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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
DATE OF REPORT: OCTOBER 31, 1997
(Date of earliest event reported)
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WHITE CAP INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
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DELAWARE 0-22989 84-1380403
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(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) (Identification No.)
3120 AIRWAY AVENUE, P.O. BOX 1770, COSTA MESA, CALIFORNIA 92626
(Address of principal executive offices, zip code)
(714) 850-0900
(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On October 31, 1997, the Registrant completed its acquisition of the
assets of Burke Construction Accessories, L.P. ("BCA") for approximately
$9 million, subject to post-closing adjustment. BCA is a full line
distributor of concrete accessories, construction chemicals and rental
equipment used in poured-in-place, precast and tilt-up concrete
construction, renovation and maintenance. BCA operates nine branch
locations in the Western United States. BCA reported revenue of
approximately $25 million for the fiscal year ended December 31, 1996.
The Registrant funded the acquisition with borrowings under its new
credit agreement with Bank of America National Trust and Savings
Association and the other financial institutions party thereto. The
amount of consideration paid by the Registrant for the acquired business
was determined through arms' length negotiations.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of the acquired business will be provided
within the next sixty (60) days as an amendment to this filing.
(b) Pro Forma Financial Information.
The unaudited pro forma condensed consolidated balance sheet
and income statement of the Registrant, will be provided
within the next sixty (60) days as an amendment to this
filing.
(c) Exhibits
2.1 Asset Purchase Agreement, dated as of September 19,
1997, by and between White Cap Industries, Corp.
(formerly White Cap Industries, Inc.) and Burke
Concrete Accessories, L.P.
10.1 Credit Agreement, dated as of October 29, 1997, among
White Cap Industries, Corp., White Cap Industries, Inc.,
Bank of America National Trust and Savings Association
and the other financial institutions party thereto.
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SIGNATURES
Pursuant to the requirement 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.
WHITE CAP INDUSTRIES, INC.
(Registrant)
Date: November 13, 1997 By: /s/ CHRIS LANE
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Chris Lane
Chief Financial Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description Page
- ------- ----------- ------------
<S> <C> <C>
2.1 Asset Purchase Agreement, dated as of September 19,
1997, by and between White Cap Industries, Corp.
(formerly White Cap Industries, Inc.) and Burke
Concrete Accessories, L.P.
10.1 Credit Agreement, dated as of October 29, 1997, among
White Cap Industries, Corp., White Cap Industries, Inc.,
Bank of America National Trust and Savings Association
and the other financial institutions party thereto.
</TABLE>
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EXHIBIT 2.1
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ASSET PURCHASE AGREEMENT
by and between
WHITE CAP INDUSTRIES, INC.,
and
BURKE CONCRETE ACCESSORIES, L.P.
September 19, 1997
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of
September 19, 1997, is made and entered into by and between White Cap
Industries, Inc., a California corporation ("Buyer"), and Burke Concrete
Accessories, L.P., a limited partnership organized under the laws of California
("Seller").
WHEREAS, Seller is engaged in the business of distributing concrete
accessories, rental equipment and related materials (the "Business"); and
WHEREAS, Seller desires to sell and assign to Buyer, and Buyer
desires to purchase and assume from Seller, on the terms and subject to the
conditions set forth in this Agreement, substantially all of the assets and
certain liabilities of Seller that are currently being used and have been
incurred by Seller in the conduct of the Business.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties, agreements and the conditions set forth in this
Agreement, Buyer and Seller hereby agree as follows:
ARTICLE I
TRANSFER OF ASSETS; ASSUMPTION OF LIABILITIES
1.01 Transfer of Assets. On the terms and subject to the conditions
set forth in this Agreement, Seller shall, at the Closing (as defined in Section
3.01 hereof), sell, transfer and assign to Buyer, and Buyer shall purchase and
acquire from Seller, all of Seller's right, title and interest, as of the
Closing Date (as defined in Section 3.01 hereof), in and to all of the assets of
Seller related to, or used in conjunction with, the Business (collectively,
except for the excluded assets set forth in Section 1.02 hereof, the "Assets"),
including, but not limited to:
(a) all of the equipment, machinery, vehicles, furniture, fixtures,
furnishings and leasehold improvements owned by Seller and used by Seller in the
operation of the Business;
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(b) Seller's interest in all real property leases to which Seller is
a party that are used in connection with the Business, all of which leases are
identified in Section 4.10 of the Disclosure Schedule (as defined in Article IV
hereof);
(c) Seller's interest in all personal property leases to which
Seller is a party that are used in connection with the operation of the
Business, including, without limitation, all agreements pursuant to which Seller
uses any equipment leased by any affiliate of Seller;
(d) all of Seller's inventories of supplies, raw materials, parts,
finished goods, work-in-process, product labels and packaging materials used in
connection with the Business and Seller's interest in all orders or contracts
for the purchase of supplies, raw materials, parts, product labels and packaging
materials used in connection with the Business;
(e) Seller's interest in all licenses, contracts or agreements with
respect to the Business to which Seller is a party and, including, without
limitation, those identified in Section 4.13 of the Disclosure Schedule as being
assumed by the Buyer;
(f) all unfilled or uncompleted customer contracts, commitments or
purchase or sales orders received and accepted by Seller in connection with the
Business in the ordinary course of business;
(g) all documents or other tangible materials embodying technology
or intellectual property rights owned by, licensed to or otherwise controlled by
Seller and used in connection with the Business, whether such properties are
located on Seller's Business premises or on the business premises of Seller's
suppliers or customers, including, without limitation, all software programs
(including both source and object codes) and related documentation for software
used in or developed for support of the Business;
(h) all rights in patents, patent applications, trademarks, service
marks, trade names, corporate names, copyrights, mask works, trade secrets or
other intellectual property rights owned by, licensed to or otherwise controlled
by Seller or used in, developed for use in or necessary to the conduct of the
Business as now conducted or planned to be conducted including, without
limitation, those set forth in the Disclosure Schedule under the caption
referencing Section 4.14 and including the rights to institute or maintain any
action or investigation for and to recover damages for any past infringement
thereof or any actions of unfair competition relating thereto;
(i) the name "Burke Concrete Accessories" or any combination of
words in which the full name "Burke Concrete Accessories" appears or any rights
associated with such name or any right to use such name in all jurisdictions in
which Seller either currently uses any such name or has any right to use any
such name; provided, that the use of such name shall be limited only to the
conduct of doing business and shall not be used to identify products offered by
Buyer, except to
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the extent permitted by the Distribution Agreements (as defined in Section 10.01
hereof);
(j) all of Seller's books, records and other documents and
information relating to the Assets or the Business, including, without
limitation, all customer, prospect, dealer and distributor lists, sales
literature, inventory records, purchase orders and invoices, sales orders and
sales order log books, customer information, commission records, correspondence,
employee payroll and personnel records, product data, material safety data
sheets, price lists, product demonstrations, quotes and bids and all product
catalogs and brochures (but excluding corporate or partnership minute books and
related records);
(k) all accounts or notes receivable (excluding intra-company
accounts) owing to Seller that relate to the Business;
(l) the current telephone listings of the Business and the right to
use the telephone numbers currently being used at the principal offices and
other offices or facilities of the Business;
(m) all permits, licenses and other governmental approvals held by
Seller with respect to the Business, to the extent they are assignable;
(n) all prepaid expenses and deposits made by Seller with respect to
the Business;
(o) all long-term investments of Seller relating to the Business;
(p) any rights to recovery by Seller arising out of litigation with
respect to the Business that is pending prior to or commences after the Closing
Date; and
(q) goodwill (including all goodwill associated with and symbolized
by the name "Burke Concrete Accessories" identified in subsection (i) above as
used as a trademark or service mark and all goodwill associated with and
symbolized by any other trademark or service mark, trade name or corporate name
used in the conduct of the Business as now conducted), all related tangibles and
intangibles which Seller uses in the conduct of the Business and all rights to
continue to use the Assets in the conduct of a going business.
The parties hereto expressly agree that Buyer is not assuming any of the
liabilities, obligations or undertakings relating to the foregoing Assets,
except for those liabilities and obligations specifically assumed by Buyer in
Section 1.03 hereof, all of which liabilities and obligations have been incurred
by Seller in the ordinary course of the Business and none of which arise from
transactions between or among Seller
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and any of Seller's affiliates (other than in connection with supply and
distribution agreements and arrangements entered into between Seller and Burke
Group, LLC which have been disclosed to Buyer pursuant to Section 4.20 hereof).
1.02 Excluded Assets. Notwithstanding the terms of Section 1.01, the
following assets shall be retained by Seller and shall not be sold, transferred
or assigned to Buyer in connection with the purchase of the Assets:
(a) all cash and cash-equivalents of Seller;
(b) all bank accounts of Seller;
(c) the rights to any insurance policies or claims of Seller;
(d) the right to use the "Burke" name in any manner other than as
contemplated by 1.01(i) hereof;
(e) corporate or partnership minute books and related records;
(f) such licenses, permits or other certificates of authority which,
by their terms, are nonassignable, all of which are identified in the Disclosure
Schedule under the caption referencing Section 4.13 or Section 4.22 as being
retained by the Seller.
1.03 Assumption of Liabilities. Buyer shall assume, pay, perform in
accordance with their terms or otherwise satisfy, as of the Closing Date:
(a) all liabilities incurred by Seller in the ordinary course of
conducting the Business that are disclosed in the balance sheet of Buyer dated
as of June 30, 1997 attached hereto as Exhibit A (the "Balance Sheet") that
continue to exist on the Closing Date, excluding (i) all interest-bearing debt
incurred by Seller, and (ii) any asserted or unasserted claims against Seller
arising from the sale of its products prior to the Closing;
(b) all liabilities of the type disclosed in the Balance Sheet that
are incurred by Seller in the ordinary course of conducting the Business,
consistent with the terms and provisions of this Agreement, subsequent to the
date of the Balance Sheet and prior to the Closing Date that continue to exist
on the Closing Date, excluding (i) any interest-bearing debt incurred prior to
the Closing Date, (ii) Taxes (as defined in Section 4.12(e) hereof) incurred
prior to the Closing Date, (iii) any asserted or unasserted claims against
Seller arising from the sale of its products prior to the Closing, and (iv) any
liability for breach of contract, breach of warranty, tort, infringement, claim
or lawsuit arising from the Business or the actions or inactions of Seller prior
to the Closing Date;
(c) Seller's obligations under the leases, agreements, contracts,
arrangements and licenses assigned to Buyer pursuant to Section 8.01(c) hereof;
and
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(d) Seller's obligations under the Rowe Employment Agreement (as
defined in, and in accordance with, Section 2.03 hereof).
1.04 Excluded Liabilities. Other than as set forth above in Section
1.03, Seller shall retain, and Buyer shall not assume, and nothing contained in
this Agreement shall be construed as an assumption by Buyer of, any liabilities,
obligations or undertakings of Seller of any nature whatsoever, whether accrued,
absolute, fixed or contingent, known or unknown due or to become due,
unliquidated or otherwise. Seller shall be responsible for all of the
liabilities, obligations and undertakings of Seller not expressly assumed by
Buyer pursuant to Section 1.03 hereof, and such liabilities shall remain the
liabilities of Seller.
ARTICLE II
PURCHASE PRICE
2.01 Amount. The total purchase price (the "Purchase Price") for the
Assets shall be EIGHT MILLION, FIVE HUNDRED THOUSAND AND NO/100 DOLLARS
($8,500,000.00), subject to any adjustments to be made pursuant to Sections 2.02
and 2.03 hereof, payable in the manner provided in Section 2.04 hereof.
2.02 Working Capital Adjustment to Purchase Price.
(a) Adjustments to be Made at Closing. The Purchase Price will be
subject to the following adjustments on the Closing Date, based on the
difference between the Net Working Capital Balance (as defined in Section
2.02(c)) of the Business as of the Closing Date as determined in good faith by
the Seller in consultation with its independent public accountants (the "Closing
Working Capital Balance"), and TWO MILLION, SEVEN HUNDRED FIFTY FOUR THOUSAND
SIX HUNDRED AND NO/100 DOLLARS ($2,754,600.00), the Net Working Capital Balance
of the Business as of June 30, 1997 (the "June 30 Working Capital Balance"):
(i) if the Closing Working Capital Balance exceeds the June 30
Working Capital Balance, the Purchase Price will be increased by the amount by
which the Closing Working Capital Balance exceeds the June 30 Working Capital
Balance;
(ii) if the June 30 Working Capital Balance exceeds the
Closing Working Capital Balance, the Purchase Price will be decreased by the
amount by which the June 30 Working Capital Balance exceeds the Closing Working
Capital Balance; and
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(iii) if the Closing Working Capital Balance equals the June
30 Working Capital Balance, the Purchase Price will not be adjusted pursuant to
this Section 2.02.
(b) Post Closing Adjustments.
(i) Buyer shall have up to ninety (90) days following the
Closing Date (the "Verification Period") to verify Seller's determination of the
Closing Working Capital Balance. Any adjustments to such determination shall be
made by written notice to Seller within the Verification Period (an "Adjustment
Notice"), setting forth (A) Buyer's objections to Seller's determination of the
Closing Working Capital Balance, (B) Buyer's determination of the Working
Capital Balance, and (C) the proposed purchase price adjustment (the "Proposed
Purchase Price Adjustment"). If Buyer does not deliver an Adjustment Notice to
Seller within the Verification Period, Seller's determination of the Closing
Working Capital Balance shall be final and binding on the parties.
(ii) To the extent that Seller has any objection to the
Proposed Purchase Price Adjustment, such objection shall be made by written
notice to Buyer (the "Objection Notice") within ten (10) days of delivery of the
Adjustment Notice (the "Objection Period"). If Seller does not object to the
Proposed Purchase Price Adjustment within the Objection Period, Buyer shall be
entitled to offset the Proposed Purchase Price Adjustment against the Holdback
(as defined in Section 2.04(c)) in accordance with Section 2.05 hereof.
(iii) If Seller delivers an Objection Notice in response to
any Adjustment Notice delivered by Buyer, and Buyer and Seller are unable to
agree upon the amount of any Proposed Purchase Price Adjustment within ten (10)
days of delivery of the Objection Notice, then the accounting firm of Deloitte &
Touche LLP (the "Auditor") shall be requested to conduct a review and determine
the amount of the Closing Working Capital Balance. The Auditor shall be
instructed in performing such review that both Buyer and Seller shall be
provided with copies of any and all correspondence and drafts distributed to any
party. Prior to issuing its final determination, both Buyer and Seller shall
have the opportunity to provide the Auditor with input and any additional
information that such party deems relevant, provided that the Auditor shall not
be required to use any such input or information in connection with its review
and determination of the Closing Working Capital Balance. Upon completion of its
review and determination, the Auditor shall promptly deliver copies of its
report to Buyer and Seller, setting forth its determination of the Closing
Working Capital Balance (the "Auditor's Report"). The Auditor's Report will be
conclusive and binding upon both Buyer and Seller and Buyer shall be entitled to
offset against the Holdback, in accordance with Section 2.05 hereof, an amount
equal to the excess, if any, of the Closing Working Capital Balance as
determined by the Auditor and reported in the Auditor's Report over the
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Closing Working Capital Balance determined by Buyer on or before the Closing
Date. Each of Seller and Buyer shall pay one-half of the costs and expenses of
the Auditor and the Auditor's Report contemplated by this Section 2.02(b)(iii).
(c) Definition of Net Working Capital Balance. For purposes of this
Section 2.02, the "Net Working Capital Balance" of the Business shall mean (i)
all current assets of the Business (excluding cash and cash equivalents), less
(ii) all current liabilities (excluding the current portion of interest-bearing
debt), plus (iii) the aggregate purchase price, not to exceed $200,000, of all
rental equipment purchased by Seller since June 30, 1997 with cash from
operations in the ordinary course of business, or with debt that is a current
liability assumed by Buyer pursuant to Section 1.03 hereof, to the extent that
such equipment is included in the Assets. Seller agrees to give Buyer at least
ten days' written notice of any purchase of rental equipment contemplated by the
foregoing sentence in excess of $10,000.
2.03 Rowe Employment Agreement. Buyer shall employ Pierce Edward
(Ned) Rowe, the current President of Seller ("Rowe"), by assuming the employment
agreement between Rowe and Seller (the "Rowe Employment Agreement") on the
Closing Date, provided, that Buyer shall retain the right to terminate Rowe at
any time after the Closing Date subject to the termination obligations set forth
in the Rowe Employment Agreement. In the event that Buyer terminates Rowe after
assuming the Rowe Employment Agreement, Seller and Buyer shall each be
responsible for fifty percent (50%) of any costs incurred in connection with any
liabilities arising under the Rowe Employment Agreement from such termination.
The portion of such termination costs to be borne by Seller will be paid by
Seller to Buyer from the Retention Amount (as defined in Section 2.06) within
five business days after Buyer has given written notice of Buyer's termination
of Rowe and its written analysis of the termination costs required to be paid
under the Rowe Employment Agreement.
2.04 Manner of Payment.
(a) Deposit. On the first business day following execution of this
Agreement, a payment of TWO HUNDRED AND FIFTY THOUSAND AND NO/100 DOLLARS
($250,000.00) shall be made by Buyer by wire transfer payable at the direction
of Seller in immediately available federal funds as a deposit to secure Buyer's
obligation to consummate the transactions contemplated hereby (the "Deposit").
On the Closing Date, the Deposit shall be credited to Buyer's payment of the
Purchase Price pursuant to Section 2.04(b) hereof. In the event that this
Agreement is terminated by Buyer, other than in accordance with Article IX
hereof, or by Seller, in accordance with Sections 9.01(b) or 9.01(g) hereof,
Seller shall be entitled to retain the Deposit. In all other cases, the Deposit
shall be returned to Buyer, by wire transfer payable at the direction of Buyer
in immediately available federal funds, within three (3) business days of the
termination of this Agreement.
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(b) Closing Payment. A payment equal to the Purchase Price (subject
to any adjustments to be made pursuant to Sections 2.02 and 2.03 hereof) less
the Deposit and the Holdback (the "Closing Cash Payment") shall be made by Buyer
by wire transfer payable at the direction of Seller in immediately available
federal funds on or before 12:00 p.m., Pacific Time, on the Closing Date.
(c) Holdback. TWO HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS
($250,000.00) of the Purchase Price (as adjusted pursuant to Sections 2.02 and
2.03 hereof) (the "Holdback") shall be retained by Buyer in reserve against
those offsets contemplated by Section 2.05 hereof. The Holdback shall be
deposited by Buyer into a segregated, interest-bearing bank account (the
"Holdback Account"). Buyer shall not withdraw any portion of the Holdback, or
any interest thereof, from the Holdback Account other than in accordance with
Section 2.05 hereof.
2.05 Holdback Offset. The Holdback shall be retained by Buyer as
security for the offset rights set forth below:
(a) Offset for Adjustments to Closing Working Capital Balance. Buyer
shall be entitled to offset against the Holdback (i) any Proposed Purchase Price
Adjustment made by Buyer pursuant to Section 2.02(b)(ii) hereof and not objected
to within the Objection Period and (ii) any adjustment to be made pursuant to
Section 2.02(b)(iii) hereof as a result of any Auditor's Report as to the
Closing Working Capital Balance.
(b) Offset for Accounts Receivable. Buyer shall be entitled to an
offset against the Holdback in an amount in cash equal to the Uncollected
Receivables (as hereinafter defined), in accordance with the procedures set
forth below:
(i) On or before the first business day following the date
that is one hundred and eighty (180) days after the Closing Date, Buyer shall
deliver to Seller a statement (the "Receivables Statement") setting forth the
Total Collections (as hereinafter defined) and Uncollected Receivables as of one
hundred and eighty (180) days after the Closing Date (the "Receivables Statement
Date"). For purposes of this Agreement, "Closing Date Receivables" shall mean
all accounts receivable of Seller (net of reserves for doubtful accounts) listed
as of the Closing Date on the schedule of notes and accounts receivable to be
delivered by Seller on the Closing Date pursuant to Section 4.11 hereof and
approved by Buyer and Seller on such date; "Total Collections" shall mean the
amount of cash collected in respect of the Closing Date Receivables through the
Receivables Statement Date; and "Uncollected Receivables" shall equal Closing
Date Receivables, reduced by (i) Total Collections, and (ii) the allowance for
doubtful accounts on the books of Seller for bad debt related to the Closing
Date Receivables. Buyer agrees to process collection of the Closing Date
Receivables in good faith using its normal and customary collection
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procedures. Buyer further agrees that all sums collected through the Receivables
Statement Date from any customer obligated with respect to a Closing Date
Receivable shall be applied (1) first, to the specific invoice referenced on the
customer's check or remittance; (2) second, if no specific invoice is
referenced, to such Closing Date Receivable and (3) third, only after full
satisfaction of such Closing Date Receivable, to Buyer's other accounts
receivables, if any; provided, that Buyer shall not be required to comply with
the application of collections required by clause (2) above if the customer
disputes the validity of such Closing Date Receivable or makes a claim that the
products or services sold related to such Closing Date Receivable are defective
or unsatisfactory.
