemental Collateral Agent, and
(ii) the provisions of this Section 8 and of subsections 9.2 and 9.3 that refer
to Administrative Agent shall inure to the benefit of such Supplemental
Collateral Agent and all references therein to Administrative Agent shall be
deemed to be references to Administrative Agent and/or such Supplemental
Collateral Agent, as the context may require.
Should any instrument in writing from Company or any other Loan Party
be required by any Supplemental Collateral Agent so appointed by Administrative
Agent for more fully and certainly vesting in and confirming to him or it such
rights, powers, privileges and duties, Company shall, or shall cause such Loan
Party to, execute, acknowledge and deliver any and all such instruments promptly
upon request by Administrative Agent. In case any Supplemental Collateral Agent,
or a successor thereto, shall die, become incapable of acting, resign or be
removed, all the rights, powers, privileges and duties of such Supplemental
Collateral Agent, to the extent permitted by law, shall vest in and be exercised
by Administrative Agent until the appointment of a new Supplemental Collateral
Agent.
8.2 POWERS AND DUTIES; GENERAL IMMUNITY.
A. POWERS; DUTIES SPECIFIED. Each Lender irrevocably authorizes each
Agent to take such action on such Lender's behalf and to exercise such powers,
rights and remedies hereunder and under the other AXEL Loan Documents as are
specifically delegated or granted to such Agent by the terms hereof and thereof,
together with such powers, rights and remedies as are reasonably incidental
thereto. Each Agent shall have only those duties and responsibilities that are
expressly specified in this Agreement and the other AXEL Loan Documents. Each
Agent may exercise such powers, rights and remedies and perform such duties by
or through its agents or employees. No Agent shall have, by reason of this
Agreement or any of the other AXEL Loan Documents, a fiduciary relationship in
respect of any Lender; and nothing in this Agreement or any of the other AXEL
Loan Documents, expressed or implied, is intended to or shall be so construed as
to impose upon any Agent any obligations in respect of this Agreement or any of
the other AXEL Loan Documents except as expressly set forth herein or therein.
B. NO RESPONSIBILITY FOR CERTAIN MATTERS. No Agent shall be responsible
to any Lender for the execution, effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement or any other
AXEL Loan Document or for any representations, warranties, recitals or
statements made herein or therein or made in any written or oral statements or
in any financial or other statements, instruments, reports or certificates or
any other documents furnished or made by any of Agent to Lenders or by or
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on behalf of Company to any Agent or any Lender in connection with the AXEL Loan
Documents and the transactions contemplated thereby or for the financial
condition or business affairs of Company or any other Person liable for the
payment of any Obligations, nor shall any Agent be required to ascertain or
inquire as to the performance or observance of any of the terms, conditions,
provisions, covenants or agreements contained in any of the AXEL Loan Documents
or as to the use of the proceeds of the AXELs or as to the existence or possible
existence of any Event of Default or Potential Event of Default. Anything
contained in this Agreement to the contrary notwithstanding, Administrative
Agent shall not have any liability arising from confirmations of the amount of
outstanding AXELs.
C. EXCULPATORY PROVISIONS. None of Agents nor any of their respective
officers, partners, directors, employees or agents shall be liable to Lenders
for any action taken or omitted by any Agent under or in connection with any of
the AXEL Loan Documents except to the extent caused by such Agent's gross
negligence or willful misconduct. Each Agent shall be entitled to refrain from
any act or the taking of any action (including the failure to take an action) in
connection with this Agreement or any of the other Loan Documents or from the
exercise of any power, discretion or authority vested in it hereunder or
thereunder unless and until such Agent shall have received instructions in
respect thereof from Requisite Lenders (or such other Lenders as may be required
to give such instructions under subsection 9.6) and, upon receipt of such
instructions from Requisite Lenders (or such other Lenders, as the case may be),
such Agent shall be entitled to act or (where so instructed) refrain from
acting, or to exercise such power, discretion or authority, in accordance with
such instructions. Without prejudice to the generality of the foregoing, (i)
each Agent shall be entitled to rely, and shall be fully protected in relying,
upon any communication, instrument or document believed by it to be genuine and
correct and to have been signed or sent by the proper person or persons, and
shall be entitled to rely and shall be protected in relying on opinions and
judgments of attorneys (who may be attorneys for Company and its Subsidiaries),
accountants, experts and other professional advisors selected by it; and (ii) no
Lender shall have any right of action whatsoever against any Agent as a result
of such Agent acting or (where so instructed) refraining from acting under this
Agreement or any of the other AXEL Loan Documents in accordance with the
instructions of Requisite Lenders (or such other Lenders as may be required to
give such instructions under subsection 9.6).
D. AGENT ENTITLED TO ACT AS LENDER. The agency hereby created shall in
no way impair or affect any of the rights and powers of, or impose any duties or
obligations upon, any Agent in its individual capacity as a Lender hereunder.
With respect to its participation in the AXELs, each Agent shall have the same
rights and powers hereunder as any other Lender and may exercise the same as
though it were not performing the duties and functions delegated to it
hereunder, and the term "Lender" or "Lenders" or any similar term shall, unless
the context clearly otherwise indicates, include each Agent in its individual
capacity. Any Agent and its Affiliates may accept deposits from, lend money to
and generally engage in any kind of banking, trust, financial advisory or other
business with Company or any of its Affiliates as if it were not performing the
duties specified herein, and
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may accept fees and other consideration from Company for services in connection
with this Agreement and otherwise without having to account for the same to
Lenders.
8.3 REPRESENTATIONS AND WARRANTIES; NO RESPONSIBILITY FOR APPRAISAL OF
CREDITWORTHINESS.
Each Lender represents and warrants that it has made its own
independent investigation of the financial condition and affairs of Company and
its Subsidiaries in connection with the making of the AXELs hereunder and that
it has made and shall continue to make its own appraisal of the creditworthiness
of Company and its Subsidiaries. No Agent shall have any duty or responsibility,
either initially or on a continuing basis, to make any such investigation or any
such appraisal on behalf of Lenders or to provide any Lender with any credit or
other information with respect thereto, whether coming into its possession
before the making of the AXELs or at any time or times thereafter, and no Agent
shall have any responsibility with respect to the accuracy of or the
completeness of any information provided to Lenders.