(ii) At Seller's request, as soon as practicable after
delivery of the Receivables Statement to Seller, Buyer shall reassign to Seller
all of the Uncollected Receivables that Buyer has offset against the Holdback;
provided, however, that at Buyer's request, Buyer and Seller shall negotiate in
good faith for Buyer to purchase the Uncollected Receivables in lieu of such
reassignment, it being understood that Seller is under no obligation to accept
any offer made by Buyer in respect of such purchase and shall be entitled to the
reassignment of the Uncollected Receivables if Buyer and Seller are unable to
agree on a purchase price therefor.
(c) Offset for Indemnification Obligations. Buyer shall be entitled
to offset against the Holdback any indemnifiable Buyer Losses (as defined in
Section 11.02 hereof), provided that, if and to the extent that any Buyer Losses
are based on a claim by a third party against Buyer, such claim must be actually
asserted against Buyer by such third party. In the event that Buyer Losses
exceed the Holdback, Buyer shall be entitled to retain the Holdback and the
Seller shall be responsible for the excess in accordance with, and subject to
the limitations of, Section 11.02 hereof.
(d) Offset Procedures. On the third (3rd) business day following the
date that is one hundred and eighty (180) days after the Closing Date (the
"Offset Payment Date"), Buyer shall (i) provide Seller with a statement setting
forth in reasonable detail the Holdback amount and any offsets, and (ii)
deliver, by wire transfer payable to the order of Seller in immediately
available federal funds, the aggregate amount held in the Holdback Account, less
the amount of any offsets to which Buyer is entitled pursuant to this Section
2.05. Notwithstanding the foregoing, to the extent that Seller has delivered an
Objection Notice relating to any Proposed Purchase Price Adjustment, and such
objection has not been settled as of the Offset Payment Date, either by the
agreement of the parties or by the delivery of the Auditor's Report with respect
to such Proposed Purchase Price Adjustment, Buyer shall be entitled to retain in
the Holdback Account an amount equal to the Proposed Purchase Price Adjustment
(the "Remaining Holdback") until such time as an Auditor's Report with respect
to such Proposed Purchase Price Adjustment. At the time such Auditor's Report is
issued, Buyer shall deliver, by wire transfer payable to the order of Seller in
immediately available federal funds, an amount
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equal to the excess, if any, of the Remaining Holdback over any adjustment to be
made pursuant to Section 2.02(b)(iii) hereof as a result of the Auditor's
Report.
2.06 Retention of Purchase Price by Seller.
(a) To secure any potential indemnification claim of Buyer pursuant
to Section 11.02 hereof, Seller agrees to retain a minimum of $500,000 of the
Closing Cash Payment for a period of one year following the Closing Date in a
segregated, interest-bearing bank account (the "Retention Account"). Seller
shall not distribute any amount held in the Retention Account to any of its
partners during such one-year period. Notwithstanding the foregoing, in the
event Buyer has not terminated Rowe's employment with Buyer under the Rowe
Employment Agreement prior to the end of such one year period, Seller shall
retain in the Retention Account an amount equal to fifty percent (50%) of the
aggregate costs that would be incurred by Buyer under the Rowe Employment
Agreement through the end of the stated employment term of October 31, 1998 (the
"Term") in the event of such termination (the "Rowe Holdback"). If Buyer has not
terminated Rowe's employment during a calendar month of the remaining Term,
Seller may distribute to its partners an amount equal to a portion of the Rowe
Holdback pro rated for such month. If Buyer terminates Rowe, Seller shall be
obligated to pay to the Buyer the remaining balance of the Rowe Holdback from
the Retention Account as of such termination date.
(b) Seller agrees to obtain the written agreement (the "Retention
Agreement") of each of BCA, LLC, the general partner of Seller (the "General
Partner") and each of Arnold W. Ackerman, John M. Duff, Jr., R. Thomas Goodrich,
John M. Noerr and William M. Robinson, the individual members of the General
Partner of Seller, pursuant to which each such person will agree to (i) cause
the Seller, on and after the Closing Date, to fulfill its obligations under this
Section 2.06, (ii) defend against any attempt by any limited partner or creditor
of Seller to have any portion of the Retention Amount distributed or paid to
such person prior to the first anniversary of the Closing Date, and (iii)
indemnify and hold harmless Buyer for any loss, liability, damage, expense or
cost arising from Seller's failure to fulfill its obligations under this Section
2.06 or, with respect to an indemnification claim by Buyer against the Retention
Amount pursuant to Section 11.02 hereof, Seller's obligations under such Section
11.02.
2.07 Allocation of Purchase Price. Prior to the Closing Date, Buyer
shall determine an allocation of the Purchase Price among the Assets, subject to
Seller's consent (which shall not be unreasonably withheld), after taking into
account any appraisals which may be obtained by Buyer, the applicable Treasury
Regulations and the fair market value of such items. Buyer shall prepare for
filing all of the tax returns, information returns and statements ("Returns")
that may be required with respect to the transaction provided for herein
pursuant to Section
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1060 of the Internal Revenue Code of 1986, as amended (the "Code"), any Treasury
Regulations promulgated thereunder, any other similar provision of the Code and
any other similar, applicable foreign, state or local tax law or regulation.
Seller shall provide information that may be required by Buyer for the purpose
of preparing such Returns, execute and file such Returns as requested by Buyer
and file all other returns and tax information on a basis that is consistent
with such Returns prepared by Buyer.
ARTICLE III
CLOSING
3.01 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") will take place at the offices of counsel to Seller,
Howard Rice Nemerovski Canady Falk & Rabin, San Francisco, California, at 10:00
a.m. on October 22, 1997, or at such other place and on such other date as is
mutually agreeable to Buyer and Seller. The date on which the Closing occurs is
referred to herein as the "Closing Date."
3.02 General Procedure. At the Closing, each party shall deliver to
the party entitled to receipt thereof the documents required to be delivered
pursuant to Article VIII hereof and such other documents, instruments and
materials (or complete and accurate copies thereof, where appropriate) as may be
reasonably required in order to effectuate the intent and provisions of this
Agreement, and all such documents, instruments and materials shall be
satisfactory in form and substance to counsel for the receiving party. The
conveyance, transfer, assignment and delivery of the Assets shall be effected by
Seller's execution and delivery to Buyer of a bill of sale substantially in the
form attached hereto as Exhibit B (the "Bill of Sale") and such other
instruments of conveyance, transfer, assignment and delivery as Buyer shall
reasonably request to cause Seller to transfer, convey, assign and deliver the
Assets to Buyer, and the assignment and assumption of Seller's Liabilities to
Buyer shall be effected by Seller's and Buyer's execution of an assignment and
assumption agreement substantially in the form attached hereto as Exhibit C (the
"Assignment and Assumption Agreement").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF SELLER
The Seller hereby represents and warrants to Buyer that, except as
set forth in the Disclosure Schedule delivered by Seller to Buyer on the date
hereof (the "Disclosure Schedule") (which Disclosure Schedule sets forth the
exceptions to the
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representations and warranties contained in this Article IV under captions
referencing the Sections to which such exceptions apply):
4.01 Organization, Qualification and Power and Authority. Seller is
a limited partnership duly formed, validly existing and in good standing under
the laws of the State of California and has all requisite power and authority
and all authorizations, licenses, permits and certifications necessary to carry
on the Business as now being conducted and to own, lease and operate the Assets.
Seller is qualified to do business in every jurisdiction in which the nature of
its business or its ownership of property requires it to be qualified and in
which the failure to be so qualified would have a material adverse effect on the
financial or operating condition of the Business.
4.02 Subsidiaries. Except as otherwise set forth in Section 4.02 of
the Disclosure Schedule, the Assets do not include any stock, partnership
interest, joint venture interest or any other security or ownership interest
issued by any other corporation, organization or entity.
4.03 Authority; Enforceability. The Seller has the right, legal
capacity, and authority to enter into and perform its obligations under this
Agreement. This Agreement constitutes the valid and legally binding obligation
of the Seller, enforceable in accordance with its terms and conditions, subject
to applicable bankruptcy, insolvency, reorganization, moratorium and other laws
affecting the rights of creditors generally, and to the exercise of judicial
discretion in accordance with general principles of equity, including (without
limitation) concepts of materiality, reasonableness, good faith and fair
dealing, and other similar doctrines affecting the enforceability of agreements
generally (regardless of whether considered in a proceeding in equity or at
law).
4.04 Noncontravention. Except as set forth in Section 4.04 of the
Disclosure Schedule, neither the execution and the delivery of this Agreement,
nor the consummation of the transactions contemplated herein will (i) violate
any law to which the Seller is subject, (ii) violate any provision of the
limited partnership certificate, limited partnership agreement, articles of
incorporation, bylaws or other governing documents (as the case may be) of the
Seller, (iii) conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to accelerate,
terminate, modify or cancel, or require any notice under any agreement,
contract, lease, license, instrument or other arrangement to which the Seller is
a party or by which it is bound or to which any of its assets is subject, or
(iv) result in the imposition of any security interest upon any of the Assets.
4.05 Governmental Authorities; Consents. No consent, approval, or
authorization of, or declaration, filing or registration with any United States
federal or state governmental or regulatory authority is required to be made or
obtained by
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the Seller in connection with the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated herein.
4.06 Financial Statements; Undisclosed Liabilities.
(a) The Balance Sheet attached to this Agreement as Exhibit A and
the financial statements of Seller for the years ended December 31, 1994, 1995
and 1996 previously provided to Buyer (including the notes thereto) (the
"Historical Financial Statements") have each been prepared in accordance with
generally accepted accounting principles ("GAAP") (except, with respect to the
Balance Sheet, subject to changes for year-end adjustments and the omission of
notes) applied on a consistent basis throughout the periods covered thereby,
present fairly the financial condition of the Business as of such dates and for
such periods, are correct and complete, and are consistent with the books and
records of Seller (which books and records are correct and complete).
(b) As of the date of the Balance Sheet, the Business had no
liabilities (whether accrued, absolute, contingent, unliquidated or otherwise,
whether due or to become due, whether known or unknown, and regardless of when
asserted) arising out of transactions entered into prior to the date of the
Balance Sheet, or any action or inaction, or any state of facts existing, with
respect to or based upon transactions or events occurring prior to the date of
the Balance Sheet, except liabilities disclosed in the Balance Sheet or which
arose in the ordinary course of business after the date of the Balance Sheet
(none of which is a material uninsured liability for breach of contract, breach
of warranty, tort, infringement, claim or lawsuit).
(c) The Monthly Financial Statements (as defined in, and to be
delivered by Seller to Buyer pursuant, to Section 10.02 hereof) shall be
prepared in accordance with GAAP (subject to changes for year-end adjustments
and except for the omission of notes) applied on a consistent basis throughout
the periods covered thereby, shall present fairly the financial condition and
the results of operations of the Business as of such dates and for such periods,
and shall be correct and complete, and consistent with the books and records of
Seller (which books and records shall be correct and complete as of the delivery
of the Monthly Financial Statements).
(d) As of the Closing, the Business will have no liabilities
(whether accrued, absolute, contingent, unliquidated or otherwise, whether due
or to become due, whether known or unknown, and regardless of when asserted)
arising out of transactions entered into prior to the Closing, or any action or
inaction, or any state of facts existing, with respect to or based upon
transactions or events occurring prior to the Closing, except liabilities
disclosed in the Financial Statements or which have arisen in the ordinary
course of business after the date of the Financial Statements
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(none of which is a material uninsured liability for breach of contract, breach
of warranty, tort, infringement, claim or lawsuit).
4.07 Events Subsequent to Balance Sheet Date. Except as contemplated
by this Agreement and as set forth in Section 4.07 of the Disclosure Schedule,
since the date of the Balance Sheet, there has not been any material adverse
change in the business, financial condition, operations or results of operations
of the Business. Except as contemplated by this Agreement and as set forth in
Section 4.07 of the Disclosure Schedule, but without limiting the generality of
the foregoing, since the date of the Balance Sheet:
(a) Seller has not sold, leased, transferred, or assigned any of its
assets, tangible or intangible, other than on an arm's-length basis in the
ordinary course of business;
(b) Seller has not entered into any agreement, contract, lease, or
license (or series of related agreements, contracts, leases, and licenses)
outside the ordinary course of business involving more than $50,000 in the
aggregate which will remain an obligation of Seller following the Closing;
(c) no party (including Seller) has accelerated, terminated,
modified, or canceled any agreement, contract, lease, or license (or series of
related agreements, contracts, leases, and licenses) involving more than $50,000
in the aggregate to which Seller is a party or by which Seller is bound;
(d) Seller has not imposed any security interest upon any of its
assets, tangible or intangible, other than pursuant to purchase money security
interests in the ordinary course of business;
(e) Seller has not made any capital expenditure (or series of
related capital expenditures) involving expenditures of more than $50,000 in the
aggregate other than as shown on the books and records of Seller made available
to the Buyer and its representatives prior to Closing;
(f) Seller has not issued any note, bond, or other debt security or
created, incurred, assumed, or guaranteed any indebtedness for borrowed money or
capitalized lease obligation involving more than $50,000 in the aggregate except
in the ordinary course of business;
(g) Seller has not delayed or postponed the payment of accounts
payable and other liabilities, or made or suffered any material adverse change
in its relationship with its vendors, outside the ordinary course of business;
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<PAGE> 16
(h) there has been no change in the normal operating balances of
Seller's inventory that could reasonably have a material adverse effect on the
operations of Seller;
(i) Seller has not canceled, compromised, waived, or released any
right or claim (or series of related rights and claims) involving more than
$50,000 in the aggregate;
(j) there has been no change made or authorized in the limited
partnership certificate, limited partnership agreement or other governing
documents of Seller;
(k) Seller has not declared, set aside, or paid any distribution to
any of its general or limited partners (whether in cash or in kind) or redeemed,
purchased, or otherwise acquired any of its general or limited partnership
interests;
(l) Seller has not experienced any material damage, destruction, or
loss to its property not covered by insurance;
(m) except for loans or advances to a partner or employee which will
be paid prior to Closing, Seller has not made any loan or advance to, or entered
into any other transaction with, any of its partners or employees;
(n) Seller has not entered into any employment contract providing
for base compensation in excess of $50,000 or collective bargaining agreement,
written or oral, or modified the terms of any existing such contract or
agreement, other than in the ordinary course of business;
(o) Seller has not granted any increase in the base compensation of
any of its employees other than in the ordinary course of business and
consistent with past practice and custom;
(p) Seller has not adopted, amended, modified, or terminated any
bonus, profit-sharing, incentive, severance, or other plan, contract, or
commitment for the benefit of any of its employees and has not granted any
increase in the hourly wage scale to any class of its employees;
(q) Seller has not adopted, amended, modified or terminated any
bonus, profit-sharing, incentive, severance, or other plan, contract, or
commitment for the benefit of any of its employees other than for compensation
plans for such employees which are performance-based, not more than one year in
duration, approved and subject to ongoing evaluation by Seller's senior
management and are otherwise in the ordinary course of business of Seller;
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(r) Seller has not made any other change in employment terms for any
of its employees outside the ordinary course of business;
(s) Seller has not made or pledged to make any charitable
contribution in excess of $5,000 in the aggregate which amounts are due after
the Closing Date;
(t) there has not been any other material occurrence, event,
incident, action, or transaction outside the ordinary course of business
involving Seller;
(u) all transactions between or among Seller and any of Seller's
affiliates or any other Selling Party or any of such Selling Party's affiliates
since the date of the Balance Sheet are described in Section 4.07 of the
Disclosure Schedule and all such transactions were made on arms-length basis,
with terms as favorable to Seller as could have been obtained from an
unaffiliated third party; and
(v) Seller has not committed to any of the foregoing.
4.08 Title to Assets. Seller has good and marketable title to, or a
valid leasehold interest in, the properties and assets used by the Seller in the
ordinary course of Business (except inventory consigned to the Seller for sale)
or shown on the Balance Sheet, or acquired after the date thereof, free and
clear of all security interests, except for assets disposed of in the ordinary
course of business since the date of the Balance Sheet and except for security
interests identified in Section 4.08 of the Disclosure Schedule and except for
statuory liens for obligations that will have been satsified as of the Closing
Date. All personal property leases to which Seller is a party are identified in
Section 4.08 of the Disclosure Schedule.
4.09 Tangible Assets and Inventory. Seller owns or leases all
buildings, machinery, equipment, and other tangible assets necessary for the
conduct of the Business as presently conducted. Each such tangible asset has
been maintained in accordance with normal industry practice, is in good
operating condition and repair (subject to normal wear and tear), and is
suitable for the purposes for which it is presently used. Seller's inventory
consists of finished goods salable by Seller in Seller's ordinary course of
business. The Balance Sheet reflects, and the Financial Statements will reflect,
an adequate reserve for all Seller's inventory that is slow-moving, as
determined in accordance with the Seller's past practices, or is obsolete,
damaged or defective.
4.10 Real Property.
(a) Seller does not own any real property.
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(b) Section 4.10(b) of the Disclosure Schedule lists all real
property leased or subleased to Seller, identifies the lessor, rental rate,
lease term, expiration date and existence of a renewal option. Seller has made
available to Buyer prior to Closing correct and complete copies of the leases
and subleases listed in Section 4.10(b) of the Disclosure Schedule (as amended
to date). With respect to each lease and sublease listed, except as otherwise
indicated in Section 4.10(b) of the Disclosure Schedule:
(i) the lease or sublease is in full force and effect and will
remain in full force and effect on identical terms on and after the Closing,
Seller is in possession of the leased premises and all rental and other
obligations of Seller are current;
(ii) Seller is not in breach or default (or has not received
notice of breach or default), and no event has occurred which, with notice or
lapse of time, would constitute a breach or default or permit termination,
modification, or acceleration under such lease or sublease;
(iii) no party has repudiated any provision of such lease or
sublease;
(iv) there are no disputes, oral agreements, or forbearance
programs in effect as to the lease or sublease to which Seller is a party;
(v) Seller has not assigned, transferred, conveyed, mortgaged,
deeded in trust, or encumbered any interest in the leasehold or subleasehold;
and
(vi) all facilities leased or subleased thereunder have
received all approvals of governmental authorities (including licenses and
permits) required in connection with the operation thereof by Seller and have
been operated and maintained by Seller in compliance with applicable laws,
except to the extent that the failure to receive any such approval, license or
permit for any such facility, or to operate and maintain any such facility in
compliance with applicable laws would not have a material adverse effect on such
facility or Seller's use of such facility as currently used.
4.11 Notes and Accounts Receivable. All notes and accounts
receivable of Seller are reflected properly on its books and records, are valid
receivables, and, to the Seller's Knowledge (as defined below), are subject to
no setoffs or counterclaims and are current and collectible. The schedule of
notes and accounts receivable of Seller delivered to Buyer dated as of August
31, 1997 sets forth all notes and accounts receivable of Seller as of such date.
Seller will also have delivered on the Closing Date a revised schedule of all
notes and accounts receivable of Seller as of the Closing Date. Such schedule
will set forth all notes and accounts
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receivable of Seller as of the Closing Date. As used in this Agreement,
"Seller's Knowledge" means, as of the date of this Agreement, the actual
knowledge, after inquiry, of (i) the general partner of the Seller, (ii) each
executive officer of the Seller; and (iii) each member and manager of the
general partner of the Seller, and (iv) each general partner of Duff, Ackerman,
Goodrich & Associates, L.P.; and, as of the Closing Date, the actual knowledge,
after inquiry, of each of the foregoing persons listed in (i) through (iv)
above, as well as (v) each of the Seller's department heads or supervisors; and
(vi) the manager of each business location operated by the Seller.
4.12 Tax Matters.
(a) Seller has timely filed with the appropriate governmental
agencies materially complete and accurate Tax Returns (as defined below)
required to be filed by it in respect of all applicable Taxes, if any, required
to be paid through the date hereof, and will timely file any such Tax Return
required to be filed by it prior to the Closing Date with respect to all
applicable Taxes, if any, required to be paid through the Closing Date. All such
Tax Returns were prepared in material compliance with applicable law and all
Taxes, if any, due, or claimed to be due by any taxing authority, pursuant
thereto (whether or not shown as due on any Tax Return) have been paid. In
addition, all Taxes, if any, due or claimed to be due by any taxing authority
(whether or not shown on any Tax Return), prior to the Closing Date for which
Seller may be liable in its own right or as a transferee of the assets of, or
successor to, any corporation, person, association, partnership, joint venture
or other entity, have been paid on a timely basis, or an adequate reserve has
been established therefor. Except as set forth in Section 4.12(a) of the
Disclosure Schedule, Seller currently is not the beneficiary of any extension of
time within which to file any Tax Return. No claim has ever been made by an
authority in a jurisdiction where Seller does not file Tax Returns that it is or
may be subject to taxation by that jurisdiction or otherwise required to file a
Tax Return in such jurisdiction. There are no liens or security interests on any
of the assets of Seller that arose in connection with any failure (or alleged
failure) to pay any Tax.
(b) Seller has withheld and paid all Taxes that Seller is required
to withhold and pay in connection with amounts paid or owing to any employee,
independent contractor, creditor, general or limited partner, or other third
party.