8.4 RIGHT TO INDEMNITY.
Each Lender, in proportion to its Pro Rata Share, severally agrees to
indemnify each Agent, to the extent that such Agent shall not have been
reimbursed by Company, for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including counsel fees and disbursements) or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against such
Agent in exercising its powers, rights and remedies or performing its duties
hereunder or under the other AXEL Loan Documents or otherwise in its capacity as
such Agent in any way relating to or arising out of this Agreement or the other
AXEL Loan Documents; provided that no Lender shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from such Agent's gross
negligence or willful misconduct and provided further that any such
indemnification of the Collateral Agent shall be on the terms described in
section 6(c) of the Intercreditor Agreement. If any indemnity furnished to any
Agent for any purpose shall, in the opinion of such Agent, be insufficient or
become impaired, such Agent may call for additional indemnity and cease, or not
commence, to do the acts indemnified against until such additional indemnity is
furnished (excluding any indemnity for its gross negligence or will misconduct).
8.5 SUCCESSOR ADMINISTRATIVE AGENT.
SUCCESSOR ADMINISTRATIVE AGENT. Administrative Agent may
resign at any time by giving 30 days' prior written notice thereof to Lenders
and Company, and Administrative Agent may be removed at any time with or without
cause by an instrument or concurrent instruments in writing delivered to Company
and Administrative Agent and signed by Requisite Lenders. Upon any such notice
of resignation or any such removal,
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Requisite Lenders shall have the right, upon five Business Days' notice to
Company, to appoint a successor Administrative Agent. If no successor
Administrative Agent shall have been so appointed by Requisite Lenders and shall
have accepted such appointment within 30 days after the notice of the intent of
the Administrative Agent to resign, then the retiring Administrative Agent may,
on behalf of the Lenders, appoint a successor Administrative Agent. Upon the
acceptance of any appointment as Administrative Agent hereunder by a successor
Administrative Agent, that successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring or removed Administrative Agent and the retiring or removed
Administrative Agent shall be discharged from its duties and obligations under
this Agreement. After any retiring or removed Administrative Agent's resignation
or removal hereunder as Administrative Agent, the provisions of this Section 8
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement.
8.6 COLLATERAL DOCUMENTS AND GUARANTIES.
Each Lender hereby further authorizes Administrative Agent, on behalf
of and for the benefit of Lenders, to enter into the Intercreditor Agreement and
to appoint the Collateral Agent thereunder as agent for and representative of
Lenders. Under the terms of the Intercreditor Agreement, the Collateral Agent is
authorized to enter into each Collateral Document as secured party and to be the
agent for and representative of Secured Parties under the Subsidiary Guaranty,
and each Lender agrees to be bound by the terms of the Intercreditor Agreement,
each Collateral Document and the Subsidiary Guaranty. Administrative Agent shall
not enter into or consent to any material amendment, modification or termination
of the Intercreditor Agreement without the prior consent of Requisite Lenders.
Each Lender acknowledges that under the terms of the Intercreditor Agreement
without further written consent or authorization from Lenders, Collateral Agent
may execute any documents or instruments necessary to (a) release any Lien
encumbering any item of Collateral that is the subject of a sale or other
disposition of assets permitted by this Agreement or to which Requisite Lenders
have otherwise consented or (b) release any Subsidiary Guarantor from the
Subsidiary Guaranty if all of the capital stock of such Subsidiary Guarantor is
sold to any Person (other than an Affiliate of Company) pursuant to a sale or
other disposition permitted hereunder or to which Requisite Lenders or Lenders
(as applicable) have otherwise consented. Anything contained in any of the AXEL
Loan Documents to the contrary notwithstanding, Company, Administrative Agent
and each Lender hereby agree that (X) no Lender shall have any right
individually to realize upon any of the Collateral under any Collateral Document
or to enforce the Subsidiary Guaranty, it being understood and agreed that all
powers, rights and remedies under the Collateral Documents and the Subsidiary
Guaranty may be exercised solely by Collateral Agent for the benefit of Secured
Parties in accordance with the terms thereof, and (Y) in the event of a
foreclosure by Collateral Agent on any of the Collateral pursuant to a public or
private sale, Collateral Agent or any Secured Party may be the purchaser of any
or all of such Collateral at any such sale and Collateral Agent, as agent for
and representative of Secured Parties (but not any Secured Party or Secured
Parties in its or their respective individual capacities
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unless Requisite Lenders shall otherwise agree in writing) shall be entitled,
for the purpose of bidding and making settlement or payment of the purchase
price for all or any portion of the Collateral sold at any such public sale, to
use and apply any of the Obligations as a credit on account of the purchase
price for any collateral payable by Collateral Agent at such sale. The Lenders
each further acknowledge and agree that pursuant to the Intercreditor Agreement
and the Collateral Documents, Collateral Agent will act as the fonde de pouvoir
(holder of the power of attorney) of the holders from time to time of Notes
issued pursuant hereto to the extent necessary or desirable for the purposes of
creating, maintaining or enforcing any Liens or guarantees created or
established under any Collateral Documents contemplated hereby to be executed
under the laws of the Province of Quebec, Canada including, without limiting the
generality of the foregoing, entering into any such Collateral Documents and
exercising all or any of the rights, powers, trusts or duties conferred upon the
Collateral Agent therein and in the Intercreditor Agreement and each holder of
Notes by receiving and holding same accepts and confirms the appointment of the
Collateral Agent as fonde de pouvoir (holder of the power of attorney) of such
holder for such purposes.
SECTION 9.
MISCELLANEOUS
9.1 ASSIGNMENTS AND PARTICIPATIONS IN AXELS.
A. GENERAL. Subject to subsection 9.1B, each Lender shall have the
right at any time to (i) sell, assign or transfer to any Eligible Assignee, or
(ii) sell participations to any Person in, all or any part of its AXEL
Commitments or the AXEL or AXELs made by it or any other interest herein or in
any other Obligations owed to it; provided that no such sale, assignment,
transfer or participation shall, without the consent of Company, require Company
to file a registration statement with the Securities and Exchange Commission or
apply to qualify such sale, assignment, transfer or participation under the
securities laws of any state; provided, further that no such sale, assignment or
transfer described in clause (i) above shall be effective unless and until an
Assignment Agreement effecting such sale, assignment or transfer shall have been
accepted by Administrative Agent and recorded in the Register as provided in
subsection 9.1B(ii). Except as otherwise provided in this subsection 9.1, no
Lender shall, as between Company and such Lender, be relieved of any of its
obligations hereunder as a result of any sale, assignment or transfer of, or any
granting of participations in, all or any part of its AXEL Commitments or the
AXELs, or the other Obligations owed to such Lender.
B. ASSIGNMENTS.
(i) Amounts and Terms of Assignments. Each AXEL Commitment,
AXEL or other Obligation may (a) be assigned in any amount to another
Lender, or to an Affiliate or a Related Fund of the assigning Lender or
another Lender, with
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the giving of notice to Company, Syndication Agent and Administrative
Agent or (b) be assigned in an aggregate amount of not less than
$5,000,000 (or such lesser amount as shall constitute the aggregate
amount of the AXEL Commitments, AXEL, and other Obligations of the
assigning Lender) to any other Eligible Assignee with the giving of
notice to Company and with the consent of Administrative Agent and
Syndication Agent (which consent shall not be unreasonably withheld or
delayed). To the extent of any such assignment in accordance with
either clause (a) or (b) above, the assigning Lender shall be relieved
of its obligations with respect to its AXEL Commitments, AXELs, or
other Obligations or the portion thereof so assigned. The parties to
each such assignment shall execute and deliver to Administrative Agent,
for its acceptance and recording in the Register, an Assignment
Agreement, together with a processing and recordation fee of $500 if
such assignment is to another Lender or an Affiliate or Related Fund of
the assigning Lender, or $2,000, if such assignment is to any other
Eligible Assignee, and such forms, certificates or other evidence, if
any, with respect to United States federal income tax withholding
matters as the assignee under such Assignment Agreement may be required
to deliver to Administrative Agent pursuant to subsection 2.7B(iii)(a).
Upon such execution, delivery, acceptance and recordation, from and
after the effective date specified in such Assignment Agreement, (y)
the assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to
such Assignment Agreement, shall have the rights and obligations of a
Lender hereunder and (z) the assigning Lender thereunder shall, to the
extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment Agreement, relinquish its rights (other
than any rights which survive the termination of this Agreement under
subsection 9.9B) and be released from its obligations under this
Agreement and, in the case of an Assignment Agreement covering all or
the remaining portion of an assigning Lender's rights and obligations
under this Agreement, such Lender shall cease to be a party hereto. The
AXEL Commitments hereunder shall be modified to reflect the AXEL
Commitment of such assignee and any remaining AXEL Commitment of such
assigning Lender and, if any such assignment occurs after the issuance
of the AXEL Notes hereunder, the assigning Lender shall, upon the
effectiveness of such assignment or as promptly thereafter as
practicable, surrender its applicable AXEL Notes to Administrative
Agent for cancellation, and thereupon new AXEL Notes shall be issued to
the assignee and/or to the assigning Lender, substantially in the form
of Exhibit III annexed hereto with appropriate insertions, to reflect
the new AXEL Commitments and/or outstanding AXELs, the case may be, of
the assignee and/or the assigning Lender.
(ii) Acceptance by Administrative Agent; Recordation in
Register. Upon its receipt of an Assignment Agreement executed by an
assigning Lender and an assignee representing that it is an Eligible
Assignee, together with the processing and recordation fee referred to
in subsection 9.1B(i) and any forms, certificates or other evidence
with respect to United States federal income tax withholding matters
that
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such assignee may be required to deliver to Administrative Agent
pursuant to subsection 2.7B(iii)(a), Administrative Agent shall, if
Administrative Agent has consented to the assignment evidenced thereby
(to the extent such consent is required pursuant to subsection
9.1B(i)), (a) accept such Assignment Agreement by executing a
counterpart thereof as provided therein (which acceptance shall
evidence any required consent of Administrative Agent to such
assignment), (b) record the information contained therein in the
Register, and (c) give prompt notice thereof to Company. Administrative
Agent shall maintain a copy of each Assignment Agreement delivered to
and accepted by it as provided in this subsection 9.1B(ii).
C. PARTICIPATIONS. The holder of any participation, other than an
Affiliate of the Lender granting such participation, shall not be entitled to
require such Lender to take or omit to take any action hereunder except action
directly affecting (i) the extension of the regularly scheduled maturity of any
portion of the principal amount of or interest on any AXEL allocated to such
participation or (ii) a reduction of the principal amount of or the rate of
interest payable on any AXEL allocated to such participation, and all amounts
payable by Company hereunder (including amounts payable to such Lender pursuant
to subsections 2.6D and 2.7) shall be determined as if such Lender had not sold
such participation. Company and each Lender hereby acknowledge and agree that,
solely for purposes of subsections 9.4 and 9.5, (a) any participation will give
rise to a direct obligation of Company to the participant and (b) the
participant shall be considered to be a "Lender".
D. ASSIGNMENTS TO FEDERAL RESERVE BANKS. In addition to the assignments
and participations permitted under the foregoing provisions of this subsection
9.1, any Lender may assign and pledge all or any portion of its AXELs, the other
Obligations owed to such Lender, and its AXEL Notes to any Federal Reserve Bank
as collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any operating circular issued by such Federal Reserve
Bank; provided that (i) no Lender shall, as between Company and such Lender, be
relieved of any of its obligations hereunder as a result of any such assignment
and pledge and (ii) in no event shall such Federal Reserve Bank be considered to
be a "Lender" or be entitled to require the assigning Lender to take or omit to
take any action hereunder.
E. INFORMATION. Each Lender may furnish any information concerning
Company and its Subsidiaries in the possession of that Lender from time to time
to assignees and participants (including prospective assignees and
participants), subject to subsection 9.19.
F. REPRESENTATIONS OF LENDERS. Each Lender listed on the signature
pages hereof hereby represents and warrants (i) that it is an Eligible Assignee
described in clause (A) of the definition thereof; (ii) that it has experience
and expertise in the making of or investing in loans such as the AXELs; and
(iii) that it will make its AXELs for its own account in the ordinary course of
its business and without a view to distribution of such AXELs within the meaning
of the Securities Act or the Exchange Act or other federal securities laws (it
being understood that, subject to the provisions of this subsection 9.1, the
disposition of such
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AXELs or any interests therein shall at all times remain within its exclusive
control). Each Lender that becomes a party hereto pursuant to an Assignment
Agreement shall be deemed to agree that the representations and warranties of
such Lender contained in Section 2(c) of such Assignment Agreement are
incorporated herein by this reference.