(c) Seller has at all times during its existence been, and currently
is, treated as a partnership for tax reporting purposes. Seller has taken no
action, and there is no basis, that would cause Seller to be treated as an
association taxable as a corporation.
(d) Seller will make available to the Buyer prior to Closing correct
and complete copies of all federal, state, local and foreign income Tax Returns
and
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all written communications from the Internal Revenue Service or other Tax
authorities relating to any such Tax Returns, examination reports, and
statements of deficiencies assessed against or agreed to by Seller.
(e) As used in this Agreement, "Tax" means any federal, state,
local, or foreign income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits, environmental
(including taxes under IRC Code Sec. 59A), customs duties, capital stock,
franchise, profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, highway, estimated, or
other tax of any kind whatsoever, including any interest, penalty, or addition
thereto, whether disputed or not imposed by any governmental or
quasi-governmental authority; and "Tax Return" means any return, declaration,
report, claim for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof.
4.13 Contracts. Section 4.13 of the Disclosure Schedule lists the
following contracts and other agreements to which Seller is a party:
(a) any agreement (or group of related agreements) for the lease of
personal property to or from any person providing for lease payments in excess
of $25,000 per annum;
(b) any agreement (or group of related agreements) for the purchase
or sale of supplies, products, or other personal property, or for the furnishing
or receipt of services, the performance of which will (i) extend over a period
of more than one year and involve consideration in excess of $50,000 in the
aggregate, or (ii) result in a loss to the Business of more than $50,000 in any
twelve month period;
(c) any agreement concerning a partnership or joint venture;
(d) any agreement (or group of related agreements) under which
Seller created, incurred, assumed, or guaranteed any indebtedness for borrowed
money, or any capitalized lease obligation in excess of $50,000 in the aggregate
or under which it has imposed a security interest on any of its assets, tangible
or intangible;
(e) any agreement concerning confidentiality or noncompetition;
(f) any agreement among Seller and any of Seller's general or
limited partners, or any of their affiliates or relatives;
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(g) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or arrangement for
the benefit of Seller's current or former employees;
(h) any collective bargaining agreement;
(i) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual compensation
or severance benefits that would make such individual one of the ten highest
paid individuals by Seller;
(j) any agreement under which Seller has advanced or loaned any
amount to (i) any of its general or limited partners, or (ii) any of its
employees, outside the ordinary course of business;
(k) any other written agreement (or group of related agreements)
under which the consequences of a default or termination could reasonably be
expected to have a material adverse effect on the Business; or
(l) any other agreement (or group of related agreements) the
performance of which involves the payment of consideration in excess of $50,000
in the aggregate during any twelve month period.
Seller has made available to Buyer prior to Closing a correct and complete copy
of each written agreement listed in Section 4.13 of the Disclosure Schedule and
a brief written summary setting forth with particularity the terms and
conditions of any oral agreement referred to in Section 4.13 of the Disclosure
Schedule. With respect to each such agreement: (i) the agreement currently is
legal, valid, binding, enforceable, and in full force and effect; (ii) to the
Seller's Knowledge, the agreement will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms as of the Closing
Date immediately after giving effect to the consummation of the transactions
contemplated hereby; (iii) the Seller is not in breach or default and, to the
Seller's Knowledge, no other party is in breach or default and no event has
occurred which with notice or lapse of time would constitute a breach or default
or permit termination, modification, or acceleration, under the agreement; and
(iv) to Seller's Knowledge, no party has repudiated any provision of the
agreement.
4.14 Intellectual Property Rights. Section 4.14 of the Disclosure
Schedule describes all rights in patents, patent applications, trademarks,
service marks, trade names, corporate names, copyrights mask works, trade
secrets, know-how or other intellectual property rights owned by, licensed to or
otherwise controlled by Seller in connection with the conduct of the Business or
used in, developed for use in or necessary to the conduct of the Business as now
conducted
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or planned to be conducted. To Seller's Knowledge, Seller owns and possesses all
right, title and interest, or holds a valid license, in and to the rights set
forth under such caption. Section 4.14 of the Disclosure Schedule describes all
intellectual property rights which have been licensed to third parties and those
intellectual property rights which are licensed from third parties. Seller has
not received any notice of, nor are there any facts known to Seller which
indicate a likelihood of, any infringement or misappropriation by, or conflict
from, any third party with respect to the intellectual property rights listed in
the Disclosure Schedule; no claim by any third party contesting the validity of
any intellectual property rights listed under such caption has been made, is
currently outstanding or, to the Seller's Knowledge, is threatened; Seller has
not received any notice of any infringement, misappropriation or violation by
Seller of any intellectual property rights of any third parties and Seller has
not infringed, misappropriated or otherwise violated any such intellectual
property rights; and, to the Seller's Knowledge, no infringement, illicit
copying, misappropriation or violation has occurred or will occur with respect
to products currently being sold by Seller or with respect to the products
currently under development (in their present state of development) or with
respect to the conduct of the Business as now conducted.
4.15 Litigation. No action, suit or proceeding is pending or, to the
Seller's Knowledge, threatened against Seller before any court or quasi-judicial
or administrative agency of any federal, state, local, or foreign jurisdiction
wherein an unfavorable injunction, judgment, order, decree, ruling, or charge
would (a) prevent consummation of any of the transactions contemplated by this
Agreement, (b) cause any of the transactions contemplated by this Agreement to
be rescinded following consummation, or (c) materially adversely affect the
right of Buyer to conduct the Business following the Closing.
4.16 Product Warranty and Liability. It is Seller's standard
practice to sell each product sold by it in conformity with all applicable
contractual commitments, if any, and all express and implied warranties of the
manufacturer. All products sold by Seller have been sold in conformity with such
practice. No product sold by Seller is subject to any other guaranty, warranty
or other indemnity beyond the applicable standard terms and conditions of sale.
Except as set forth in Section 4.16 of the Disclosure Schedule, Seller has no
liability arising out of any injury to individuals or property as a result of
the ownership, possession or use of any product sold by Seller prior to the
Closing.
4.17 Employees. Except as set forth in Section 4.17 of the
Disclosure Schedule, to the Seller's Knowledge, no executive, key employee, or
group of employees has any plans to terminate employment with Seller prior to or
after the Closing. Seller is not a party to or bound by any collective
bargaining agreement, nor has Seller experienced any strikes, grievances, claims
of unfair labor practices, or other collective bargaining disputes. Seller has
not taken any action, or omitted to
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take any action, that would result in any unfair labor practice. To the Seller's
Knowledge, no organizational effort is presently being made or threatened by or
on behalf of any labor union with respect to employees of Seller. All of
Seller's current procedures, policies and training practices with respect to
employee matters, including, without limitation, those relating to the hiring
and termination of employees and worker safety, conform with applicable laws to
which the Seller is subject, except for any such noncompliance as would not,
singly or in the aggregate, have a material adverse effect on the Business. All
employees of Seller have been properly classified as exempt or non-exempt for
overtime compensation. All overtime compensation earned by employees of Seller
has been properly paid or accrued.
4.18 Employee Benefits.
(a) Except as set forth in Section 4.18 of the Disclosure Schedule,
with respect to all employees and former employees of Seller who perform or
performed functions in connection with Seller's business and all dependents and
beneficiaries of such employees and former employees: (i) Seller does not
maintain or contribute to any nonqualified deferred compensation or retirement
plans, contracts or arrangements; (ii) Seller does not maintain or contribute to
any qualified defined contribution plans (as defined in Section 3(34) of ERISA
(as defined below) or Section 414(i) of the Code (as defined below); (iii)
Seller does not maintain or contribute to any qualified defined benefit plans
(as defined in Section 3(35) of ERISA or Section 414(j) of the Code); (iv)
Seller does not maintain or contribute to any employee welfare benefit plans (as
defined in Section 3(1) of ERISA); and (v) Seller does not maintain any
severance plan for, or have any severance agreement with, any employee. Seller
has no unfunded liability with respect to any Employee Benefit Plan.
(b) To the extent required (either as a matter of law or to obtain
the intended tax treatment and tax benefits), all Employee Benefit Plans (as
defined below) comply in all material respects with the requirements of ERISA
and the Code. With respect to the Employee Benefit Plans, (a) all required
contributions which are due have been made and a proper accrual has been made
for all contributions due in the current fiscal year; and (b) there have been no
Prohibited Transactions (as defined below) that would have a material adverse
effect on the Business.
(c) Seller does not contribute (and has not ever contributed) to any
multi-employer plan, as defined in Section 3(37) of ERISA. Seller has no actual
or potential liabilities under Section 4201 of ERISA for any complete or partial
withdrawal from a multi-employer plan. Seller has no actual or potential
liability for death or medical benefits after separation from employment, other
than (i) death benefits under the employee benefit plans or programs (whether or
not subject to
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<PAGE> 24
ERISA) set forth under Section 4.18 in the Disclosure Schedule, (b) health care
continuation benefits described in Section 4980B of the Code, or (c) other
actual or potential liabilities that would not, singly or in the aggregate, have
a material adverse effect on the Business.
(d) Neither Seller nor any of its partners, agents or employees, has
committed any breach of fiduciary responsibility imposed by ERISA or any other
applicable law with respect to the Employee Benefit Plans which would subject
Seller, Buyer or any of their respective directors, officers, partners, agents
or employees to any liability under ERISA or any applicable law.
(e) Seller has not incurred any liability for any tax or civil
penalty or any disqualification of any Employee Benefit Plan imposed by Sections
4980B and 4975 of the Code and Part 6 of Title I and Section 502(i) of ERISA.
(f) As used in this Agreement:
"Employee Benefit Plan" means any (i) nonqualified
deferred compensation or retirement plan or arrangement which is an
Employee Pension Benefit Plan, (ii) qualified defined contribution
retirement plan or arrangement which is an Employee Pension Benefit
Plan, (iii) qualified defined benefit retirement plan or arrangement
which is an Employee Pension Benefit Plan (including any
Multiemployer Plan), or (iv) Employee Welfare Benefit Plan or
material fringe benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set
forth in ERISA Sec. 3(2).
"Employee Welfare Benefit Plan" has the meaning set
forth in ERISA Sec. 3(1).
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
"Multiemployer Plan" has the meaning set forth in ERISA
Sec. 3(37).
"Multiemployer Plan" has the meaning set forth in ERISA
Sec. 3(37).
4.19 Insurance. Section 4.19 of the Disclosure Schedule sets forth
the following information with respect to each insurance policy (including
policies providing property, casualty, liability, and workers' compensation
coverage and bond and surety arrangements) to which Seller is a party, a named
insured, or otherwise the beneficiary of coverage:
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(a) the name of the insurer, the name of the policyholder, and the
name of each covered insured;
(b) the policy number and the period of coverage;
(c) the scope (including an indication of whether the coverage was
on a claims made, occurrence, or other basis) and amount (including a
description of how deductibles and ceilings are calculated and operate) of
coverage; and
(d) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
With respect to each such insurance policy: (i) the policy is legal, valid,
binding, enforceable, and in full force and effect, (ii) Seller will keep such
policy in full force and effect on identical terms through the Closing Date;
(iii) neither Seller nor, to the Seller's Knowledge, any other party to the
policy is in breach or default (including with respect to the payment of
premiums or the giving of notices) and no event has occurred which, with notice
or the lapse of time, would constitute such a breach or default, or permit
termination, modification, or acceleration, under the policy; and (iv) to the
Seller's Knowledge, no party to the policy has repudiated any provision thereof.
Section 4.19 of the Disclosure Schedule describes any self-insurance
arrangements affecting Seller.
4.20 Affiliate Transactions. Except as disclosed in the Disclosure
Schedule under the caption referencing this Section 4.20, no general or limited
partner or employee of Seller, or any of their affiliates or relatives, has been
involved in any business arrangement or relationship (other than normal employee
or partnership relationships) with Seller within the past twelve months, and
none of the foregoing persons owns any assets, tangible or intangible, which is
used in the Business.
4.21 Relationship with Suppliers. Seller currently has good
relationships with its suppliers of materials. Seller currently is not in
dispute with any current or former supplier and no supplier has notified Seller
that it will stop business with Seller prior to the Closing or with Buyer, in
the operation of the Business, after the Closing.
4.22 Legal Compliance; Permits.
(a) Except as set forth in Section 4.22 of the Disclosure Schedule,
Seller has complied with all laws applicable to it except to the extent that any
noncompliance would not, singly or in the aggregate, have a material adverse
effect on the financial condition or operations of the Business or the value of
the Assets, and neither Seller, nor any of its general or limited partners or
employees, has
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received any notice of any violation of any applicable federal, state, or local
statute, law, or regulation (including, without limitation, any applicable
building, zoning, environmental protection, or other law, ordinance or
regulation) affecting its properties, the Assets or the operation of the
Business.
(b) Seller has, in full force and effect, all licenses, permits and
certificates, from federal, state, local and foreign authorities (including,
without limitation, federal and state agencies regulating occupational health
and safety) necessary to conduct the Business and own and operate the Assets
(collectively, the "Permits"). A true, correct and complete list of all the
Permits is set forth under the caption referencing this Section 4.22 in the
Disclosure Schedule, with an indication as to whether the Permit is assignable
to Buyer. Seller has conducted its business in compliance with all material
terms and conditions of the Permits.
(c) In connection with the Business, Seller has not made or agreed
to make gifts of money, other property or similar benefits (other than
incidental gifts of articles of nominal value) to any actual or potential
customer, supplier, governmental employee or any other person in a position to
assist or hinder Seller in connection with any actual or proposed transaction.
(d) In particular, but without limiting the generality of the
foregoing, Seller has not violated and has no liability, and has not received a
notice or charge asserting any violation of or liability under, the federal
Occupational Safety and Health Act of 1970 or any other federal or state acts
(including rules and regulations thereunder) regulating or otherwise affecting
employee health and safety in connection with the Business.
4.23 Environmental Compliance.
(a) Seller and all real property leased or otherwise operated by
Seller (the "Real Property") is currently, and at all times during Seller's
ownership and/or operation of the Business has been, in compliance in all
material respects with all applicable Environmental Laws (as defined below). At
all times during the Seller's ownership and/or operation of the Real Property,
there has not been, or is not now occurring, any Release (as defined below) of
any Hazardous Material (as defined below) or any Contamination (as defined
below) on, under or from the Real Property, except any such Release permitted
by, and made in accordance with, applicable Environmental Laws. Except as
disclosed on Section 4.23 of the Disclosure Schedule, to the Seller's Knowledge,
at all times prior to Seller's ownership and/or operation of the Real Property,
there did not occur any Release of any Hazardous Material or any Contamination
on, under or from the Real Property, except any such Release permitted by, and
made in accordance with, applicable Environmental Laws.
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(b) Seller has obtained and maintained in full force and effect, all
environmental permits, licenses, certificates of compliance, approvals and other
authorizations necessary to conduct the Business, and to own or operate the Real
Property (collectively the "Environmental Permits"). Seller has conducted its
activities and business in compliance in all material respects with all terms
and conditions of any Environmental Permits. Seller has filed all reports and
notifications required to be filed under applicable Environmental Laws.
(c) Except as disclosed on Section 4.23 of the Disclosure Schedule,
neither Seller nor any general or limited partner or employee of Seller has
received any notice that any Third Party Environmental Claims (as defined below)
or Regulatory Actions (as defined below) have been asserted or assessed against
Seller or the Real Property and, except as disclosed on Section 4.23 of the
Disclosure Schedule, to the Seller's Knowledge, no Third Party Environmental
Claims or Regulatory Actions are pending or threatened against Seller or the
Real Property arising out of or due to, or allegedly arising out of or due to,
(i) the Release on, under or from the Real Property of any Hazardous Materials;
(ii) any Contamination of the Real Property, including, without limitation, the
presence of any Hazardous Material which has come to be located on or under the
Real Property from another location; (iii) any violation or alleged violation of
any Environmental Law with respect to the Real Property or the activities of
Seller; (iv) any injury to human health or safety or to the environment by
reason of the past or present condition of, or past or present activities on or
under, the Real Property; or (v) the generation, manufacture, storage,
treatment, handling, transportation or other use, however defined, of any
Hazardous Material by or for Seller on or off the Real Property.
(d) Except as disclosed on Section 4.23 of the Disclosure Schedule,
Seller has not stored, transported, handled, treated, processed, used or
disposed of any Hazardous Materials on, in or under the Real Property, including
specifically, but not limited to, PCBs, asbestos or asbestos containing
materials, radon, urea formaldehyde or radioactive materials, except any of the
foregoing permitted by, and made in accordance with, applicable Environmental
Laws.
(e) Except as disclosed on Section 4.23 of the Disclosure Schedule,
Seller has not transported or arranged for the transportation of any Hazardous
Materials to any location which is: (i) listed on the EPA's National Priorities
List of Hazardous Waste Sites (the "National Priorities List"); (ii) listed on
the Comprehensive Environmental Response, Compensation, Liability Information
System ("CERCLIS") or on any similar state list; or (iii) the subject of any
Regulatory Action which may lead to claims against Buyer for damages to natural
resources, personal injury, clean-up costs or clean-up work, including, but not
limited to, claims under CERCLA.
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(f) Except as disclosed on Section 4.23 of the Disclosure Schedule,
to the Seller's Knowledge, none of the Real Property is listed in the National
Priorities List or any other list, schedule, log, inventory or record, however
defined, maintained by any federal, state or local governmental agency with
respect to sites from which there is or has been a Release of any Hazardous
Material or any Contamination. Except as disclosed on Section 4.23 of the
Disclosure Schedule, to the Seller's Knowledge, no part of the Real Property was
ever used, nor is it now being used (i) as a landfill, dump or other disposal,
storage, transfer or handling area for Hazardous Materials which requires a
permit under Environmental Laws; or (ii) as a gasoline service station. There
are no underground or above ground tanks on the Real Property.
(g) As used in this Agreement:
"Clean-up" shall mean removal and/or remediation of, or
other response to (including, without limitation, testing,
monitoring, sampling or investigating of any kind) any Release of
Hazardous Materials or Contamination, to the satisfaction of all
applicable governmental agencies, in compliance with Environmental
Laws and in compliance with good commercial practice.
"Contamination" shall mean the presence of, or Release
on, under, from or to the Real Property of any Hazardous Material,
except the routine storage and use of Hazardous Materials from time
to time in the ordinary course of business, in compliance with
Environmental Laws and compliance with good commercial practice.
"Environmental Law(s)" shall mean any and all federal,
state and local laws, statutes, codes, ordinances, regulations,
rules, consent decrees, judicial orders, administrative orders or
other requirements relating to the environment or to human health or
safety associated with the environment, all as amended or modified
from time to time. Environmental Laws shall include, but are not
limited to, the following statutes and all rules and regulations
relating thereto, all as amended or modified from time to time:
(i) The Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), as
amended by the Superfund Amendments and Reauthorization
Act of 1986 ("SARA") 42 U.S.C. Sections 9601-9675; the
Resource Conservation and Recovery Act of 1976 ("RCRA")
42 U.S.C. Section 6901-6991; the Clean Water Act 33
U.S.C. Section 1321 et seq; the Clean Air Act 42 U.S.C.
Sections 7401 et seq; the Federal Insecticide, Fungicide
and Rodenticide Act ("FIFRA") 7 U.S.C. Section 136 et
seq; the Toxic Substances Control Act ("TSCA") 15 U.S.C.
Sections 2601-2671;
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the Food, Drug and Cosmetic Act; and the Occupational
Safety and Health Act of 1970, and
(ii)all similar California state and local
laws, statutes, codes, ordinances, regulations and
rules.
"Hazardous Material(s)" shall mean (A) any substance,
the presence of which requires investigation or remediation under
any Environmental Law or under common law; (B) any toxic, explosive,
corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic or otherwise hazardous substance which is regulated by any
Environmental Law; (C) any substance, the presence of which poses or
threatens to pose a hazard to the health or safety of persons on or
about the Real Property; and (D) urea-formaldehyde, polychlorinated
biphenyls, asbestos or asbestos-containing materials, radon,
petroleum and petroleum products.
"Regulatory Action(s)" shall mean any claim, demand,
action or proceeding brought or instigated by any governmental
agency in connection with any Environmental Law (including without
limitation civil, criminal and/or administrative proceedings),
whether or not seeking costs, damages, penalties or expenses.
"Release" shall mean the spilling, leaking, disposing,
discharging, emitting, depositing, injecting, leaching, escaping, or
any other release or threatened release, however defined, and
whether intentional or unintentional, of any Hazardous Material.
"Third Party Environmental Claim(s)" shall mean third
party claims, actions, demands or proceedings (other than Regulatory
Actions) based on negligence, trespass, strict liability, nuisance,
toxic tort or detriment to human health or welfare due to any
Release of Hazardous Materials or Contamination, and whether or not
seeking costs, damages, penalties or expenses.
4.24 Partners and Affiliates of Seller. Section 4.24 of the
Disclosure Schedule sets forth a true and complete list of (a) each of Seller's
general and limited partners, and (b) each partner or shareholder of any entity
that, directly or indirectly, holds a general or limited partnership interest in
Seller.