9.2 EXPENSES.
Whether or not the transactions contemplated hereby shall be
consummated, Company agrees to pay promptly (i) all the actual and reasonable
costs and expenses of preparation of the AXEL Loan Documents and any consents,
amendments, waivers or other modifications thereto; (ii) all the costs of
furnishing all opinions by counsel for Company (including any opinions requested
by Lenders as to any legal matters arising hereunder) and of Company's
performance of and compliance with all agreements and conditions on its part to
be performed or complied with under this Agreement and the other AXEL Loan
Documents including with respect to confirming compliance with environmental,
insurance and solvency requirements; (iii) the reasonable fees, expenses and
disbursements of counsel to Arranger and counsel to Administrative Agent (in
each case including allocated costs of internal counsel) in connection with the
negotiation, preparation, execution and administration of the AXEL Loan
Documents and any consents, amendments, waivers or other modifications thereto
and any other documents or matters requested by Company; (iv) all the actual
costs and reasonable expenses of creating and perfecting Liens in favor of
Collateral Agent on behalf of Secured Parties pursuant to any Collateral
Document, including filing and recording fees, expenses and taxes, stamp or
documentary taxes, search fees, title insurance premiums, and reasonable fees,
expenses and disbursements of counsel to Arranger and counsel to Administrative
Agent and of counsel providing any opinions that Arranger, Administrative Agent
or Requisite Lenders may request in respect of the Collateral Documents or the
Liens created pursuant thereto; (v) all the actual costs and reasonable expenses
(including the reasonable fees, expenses and disbursements of any auditors,
accountants or appraisers and any environmental or other consultants, advisors
and agents employed or retained by Administrative Agent or Arranger and its
counsel) of obtaining and reviewing any appraisals provided for under subsection
3.1J or 5.9C, any environmental audits or reports provided for under subsection
3.1K or 5.9B(viii) and any reports provided for under subsection 3.1L; (vi) all
the actual costs and reasonable expenses (including the reasonable fees,
expenses and disbursements of any consultants, advisors and agents employed or
retained by Administrative Agent and its counsel) in connection with the custody
or preservation of any of the Collateral; (vii) all other actual and reasonable
costs and expenses incurred by Syndication Agent, Arranger or Administrative
Agent in connection with the syndication of the AXEL Commitments and the
negotiation, preparation and execution of the AXEL Loan Documents and any
consents, amendments, waivers or other modifications thereto and the
transactions contemplated thereby; and (viii) after the occurrence of an Event
of Default, all costs and expenses, including reasonable attorneys' fees
(including allocated costs of internal counsel) and costs of settlement,
incurred by Arranger, Administrative Agent and Lenders in enforcing any
Obligations of or in collecting any payments due from any Loan Party hereunder
or under the other AXEL Loan
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Documents by reason of such Event of Default (including in connection with the
sale of, collection from, or other realization upon any of the Collateral or the
enforcement of the Subsidiary Guaranty) or in connection with any refinancing or
restructuring of the credit arrangements provided under this Agreement in the
nature of a "work-out" or pursuant to any insolvency or bankruptcy proceedings.
9.3 INDEMNITY.
In addition to the payment of expenses pursuant to subsection 9.2,
whether or not the transactions contemplated hereby shall be consummated,
Company agrees to defend (subject to Indemnitees' selection of counsel),
indemnify, pay and hold harmless Agents and Lenders, and the officers, partners,
directors, employees, agents and affiliates of any of Agents and Lenders
(collectively called the "INDEMNITEES"), from and against any and all
Indemnified Liabilities (as hereinafter defined); provided that Company shall
not have any obligation to any Indemnitee hereunder with respect to any
Indemnified Liabilities to the extent such Indemnified Liabilities arise solely
from the gross negligence or willful misconduct of that Indemnitee as determined
by a final, non-appealable judgment of a court of competent jurisdiction.
As used herein, "INDEMNIFIED LIABILITIES" means, collectively, any and
all liabilities, obligations, losses, damages (including natural resource
damages), penalties, actions, judgments, suits, claims (including Environmental
Claims), costs (including the costs of any investigation, study, sampling,
testing, abatement, cleanup, removal, remediation or other response action
necessary to remove, remediate, clean up or abate any Hazardous Materials
Activity), expenses and disbursements of any kind or nature whatsoever
(including the reasonable fees and disbursements of counsel for Indemnitees in
connection with any investigative, administrative or judicial proceeding
commenced or threatened by any Person, whether or not any such Indemnitee shall
be designated as a party or a potential party thereto, and any fees or expenses
incurred by Indemnitees in enforcing this indemnity), whether direct, indirect
or consequential and whether based on any federal, state or foreign laws,
statutes, rules or regulations (including securities and commercial laws,
statutes, rules or regulations and Environmental Laws), on common law or
equitable cause or on contract or otherwise, that may be imposed on, incurred
by, or asserted against any such Indemnitee, in any manner relating to or
arising out of (i) this Agreement or the other AXEL Loan Documents or the
Related Agreements or the transactions contemplated hereby or thereby (including
Lenders' agreement to make the AXELs hereunder or the use or intended use of the
proceeds thereof or any enforcement of any of the AXEL Loan Documents (including
any sale of, collection from, or other realization upon any of the Collateral or
the enforcement of the Subsidiary Guaranty)), (ii) the statements contained in
the commitment letter delivered by any Lender to Company with respect thereto,
or (iii) any Environmental Claim or any Hazardous Materials Activity relating to
or arising from, directly or indirectly, any past or present activity,
operation, land ownership, or practice of Company or any of its Subsidiaries.
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To the extent that the undertakings to defend, indemnify, pay and hold
harmless set forth in this subsection 9.3 may be unenforceable in whole or in
part because they are violative of any law or public policy, Company shall
contribute the maximum portion that it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all Indemnified Liabilities
incurred by Indemnitees or any of them.
9.4 SET-OFF; SECURITY INTEREST IN DEPOSIT ACCOUNTS.
In addition to any rights now or hereafter granted under applicable law
and not by way of limitation of any such rights, upon the occurrence of any
Event of Default each Lender is hereby authorized by Company at any time or from
time to time, subject to the consent of Administrative Agent, without notice to
Company or to any other Person (other than Administrative Agent), any such
notice being hereby expressly waived, to set off and to appropriate and to apply
any and all deposits (general or special, including Indebtedness evidenced by
certificates of deposit, whether matured or unmatured, but not including trust
accounts) and any other Indebtedness at any time held or owing by that Lender to
or for the credit or the account of Company against and on account of the
obligations and liabilities of Company to that Lender under this Agreement, and
the other AXEL Loan Documents, including all claims of any nature or description
arising out of or connected with this Agreement any other Loan Document,
irrespective of whether or not (i) that Lender shall have made any demand
hereunder or (ii) the principal of or the interest on the AXELs or any other
amounts due hereunder shall have become due and payable pursuant to Section 7
and although said obligations and liabilities, or any of them, may be contingent
or unmatured. Company hereby further grants to Collateral Agent and each Lender
a security interest in all deposits and accounts maintained with Administrative
Agent or such Lender as security for the Obligations.
9.5 RATABLE SHARING.
Lenders hereby agree among themselves that if any of them shall,
whether by voluntary payment (other than a voluntary prepayment of AXELs made
and applied in accordance with the terms of this Agreement), by realization upon
security, through the exercise of any right of set-off or banker's lien, by
counterclaim or cross action or by the enforcement of any right under the AXEL
Loan Documents or otherwise, or as adequate protection of a deposit treated as
cash collateral under the Bankruptcy Code, receive payment or reduction of a
proportion of the aggregate amount of principal, interest, amounts payable in
respect of, fees and other amounts then due and owing to that Lender hereunder
or under the other AXEL Loan Documents (collectively, the "AGGREGATE AMOUNTS
DUE" to such Lender) which is greater than the proportion received by any other
Lender in respect of the Aggregate Amounts Due to such other Lender, then the
Lender receiving such proportionately greater payment shall (i) notify
Administrative Agent and each other Lender of the receipt of such payment and
(ii) apply a portion of such payment to purchase participations (which it shall
be deemed to have purchased from each seller of a participation simultaneously
upon the receipt by such seller of its portion of such payment)
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in the Aggregate Amounts Due to the other Lenders so that all such recoveries of
Aggregate Amounts Due shall be shared by all Lenders in proportion to the
Aggregate Amounts Due to them; provided that if all or part of such
proportionately greater payment received by such purchasing Lender is thereafter
recovered from such Lender upon the bankruptcy or reorganization of Company or
otherwise, those purchases shall be rescinded and the purchase prices paid for
such participations shall be returned to such purchasing Lender ratably to the
extent of such recovery, but without interest. Company expressly consents to the
foregoing arrangement and agrees that any holder of a participation so purchased
may exercise any and all rights of banker's lien, set-off or counterclaim with
respect to any and all monies owing by Company to that holder with respect
thereto as fully as if that holder were owed the amount of the participation
held by that holder.
9.6 AMENDMENTS AND WAIVERS.
A. No amendment, modification, termination or waiver of any provision
of the AXEL Loan Documents, or consent to any departure by the Company
therefrom, shall in any event be effective without the written concurrence of
Requisite Lenders; provided that no such amendment, modification, termination,
waiver or consent shall, without the consent of each Lender (with Obligations
directly affected in the case of the following clause (i)): (i) extend the
scheduled final maturity of any AXEL, or extend the due date or reduce the
amount of any scheduled principal payment in respect of any AXELs, or reduce the
rate of interest on any AXEL (other than any waiver of any increase in the
interest rate applicable to any AXEL pursuant to subsection 2.2E) or any
commitment fees payable hereunder, or extend the time for payment of any such
interest or fees, or reduce the principal amount of any AXEL, (ii) amend,
modify, terminate or waive any provision of this subsection 9.6, (iii) reduce
the percentage specified in the definition of "Requisite Lenders" (it being
understood that, with the consent of Requisite Lenders, additional extensions of
credit pursuant to this Agreement may be included in the determination of
"Requisite Lenders" on substantially the same basis as the AXEL Commitments and
the AXELs (as such terms are defined in the Existing AXEL Credit Agreement) are
included on the Closing Date), (iv) consent to the assignment or transfer by the
Company of any of its rights and obligations under this Agreement or (v) release
all or substantially all the Liens granted pursuant to the Collateral Documents
(including Liens on real property) or release any Subsidiary from the Subsidiary
Guaranty if such release would constitute a release of all or substantially all
of the Collateral; provided, further that no such amendment, modification,
termination or waiver shall (1) increase the Additional AXEL Commitment of any
Lender over the amount thereof then in effect without the consent of such Lender
(it being understood that no amendment, modification or waiver of any condition
precedent, covenant, Potential Event of Default or Event of Default shall
constitute an increase in the Additional AXEL Commitment of any Lender, and that
no increase in the available portion of the Additional AXEL Commitment of any
Lender shall constitute an increase in such Additional AXEL Commitment of such
Lender); or (2) amend, modify, terminate or waive any provision of Section 8 as
the same applies to any Agent, or any other provision of this
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Agreement as the same applies to the rights or obligations of any Agent, in each
case without the consent of such Agent.
B. Administrative Agent may, but shall have no obligation to, with the
concurrence of any Lender, execute amendments, modifications, waivers or
consents on behalf of that Lender. Any waiver or consent shall be effective only
in the specific instance and for the specific purpose for which it was given. No
notice to or demand on the Company in any case shall entitle Company to any
other or further notice or demand in similar or other circumstances. Any
amendment, modification, termination, waiver or consent effected in accordance
with this subsection 9.6 shall be binding upon each Lender at the time
outstanding, each future Lender and, if signed by Company, the Company.
9.7 INDEPENDENCE OF COVENANTS.
All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or would otherwise be within
the limitations of, another covenant shall not avoid the occurrence of an Event
of Default or Potential Event of Default if such action is taken or condition
exists.