4.25 Liabilities Assumed by Buyer. All of the liabilities and
obligations of Seller to be assumed by Buyer pursuant to this Agreement have
been incurred by Seller in the ordinary course of the Business and none arise
from transactions between or among Seller and any of Seller's affiliates or any
other
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Selling Party or any of such Selling Party's affiliates, except those
disclosed in the Disclosure Schedule under the caption referencing Section 4.20.
4.26 Broker's Fees. Seller has no liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement, other than to Duff, Ackerman,
Goodrich & Associates, L.P., the fees and expenses of which will be paid by
Seller.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller that:
5.01 Incorporation. Buyer is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of California.
5.02 Authority; Enforceability. Buyer has the right, legal capacity,
and corporate authority to enter into and perform its obligations under this
Agreement. This Agreement constitutes the valid and legally binding obligation
of Buyer, enforceable in accordance with its terms and conditions, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and other laws
affecting the rights of creditors generally, and to the exercise of judicial
discretion in accordance with general principles of equity, including (without
limitation) concepts of materiality, reasonableness, good faith and fair
dealing, and other similar doctrines affecting the enforceability of agreements
generally (regardless of whether considered in a proceeding in equity or at
law).
5.03 Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated herein
will (i) violate any law to which Buyer is subject, (ii) violate any provision
of the articles of incorporation or bylaws of Buyer, or (iii) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify or cancel, or
require any notice under any agreement, contract, lease, license, instrument or
other arrangement to which Buyer is a party or by which it is bound or to which
any of its assets is subject.
5.04 Governmental Authorities; Consents. No consent, approval, or
authorization of, or declaration, filing or registration with any United States
federal or state governmental or regulatory authority is required to be made or
obtained by Buyer in connection with the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated herein.
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5.05 Litigation. No action, suit or proceeding is pending or, to the
best of Buyer's knowledge, threatened against Buyer before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction wherein an unfavorable injunction, judgment, order, decree, ruling,
or charge would (a) prevent consummation of any of the transactions contemplated
by this Agreement, or (b) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation.
ARTICLE VI
COVENANTS OF SELLER
6.01 Conduct of the Business. In connection with the Assets or the
Business, the Seller each agree to observe each term set forth in this Section
6.01 and agrees that, from the date hereof until the Closing Date, unless
otherwise consented to by Buyer in writing:
(a) The Business shall be conducted only in, and Seller shall not
take any action except in, the ordinary course of Seller's business, on an
arm's-length basis and in accordance in all material respects with all
applicable laws, rules and regulations and Seller's past custom and practice;
(b) Seller shall not, directly or indirectly, do or permit to occur
any of the following insofar as they relate to Business or the Assets: (i) sell,
pledge, dispose of or encumber any of the Assets, except in the ordinary course
of business; (ii) acquire (by merger, exchange, consolidation, acquisition of
stock or assets or otherwise) any corporation, partnership, joint venture or
other business organization or division or material assets thereof; (iii) incur
any indebtedness for borrowed money or issue any debt securities except the
borrowing of working capital in the ordinary course of business and consistent
with past practice; (iv) permit any accounts payable owed to trade creditors to
remain outstanding except to the extent consistent with past practice; (v)
accelerate, beyond the normal collection cycle, collection of accounts
receivable; or (vi) enter into or propose to enter into, or modify or propose to
modify, any agreement, arrangement or understanding with respect to any of the
matters set forth in this Section 6.01(b);
(c) Seller shall not adopt or amend any bonus, profit sharing,
compensation, pension, retirement, deferred compensation, employment or other
employee benefit plan, trust, fund or group arrangement for the benefit or
welfare of any employees or affiliates;
(d) Seller shall not cancel or terminate its current insurance
policies covering the Assets and the Business, or cause any of the coverage
thereunder to lapse, unless simultaneously with such termination, cancellation
or lapse,
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replacement policies providing coverage equal to or greater than the coverage
under the canceled, terminated or lapsed policies for substantially similar
premiums are in full force and effect;
(e) Seller shall (i) use its best efforts to preserve intact the
organization and goodwill of the Business, keep available the services of
Seller's officers and employees as a group and maintain satisfactory
relationships with suppliers, distributors, customers and others having business
relationships with Seller in connection with the Business; (ii) confer on a
regular and frequent basis with representatives of Buyer to report operational
matters and the general status of ongoing operations with respect to the
Business; (iii) not intentionally take any action which would render, or which
reasonably may be expected to render, any representation or warranty made by it
in this Agreement untrue at the Closing; (iv) notify Buyer of any emergency or
other change in the normal course of the Business or in the operation of the
properties of the Business and of any governmental or third party complaints,
investigations or hearings (or communications indicating that the same may be
contemplated) if such emergency, change, complaint, investigation or hearing
would be material, individually or in the aggregate, to the business, operations
or financial condition of Seller or to Seller's or Buyer's ability to consummate
the transactions contemplated by this Agreement; and (v) promptly notify Buyer
in writing if Seller shall discover that any representation or warranty made by
it in this Agreement was when made, or has subsequently become, untrue in any
respect;
(f) Seller shall (i) file any Tax returns, elections or information
statements with respect to any liabilities for Taxes of Seller, if any, or other
matters relating to Taxes of Seller which affect the Assets and pursuant to
applicable law must be filed prior to the Closing Date; (ii) promptly upon
filing provide copies of any such Tax returns, elections or information
statements to Buyer; and (iii) make any such Tax elections or other
discretionary positions with respect to Taxes taken by or affecting Seller only
upon prior consultation with and consent of Buyer to the extent that such
election affects any Asset;
(g) Neither Seller nor any of its Affiliates shall make any election
with respect to Taxes, change an annual accounting period, adopt or change any
accounting method or file any amended return, report or form, if such election,
adoption, change or filing would have the effect of increasing the Tax liability
of the Buyer with respect to any period ending after the Closing Date; and
(h) Seller shall not perform any act referenced by (or omit to
perform any act which omission is referenced by) the terms of Section 4.07.
6.02 Access to Books and Records. Between the date hereof and the
Closing Date, Buyer and its counsel, accountants, and other representatives
shall
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have reasonable access to all properties, books, accounts, records, contracts,
and documents of or relating to Seller. Seller shall furnish or cause to be
furnished to Buyer and its representatives all data and information concerning
the business, finances, and properties of Seller that may reasonably be
requested to complete its due diligence review of Seller. Seller also agrees to
provide the same access to Buyer's lenders in futherance of such lenders' due
diligence contemplated by Section 7.01(b).
6.03 Conditions. Seller shall take all commercially reasonable
actions necessary or desirable to cause the conditions set forth in Section 8.01
to be satisfied and to consummate the transactions contemplated herein as soon
as reasonably possible after the satisfaction thereof (but in any event within
three business days of such date).
6.04 Notices and Consent. Seller will give any notices to third
parties, and will use its best efforts to obtain any third party consents,
including, without limitation, the consent of lessors and sublessors, that Buyer
may reasonably request in connection with the consummation of the transactions
contemplated by this Agreement.
6.05 Exclusivity. Until the date of Closing or the earlier
termination (for whatever reason) of this Agreement, neither Seller nor any of
its general or limited partners or employees, nor any other Selling Party shall
solicit, initiate or encourage any other bids for the sale of the Business or
the Assets or enter into any other negotiations for the sale of the Business or
the Assets without the written consent of Buyer. Seller will notify Buyer
immediately if any person makes any proposal, offer, inquiry or contact with
respect to any of the foregoing.
6.06 Notice of Developments. Seller shall give prompt written notice
to Buyer of any material adverse development causing a breach of any of the
representations and warranties contained in Article IV hereof or Seller's
awareness of the breach of any representation, warranty or covenant contained in
this Agreement. No disclosure by Seller pursuant to this Section 6.06, however,
shall be deemed to amend or supplement the Disclosure Schedule or to prevent or
cure any misrepresentation or breach of warranty.
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ARTICLE VII
COVENANTS OF BUYER
Buyer covenants and agrees with Seller as follows:
7.01 Due Diligence.
(a) The parties agree that Buyer shall conduct a due diligence
investigation of Seller (including, without limitation, a review of the
information, documents and other matters identified in the Disclosure Schedule
or delivered pursuant to the terms of this Agreement) which shall commence
promptly following the execution of this Agreement and, except as provided in
subsection (b) below, shall be completed by Buyer no later than October 10,
1997. If, during the course of such investigation, Buyer obtains any actual
knowledge of any fact causing a breach of any of the representations and
warranties contained in Article IV hereof, Buyer shall promptly inform Seller
thereof in writing.
(b) The parties acknowledge that the lenders providing the financing
necessary for Buyer to consummate the transactions contemplated by this
Agreement will conduct a due diligence review, including an environmental due
diligence review (the "Environmental Due Diligence Review"), of Seller in scope
and substance as may reasonably be requested by such lenders and agreed to by
Buyer. Buyer agrees that it shall be solely responsible for the costs and
expenses related to the such due diligence review, including the Environmental
Due Diligence Review. In order to complete such Environmental Due Diligence
Review, Buyer will retain an environmental consultant mutually satisfactory to
the Buyer and its lenders (the "Environmental Consultant"), and request that the
Environmental Consultant deliver to the Buyer no later than October 10, 1997 (i)
a Phase I or limited scope environmental assessment of all Real Property of the
Seller, prepared in substance and pursuant to such methods as is requested by
the Buyer, and (ii) if such Phase I or limited scope environmental assessment
recommends a Phase II environmental assessment, a Phase II environmental
assessment that shall include the testing of the soil, surface or subsurface
waters, and air quality at, in, on, beneath or about the Real Property, in a
manner consistent with good engineering practice. Seller agrees to cooperate
with Buyer and the Environmental Consultant in completing the Environmental Due
Diligence Review.
7.02 Conditions. Buyer shall take all commercially reasonable
actions necessary or desirable to cause the conditions set forth in Section 8.02
to be satisfied and to consummate the transactions contemplated herein as soon
as reasonably possible after the satisfaction thereof (but in any event within
three business days of such date).
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7.03 Notices and Consent. Buyer will give any notices to third
parties, and will use its best efforts to obtain any third party consents,
including, without limitation, the consent of lessors and sublessors, that
Seller may reasonably request in connection with the consummation of the
transactions contemplated by this Agreement.
7.04 Notice of Developments. Buyer shall give prompt written notice
to Seller of any material adverse development causing a breach of any of the
representations and warranties contained in Article V hereof or Buyer's
awareness of the breach of any representation, warranty or covenant contained in
this Agreement. No disclosure by Buyer pursuant to this Section 7.04, however,
shall be deemed to prevent or cure any misrepresentation or breach of warranty.
7.05 Financing. Immediately upon execution of this Agreement, Buyer
shall use its best efforts to obtain by October 17, 1997 a commitment letter
("Commitment Letter") consistent with standard commercial lending practices
executed by a reputable institutional lender which evidences a commitment by
such institutional lender to lend to Buyer money sufficient, together with funds
currently available to Buyer, to pay the Purchase Price to Seller.
ARTICLE VIII
CONDITIONS TO CLOSING
8.01 Conditions to Buyer's Obligations. The obligation of Buyer to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction of the following conditions on or before the Closing Date:
(a) the representations and warranties set forth in Article IV
hereof shall be true and correct in all material respects at and as of the
Closing Date as though then made and as though the Closing Date had been
substituted for the date of this Agreement throughout such representations and
warranties (without taking into account any disclosures by Seller of
discoveries, events or occurrences arising on or after the date hereof), except
that any such representation or warranty made as of a specified date (other than
the date hereof) shall only need to have been true on and as of such date;
(b) Seller shall have performed in all material respects all of the
covenants and agreements required to be performed and complied with by it under
this Agreement prior to the Closing, including, but not limited to, that set
forth in Section 2.06 hereof;
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(c) Seller shall have assigned to Buyer the leases, agreements,
contracts, arrangements and licenses specified in Sections 4.08, 4.10, 4.11,
4.13, 4.14, 4.19 and 4.22(b) of the Disclosure Schedule.
(d) Seller shall have obtained, or caused to be obtained, each
consent and approval necessary in order that the transactions contemplated
herein not constitute a breach or violation of, or result in a right of
termination or acceleration of, or creation of any encumbrance on any of the
Assets pursuant to the provisions of, any agreement, arrangement or undertaking
of or affecting Seller or any license, franchise or permit of or affecting
Seller, regardless of whether assigned to Seller pursuant to Section 8.01(c),
including, without limitation, the written approval of the lessor under each
real or personal property lease to be assigned to Buyer to such assignment,
which approval shall contain the lessor's consent to Buyer providing its lenders
with a security interest in Buyer's interest in such leasehold following the
Closing;
(e) Seller's general and limited partners shall have approved this
Agreement and the transactions contemplated hereby to the extent required by law
and Seller's agreement of limited partnership;
(f) all material governmental filings, authorizations and approvals
that are required for the consummation of the transactions contemplated hereby
will have been duly made and obtained;
(g) there shall not be threatened, instituted or pending any action
or proceeding, before any court or governmental authority or agency, domestic or
foreign, (i) challenging or seeking to make illegal, or to delay or otherwise
directly or indirectly restrain or prohibit, the consummation of the
transactions contemplated hereby or seeking to obtain material damages in
connection with such transactions, (ii) seeking to prohibit direct or indirect
ownership or operation by Buyer of all or a material portion of the Assets, or
to compel Buyer or any of its subsidiaries to dispose of or to hold separately
all or a material portion of the business or assets of Buyer and its
subsidiaries, as a result of the transactions contemplated hereby, (iii) seeking
to invalidate or render unenforceable any material provision of this Agreement,
or (iv) otherwise relating to and materially adversely affecting the
transactions contemplated hereby;
(h) there shall not be any action taken, or any statute, rule,
regulation, judgment, order or injunction enacted, entered, enforced,
promulgated, issued or deemed applicable to the transactions contemplated hereby
by any federal, state or foreign court, government or governmental authority or
agency, which would reasonably be expected to result, directly or indirectly, in
any of the consequences referred to in Section 8.01(g) hereof;
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(i) there shall have been no material adverse change in the
financial condition or operations of the Business or the condition or value of
the Assets; provided, that Buyer and Seller agree that the failure to accept
offers of employment made by Buyer consistent with Section 10.04(a) hereof by a
group of Seller employees material to the Business shall be deemed a material
adverse change in the operations of the Business;
(j) there shall have been no damage, destruction or loss of or to
any of the Assets, whether or not covered by insurance, which, in the aggregate,
has, or would be reasonably likely to have, a material adverse effect on the
Business or the condition or value of the Assets;
(k) the information set forth in the Disclosure Schedule shall be
true, complete and correct, in all material respects, and the information
contained therein shall not have changed materially from the information
contained therein as of the date of execution of this Agreement;
(l) Buyer shall have received from counsel for Seller a written
opinion, dated as of the Closing Date, addressed to Buyer, in form and substance
reasonably satisfactory to Buyer and its counsel, with respect to such matters
as Buyer and its counsel may reasonably request;
(m) on the Closing Date, Seller shall have delivered to Buyer all of
the following:
(i) the Bill of Sale and such other instruments of conveyance,
transfer, assignment and delivery as Buyer shall have reasonably requested
pursuant to Section 3.02 hereof;
(ii) the Assignment and Assumption Agreement;
(iii) a certificate of an appropriate officer of Seller, dated
the Closing Date, stating that the conditions set forth in subsections 8.01(a) -
8.01(k) above have been satisfied;
(iv) copies of the third party and governmental consents and
approvals referred to in subsections (d) and (f) above;
(v) a copy of the text of the resolutions adopted by the
general and/or limited partners of Seller authorizing the execution, delivery
and performance of this Agreement and the consummation of all of the
transactions contemplated by this Agreement; along with a certificate executed
on behalf of Seller, by an appropriate officer certifying to Seller that such
copy is a true, correct
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<PAGE> 38
and complete copy of such resolutions, and that such resolutions were duly
adopted and have not been amended or rescinded;
(vi) incumbency certificates executed on behalf of Seller by
an appropriate officer, certifying the signature and office of each officer
executing this Agreement or any agreements or documents contemplated hereby; and
(vii) such other certificates, documents and instruments as
Buyer reasonably requests related to the transactions contemplated hereby; and
(n) The Burke Group, LLC shall have executed and delivered the
Distribution Agreements and such Distribution Agreements shall be in force and
effect as of the Closing.
8.02 Conditions to Seller's Obligations. The obligations of Seller
to consummate the transactions contemplated by this Agreement are subject to the
satisfaction of the following conditions on or before the Closing Date:
(a) the representations and warranties set forth in Article V hereof
will be true and correct in all material respects at and as of the Closing as
though then made and as though the Closing Date had been substituted for the
date of this Agreement throughout such representations and warranties, except
that any such representation or warranty made as of a specified date (other than
the date hereof) shall only need to have been true on and as of such date;
(b) Buyer shall have performed in all material respects all the
covenants and agreements required to be performed by it under this Agreement
prior to the Closing;
(c) Seller shall have obtained, or caused to be obtained, each
consent and approval required in order to complete the transactions contemplated
hereby;
(d) all material governmental filings, authorizations and approvals
that are required for the consummation of the transactions contemplated hereby
will have been duly made and obtained;
(e) there shall not be threatened, instituted or pending any action
or proceeding, before any court or governmental authority or agency, domestic or
foreign, (i) challenging or seeking to make illegal, or to delay or otherwise
directly or indirectly restrain or prohibit, the consummation of the
transactions contemplated hereby or seeking to obtain material damages in
connection with such transactions, (ii) seeking to invalidate or render
unenforceable any material provision of this Agreement, or (iii) otherwise
relating to and materially adversely affecting the transactions contemplated
hereby;
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<PAGE> 39
(f) there shall not be any action taken, or any statute, rule,
regulation, judgment, order or injunction, enacted, entered, enforced,
promulgated, issued or deemed applicable to the transactions contemplated hereby
by any federal, state or foreign court, government or governmental authority or
agency, which would reasonably be expected to result, directly or indirectly, in
any of the consequences referred to in Section 8.02(e) hereof;
(g) Seller shall have received from counsel for Buyer a written
opinion, dated as of the Closing Date, addressed to Seller, in form and
substance reasonably satisfactory to Seller and its counsel, with respect to
such matters as Seller and its counsel may reasonably request;
(h) on the Closing Date, Buyer shall have delivered to Seller all of
the following:
(i) the Closing Cash Payment, less any amounts withheld
pursuant to Section 2.06(a) hereof;
(ii) a certificate of an appropriate officer of Buyer, dated
the Closing Date, stating that the conditions set forth in subsections 8.01(a) -
8.01(f) above have been satisfied;
(iii) copies of the third party and governmental consents and
approvals referred to in subsections (c) and (d) above;
(iv) a copy of the text of the resolutions adopted by the
Board of Directors of Buyer, authorizing the execution, delivery and performance
of this Agreement and the consummation of all of the transactions contemplated
by this Agreement; along with a certificate executed on behalf of Buyer, by an
appropriate officer certifying to Seller that such copy is a true, correct and
complete copy of such resolutions, and that such resolutions were duly adopted
and have not been amended or rescinded;
(v) incumbency certificates executed on behalf of Buyer by its
corporate secretary, certifying the signature and office of each officer
executing this Agreement or any agreements or documents contemplated hereby; and
(vi) such other certificates, documents and instruments as
Buyer reasonably requests related to the transactions contemplated hereby; and
(i) Buyer shall have executed and delivered the Distribution
Agreements and such Distribution Agreements shall be in force and effect as of
the Closing.
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<PAGE> 40
ARTICLE IX
TERMINATION
9.01 Termination. This Agreement may be terminated at any time prior
to the Closing:
(a) by the mutual consent of Buyer and Seller;
(b) by either Buyer or Seller if there has been a material
misrepresentation, breach of warranty or breach of covenant on the part of the
other in the representations, warranties and covenants set forth in this
Agreement or if the information set forth in the Disclosure Schedule is not
true, complete and correct, in all material respects, or if the information
contained therein has changed materially from the information contained therein
as of the date of execution of this Agreement;
(c) by either Buyer or Seller if the transactions contemplated
hereby have not been consummated by October 31, 1997; provided that, neither
Buyer nor Seller will be entitled to terminate this Agreement pursuant to this
Section 9.01(c) if such party's willful breach of this Agreement has prevented
the consummation of the transactions contemplated hereby; or
(d) by Buyer on or prior to October 10, 1997 if Buyer is not
satisfied, in its sole discretion, with any of the results of its due diligence
investigation contemplated by Section 7.01(a);
(e) by Buyer if, after the date hereof, there shall have been a
material adverse change in the financial condition or operations of the Business
or in the value of the Assets; provided, that Buyer and Seller agree that the
failure to accept offers of employment made by Buyer consistent with Section
10.04(a) hereof by a group of Seller employees material to the Business shall be
deemed a material adverse change in the operations of the Business;
(f) by Buyer if, as a result of the Environmental Due Diligence
Review to be performed with respect to Seller's Real Property, it becomes aware
of facts that could reasonably be expected (i) to have a material adverse effect
on the Assets, (ii) have a material adverse effect on the Real Property or (iii)
have a material adverse effect on Buyer, if it were to consummate the
transactions contemplated by this Agreement;
(g) by Seller if Buyer has not delivered to Seller a Commitment
Letter as contemplated by Section 7.05 to Seller on or prior to October 17,
1997; or
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<PAGE> 41
(h) by Buyer or Seller if Buyer and Burke Group (as defined in
Section 10.01) have not entered into the Distribution Agreements (as defined in
Section 10.01) on or before October 1, 1997 or if such agreements do not state
that the sole cause for termination of the Distribution Agreements by Burke
Group pertaining to performance standards of Buyer thereunder shall be the
failure to meet the minimum annual sales amounts set forth on Exhibit 9.01(h)
hereto.