9.8 NOTICES.
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telexed or sent by telefacsimile or United States mail
or courier service and shall be deemed to have been given when delivered in
person or by courier service, upon receipt of telefacsimile or telex, or three
Business Days after depositing it in the United States mail with postage prepaid
and properly addressed; provided that notices to Arranger, Syndication Agent or
Administrative Agent shall not be effective until received. For the purposes
hereof, the address of each party hereto shall be as set forth under such
party's name on the signature pages hereof or (i) as to Company and
Administrative Agent, such other address as shall be designated by such Person
in a written notice delivered to the other parties hereto and (ii) as to each
other party, such other address as shall be designated by such party in a
written notice delivered to Administrative Agent and Company.
9.9 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
A. All representations, warranties and agreements made herein shall
survive the execution and delivery of this Agreement and the making of the AXELs
hereunder.
B. Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements of Company set forth in subsections 2.6D, 2.7, 9.2, 9.3
and 9.4 and the agreements of Lenders set forth in subsections 8.2C, 8.4 and 9.5
shall survive the payment of the AXELs, and the termination of this Agreement.
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9.10 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of Administrative Agent or any Lender
in the exercise of any power, right or privilege hereunder or under any other
AXEL Loan Document shall impair such power, right or privilege or be construed
to be a waiver of any default or acquiescence therein, nor shall any single or
partial exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other power, right or privilege. All rights and
remedies existing under this Agreement and the other Loan Documents are
cumulative to, and not exclusive of, any rights or remedies otherwise available.
9.11 MARSHALLING; PAYMENTS SET ASIDE.
Neither Administrative Agent nor any Lender shall be under any
obligation to marshal any assets in favor of Company or any other party or
against or in payment of any or all of the Obligations. To the extent that
Company makes a payment or payments to Administrative Agent or Lenders (or to
Administrative Agent for the benefit of Lenders), or Administrative Agent or
Lenders enforce any security interests or exercise their rights of setoff, and
such payment or payments or the proceeds of such enforcement or setoff or any
part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver or
any other party under any bankruptcy law, any other state or federal law, common
law or any equitable cause, then, to the extent of such recovery, the obligation
or part thereof originally intended to be satisfied, and all Liens, rights and
remedies therefor or related thereto, shall be revived and continued in full
force and effect as if such payment or payments had not been made or such
enforcement or setoff had not occurred.
9.12 SEVERABILITY.
In case any provision in or obligation under this Agreement or the AXEL
Notes shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
9.13 OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS' RIGHTS.
The obligations of Lenders hereunder are several and no Lender shall be
responsible for the obligations or AXEL Commitments of any other Lender
hereunder. Nothing contained herein or in any other Loan Document, and no action
taken by Lenders pursuant hereto or thereto, shall be deemed to constitute
Lenders as a partnership, an association, a joint venture or any other kind of
entity. The amounts payable at any time hereunder to each Lender shall be a
separate and independent debt, and each Lender shall be entitled to protect and
enforce its rights arising out of this Agreement and it shall not be necessary
for any other Lender to be joined as an additional party in any proceeding for
such purpose.
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9.14 HEADINGS.
Section and subsection headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
9.15 APPLICABLE LAW.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES.
9.16 SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns of Lenders (it being understood that
Lenders' rights of assignment are subject to subsection 9.1). Neither Company's
rights or obligations hereunder nor any interest therein may be assigned or
delegated by Company without the prior written consent of all Lenders.
9.17 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST COMPANY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY OBLIGATIONS
THEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING AND
DELIVERING THIS AGREEMENT, COMPANY, FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE
JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, TO COMPANY AT ITS ADDRESS PROVIDED IN
ACCORDANCE WITH SUBSECTION 9.8;
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(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS
SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER COMPANY IN ANY SUCH
PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT;
(V) AGREES THAT LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST
COMPANY IN THE COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 9.17
RELATING TO JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO
THE FULLEST EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW
SECTION 5-1402 OR OTHERWISE.
9.18 WAIVER OF JURY TRIAL.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER AXEL LOAN DOCUMENTS OR ANY
DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR
THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this
waiver is intended to be all-encompassing of any and all disputes that may be
filed in any court and that relate to the subject matter of this transaction,
including contract claims, tort claims, breach of duty claims and all other
common law and statutory claims. Each party hereto acknowledges that this waiver
is a material inducement to enter into a business relationship, that each has
already relied on this waiver in entering into this Agreement, and that each
will continue to rely on this waiver in their related future dealings. Each
party hereto further warrants and represents that it has reviewed this waiver
with its legal counsel and that it knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SUBSECTION
9.18 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT OR ANY OF THE OTHER AXEL LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING TO THE OBLIGATIONS MADE HEREUNDER. In the event of
litigation, this Agreement may be filed as a written consent to a trial by the
court.
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9.19 CONFIDENTIALITY.
Each Lender shall hold all non-public information obtained pursuant to
the requirements of this Agreement in accordance with such Lender's customary
procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices (and any Lender without such
customary procedures agrees to keep such information confidential), it being
understood and agreed by Company that in any event a Lender may make disclosures
to Affiliates or Related Funds of such Lender or disclosures reasonably required
by any bona fide assignee, transferee or participant in connection with the
contemplated assignment or transfer by such Lender of any AXELs (so long as such
Persons agree in advance in writing to keep such information confidential) or
disclosures required or requested by any governmental agency or representative
thereof or pursuant to legal process; provided that, unless specifically
prohibited by applicable law or court order, each Lender shall notify Company of
any request by any governmental agency or representative thereof (other than any
such request in connection with any examination of such Lender by such
governmental agency) for disclosure of any such non-public information prior to
disclosure of such information; and provided, further that in no event shall any
Lender be obligated or required to return any materials furnished by Company or
any of its Subsidiaries.
9.20 COUNTERPARTS; EFFECTIVENESS.
This Agreement and any amendments, waivers, consents or supplements
hereto or in connection herewith may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.
It is the intention of each of the parties hereto that the Existing
AXEL Credit Agreement be amended and restated so as to preserve the perfection
and priority of all security interests securing indebtedness and obligations
under the Existing AXEL Credit Agreement and the other Loan Documents and that
all indebtedness and obligations of Company and its Subsidiaries hereunder and
thereunder shall be secured by the Collateral Documents and that this Agreement
shall not constitute a novation of the obligations and liabilities existing
under the Existing AXEL Credit Agreement or be deemed to evidence or constitute
repayment of all or any portion of any such obligations or liabilities. The
parties hereto further acknowledge and agree that this Agreement constitutes an
amendment of the Existing AXEL Credit Agreement made under the terms of
subsection 9.6 thereof.
This Agreement shall become effective upon the execution of a
counterpart hereof by Company, Administrative Agent, Arranger and Requisite
Lenders (as such term is defined in the Existing AXEL Credit Agreement) and
receipt by Company and
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Administrative Agent of written or telephonic notification of such execution and
authorization of delivery thereof; provided that, unless and until all of the
conditions set forth in subsections 3.1 and 3.2 have been satisfied or waived in
accordance with subsection 9.6 of the Existing AXEL Credit Agreement, the
Existing AXEL Credit Agreement shall remain in full force and effect without
giving effect to the amendments set forth herein, all as if this Agreement had
never been executed and delivered.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
COMPANY:
AMSCAN HOLDINGS, INC.
By:/s/ James Harrison
-----------------------------------
Name: James Harrison
Title: President
Notice Address:
Amscan Holdings, Inc.
80 Grasslands Road
Elmsford, New York 10523
Attention: James M. Harrison
Telecopy: (914) 345-2056
S-1
<PAGE>
AGENTS AND LENDERS:
GOLDMAN SACHS CREDIT PARTNERS L.P.
individually and as Arranger
and Syndication Agent
By:/s/
------------------------------------
Authorized Signatory
Notice Address:
Goldman Sachs Credit Partners L.P.
16th Floor
85 Broad Street
New York, New York 10004
Attention: Stephen King (Credit)
Telecopy: (212) 902-2417
With a copy to:
Goldman Sachs Credit Partners L.P.
27th Floor
85 Broad Street
New York, New York 10004
Attention: Kathy King (Operations)
Telecopy: (212) 902-3757
S-2
<PAGE>
FLEET NATIONAL BANK,
as Administrative Agent
By:/s/ Stephen Curran
---------------------------------
Name: Stephen Curran
Title: AVP
Notice Address:
Fleet National Bank
One Federal Street, 5th Floor
Mail Stop MAOFD05P
Boston, Massachusetts 02110
Attention: John Mann
Telecopy: (617) 346-4682
with a copy to:
Fleet National Bank
One Federal Street, 3rd Floor
Mail Stop MAOFD03C
Boston, Massachusetts 02110
Attention: Steve Curran
Telecopy: (617) 346-5093
S-3
<PAGE>
GENERAL ELECTRIC CAPITAL CORPORATION
By:/s/ Murry Stegelmann
---------------------------------------
Name: Murry Stegelmann
Title: Duly Authorized Signatory
Notice Address:
General Electric Capital Corporation
201 High Ridge Road
Stamford, Connecticut 06927-5100
Attention: Joseph Badini,
Associate
Telecopy: (203) 316-7978
With a copy to:
General Electric Capital Corporation
201 High Ridge Road
Stamford, Connecticut 06927-5100
Attention: Janet K. Williams,
Senior Vice President
Telecopy: (203) 316-7978
S-4
<PAGE>
SOUTHERN PACIFIC BANK
By:/s/ Cheryl A. Wasilewski
-----------------------------------
Name: Cheryl A. Wasilewski
Title: Vice President
Notice Address:
Southern Pacific Bank
150 South Rodeo Drive, Suite 230
Beverly Hills, CA 90212
Attention: Cheryl Wasilewski
Telecopy: (310) 246-3666
S-5
<PAGE>
TRANSAMERICA BUSINESS CREDIT CORPORATION
By:/s/ Perry Vavoules
------------------------------------
Name: Perry Vavoules
Title: Senior Vice President
Notice Address:
Transamerica Business Credit Corporation
555 Theodore Fremd Avenue, Suite C-301
Rye, New York 10580
Attention: Perry Vavoules
Telecopy: (914) 921-0110
S-6
<PAGE>
CREDIT AGRICOLE INDOSUEZ
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
Notice Address:
Credit Agricole Indosuez
1211 Avenue of the Americas
New York, NY 10036-8701
Attention: Francoise Berthelot/
Isabelle Pradel (Credit)
Telecopy: (212) 278-2254
With a copy to:
Credit Agricole Indosuez
1211 Avenue of the Americas
New York, NY 10036-8701
Attention: Raymond Wright/
Michelle Sciaraffo (Loans)
Telecopy: (212) 278-2502
S-7
<PAGE>
MERRILL LYNCH SENIOR FLOATING
RATE FUND, INC.
By:/s/ John M. Johnson
-------------------------------------
Name: John M. Johnson
Title: Authorized Signatory
Notice Address:
Merrill Lynch Senior Floating Rate Fund, Inc.
800 Scudders Mill Road - Area 1B
Plainsboro, New Jersey 08536
Attention: John Johnson
Telecopy: (609) 282-2756
S-8
<PAGE>
PILGRIM AMERICA PRIME RATE TRUST
By: Pilgrim America Investments, Inc.,
its Investment Manager
By:
--------------------------------------
Name:
Title:
Notice Address:
Pilgrim America Prime Rate Trust
2 Renaissance Square
40 North Central Avenue
Suite 1200
Phoenix, Arizona 85004-3444
Attention: Howard Tiffen
Telecopy: (602) 417-8327
With a copy to
Pilgrim America Prime Rate Trust
2 Renaissance Square
40 North Central Avenue
Suite 1200
Phoenix, Arizona 85004-3444
Attention: Melina Dempsey
Telecopy: (602) 417-8321
With a copy to:
State Street Bank and Trust Company
Alternative Structures Unit
Boston, Massachusetts
Attention: Wayne Elpus
Reference: Pilgrim America Prime Rate Trust
Telecopy: (617) 664-5366/5367/5368
S-9
<PAGE>
CRESCENT/MACH I PARTNERS, L.P.
by: TCW Asset Management Company,
its Investment Manager
By:
------------------------------------
Name:
Title:
Notice Address:
TCW Asset Management Company
200 Park Avenue, Suite 2200
New York, New York 10166-0228
Attention: Mark L. Gold/Justin Driscoll
Telecopy: (212) 297-4159
With a copy to:
Crescent/Mach I Partners, L.P.
c/o State Street Bank & Trust Co.