9.02 Effect of Termination. In the event of termination of this
Agreement by either Buyer or Seller as provided in Section 9.01, this Agreement
shall become void and there shall be no liability on the part of either Buyer or
Seller, or their respective stockholders, officers, or directors, except that
Sections 2.04(a), 12.01, 12.02 and 12.03 hereof shall survive indefinitely, and
except with respect to breaches of this Agreement prior to the time of such
termination.
ARTICLE X
ADDITIONAL AGREEMENTS
10.01 Distribution Agreement. Seller shall use its best efforts to
cause The Burke Group, LLC, a Delaware limited liability company ("Burke
Group"), by October 1, 1997, to enter into distribution agreements with Buyer,
in form and substance mutually acceptable to Burke Group and Buyer (the
"Distribution Agreements"), pursuant to which Burke Group shall supply Buyer
with all of Buyer's requirements for Burke-labeled products produced by Burke
(including chemicals and hardware) and for Burke's proprietrary lifting systems
used in tilt-up and precast concrete construction. The Distribution Agreements
shall expressly state they will become effective as of the Closing Date.
10.02 Delivery of Financial Statements. Seller agrees to prepare and
deliver to Buyer a statement of Seller's assets and liabilities, including
footnotes regarding any material liabilities and contingencies in the Business,
and a statement of Seller's operating income, for each calendar month subsequent
to June 30, 1997, as soon as is practicable after the end of each such calendar
month (collectively, the "Monthly Financial Statements").
10.03 Delivery of Revised Receivables Schedule. On the Closing Date,
Seller shall deliver the revised schedule required pursuant to Section 4.11
hereof.
10.04 Transferred Employees.
(a) Concurrently with or immediately following the Closing, Buyer
will offer employment at will to all employees of Seller at compensation levels
generally comparable to those offered to such employees by Seller and benefits
generally comparable to those offered to current employees of Buyer. Employees
who accept such employment with Buyer shall be referred to as "Transferred
Employees." For all purposes, including, without limitation, for purposes of
eligibility, vesting and credited service under any employee benefit plans,
programs
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<PAGE> 42
and policies, and fringe benefits offered by Buyer, Transferred Employees shall
be considered to have commenced employment with Buyer on the date such
Transferred Employees commenced employment with Seller.
(b) Seller shall retain liability for: (i) payment of all medical
and dental claims incurred by Transferred Employees prior to the Closing Date;
(ii) all benefits to be paid to Transferred Employees pursuant to the plans and
arrangements set forth in Section 4.18 of the Disclosure Schedule; (iii) any
severance claim made by any employee of Seller; (iv) any workers' compensation
claims made with respect to injuries occurring prior to the Closing Date,
regardless of when any such claim is filed; and (v) any claim made by any former
or current employee of Seller for salary, commissions, overtime pay, bonuses or
accrued but unused vacation pay during their employment tenure with Seller,
except, with respect to any such claim, to the extent that the costs thereof
have been counted as a current liability in the calculation of the Closing
Working Capital Balance pursuant to Section 2.02 hereof). Promptly after the
Closing Date, Seller shall pay its employees all outstanding salary,
commissions, overtime pay, bonuses and accrued but unused vacation pay to the
Closing Date.
ARTICLE XI
SURVIVAL; INDEMNIFICATION
11.01 Survival of Representations and Warranties. Notwithstanding
any investigation made by or on behalf of any of the parties hereto or the
results of any such investigation and notwithstanding the participation of such
party in the Closing, the representations and warranties contained in Article IV
and Article V hereof shall survive the Closing for a period of one (1) year
following the Closing Date.
11.02 Indemnification by Seller.
(a) Subject to the limitations of Section 11.02(b), (c) and (d)
below, the Seller agrees to indemnify in full Buyer and its officers, directors,
employees, agents and stockholders (collectively, the "Buyer Indemnified
Parties") and hold them harmless against any loss, liability, deficiency,
damage, expense or cost (including reasonable legal expenses), whether or not
actually incurred (collectively, "Losses"), which Buyer Indemnified Parties may
suffer, sustain or become subject to, as a result of (i) any misrepresentation
in any of the representations and warranties of Seller contained in this
Agreement or in any exhibits, schedules, certificates or other documents
delivered or to be delivered by or on behalf of Seller pursuant to the terms of
this Agreement or otherwise referenced or incorporated in this Agreement
(collectively, the "Related Documents"), (ii) any breach of, or failure to
perform, any agreement of Seller contained in this Agreement or any of the
Related Documents,
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<PAGE> 43
or (iii) any "Claims" (as defined in Section 11.04(a) hereof) or threatened
Claims against Buyer arising out of the actions or inactions of Seller with
respect to the Assets or the Business prior to the Closing (collectively, "Buyer
Losses").
(b) Seller shall be liable to Buyer Indemnified Parties for any
Buyer Losses only if (i) Buyer or another Buyer Indemnified Party delivers to
Seller written notice, setting forth in reasonable detail the identity, nature
and amount of Buyer Losses related to such claim or claims prior to the first
anniversary of the Closing Date and (ii) only to the extent that the aggregate
amount of all Buyer Losses at such time exceeds $100,000 (the "Basket Amount").
A Buyer Indemnified Party's failure to provide the detail required by clause (i)
of the preceding sentence shall not constitute either a breach of this Agreement
by the Buyer Indemnified Party or any basis for Seller to assert that the Buyer
Indemnified Party did not comply with the terms of this Section 11.02 sufficient
to cause the Buyer Indemnified Party to have waived its rights under this
Section 11.02, unless Seller demonstrates that its ability to defend against any
Claims with respect thereto has been materially adversely affected.
(c) The Seller will be obligated to indemnify the Buyer Indemnified
Parties from and against Buyer Losses only to the extent of the $750,000
represented by the Holdback and the Retention Amount.
(d) Notwithstanding anything to the contrary set forth in this
Section 11.02, Buyer shall not have the right to make any claim with respect to
a breach by Seller of Seller's representations set forth in Section 4.09
pertaining to inventory after the period ending six months from the Closing
Date.
11.03 Indemnification by Buyer.
(a) Subject to the limitations of Section 11.03(b) and (c) below,
Buyer agrees to indemnify in full the Seller, and its employees, agents and
general and limited partners (collectively, the "Seller Indemnified Parties")
and hold them harmless against any Losses which the Seller Indemnified Parties
may suffer, sustain or become subject to as a result of (i) any
misrepresentation in any of the representations and warranties of Buyer
contained in this Agreement or in any of the Related Documents, (ii) any breach
of, or failure to perform, any agreement of Buyer contained in this Agreement or
any of the Related Documents, (iii) any Claims or threatened Claims against
Seller arising out of the actions or inactions of Buyer with respect to the
Assets or the Business after the Closing, or (iv) any Claims or threatened
Claims against Seller by an employee of Seller arising out of any illegal
conduct by Buyer during the offer of employment to, and the employment by Buyer
of, the Transferred Employees contemplated by Section 10.04(a) hereof
(collectively, "Seller Losses").
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<PAGE> 44
(b) Buyer shall be liable to the Seller Indemnified Parties for any
Seller Losses only if (i) Seller or another Seller Indemnified Party delivers to
Buyer written notice, setting forth in reasonable detail the identity, nature
and amount of Seller Losses related to such claim or claims prior to the third
anniversary of the Closing Date and (ii) only to the extent that the aggregate
amount of all Seller Losses at such time exceeds the Basket Amount. A Seller
Indemnified Party's failure to provide the detail required by clause (i) of the
preceding sentence shall not constitute either a breach of this Agreement by the
Seller Indemnified Party or any basis for Buyer to assert that the Seller
Indemnified Party did not comply with the terms of this Section 11.03 sufficient
to cause the Seller Indemnified Party to have waived its rights under this
Section 11.03, unless Buyer demonstrates that its ability to defend against any
Claims with respect thereto has been materially adversely affected.
(c) The Buyer will be obligated to indemnify the Seller Indemnified
Parties from and against Seller Losses in a maximum amount of $750,000 in the
aggregate, which maximum amount shall be decreased to $500,000 after the
six-month anniversary of the Closing Date.
11.04 Method of Asserting Claims. As used herein, an "Indemnified
Party" shall refer to a "Buyer Indemnified Party" or "Seller Indemnified Party,"
as applicable, the "Notifying Party" shall refer to the party hereto whose
Indemnified Parties are entitled to indemnification hereunder, and the
"Indemnifying Party" shall refer to the party hereto obligated to indemnify such
Notifying Party's Indemnified Parties.
(a) In the event that any of the Indemnified Parties is made a
defendant in or party to any action or proceeding, judicial or administrative,
instituted by any third party for the liability or the costs or expenses of
which are Losses (any such third party action or proceeding being referred to as
a "Claim"), the Notifying Party shall give the Indemnifying Party prompt notice
thereof. The failure to give such notice shall not affect any Indemnified
Party's ability to seek reimbursement unless such failure has materially and
adversely affected the Indemnifying Party's ability to defend successfully a
Claim. The Indemnifying Party shall be entitled to contest and defend such
Claim; provided, that the Indemnifying Party (i) has a reasonable basis for
concluding that such defense may be successful and (ii) diligently contests and
defends such Claim. Notice of the intention so to contest and defend shall be
given by the Indemnifying Party to the Notifying Party within 20 business days
after the Notifying Party's notice of such Claim (but, in all events, at least
five business days prior to the date that an answer to such Claim is due to be
filed). Such contest and defense shall be conducted by reputable attorneys
employed by the Indemnifying Party. The Notifying Party shall be entitled at any
time, at its own cost and expense (which expense shall not constitute a Loss
unless the Notifying Party reasonably determines that the Indemnifying Party is
not adequately representing or, because of a conflict of interest, may not
adequately
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<PAGE> 45
represent, any interests of the Indemnified Parties, and only to the extent that
such expenses are reasonable), to participate in such contest and defense and to
be represented by attorneys of its or their own choosing. If the Notifying Party
elects to participate in such defense, the Notifying Party will cooperate with
the Indemnifying Party in the conduct of such defense. Neither the Notifying
Party nor the Indemnifying Party may concede, settle or compromise any Claim
without the consent of the other party, which consents will not be unreasonably
withheld. Notwithstanding the foregoing, (i) if a Claim seeks equitable relief
or (ii) if the subject matter of a Claim relates to the ongoing business of any
of the Indemnified Parties, which Claim, if decided against any of the
Indemnified Parties, would materially adversely affect the ongoing business or
reputation of any of the Indemnified Parties, then, in each such case, the
Indemnified Parties alone shall be entitled to contest, defend and settle such
Claim in the first instance and, if the Indemnified Parties do not contest,
defend or settle such Claim, the Indemnifying Party shall then have the right to
contest and defend (but not settle) such Claim.
(b) In the event any Indemnified Party should have a claim against
any Indemnifying Party that does not involve a Claim, the Notifying Party shall
deliver a notice of such claim with reasonable promptness to the Indemnifying
Party. If the Indemnifying Party notifies the Notifying Party that it does not
dispute the claim described in such notice or fails to notify the Notifying
Party within 30 days after delivery of such notice by the Notifying Party
whether the Indemnifying Party disputes the claim described in such notice, the
Loss in the amount specified in the Notifying Party's notice will be
conclusively deemed a liability of the Indemnifying Party and the Indemnifying
Party shall pay the amount of such Loss to the Indemnified Party on demand.
(c) After the Closing, the rights set forth in this Article XI shall
be each party's sole and exclusive remedies against the other party hereto for
misrepresentations or breaches of covenants contained in this Agreement and the
Related Documents.
(d) Any indemnification payable under this Article XI shall be, to
the extent permitted by law, an adjustment to purchase price.
ARTICLE XII
MISCELLANEOUS
12.01 Press Releases and Announcements. Prior to the Closing Date,
subject to the exceptions described below, neither party hereto shall issue any
press release (or make any other public announcement) related to this Agreement
or the transactions contemplated hereby or make any announcement to the
employees, customers or suppliers of Seller without prior written approval of
the other party
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<PAGE> 46
hereto, except as may be necessary, in the opinion of counsel to the party
seeking to make disclosure, to comply with the requirements of this Agreement or
applicable law. If any such press release or public announcement is so required,
the party making such disclosure shall consult with the other party prior to
making such disclosure, and the parties shall use all reasonable efforts, acting
in good faith, to agree upon a text for such disclosure which is satisfactory to
both parties. Seller acknowledges that Buyer has filed a registration statement
with the Securities and Exchange Commission in connection with its initial
public offering of equity securities (the "Registration Statement").
Accordingly, notwithstanding the foregoing, Seller hereby consents to Buyer
including in its Registration Statement such information relating to the
Business and the transactions contemplated by this Agreement as Buyer deems
appropriate, in its sole discretion.
12.02 Expenses; Sales Tax. Except as otherwise expressly provided
for herein, Seller and Buyer will pay all of their own expenses (including
attorneys' and accountants' fees, in connection with the negotiation of this
Agreement, the performance of their respective obligations hereunder and the
consummation of the transactions contemplated by this Agreement (whether
consummated or not). Seller and Buyer agree to each pay one-half of any sales
tax due as a result of the sale of the Assets contemplated by this Agreement.
12.03 Further Assurances. Seller agrees that, on and after the
Closing Date, it shall take all appropriate action and execute any documents,
instruments or conveyances of any kind which may be reasonably necessary or
advisable to carry out any of the provisions hereof, including, without
limitation, putting Buyer in possession and operating control of the Assets and
transferring all Permits and Environmental Permits to Buyer that are
transferable.
12.04 Cooperation and Exchange of Information. Buyer and Seller
shall provide each other with such cooperation and information as either of them
reasonably may request of the other in filing any Tax return, amended return or
claim for refund, determining a liability for Taxes or a right to a refund of
Taxes or in conducting any audit or proceeding in respect of Taxes. Such
cooperation and information shall include providing copies of relevant Tax
returns or portions thereof, together with accompanying schedules and related
work papers and documents relating to rulings or other determinations by Taxing
authorities. Each party shall make its employees available on a mutually
convenient basis to provide explanation of any documents or information provided
hereunder. The Seller upon written request by the Buyer, will provide to the
Buyer such factual information reasonably necessary for filing Tax returns, Tax
planning and contesting any Tax audit that the Seller possesses as the Buyer may
reasonably request with respect to the Assets (which information the Seller
agrees to maintain and preserve for so long as it may be needed by the Buyer).
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<PAGE> 47
12.05 Amendment and Waiver. This Agreement may not be amended or
waived except in a writing executed by the party against which such amendment or
waiver is sought to be enforced. No course of dealing between or among any
persons having any interest in this Agreement will be deemed effective to modify
or amend any part of this Agreement or any rights or obligations of any person
under or by reason of this Agreement.
12.06 Notices. All notices, demands and other communications to be
given or delivered under or by reason of the provisions of this Agreement will
be in writing and will be deemed to have been given when personally delivered or
three business days after being mailed by first class U.S. mail, return receipt
requested, or when receipt is acknowledged, if sent by facsimile, telecopy or
other electronic transmission device. Notices, demands and communications to
Buyer and Seller will, unless another address is specified in writing, be sent
to the address indicated below:
Notices to Buyer: with a copy to:
White Cap Industries, Inc. Dorsey & Whitney LLP
3120 Airway Avenue 370 Seventeenth Street, Suite 4400
Costa Mesa, California 92626 Denver, CO 80202
Attn: Greg Grosch Attn: Kevin A. Cudney, Esq.
Fax: (714) 850-1634 Fax: (303) 629-3450
and
KRG Capital Partners
370 Seventeenth Street, Suite 2300
Denver, CO 80202
Attn: Mark M. King and Bruce
L. Rogers
Fax: (303) 572-5015
Notices to Seller: with a copy to:
Burke Concrete Accessories Howard Rice Nemerovski Canady
Two Embarcadero Center, Suite 2930 Falk & Rabkin
San Francisco, California 94111 Three Embarcadero Center, 7th Floor
Attn: Arnold W. Ackerman San Francisco, California 94111
Fax: (415) 788-7311 Attn: Richard W. Canady, Esq.
Fax: (415) 399-3041
12.07 Specific Performance. Seller hereby acknowledges that any
breach of this Agreement by Seller would cause Buyer irreparable harm and that a
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<PAGE> 48
remedy at law for such breach would be inadequate. Seller therefore hereby
agrees that, in addition, to any other available remedy at law or in equity,
injunctive relief and specific performance may be granted in any proceeding
commenced by Buyer to enforce this Agreement without the necessity of proof that
any other remedy at law is inadequate.
12.08 Assignment. This Agreement and all of the provisions hereof
will be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, except that neither this Agreement
nor any of the rights, interests or obligations hereunder may be assigned by
either party hereto (except by Buyer to (i) an affiliate that is wholly-owned
by, or wholly-owns, Buyer, or (ii) Buyer's lenders if requested by such lenders
for security of Buyer's obligations to such lenders) without the prior written
consent of the other party hereto.
12.09 Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Agreement.
12.10 Complete Agreement. This Agreement and the Exhibits hereto,
the Disclosure Schedule and the other documents referred to herein contain the
complete agreement between the parties and supersede any prior understandings,
agreements or representations by or between the parties, written or oral, which
may have related to the subject matter hereof in any way.
12.11 Counterparts. This Agreement may be executed in one or more
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together will constitute one and the same
instrument.
12.12 Governing Law. The internal law, without regard to conflicts
of law principles, of the State of California will govern all questions
concerning the construction, validity and interpretation of this Agreement and
the performance of the obligations imposed by this Agreement.
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<PAGE> 49
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
WHITE CAP INDUSTRIES, INC.
By: /s/ GARY GROSCH
---------------------------------
Name: GARY GROSCH
Title: PRESIDENT
BURKE CONCRETE ACCESSORIES, L.P.
By: BCA, LLC
By:
---------------------------------
Name:
Title:
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<PAGE> 50
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
WHITE CAP INDUSTRIES, INC.
By:
---------------------------------
Name:
Title:
BURKE CONCRETE ACCESSORIES, L.P.