Two International Place
Boston, Massachusetts 02110
Attention: Howie Gorman
Telecopy: (617) 664-5367
S-10
<PAGE>
MORGAN STANLEY DEAN WITTER
PRIME INCOME TRUST
By:/s/ Sheila A. Finnerty
----------------------------------
Name: Sheila A. Finnerty
Title: Vice President
Notice Address:
Morgan Stanley Dean Witter
Prime Income Trust
c/o Morgan Stanley Dean Witter Advisors
2 World Trade Center - 72nd Floor
New York, New York 10048
Attention: Sheila Finnerty (Credit)
Telecopy: (212) 392-5345
With a copy to:
Morgan Stanley Dean Witter
Prime Income Trust
c/o Morgan Stanley Dean Witter Advisors
2 World Trade Center - 72nd Floor
New York, New York 10048
Attention: Chris Colman (Administration)
Telecopy: (212) 392-5709
S-11
<PAGE>
BANK OF AMERICA NT & SA
By:
------------------------------------
Name: Francis Griffin
Title:
Notice Address:
Bank of America NT & SA
231 S. LaSalle Street, 19th Floor
Chicago, Illinois 60697
Attention: Chuck Tanskul
Telecopy: (312) 828-5100
S-12
<PAGE>
CYPRESSTREE INVESTMENT PARTNERS I, LTD.,
By: CypressTree Investment Management
Company, Inc., as Portfolio Manager,
soley in its capacity as an existing
Lender
By:/s/ Philip C. Robbins
------------------------------------
Name: Philip C. Robbins
Title: Principal
Notice Address:
CypressTree Investment Partners I, Ltd.
c/o CypressTree Investment Management
Company, Inc.
125 High Street
Boston, Massachusetts 02110
Attention: Peter Merrill
Telecopy: (617) 946-5681
With a copy to:
CypressTree Investment Partners I, Ltd.
c/o CypressTree Investment Management
Company, Inc.
125 High Street
Boston, Massachusetts 02110
Attention: Paul Thompson
Telecopy: (617) 946-5687
S-13
<PAGE>
KZH CYPRESSTREE-1 LLC
By:/s/ Virgina Conway
-----------------------------------
Name: Virgina Conway
Title: Authorized Signatory
Notice Address:
KZH CypressTree-1 LLC
c/o The Chase Manhattan Bank
450 West 33rd Street - 15th Floor
New York, New York 10001
Attention: Virginia Conway
Telecopy: (212) 946-7776
With a copy to:
Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, New York 10166-0193
Attention: Shan McSweeney
Telecopy: (212) 351-4035
S-13-A
<PAGE>
KZH CRESCENT-2 LLC
By:/s/ Virgina Conway
-----------------------------------
Name: Virgina Conway
Title: Authorized Signatory
Notice Address:
KZH CRESCENT-2 LLC
c/o The Chase Manhattan Bank
450 West 33rd Street - 15th Floor
New York, New York 10001
Attention: Virginia Conway
Telecopy: (212) 946-7776
With a copy to:
Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, New York 10166-0193
Attention: Shan McSweeney
Telecopy: (212) 351-4035
S-13-B
<PAGE>
KZH ING-2 LLC
By:/s/ Virgina Conway
-----------------------------------
Name: Virgina Conway
Title: Authorized Signatory
Notice Address:
KZH ING-2 LLC
c/o The Chase Manhattan Bank
450 West 33rd Street - 15th Floor
New York, New York 10001
Attention: Virginia Conway
Telecopy: (212) 946-7776
With a copy to:
Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, New York 10166-0193
Attention: Shan McSweeney
Telecopy: (212) 351-4035
S-13-C
<PAGE>
SENIOR DEBT PORTFOLIO
By:/s/ Payson F. Swaffield
-------------------------------------
Name: Payson F. Swaffield
Title: Vice President
Notice Address:
Senior Debt Portfolio
c/o Eaton Vance Asset Management
24 Federal Street
Boston, Massachusetts 0211
Attention: Gretchen Bergstresser
Telecopy: (617) 895-9594
S-14
<PAGE>
TORONTO DOMINION (TEXAS), INC.
By:
-----------------------------------
Name:
Title:
Notice Address:
Toronto Dominion (Texas), Inc.
909 Fannin street
Suite 1700
Houston, Texas 77010
Attention: David Parker
Telecopy: (713) 652-2647
S-15
<PAGE>
ING CAPITAL ADVISORS
By:
-----------------------------------
Name:
Title:
Notice Address:
ING Capital Advisors
333 South Grand Street
Los Angeles, California 90071
Attention: Beth Digati
Telecopy: (213) 346-3995
S-16
<PAGE>
KZH PAMCO LLC
By:/s/ Virgina Conway
-----------------------------------
Name: Virgina Conway
Title: Authorized Agent
Notice Address:
KZH Pamco LLC
c/o The Chase Manhattan Bank
450 West 33rd Street - 15th Floor
New York, NY 10001
Attention: Virginia Conway
Telecopy: (212) 946-7776
With a copy to:
Highland Capital Management, L.P.
1150 Two Galleria Tower
13455 Noel Road-DB #45
Dallas, Texas 75240
Attention: Mark Okada
Telecopy: (972) 233-4343
S-17
<PAGE>
WADDELL & REED FINANCIAL, INC.
By:
-----------------------------------
Name:
Title:
Notice Address:
Waddell & Reed Financial, Inc.
6300 Lamer
Overland Park, Kansas 66202
Attention: Jennifer Askins
Telecopy: (913) 236-1801
S-18
<PAGE>
BANKERS TRUST COMPANY
By:/s/ James Reilly
---------------------------------
Name: James Reilly
Title: Vice President
Notice Address:
Bankers Trust Company
130 Liberty Street
Mailstop 2344
New York, New York 10006
Attention: Jim Reilly
Telecopy: (212) 250-7218
S-20
<PAGE>
HIGHLAND CAPITAL MANAGEMENT, L.P.
By:
-------------------------------------
Name:
Title:
Notice Address:
Highland Capital Management, L.P.
1150 Two Galleria Tower
13455 Noel Road-DB #45
Dallas, Texas 75240
Attention: Davis Deadman
Telecopy: (972) 233-4343
S-20