By: BCA, LLC
By: /s/ ARNOLD W. ACKERMAN
---------------------------------
Name: Arnold W. Ackerman
Title: Chairman of the Board
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<PAGE> 1
EXHIBIT 10.1
CREDIT AGREEMENT
DATED AS OF OCTOBER 29, 1997
AMONG
WHITE CAP INDUSTRIES, CORP.,
AS BORROWER
WHITE CAP INDUSTRIES, INC.,
AS GUARANTOR
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
AS ADMINISTRATIVE AGENT, SYNDICATION AGENT AND DOCUMENTATION AGENT
AND
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
ARRANGER:
BANCAMERICA ROBERTSON STEPHENS
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
<S> <C> <C>
ARTICLE I
DEFINITIONS
1.01 Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Other Interpretive Provisions . . . . . . . . . . . . . . . . . . . . . 31
1.03 Accounting Principles . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE II
THE CREDITS
2.01 Amounts and Terms of Commitments . . . . . . . . . . . . . . . . . . . . 33
(a) Closing Date Term Loans . . . . . . . . . . . . . . . . . . . . 33
(b) Delayed Draw Term Loans . . . . . . . . . . . . . . . . . . . . 33
(c) Revolving Loans . . . . . . . . . . . . . . . . . . . . . . . . 34
2.02 Register; Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(a) The Register . . . . . . . . . . . . . . . . . . . . . . . . . 34
(b) Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.03 Procedure for Borrowing . . . . . . . . . . . . . . . . . . . . . . . . 36
2.04 Conversion and Continuation Elections . . . . . . . . . . . . . . . . . 37
2.05 Voluntary Termination or Reduction of Commitments . . . . . . . . . . . 38
2.06 Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . 39
2.07 Mandatory Prepayments of Loans . . . . . . . . . . . . . . . . . . . . . 39
(a) Asset Dispositions; Events of Loss . . . . . . . . . . . . . . 39
(b) Equity Issuance . . . . . . . . . . . . . . . . . . . . . . . . 40
(c) Application of Mandatory Prepayments . . . . . . . . . . . . . 40
(d) General . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(e) Clean Down . . . . . . . . . . . . . . . . . . . . . . . . . . 41
2.08 Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(a) Scheduled Payments of Term Loans . . . . . . . . . . . . . . . 41
(b) The Revolving Credit . . . . . . . . . . . . . . . . . . . . . 42
2.09 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
2.10 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
(a) Facility Underwriting Fee; Agency Fee . . . . . . . . . . . . . 43
(b) Commitment Fees . . . . . . . . . . . . . . . . . . . . . . . . 43
(i) Revolving Commitments . . . . . . . . . . . . . . . . 43
(ii) Term Loan Commitments . . . . . . . . . . . . . . . . 43
2.11 Computation of Fees and Interest . . . . . . . . . . . . . . . . . . . . 44
2.12 Payments by the Company . . . . . . . . . . . . . . . . . . . . . . . . 44
2.13 Payments by the Lenders to the Agent . . . . . . . . . . . . . . . . . . 45
2.14 Sharing of Payments, Etc. . . . . . . . . . . . . . . . . . . . . . . . 46
2.15 Security and Guaranties . . . . . . . . . . . . . . . . . . . . . . . . 46
2.16 Extension of Revolving Termination Date, Term Loan Final Maturity
Date, Draw Period Termination Date and Term Loan Amortization Dates
at Option of Company . . . . . . . . . . . . . . . . . . . . . . . . . . 46
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ARTICLE III
THE LETTERS OF CREDIT
3.01 The Letter of Credit Subfacility. . . . . . . . . . . . . . . . . . . . 47
3.02 Issuance, Amendment and Renewal of Letters of Credit . . . . . . . . . . 49
3.03 Risk Participations, Drawings and Reimbursements . . . . . . . . . . . . 51
3.04 Repayment of Participations . . . . . . . . . . . . . . . . . . . . . . 53
3.05 Role of the Issuing Lender . . . . . . . . . . . . . . . . . . . . . . . 53
3.06 Obligations Absolute . . . . . . . . . . . . . . . . . . . . . . . . . . 54
3.07 Cash Collateral Pledge . . . . . . . . . . . . . . . . . . . . . . . . . 55
3.08 Letter of Credit Fees . . . . . . . . . . . . . . . . . . . . . . . . . 56
3.09 Uniform Customs and Practice . . . . . . . . . . . . . . . . . . . . . . 57
3.10 Mandatory Prepayments of L/C Obligations . . . . . . . . . . . . . . . . 57
ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY
4.01 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
4.02 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
4.03 Increased Costs and Reduction of Return . . . . . . . . . . . . . . . . 59
4.04 Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
4.05 Inability to Determine Rates . . . . . . . . . . . . . . . . . . . . . . 60
4.06 Certificates of Lenders . . . . . . . . . . . . . . . . . . . . . . . . 61
4.07 Substitution of Lenders . . . . . . . . . . . . . . . . . . . . . . . . 61
4.08 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE V
CONDITIONS PRECEDENT
5.01 Conditions of Initial Credit Extension . . . . . . . . . . . . . . . . . 62
(a) Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
(i) Credit Agreement and Notes . . . . . . . . . . . . . 62
(ii) Resolutions; Incumbency Certificates . . . . . . . . 62
(iii) Organization Documents; Good Standing . . . . . . . . 62
(iv) Legal Opinions . . . . . . . . . . . . . . . . . . . 62
(v) Payment of Fees . . . . . . . . . . . . . . . . . . . 63
(vi) Guaranties and Collateral Documents . . . . . . . . . 63
(vii) Evidence of Insurance . . . . . . . . . . . . . . . . 64
(viii) Environmental Questionnaire . . . . . . . . . . . . . 64
(ix) Certificate . . . . . . . . . . . . . . . . . . . . . 64
(x) Other Documents . . . . . . . . . . . . . . . . . . . 64
(b) No Material Adverse Effect . . . . . . . . . . . . . . . . . . 64
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(c) Corporate and Capital Structure, Ownership, Tax Structure,
Management, Contracts, Etc. . . . . . . . . . . . . . . . . . . 64
(i) Corporate Structure . . . . . . . . . . . . . . . . . 64
(ii) Capital Structure and Ownership . . . . . . . . . . . 64
(iii) Tax Structure . . . . . . . . . . . . . . . . . . . . 64
(iv) Management . . . . . . . . . . . . . . . . . . . . . 65
(v) Contracts and Plans . . . . . . . . . . . . . . . . . 65
(vi) Schedule of Leases . . . . . . . . . . . . . . . . . 65
(d) Termination of Existing Credit Agreements . . . . . . . . . . . 65
(e) Consummation of IPO . . . . . . . . . . . . . . . . . . . . . . 65
(f) Related Agreements . . . . . . . . . . . . . . . . . . . . . . 65
(i) Approval of Related Agreements . . . . . . . . . . . 65
(ii) Related Agreements in Full Force and Effect . . . . . 65
(g) Necessary Governmental Authorizations, Etc. . . . . . . . . . . 66
(h) Financial Statements; Pro Forma Balance Sheet and
Projections . . . . . . . . . . . . . . . . . . . . . . . . . . 66
5.02 Conditions to All Credit Extensions . . . . . . . . . . . . . . . . . . 67
(a) Notice, Application . . . . . . . . . . . . . . . . . . . . . . 67
(b) Continuation of Representations and Warranties . . . . . . . . 67
(c) No Existing Default . . . . . . . . . . . . . . . . . . . . . . 67
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.01 Corporate Existence and Power . . . . . . . . . . . . . . . . . . . . . 68
6.02 Corporate Authorization; No Contravention . . . . . . . . . . . . . . . 68
6.03 Governmental Authorization . . . . . . . . . . . . . . . . . . . . . . . 69
6.04 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
6.05 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
6.06 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
6.07 ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
6.08 Use of Proceeds; Margin Regulations . . . . . . . . . . . . . . . . . . 70
6.09 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . 70
6.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
6.11 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . 71
6.12 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . 71
6.13 Collateral Documents . . . . . . . . . . . . . . . . . . . . . . . . . . 72
6.14 Regulated Entities . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
6.15 No Burdensome Restrictions . . . . . . . . . . . . . . . . . . . . . . . 73
6.16 Copyrights, Patents, Trademarks and Licenses, etc. . . . . . . . . . . . 73
6.17 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
6.18 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
6.19 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
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6.20 Swap Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
6.21 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
6.22 Related Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
ARTICLE VII
AFFIRMATIVE COVENANTS
7.01 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . 75
7.02 Certificates; Other Information . . . . . . . . . . . . . . . . . . . . 76
7.03 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
7.04 Preservation of Corporate Existence, Etc . . . . . . . . . . . . . . . . 78
7.05 Maintenance of Property . . . . . . . . . . . . . . . . . . . . . . . . 79
7.06 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
7.07 Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 79
7.08 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . 80
7.09 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . 80
7.10 Inspection of Property and Books and Records . . . . . . . . . . . . . . 80
7.11 Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
7.12 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
7.13 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
7.14 Additional Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . 81
ARTICLE VIII
NEGATIVE COVENANTS
8.01 Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . 82
8.02 Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . 84
8.03 Consolidations and Mergers . . . . . . . . . . . . . . . . . . . . . . . 85
8.04 Loans, Investments and Acquisitions . . . . . . . . . . . . . . . . . . 85
8.05 Limitation on Indebtedness . . . . . . . . . . . . . . . . . . . . . . . 86
8.06 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . 86
8.07 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
8.08 Contingent Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 87
8.09 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . 87
8.10 Lease Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
8.11 Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . 88
8.12 Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . 89
8.13 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
8.14 Change in Business . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
8.15 Accounting Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
ARTICLE IX
EVENTS OF DEFAULT
9.01 Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
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(a) Non-Payment . . . . . . . . . . . . . . . . . . . . . . . . . . 91
(b) Representation or Warranty . . . . . . . . . . . . . . . . . . 91
(c) Specific Defaults . . . . . . . . . . . . . . . . . . . . . . . 91
(d) Other Defaults . . . . . . . . . . . . . . . . . . . . . . . . 92
(e) Cross-Default . . . . . . . . . . . . . . . . . . . . . . . . . 92
(f) Insolvency; Voluntary Proceedings . . . . . . . . . . . . . . . 92
(g) Involuntary Proceedings . . . . . . . . . . . . . . . . . . . . 93
(h) ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
(i) Monetary Judgments . . . . . . . . . . . . . . . . . . . . . . 93
(j) Non-Monetary Judgments . . . . . . . . . . . . . . . . . . . . 93
(k) Change of Control . . . . . . . . . . . . . . . . . . . . . . . 94
(l) Loss of Licenses . . . . . . . . . . . . . . . . . . . . . . . 94
(m) Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . 94
(n) Guarantor Defaults . . . . . . . . . . . . . . . . . . . . . . 94
(o) Invalidity of Subordination Provisions . . . . . . . . . . . . 94
(p) Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . 94
9.02 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
9.03 Specified Swap Contract Remedies . . . . . . . . . . . . . . . . . . . . 95
9.04 Rights Not Exclusive . . . . . . . . . . . . . . . . . . . . . . . . . . 96
ARTICLE X
THE AGENT
10.01 Appointment and Authorization; "Agent" . . . . . . . . . . . . . . . . . 96
10.02 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . 97
10.03 Liability of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
10.04 Reliance by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
10.05 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
10.06 Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
10.07 Indemnification of Agent . . . . . . . . . . . . . . . . . . . . . . . . 99
10.08 Agent in Individual Capacity . . . . . . . . . . . . . . . . . . . . . . 99
10.09 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
10.10 Withholding Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
10.11 Collateral Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
10.12 Co-Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
ARTICLE XI
MISCELLANEOUS
11.01 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . 103
11.02 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
11.03 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . 105
11.04 Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
11.05 Company Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 106
11.06 Marshalling; Payments Set Aside . . . . . . . . . . . . . . . . . . . . 107
11.07 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . 107
11.08 Assignments, Participations, etc. . . . . . . . . . . . . . . . . . . . 107
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11.09 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
11.10 Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
11.11 Automatic Debits of Fees . . . . . . . . . . . . . . . . . . . . . . . . 111
11.12 Notification of Addresses, Lending Offices, Etc. . . . . . . . . . . . . 111
11.13 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
11.14 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
11.15 No Third Parties Benefited . . . . . . . . . . . . . . . . . . . . . . . 111
11.16 Governing Law and Jurisdiction . . . . . . . . . . . . . . . . . . . . . 111
11.17 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . 112
11.18 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
</TABLE>
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SCHEDULES
Schedule 1.01 Determination of Offshore Rate Margin, Base
Rate Margin Standby L/C Fee Rate and Commitment
Fee Rate
Schedule 2.01 Commitments and Pro Rata Shares
Schedule 6.05 Litigation
Schedule 6.11 Permitted Liabilities
Schedule 6.12 Environmental Matters
Schedule 6.17 Minority Interests
Schedule 6.18 Insurance Matters
Schedule 8.01 Permitted Liens
Schedule 8.05 Permitted Indebtedness
Schedule 8.08 Contingent Obligations
Schedule 11.02 Lending Offices; Addresses for Notices
EXHIBITS
Exhibit A Form of Notice of Borrowing
Exhibit B Form of Notice of Conversion/Continuation
Exhibit C Form of Compliance Certificate
Exhibit D Form of Term Note
Exhibit E Form of Revolving Note
Exhibit F Form of Company Pledge Agreement
Exhibit G Form of Company Security Agreement
Exhibit H Form of Subsidiary Guaranty
Exhibit I Form of Company Trademark Security Agreement
Exhibit J Form of Subsidiary Security Agreement
Exhibit K Form of Holdings Pledge Agreement
Exhibit L Form of Holdings Guaranty
Exhibit M Form of Assignment and Acceptance
Exhibit N Form of Legal Opinion of Dorsey & Whitney LLP
Exhibit O Form of Legal Opinion of O'Melveny & Myers LLP
Exhibit P Form of Extension Notice
Exhibit Q Form of Permitted Acquisition Certificate
</TABLE>
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CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of October 29, 1997, among
White Cap Industries, Corp. (formerly known as White Cap Industries, Inc.), a
California corporation (the "Company"), White Cap Industries, Inc. (formerly
known as White Cap Holdings, Inc.), a Delaware corporation ("Holdings"), the
several financial institutions from time to time party to this Agreement
(collectively, the "Lenders"; individually, a "Lender"), and Bank of America
National Trust and Savings Association, as letter of credit issuing lender and
as administrative agent, syndication agent and documentation agent for the
Lenders.
WHEREAS, the Lenders have agreed, on the terms and conditions set
forth herein, to extend certain credit facilities to the Company, the proceeds
of which shall be used to provide financing for permitted acquisitions, working
capital and other general purposes of the Company and its Subsidiaries; and
WHEREAS, the Company desires to secure all of the obligations
hereunder and under the other Loan Documents by granting to the Agent, for the
benefit of the Lenders, a first priority Lien on certain of its assets; and
WHEREAS, Holdings has agreed to guarantee the obligations hereunder
and under the other Loan Documents, and to secure its guarantee by granting to
the Agent, for the benefit of the Lenders, a first priority Lien on the capital
stock of the Company;
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.01 Certain Defined Terms. The following terms have the following
meanings:
"Acquired Business" means the entity or assets acquired by the
Company or a Subsidiary of the Company in an Acquisition, whether
before or after the date hereof.
"Acquired Business EBITDA" means for any period ending on or
before the date of any Acquisition of an Acquired Business the sum
(determined in accordance with GAAP) of (a) the net income (or net
loss) of the Acquired Business for the applicable period ending on the
date of such Acquisition, plus (b) all amounts treated as interest and
1
<PAGE> 10
all depreciation, amortization and other similar non-cash charges to
the extent included in the determination of such net income (or loss),
plus (c) all accrued taxes on or measured by income to the extent
included in the determination of such net income (or loss), provided,
however, that net income (or loss) shall be computed for these
purposes without giving effect to extraordinary losses or
extraordinary gains; provided that with respect to any Acquired
Business acquired pursuant to a Permitted Acquisition made after the
Closing Date, the Acquired Business EBITDA of such Acquired Business
shall be subject to adjustment in accordance with clause (e) of the
definition of Permitted Acquisition.
"Acquisition" means any transaction or series of related
transactions for the purpose of or resulting, directly or indirectly,
in (a) the acquisition of all or substantially all of the assets of a
Person, or of any business or division of a Person, (b) the
acquisition of in excess of 50% of the capital stock, partnership
interests, membership interests or equity of any Person (other than a
Person that is a Subsidiary), or otherwise causing any Person to
become a Subsidiary, or (c) a merger or consolidation or any other
combination with another Person (other than a Person that is a
Subsidiary) provided that the Company or the Subsidiary is the
surviving entity.
"Affiliate" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is
under common control with, such Person. A Person shall be deemed to
control another Person if the controlling Person possesses, directly
or indirectly, the power to direct or cause the direction of the
management and policies of the other Person, whether through the
ownership of voting securities, membership interests, by contract, or
otherwise.
"Agent" means BofA in its capacity as administrative agent,
syndication agent and documentation agent for the Lenders hereunder,
and any successor Agent arising under Section 10.09.
"Agent-Related Persons" means BofA and any successor agent
arising under Section 10.09, together with their respective Affiliates
(including, in the case of BofA, BARS), and the officers, directors,
employees, agents and attorneys-in-fact of such Persons and
Affiliates.
"Agent's Payment Office" means the address for payments set
forth on Schedule 11.02 or such other address as the Agent may from
time to time specify.
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<PAGE> 11
"Aggregate Specified Swap Amount" means, at any time, the sum
of all Specified Swap Amounts owing to all Swap Providers.
"Agreement" means this Credit Agreement.
"Asset Coverage Ratio" means, as at any date of determination,
the ratio of (a) 75% of Consolidated Accounts Receivable in which the
Agent has a valid and perfected first priority security interest and
the account debtors for which are Persons located in the United
States, plus 60% of Consolidated Inventory in which the Agent has a
valid and perfected first priority security interest to (b) the
aggregate outstanding amount of the Term Loans plus the Effective
Amount of the outstanding Revolving Loans and L/C Obligations less,
during the period May 1 through November 15 in each year, $5,000,000.
"Assignee" has the meaning specified in subsection 11.08(a).
"Assignment and Acceptance" has the meaning specified in
subsection 11.08(a).
"Attorney Costs" means and includes all fees and disbursements
of any law firm or other external counsel, the allocated cost of
internal legal services and all disbursements of internal counsel.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of
1978 (11 U.S.C. Section101, et seq.).
"Base Rate" means, for any day, the higher of: (a) 0.50% per
annum above the latest Federal Funds Rate; and (b) the rate of
interest in effect for such day as publicly announced from time to
time by BofA in San Francisco, California, as its "reference rate."
(The "reference rate" is a rate set by BofA based upon various factors
including BofA's costs and desired return, general economic conditions
and other factors, and is used as a reference point for pricing some
loans, which may be priced at, above, or below such announced rate.)
Any change in the reference rate announced by BofA shall take effect
at the opening of business on the day specified in the public
announcement of such change.
"Base Rate Loan" means a Loan that bears interest based on the
Base Rate.
"Base Rate Margin" means (a) during the period from the
Closing Date through the date the Compliance Certificate with respect
to the Company's financial statements for the period ending March 31,
1998 is delivered to the Lenders
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pursuant to subsection 7.02(b), the rate per annum determined as of
the Closing Date in accordance with Schedule 1.01 attached hereto, and
(b) thereafter the rate per annum determined in accordance with
Schedule 1.01 attached hereto.
"BARS" means BancAmerica Robertson Stephens, a Delaware
corporation.
"BofA" means Bank of America National Trust and Savings
Association, a national banking association.
"Borrowing" means a borrowing hereunder consisting of Loans of
the same Type made to the Company on the same day by the Lenders under
Article II, and, other than in the case of Base Rate Loans, having the
same Interest Period.
"Borrowing Date" means any date on which a Borrowing occurs
under Section 2.03.
"Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks in New York City or San Francisco
are authorized or required by law to close and, if the applicable
Business Day relates to any Offshore Rate Loan, means such a day on
which dealings are carried on in the applicable offshore dollar
interbank market.
"Capital Adequacy Regulation" means any guideline, request or
directive of any central bank or other Governmental Authority, or any
other law, rule or regulation, whether or not having the force of law,
in each case, regarding capital adequacy of any bank or of any
corporation controlling a bank.
"Cash Collateralize" means to pledge and deposit with or
deliver to the Agent, for the benefit of the Agent, the Issuing Lender
and the Lenders, as additional Collateral for the Obligations, cash or
deposit account balances pursuant to documentation in form and
substance reasonably satisfactory to the Agent and the Issuing Lender
(which documents are hereby consented to by the Lenders). Derivatives
of such term shall have corresponding meaning. The Company hereby
grants the Agent, for the benefit of the Agent, the Issuing Lender and
the Lenders, a security interest in all such cash and deposit account
balances. Cash collateral shall be maintained in blocked,
non-interest bearing deposit accounts at BofA.
"CERCLA" has the meaning specified in the definition of
"Environmental Laws."
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"Change of Control" means any of (a) the acquisition by any
"person" or "group" (as such terms are used in sections 13(d) and
14(d) of the Exchange Act) (other than KRG or Greg Grosch) at any time
of beneficial ownership of thirty percent (30%) or more of the
outstanding capital stock of Holdings on a fully-diluted basis, (b)
the failure of individuals who are members of the board of directors
of the Company on the Closing Date (together with any new or
replacement directors whose initial nomination for election was
approved by a majority of the directors who were either directors on
the Closing Date or previously so approved) to constitute a majority
of the board of directors of the Company, or (c) the failure of
Holdings to own 100% of the outstanding capital stock of the Company.
"Closing" means the time at which all conditions precedent set
forth in Section 5.01 are satisfied or waived (or, in the case of
subsection 5.01(a)(v), waived by the Person entitled to receive such
payment).
"Closing Date" means the date on which the Closing occurs.
"Closing Date Term Loans" means the Term Loans made on the
Closing Date pursuant to subsection 2.01(a).
"Code" means the Internal Revenue Code of 1986, and
regulations promulgated thereunder.
"Collateral" means all property and interests in property and
proceeds thereof now owned or hereafter acquired by the Company and
the Guarantors in or upon which a Lien now or hereafter exists
pursuant to this Agreement or the Collateral Documents in favor of the
Lenders, or the Agent on behalf of the Lenders.
"Collateral Documents" means, collectively, (a) the Holdings
Pledge Agreement, the Company Pledge Agreement, the Company Trademark
Security Agreement, the Company Security Agreement, the Subsidiary
Security Agreement, and all other security agreements and other
similar agreements between Holdings, the Company or any Subsidiary or
any Guarantor and the Lenders or the Agent for the benefit of the
Lenders now or hereafter delivered to the Lenders or the Agent
pursuant to or in connection with the transactions contemplated
hereby, and all financing statements (or comparable documents now or
hereafter filed in accordance with the Uniform Commercial Code or
comparable law) against the Company or any Subsidiary or any Guarantor
as debtor in favor of the Lenders or the Agent for the benefit of the
Lenders as secured party, and (b) any amendments, supplements,
modifications, renewals, replacements,
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<PAGE> 14
consolidations, substitutions and extensions of any of the foregoing.
"Commercial Letter of Credit" means any Letter of Credit
issued for the account of the Company for the purpose of providing the
primary payment mechanism through the presentation of documents for
the purchase of materials, goods or services by the Company or its
Subsidiaries.
"Commitment," as to each Lender, means such Lender's Revolving
Loan Commitment and/or Term Loan Commitment, and "Commitments" means
such commitments of all Lenders in the aggregate.
"Commitment Fee Rate" means (a) during the period from the
Closing Date through the date the Compliance Certificate with respect
to the Company's financial statements for the period ending March 31,
1998 is delivered to the Lenders pursuant to subsection 7.02(b), the
greater of 0.30% per annum and the rate per annum determined as of the
Closing Date in accordance with Schedule 1.01 attached hereto, and (b)
thereafter the rate per annum determined in accordance with Schedule
1.01 attached hereto.
"Company" means White Cap Industries, Corp. (formerly known as
White Cap Industries, Inc.), a Delaware corporation.
"Company Pledge Agreement" means the Company Pledge Agreement,
substantially in the form of Exhibit F attached hereto, executed and
delivered by the Company pursuant to Section 7.14, as amended,
supplemented or otherwise modified from time to time.
"Company Security Agreement" means the Company Security
Agreement, substantially in the form of Exhibit G attached hereto,
executed and delivered by the Company on the Closing Date, as amended,
supplemented or otherwise modified from time to time.
"Company Trademark Security Agreement" means the Company
Trademark Security Agreement, substantially in the form of Exhibit I
attached hereto, executed and delivered by the Company on the Closing
Date, as amended, supplemented or otherwise modified from time to
time.
"Compliance Certificate" means a certificate substantially in
the form of Exhibit C.
"Consolidated Accounts Receivable" means the accounts
receivable of Holdings, the Company and its Subsidiaries arising from
the sale of goods or services in the ordinary
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<PAGE> 15
course of business, determined on a consolidated basis in accordance
with GAAP.
"Consolidated Adjusted EBITDA" means, for any period, (a)
Consolidated Company EBITDA for such period, plus (b) the aggregate of
Acquired Business EBITDA for such period, plus (c) to the extent such
charges are included in the determination of EBITDA, certain one-time
charges relating to the IPO, consisting of up to a $1,000,000 bonus
paid to Rick Gagnon plus taxes thereon of up to $14,500, up to
$130,000 paid for securities D&O insurance, up to $77,000 for
termination costs associated with a former chief financial officer, up
to $77,000 for termination costs associated with the former controller
of Viking, and up to $150,000 for a non-refundable deposit related to
the terminated purchase of a new corporate airplane.
"Consolidated Capital Expenditures" means, for any period, the
sum of (a) the aggregate of all expenditures (whether paid in cash or
other consideration or accrued as a liability and including that
portion of capital leases which is capitalized on the consolidated
balance sheet of Holdings, the Company and its Subsidiaries) by
Holdings, the 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 Holdings, the Company and its Subsidiaries plus (b)
to the extent not covered by clause (a) of this definition, the
aggregate of all expenditures by Holdings, the Company and its
Subsidiaries during that period to purchase or develop computer
software or systems (but only to the extent such expenditures are
capitalized on the consolidated balance sheet of Holdings, the Company
and its Subsidiaries in conformity with GAAP).
"Consolidated Company EBITDA" means, for any period, EBITDA of
Holdings, the Company and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP.
"Consolidated Fixed Charges" means, for any period, the sum of
(a) gross interest expense payable in cash during such period,
excluding, to the extent included in gross interest expense, certain
one-time interest charges incurred in 1997, consisting of up to
$2,430,000 in prepayment penalties to certain lenders, up to
$5,411,000 in prepayment penalties to a senior subordinated investor,
up to $1,200,000 for deferred loan fees and up to $167,000 in interest
expense related to the exercise of a warrant issued to former
shareholders of A-Y, a to-be-determined make whole payment payable to
NationsCredit for extinguishment of a $1,040,000 lease due August,
2000, provided that such lease is extinguished before December 31,
1997, and (b) scheduled
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<PAGE> 16
principal payments during such period on Indebtedness described in
clauses (a), (b), (c), (d), (e), (f) and (g) of the definition of
Indebtedness, all for Holdings, the Company and its Subsidiaries on a
consolidated basis determined in accordance with GAAP. During the
period from the Closing Date through September 30, 1998, Consolidated
Fixed Charges shall be calculated from November 1, 1997 and annualized
for the measurement period.
"Consolidated Inventory" means the inventory of Holdings, the
Company and its Subsidiaries, determined on a consolidated basis in
accordance with GAAP.
"Consolidated Net Income" means the net income of Holdings,
the Company and its Subsidiaries, determined on a consolidated basis
in accordance with GAAP.
"Consolidated Net Worth" means the net worth of Holdings, the
Company and its Subsidiaries, determined on a consolidated basis in
accordance with GAAP.
"Consolidated Total Debt" means all Indebtedness of Holdings,
the Company and its Subsidiaries, determined on a consolidated basis
in accordance with GAAP.
"Consolidated Total Debt to Adjusted EBITDA Ratio" means, as
at any date of determination, the ratio of Consolidated Total Debt as
of such date to Consolidated Adjusted EBITDA for the four fiscal
quarters ending on or immediately prior to such date, for Holdings,
the Company and its Subsidiaries on a consolidated basis determined in
accordance with GAAP, provided that for purposes of this definition,
Consolidated Total Debt shall exclude guarantees of Indebtedness under
the SBA loan program as described on Schedule 8.08, so long as the
obligation covered by such guaranty is not in default.
"Contingent Obligation" means, as to any Person, any direct or
indirect liability of that Person, whether or not contingent, with or
without recourse, (a) with respect to any Indebtedness, lease,
dividend, letter of credit or other obligation (the "primary
obligations") of another Person (the "primary obligor"), including any
obligation of that Person (i) to purchase, repurchase or otherwise
acquire such primary obligations or any security therefor, (ii) to
advance or provide funds for the payment or discharge of any such
primary obligation, or to maintain working capital or equity capital
of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet item, level of income or financial
condition of the primary obligor, (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor
to
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<PAGE> 17
make payment of such primary obligation, or (iv) otherwise to assure
or hold harmless the holder of any such primary obligation against
loss in respect thereof (each, a "Guaranty Obligation"); (b) with
respect to any Surety Instrument issued for the account of that Person
or as to which that Person is otherwise liable for reimbursement of
drawings or payments; (c) to purchase any materials, supplies or other
property from, or to obtain the services of, another Person if the
relevant contract or other related document or obligation requires
that payment for such materials, supplies or other property, or for
such services, shall be made regardless of whether delivery of such
materials, supplies or other property is ever made or tendered, or
such services are ever performed or tendered, or (d) in respect of any
Swap Contract. The amount of any Contingent Obligation shall, in the
case of Guaranty Obligations, be deemed equal to the stated or
determinable amount of the primary obligation in respect of which such
Guaranty Obligation is made or, if not stated or if indeterminable,
the maximum reasonably anticipated liability in respect thereof, and
in the case of other Contingent Obligations other than in respect of
Swap Contracts, shall be equal to the maximum reasonably anticipated
liability in respect thereof and, in the case of Contingent
Obligations in respect of Swap Contracts, shall be equal to the Swap
Termination Value.
"Contractual Obligation" means, as to any Person, any
provision of any security issued by such Person or of any agreement,
undertaking, contract, indenture, mortgage, deed of trust or other
instrument, document or agreement to which such Person is a party or
by which it or any of its property is bound.
"Conversion/Continuation Date" means any date on which, under
Section 2.04, the Company (a) converts Loans of one Type to another
Type, or (b) continues as Loans of the same Type, but with a new
Interest Period, Loans having Interest Periods expiring on such date.
"Credit Extension" means and includes (a) the making of any
Loans hereunder, and (b) the Issuance of any Letters of Credit
hereunder.
"Default" means any event or circumstance which, with the
giving of notice, the lapse of time, or both, would (if not cured or
otherwise remedied during such time) constitute an Event of Default.
"Delayed Draw Term Loans" means the Term Loans made subsequent
to the Closing Date and on or before the Draw Period Termination Date
pursuant to subsection 2.01(b).
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"Disposition" means (a) the sale, lease, conveyance or other
disposition of property, other than sales or other dispositions
expressly permitted under subsection 8.02(a), and (b) the sale or
transfer by the Company or any Subsidiary of the Company of any equity
securities issued by such Subsidiary to any Person other than a
Wholly-Owned Subsidiary of the Company.
"Dollars," "dollars" and "$" each mean lawful money of the
United States.
"Draw Period Termination Date" means the second anniversary of
the Closing Date, or such later date as may be determined pursuant to
Section 2.16.
"EBITDA" means, with respect to any Person and with respect to
any period, the sum of (a) the net income (or net loss) for such
period, plus (b) all amounts treated as interest and all depreciation,
amortization and other similar non-cash charges to the extent included
in the determination of such net income (or loss), plus (c) all income
taxes to the extent included in the determination of such net income
(or loss); provided, however, that net income (or loss) shall be
computed for these purposes without giving effect to extraordinary
losses or extraordinary gains, all determined in accordance with GAAP.
"Effective Amount" means (a) with respect to any Revolving
Loans on any date, the aggregate outstanding principal amount thereof
after giving effect to any Borrowings and prepayments or repayments of
Revolving Loans occurring on such date; and (b) with respect to any
outstanding L/C Obligations on any date, the amount of such L/C
Obligations on such date after giving effect to any Issuances of
Letters of Credit occurring on such date and any other changes in the
aggregate amount of the L/C Obligations as of such date, including as
a result of any reimbursements of outstanding unpaid drawings under
any Letters of Credit or any reductions in the maximum amount
available for drawing under Letters of Credit taking effect on such
date.
"Eligible Assignee" means (a) a commercial bank organized
under the laws of the United States, or any state thereof, and having
a combined capital and surplus of at least $100,000,000; (b) a
commercial bank organized under the laws of any other country which is
a member of the Organization for Economic Cooperation and Development
(the "OECD"), or a political subdivision of any such country, and
having a combined capital and surplus of at least $100,000,000,
provided that such bank is acting through a branch or agency located
in the country in which it is organized or another country which is
also a member of the
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<PAGE> 19
OECD; (c) 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 but not limited to,
insurance companies, mutual funds and lease financing companies, and
(d) a Person that is primarily engaged in the business of lending that
is (i) a Subsidiary of a Lender, (ii) a Subsidiary of a Person of
which a Lender is a Subsidiary, or (iii) a Person of which a Lender is
a Subsidiary; provided that no Affiliate of the Company shall be an
Eligible Assignee.
"Employment Agreements" means the employment agreements
entered into between the Company and Greg Grosch, Rick Gagnon and
Chris Lane.
"Environmental Claims" means all claims, however asserted, by
any Governmental Authority or other Person alleging potential
liability or responsibility for violation of any Environmental Law, or
for release or injury to the environment or threat to public health,
personal injury (including sickness, disease or death), property
damage, natural resources damage, or otherwise alleging liability or
responsibility for damages (punitive or otherwise), cleanup, removal,
remedial or response costs, restitution, civil or criminal penalties,
injunctive relief, or other type of relief, resulting from or based
upon the presence, placement, discharge, emission or release
(including intentional and unintentional, negligent and non-negligent,
sudden or non-sudden, accidental or non-accidental, placement, spills,
leaks, discharges, emissions or releases) of any Hazardous Material
at, in, or from Property, whether or not owned by the Company.
"Environmental Laws" means all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed duties, requests,
licenses, authorizations and permits of, and agreements with, any
Governmental Authorities, in each case relating to environmental,
health, safety and land use matters; including the Comprehensive
Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), the Clean Air Act, the Federal Water Pollution Control Act
of 1972, the Solid Waste Disposal Act, the Federal Resource
Conservation and Recovery Act, the Toxic Substances Control Act, the
Emergency Planning and Community Right-to-Know Act, the California
Hazardous Waste Control Law, the California Solid Waste Management,
Resource, Recovery and Recycling Act, the California Water Code and
the California Health and Safety Code, and similar laws in other
states.
"ERISA" means the Employee Retirement Income Security Act of
1974, and regulations promulgated thereunder.
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<PAGE> 20
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Company within the meaning
of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of
the Code for purposes of provisions relating to Section 412 of the
Code).
"ERISA Event" means (a) a Reportable Event with respect to a
Pension Plan; (b) a withdrawal by the Company or any ERISA Affiliate
from a Pension Plan subject to Section 4063 of ERISA during a plan
year in which it was a substantial employer (as defined in Section
4001(a)(2) of ERISA) or a cessation of operations which is treated as
such a withdrawal under Section 4062(e) of ERISA; (c) a complete or
partial withdrawal by the Company or any ERISA Affiliate from a
Multiemployer Plan or notification that a Multiemployer Plan is in
reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Section 4041 or
4041A of ERISA, or the commencement of proceedings by the PBGC to
terminate a Pension Plan or Multiemployer Plan; (e) an event or
condition which might reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Pension Plan or Multiemployer Plan; or
(f) the imposition of any liability under Title IV of ERISA, other
than PBGC premiums due but not delinquent under Section 4007 of ERISA,
upon the Company or any ERISA Affiliate.
"Estimated Remediation Costs" means all costs associated with
performing work to remediate contamination of real property or
groundwater, including engineering and other professional fees and
expenses, costs to remove, transport and dispose of contaminated soil,
costs to "cap" or otherwise contain contaminated soil, and costs to
pump and treat water and monitor water quality.
"Eurodollar Reserve Percentage" has the meaning specified in
the definition of "Offshore Rate".
"Event of Default" means any of the events or circumstances
specified in Section 9.01.
"Event of Loss" means, with respect to any property, any of
the following: (a) any loss, destruction or damage of such property;
(b) the receipt of written notice of the institution of any
proceedings for the condemnation or seizure of such property or for
the exercise of any right of eminent domain; or (c) any actual
condemnation, seizure or taking, by exercise of the power of eminent
domain or otherwise, of such property, or confiscation of such
property or the requisition of the use of such property.
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<PAGE> 21
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and regulations promulgated thereunder.
"Existing Credit Agreements" means the Loan and Security
Agreement, dated February 25, 1997, between the Company and Mellon
Bank, N.A. and the Note Purchase Agreement, dated February 25, 1997,
between the Company and Churchill Capital Partners II.
"FDIC" means the Federal Deposit Insurance Corporation, and
any Governmental Authority succeeding to any of its principal
functions.
"Federal Funds Rate" means, for any day, the rate set forth in
the weekly statistical release designated as H.15(519), or any
successor publication, published by the Federal Reserve Bank of New
York (including any such successor, "H.15(519)") on the preceding
Business Day opposite the caption "Federal Funds (Effective)"; or, if
for any relevant day such rate is not so published on any such
preceding Business Day, the rate for such day will be the arithmetic
mean as determined by the Agent of the rates for the last transaction
in overnight Federal funds arranged prior to 9:00 a.m. (New York City
time) on that day by each of three leading brokers of Federal funds
transactions in New York City selected by the Agent.
"Fee Letter" has the meaning specified in subsection 2.10(a).
"Fixed Charge Coverage Ratio Step Down Dates" means the dates
December 30, 1999, December 31, 1999, March 30, 2000, March 31, 2000,
June 29, 2000, June 30, 2000, September 29, 2000 and September 30,
2000 set forth in subsection 8.12(a).
"FRB" means the Board of Governors of the Federal Reserve
System, and any Governmental Authority succeeding to any of its
principal functions.
"Further Taxes" means any and all present or future taxes,
levies, assessments, imposts, duties, deductions, fees, withholdings
or similar charges (including, without limitation, net income taxes
and franchise taxes), and all liabilities with respect thereto,
imposed by any jurisdiction on account of any Taxes or Other Taxes
payable or paid pursuant to Section 4.01.
"GAAP" means generally accepted accounting principles set
forth from time to time in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of Certified
Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board (or agencies with similar functions of
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<PAGE> 22
comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date
of determination.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, and any
corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"Guaranties" means the Holdings Guaranty executed and
delivered by Holdings on the Closing Date and all Subsidiary
Guaranties thereafter executed and delivered by the Subsidiary
Guarantors.
"Guarantor" means Holdings and each Subsidiary of the Company
which executes and delivers Subsidiary Guaranty pursuant to Section
7.14.
"Guaranty Obligation" has the meaning specified in the
definition of "Contingent Obligation."
"Hazardous Materials" means all those substances that are
regulated by, or which may form the basis of liability under, any
Environmental Law, including any substance identified under any
Environmental Law as a pollutant, contaminant, hazardous waste,
hazardous constituent, special waste, hazardous substance, hazardous
material, or toxic substance, or petroleum or petroleum derived
substance or waste.
"Holdings" means White Cap Industries, Inc. (formerly known as
White Cap Holdings, Inc.), a Delaware corporation.
"Holdings Guaranty" means the Holdings Guaranty, in
substantially the form of Exhibit L attached hereto, executed and
delivered by Holdings on the Closing Date, as amended, supplemented or
otherwise modified from time to time.
"Holdings Pledge Agreement" means the Holdings Pledge
Agreement, in substantially the form of Exhibit K attached hereto,
executed and delivered by Holdings on the Closing Date, as amended,
supplemented or otherwise modified from time to time.
"Honor Date" has the meaning specified in subsection 3.03(c).
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<PAGE> 23
"Hostile Acquisition" means the acquisition of the capital
stock or other equity interests of a Person through a tender offer or
similar solicitation of the owners of such capital stock or other
equity interests which has not been approved (prior to such
acquisition) by resolutions of the Board of Directors of such Person
or by similar action if such Person is not a corporation, and as to
which such approval has not been withdrawn.
"Indebtedness" of any Person means, without duplication, (a)
all indebtedness for borrowed money; (b) all obligations issued,
undertaken or assumed as the deferred purchase price of property or
services (other than trade payables and accrued liabilities entered
into in the ordinary course of business on ordinary terms); (c) all
non-contingent reimbursement or payment obligations with respect to
Surety Instruments; (d) all obligations evidenced by notes, bonds,
debentures or similar instruments, including obligations so evidenced
incurred in connection with the acquisition of property, assets or
businesses; (e) all indebtedness created or arising under any
conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to property acquired by the
Person (even though the rights and remedies of the seller or bank
under such agreement in the event of default are limited to
repossession or sale of such property); (f) all obligations with
respect to capital leases; (g) all indebtedness referred to in clauses
(a) through (f) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien upon or in property (including accounts and
contracts rights) owned by such Person, even though such Person has
not assumed or become liable for the payment of such Indebtedness; and
(h) all Guaranty Obligations in respect of indebtedness or obligations
of others of the kinds referred to in clauses (a) through (g) above.
"Indemnified Liabilities" has the meaning specified in Section
11.05.
"Indemnified Person" has the meaning specified in Section
11.05.
"Independent Auditor" has the meaning specified in subsection
7.01(a).
"Insolvency Proceeding" means, with respect to any Person, (a)
any case, action or proceeding with respect to such Person before any
court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution,
winding-up or relief of debtors, or (b) any general assignment for the
benefit of creditors, composition, marshalling of assets for
creditors,
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<PAGE> 24
or other, similar arrangement in respect of its creditors generally or
any substantial portion of its creditors; undertaken under U.S.
Federal, state or foreign law, including the Bankruptcy Code.
"Interest Payment Date" means, as to any Loan other than a
Base Rate Loan, the last day of each Interest Period applicable to
such Loan and, as to any Base Rate Loan, the last Business Day of each
calendar month and each date such Loan is converted into another Type
of Loan, provided, however, that if any Interest Period for an
Offshore Rate Loan exceeds three months, the date that falls three
months after the beginning of such Interest Period and after each
Interest Payment Date thereafter is also an Interest Payment Date.
"Interest Period" means, as to any Offshore Rate Loan, the
period commencing on the Borrowing Date of such Loan or on the
Conversion/Continuation Date on which the Loan is converted into or
continued as an Offshore Rate Loan, and ending on the date one, two,
three or six months thereafter as selected by the Company in its
Notice of Borrowing or Notice of Conversion/Continuation;
provided that:
(i) if any Interest Period would otherwise end on
a day that is not a Business Day, that Interest Period shall
be extended to the following Business Day unless the result of
such extension would be to carry such Interest Period into
another calendar month, in which event such Interest Period
shall end on the preceding Business Day;
(ii) any Interest Period pertaining to an Offshore
Rate Loan 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 end on the last Business Day of the
calendar month at the end of such Interest Period; and
(iii) no Interest Period with respect to any
portion of the Term Loans shall extend beyond the Term Loan
Final Maturity Date, and no Interest Period with respect to
any portion of the Revolving Loans shall extend beyond the
Revolving Termination Date; and
(iv) no Interest Period with respect to any
portion of the Term Loans shall extend beyond a date on which
Company is required to make a scheduled payment of principal
of the Term Loans, unless the sum of (a) the aggregate
principal amount of Term Loans that
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<PAGE> 25
are Base Rate Loans plus (b) the aggregate principal amount of
Term Loans that are Offshore Rate Loans with Interest Periods
expiring on or before such date equals or exceeds the
principal amount required to be paid on the Term Loans on such
date.
"IPO" means the initial public offering of the common stock of
Holdings pursuant to the Registration Statement on Form S-1 filed with
the SEC on August 15, 1997, as amended from time to time.
"IRS" means the Internal Revenue Service, and any Governmental
Authority succeeding to any of its principal functions under the Code.
"Issuance Date" has the meaning specified in subsection
3.01(a).
"Issue" means, with respect to any Letter of Credit, to issue
or to extend the expiry of, or to renew or increase the amount of,
such Letter of Credit; and the terms "Issued," "Issuing" and
"Issuance" have corresponding meanings.
"Issuing Lender" means BofA in its capacity as issuer of one
or more Letters of Credit hereunder, together with any replacement
letter of credit issuer arising under subsection 10.01(b) or Section
10.09.
"Joint Venture" means a single-purpose corporation,
partnership, limited liability company, joint venture or other similar
legal arrangement (whether created by contract or conducted through a
separate legal entity) now or hereafter formed by the Company or any
of its Subsidiaries with another Person in order to conduct a common
venture or enterprise with such Person.
"KRG" means KRG Capital Partners, LLC, a Colorado limited
liability company.
"KRG Transaction Advisory Agreement" means the Transaction
Advisory Agreement between KRG Capital Partners, LLC, White Cap
Industries, Corp. and White Cap Industries, Inc., dated as of October
27, 1997.
"L/C Advance" means each Lender's participation in any L/C
Borrowing in accordance with its Pro Rata Share.
"L/C Amendment Application" means an application form for
amendment of outstanding standby or commercial documentary letters of
credit as shall at any time be in use at the Issuing Lender, as the
Issuing Lender shall request.
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"L/C Application" means an application form for issuances of
Standby Letters of Credit or Commercial Letters of Credit as shall at
any time be in use at the Issuing Lender, as the Issuing Lender shall
request.
"L/C Borrowing" means an extension of credit resulting from a
drawing under any Letter of Credit which shall not have been
reimbursed on the date when made nor converted into a Borrowing of
Revolving Loans under subsection 3.03(c).
"L/C Commitment" means the commitment of the Issuing Lender to
Issue, and the commitment of the Lenders severally to participate in,
Letters of Credit from time to time Issued or outstanding under
Article III, in an aggregate amount not to exceed on any date the
amount of $10,000,000, as the same shall be reduced as a result of a
reduction in the L/C Commitment pursuant to Section 2.05; provided
that the L/C Commitment is a part of the Revolving Loan Commitments,
rather than a separate, independent commitment.
"L/C Obligations" means at any time the sum of (a) the
aggregate undrawn amount of all Letters of Credit then outstanding,
plus (b) the amount of all unreimbursed drawings under all Letters of
Credit, including all outstanding L/C Borrowings.
"L/C-Related Documents" means the Letters of Credit, the L/C
Applications, the L/C Amendment Applications and any other document
relating to any Letter of Credit, including any of the Issuing
Lender's standard form documents for letter of credit issuances.
"Lender" means the institutions specified in the introductory
clause hereto. Unless the context otherwise clearly requires,
"Lender" includes any such institution in its capacity as Issuing
Lender or Swap Provider. Unless the context otherwise clearly
requires, references to any such institution as a "Lender" shall also
include any of such institution's Affiliates that may at any time of
determination be Swap Providers.
"Lending Office" means, as to any Lender, the office or
offices of such Lender specified as its "Lending Office" or "Domestic
Lending Office" or "Offshore Lending Office," as the case may be, on
Schedule 11.02, or such other office or offices as the Lender may from
time to time notify the Company and the Agent.
"Letters of Credit" means any letters of credit (whether
Standby Letters of Credit or Commercial Letters of Credit) Issued by
the Issuing Lender pursuant to Article III.
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"Lien" means any security interest, mortgage, deed of trust,
pledge, hypothecation, assignment, charge or deposit arrangement,
encumbrance, lien (statutory or other) or preferential arrangement of
any kind or nature whatsoever in respect of any property (including
those created by, arising under or evidenced by any conditional sale
or other title retention agreement, the interest of a lessor under a
capital lease, any financing lease having substantially the same
economic effect as any of the foregoing, or the filing of any
financing statement naming the owner of the asset to which such lien
relates as debtor, under the Uniform Commercial Code or any comparable
law) and any contingent or other agreement to provide any of the
foregoing, including the interest of a purchaser of Receivables under
any Receivables Purchase Facility but not including the interest of a
lessor under an operating lease.
"Loan" means an extension of credit by a Lender to the Company
under Article II or Article III, and may be a Base Rate Loan or an
Offshore Rate Loan (each, a "Type" of Loan), and includes any
Revolving Loan or Term Loan.
"Loan Documents" means this Agreement, the Notes, the
Guaranties, the Collateral Documents, the Fee Letters, the L/C Related
Documents, any documents evidencing or relating to Specified Swap
Contracts, and all other documents delivered to the Agent or any
Lender in connection with the transactions contemplated by this
Agreement.
"Loan Exposure" means the Term Loan Exposure or the Revolving
Loan Exposure.
"Loan Party" means each of Holdings, the Company and any of
its Subsidiaries from time to time executing a Loan Document, and
"Loan Parties'" means all such Persons collectively.
"Majority Lenders" means at any time Lenders then holding at
least 60% of the then aggregate amount of Term Loan Exposure and
Revolving Loan Exposure or, if the Commitments have been terminated
and no Loans are then outstanding, Lenders then owed a Specified Swap
Amount of at least 60% of the Aggregate Specified Swap Amount.
"Margin Stock" means "margin stock" as such term is defined in
Regulation G, T, U or X of the FRB.
"Material Adverse Effect" means (a) a material adverse change
in, or a material adverse effect upon, the operations, business,
properties, condition (financial or otherwise) or prospects of
Holdings, the Company, or the Company and its Subsidiaries taken as a
whole; (b) a material impairment of the ability of Holdings, the
Company
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<PAGE> 28
or any Subsidiary to perform its material obligations under any Loan
Document and to avoid any Event of Default; or (c) a material adverse
effect upon (i) the legality, validity, binding effect or
enforceability against Holdings, the Company or any Subsidiary of any
Loan Document, or (ii) the perfection or priority of any Lien granted
under any of the Collateral Documents.
"Material Subsidiary" means, at any time, any Subsidiary
having at such time either (a) total (gross) revenues for the
preceding four fiscal quarter period in excess of $500,000 or (b)
total assets, as of the last day of the preceding fiscal quarter,
having a net book or market value in excess of $500,000, in each case,
based upon the Company's most recent annual or quarterly financial
statements delivered to the Agent under Section 7.01.
"Multiemployer Plan" means a "multiemployer plan," within the
meaning of Section 4001(a)(3) of ERISA, to which the Company or any
ERISA Affiliate makes, is making, or is obligated to make
contributions or, during the preceding three calendar years, has made,
or been obligated to make, contributions.
"Net Issuance Proceeds" means, as to any issuance or
incurrence of debt or issuance of equity by any Person, cash proceeds
and non-cash proceeds received or receivable by such Person in
connection therewith, net of reasonable out-of-pocket costs and
expenses paid or incurred in connection therewith in favor of any
Person not an Affiliate of such Person, such costs and expenses not to
exceed ordinary and customary amounts for similar transactions.
"Net Proceeds" means, as to any Disposition by a Person,
proceeds in cash, checks or other cash equivalent financial
instruments as and when received by such Person, net of: (a) the
direct costs relating to such Disposition excluding amounts payable to
such Person or any Affiliate of such Person, except that KRG shall not
be deemed an Affiliate of the Company or of Holdings for this purpose,
(b) sale, use or other transaction taxes paid or payable by such
Person as a direct result thereof, and (c) amounts required to be
applied to repay principal, interest and prepayment premiums and
penalties and other charges on Indebtedness secured by a Lien on the
asset which is the subject of such Disposition. "Net Proceeds" shall
also include proceeds paid on account of any Event of Loss, net of (i)
all money actually applied to repair, replace or reconstruct the
damaged property or property affected by the condemnation or taking,
(ii) all of the costs and expenses reasonably incurred in connection
with the collection of such proceeds, award or other payments, and
(iii) any
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amounts retained by or paid to parties having superior rights to such
proceeds, awards or other payments.
"Note" means a Revolving Note or a Term Note, and "Notes"
means all such notes collectively.
"Notice of Borrowing" means a notice in substantially the form
of Exhibit A.
"Notice of Conversion/Continuation" means a notice in
substantially the form of Exhibit B.
"Obligations" means all advances, debts, liabilities,
obligations, covenants and duties arising under this Agreement, the
Notes or any other Loan Document owing by the Company or any Guarantor
to any Lender, the Agent, or any Indemnified Person, whether direct or
indirect (including those acquired by assignment), absolute or
contingent, due or to become due, now existing or hereafter arising.
"Offshore Rate" means, for any Interest Period, with respect
to Offshore Rate Loans comprising part of the same Borrowing, the rate
of interest per annum (rounded upward to the next 1/16th of 1%)
determined by the Agent as follows:
Offshore Rate = LIBOR
------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means for any day for any
Interest Period the maximum reserve percentage (expressed as a
decimal, rounded upward to the next 1/100th of 1%) in effect
on such day (whether or not applicable to any Lender) under
regulations issued from time to time by the FRB for
determining the maximum reserve requirement (including any
emergency, supplemental or other marginal reserve requirement)
with respect to Eurocurrency funding (currently referred to as
"Eurocurrency liabilities"); and
"LIBOR" means the rate of interest per annum
determined by the Agent to be the rate of interest per annum
notified to the Agent by the Reference Lender as the rate of
interest at which dollar deposits in the approximate amount of
the amount of the Loan to be made or continued as, or
converted into, an Offshore Rate Loan by such Reference Lender
and having a maturity comparable to such Interest Period would
be offered to major banks in the London interbank market at
their request at approximately 11:00 a.m. (London time) two
Business Days prior to the commencement of such Interest
Period. Such rate shall be the same rate as
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quoted by such Reference Lender to all other borrowers for
similar amounts of loans as of the same time.
The Offshore Rate shall be adjusted automatically as
to all Offshore Rate Loans then outstanding as of the
effective date of any change in the Eurodollar Reserve
Percentage.
"Offshore Rate Loan" means a Loan that bears interest based on
the Offshore Rate.
"Offshore Rate Margin" means (a) during the period from the
Closing Date through the date the Compliance Certificate with respect
to the Company's financial statements for the period ending March 31,
1998 is delivered to the Lenders pursuant to subsection 7.02(b), the
greater of 1.00% per annum and the rate per annum determined as of the
Closing Date in accordance with Schedule 1.01 attached hereto, and (b)
thereafter the rate per annum determined in accordance with Schedule
1.01 attached hereto.
"Organization Documents" means, for any corporation, the
certificate or articles of incorporation, the bylaws, any certificate
of determination or instrument relating to the rights of preferred
shareholders of such corporation, any shareholder rights agreement,
and all applicable resolutions of the board of directors (or any
committee thereof) of such corporation.
"Other Taxes" means any present or future stamp, court or
documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or from the
execution, delivery, performance, enforcement or registration of, or
otherwise with respect to, this Agreement or any other Loan Documents.
"Participant" has the meaning specified in subsection
11.08(d).
"PBGC" means the Pension Benefit Guaranty Corporation, or any
Governmental Authority succeeding to any of its principal functions
under ERISA.
"Pension Plan" means a pension plan (as defined in Section
3(2) of ERISA) subject to Title IV of ERISA which the Company
sponsors, maintains, or to which it makes, is making, or is obligated
to make contributions, or in the case of a multiple employer plan (as
described in Section 4064(a) of ERISA) has made contributions at any
time during the immediately preceding five (5) plan years.
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<PAGE> 31
"Permitted Acquisition" means an Acquisition with respect to
which all of the following conditions shall have been satisfied:
(a) the Acquired Business being acquired shall
derive most of its revenues from the same line of business as
is carried on by the Company and its Subsidiaries as of the
date hereof;
(b) the Acquisition shall not be a Hostile
Acquisition;
(c) the Acquired Business shall have a positive
Acquired Business EBITDA for the four fiscal quarter period
immediately preceding the date of the Acquisition;
(d) the financial statements of the Acquired
Business shall have been audited by one of the "Big Six"
accounting firms or by another independent accounting firm of
national or regional repute or otherwise satisfactory to the
Majority Lenders, or if such financial statements have not
been audited by such an accounting firm, such financial
statements shall have been approved by the Majority Lenders,
except in the case of Project Beta, as described in the
Confidential Information Memorandum of September 1997, which
shall be deemed to be preapproved by the Lenders as of the
date hereof based on its tax returns;
(e) any adjustments in EBITDA of the Acquired
Business made in determining Acquired Business EBITDA shall
have been approved by the Majority Lenders; provided that
adjustments in EBITDA resulting from owners' salaries, or
other cash compensation or fringe benefits such as life
insurance or club memberships provided to such owners that
will either be eliminated or replaced by a lower salary and
benefits upon the consummation of the Acquisition will not
require approval of the Majority Lenders so long as the
Company provides supporting documentation for such
adjustments, in form and substance satisfactory to the
Majority Lenders;
(f) the Total Consideration paid for the Target
shall not exceed 7.5 times the Acquired Business EBITDA for
the four fiscal quarter period immediately preceding the date
of the Acquisition, except in the case of Burke, as described
in the Confidential Information Memorandum of September 1997
as Project Alpha;
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<PAGE> 32
(g) if the Total Consideration for the Acquired
Business exceeds $25,000,000, the Acquisition shall have been
approved by the Majority Lenders; and
(h) after giving effect to the Acquisition, (i)
the Consolidated Total Debt to Adjusted EBITDA Ratio, on a pro
forma basis including the Acquired Business, shall be less
than 3.00 to 1.0, (ii) there shall be at least $7,500,000
available under the Revolving Loan Commitment for Borrowings
thereunder, and (iii) no Default or Event of Default shall
exist, including with respect to the covenants contained in
section 8.12 on a pro forma basis.
"Permitted Acquisition Certificate" means a certificate
substantially in the form of Exhibit Q.
"Permitted Liens" has the meaning specified in Section 8.01.
"Permitted Swap Obligations" means all obligations (contingent
or otherwise) of the Company or any Subsidiary existing or arising
under Swap Contracts, provided that each of the following criteria is
satisfied: (a) such obligations are (or were) entered into by such
Person in the ordinary course of business for the purpose of directly
mitigating risks associated with liabilities, commitments or assets
held by such Person, or changes in the value of securities issued by
such Person in conjunction with a securities repurchase program not
otherwise prohibited hereunder, and not for purposes of speculation or
taking a "market view;" and (b) such Swap Contracts do not contain (i)
any provision ("walk-away" provision) exonerating the non-defaulting
party from its obligation to make payments on outstanding transactions
to the defaulting party, or (ii) with respect to any Swap Contract
that is not a Specified Swap Contract, any provision creating or
permitting the declaration of an event of default, termination event
or similar event upon the occurrence of an Event of Default hereunder
(other than an Event of Default under subsection 9.01(a)).
"Person" means an individual, partnership, corporation,
limited liability company, business trust, joint stock company, trust,
unincorporated association, joint venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section
3(3) of ERISA) which the Company sponsors or maintains or to which the
Company makes, is making, or is obligated to make contributions and
includes any Pension Plan.
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<PAGE> 33
"Pledged Collateral" has the meaning specified in the Holdings
Pledge Agreement and the Company Pledge Agreement.
"Pro Rata Share" means (a) with respect to all payments,
computations and other matters relating to the Term Loan Commitment or
the Term Loan of any Lender, the percentage obtained by dividing (x)
the Term Loan Exposure of that Lender by (y) the aggregate Term Loan
Exposure of all Lenders, (b) with respect to all payments,
computations and other matters relating to the Revolving Loan
Commitment or the Revolving Loans and L/C Obligations of 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, and (c) for all other purposes with respect to each Lender,
the percentage obtained by dividing (x) the sum of the Term Loan
Exposure of that Lender plus the Revolving Loan Exposure of that
Lender by (y) the sum of the aggregate Term Loan Exposure of all
Lenders plus the aggregate Revolving Loan Exposure of all Lenders, in
any such case as the applicable percentage may be adjusted by
assignments permitted pursuant to Section 11.08. The initial Pro Rata
Share of each Lender for purposes of each of clauses (a) and (b) of
the preceding sentence is set forth opposite the name of that Lender
in Schedule 2.01 annexed hereto.
"Recapitalization" means the consummation of the IPO, the
repayment of all outstanding Indebtedness under the Existing Credit
Agreements and the termination of the Existing Credit Agreements, and
the entering into this Agreement and the making of the initial Loans
hereunder.
"Recapitalization Financing Requirements" means the aggregate
of all amounts necessary (a) to pay in full all outstanding
Indebtedness under the Existing Credit Agreements, and (b) to pay
Transaction Costs.
"Receivables" shall mean all obligations of any obligor
(whether now existing or hereafter arising) under a contract for sale
of goods or services by the Company or any of its Subsidiaries, which
shall include any obligation of such obligor (whether now existing or
hereafter arising) to pay interest, finance charges or amounts with
respect thereto, and, with respect to any of the foregoing receivables
or obligations, (a) all of the interest of the Company or any of its
Subsidiaries in the goods (including returned goods) the sale of which
gave rise to such receivable or obligation after the passage of title
thereto to any obligor, (b) all other Liens and property subject
thereto from time to time purporting to secure payment of such
receivables or obligations, and (c) all guarantees, insurance, letters
of credit and other agreements or arrangements of whatever
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<PAGE> 34
character from time to time supporting or securing payment of any such
receivables or obligations.
"Receivables Purchase Facility" shall mean any agreement of
the Company or any of its Subsidiaries providing for sales, transfers
or conveyances of Receivables purporting to be sales (and considered
sales under GAAP).
"Reference Lender" means BofA.
"Register" has the meaning specified in subsection 2.02(a)(i).
"Related Agreements" means, collectively, the KRG Transaction
Advisory Agreement and the Employment Agreements.
"Replacement Lender" has the meaning specified in Section
4.07.
"Reportable Event" means, any of the events set forth in
Section 4043(b) of ERISA or the regulations thereunder, other than any
such event for which the 30-day notice requirement under ERISA has
been waived in regulations issued by the PBGC.
"Required Revolving Lenders" means Lenders having at least 60%
of the Revolving Loan Exposure.
"Requirement of Law" means, as to any Person, any law
(statutory or common), treaty, rule or regulation or determination of
an arbitrator or of a Governmental Authority, in each case applicable
to or binding upon the Person or any of its property or to which the
Person or any of its property is subject.
"Responsible Officer" means the chief executive officer or the
president of the Company, or any other officer having substantially
the same authority and responsibility; or, with respect to compliance
with financial covenants, the chief financial officer or the treasurer
of the Company, or any other officer having substantially the same
authority and responsibility.
"Revolving Clean-Down Amount" means $15,000,000.
"Revolving Loan" means a Loan made by a Lender to the Company
pursuant to subsection 2.01(c).
"Revolving Loan Commitment," as to each Lender, has the
meaning specified in Section 2.01, and "Revolving Loan Commitments"
means such commitments of all Lenders in the aggregate.
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<PAGE> 35
"Revolving Loan Exposure" means, with respect to any Lender as
of any date of determination (a) prior to the termination of the
Revolving Loan Commitments, that Lender's Revolving Loan Commitment
and (b) after the termination of the Revolving Loan Commitments, the
sum of (x) the aggregate outstanding principal amount of the Revolving
Loans of that Lender plus (y) the amount of such Lender's pro rata
share of the L/C Obligations.
"Revolving Notes" means (a) the promissory notes of Company
issued pursuant to subsection 2.02(b) on the Closing Date and (b) any
promissory notes issued by Company pursuant to subsection 11.08(c) in
connection with assignments of the Revolving Loan Commitments and
Revolving Loans of any Lenders, in each case substantially in the form
of Exhibit E annexed hereto, as they may be amended, supplemented or
otherwise modified from time to time.
"Revolving Termination Date" means the earlier to occur of:
(a) October 29, 2001 or such later date as may be
determined pursuant to Section 2.16;
(b) the date on which the Commitments terminate
in accordance with the provisions of this Agreement.
"SEC" means the Securities and Exchange Commission, or any
Governmental Authority succeeding to any of its principal functions.
"Securities Act" means the Securities Act of 1933, as amended,
and regulations promulgated thereunder.
"Solvent" means, as to any Person at any time, that (a) the
fair value of the property of such Person is greater than the amount
of such Person's liabilities (including a reasonable estimate of
disputed, contingent and unliquidated liabilities) as such value is
established and liabilities evaluated for purposes of Section 101(31)
of the Bankruptcy Code and, in the alternative, for purposes of the
California Uniform Fraudulent Transfer Act; (b) the present fair
saleable value of the property of such Person is not less than the
amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured; (c) such
Person is able to realize upon its property and pay its debts and
other liabilities (including a reasonable estimate of disputed,
contingent and unliquidated liabilities) as they mature in the normal
course of business; (d) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such Person's
ability to pay as such debts and liabilities mature; and (e) such
Person is not engaged in
27
<PAGE> 36
business or a transaction, and is not about to engage in business or a
transaction, for which such Person's property would constitute
unreasonably small capital.
"Specified Swap Amount" means, at any time, in respect of
Specified Swap Contracts to which any Swap Provider is party, the Swap
Termination Value relating thereto; provided that for purposes of this
definition, any Swap Termination Value that is negative as to (i.e.,
owing by) any Swap Provider shall be deemed equal to zero (0).
"Specified Swap Contract" means any Swap Contract made or
entered into at any time, or in effect at any time (whether heretofore
or hereafter), whether directly or indirectly, and whether as a result
of assignment or transfer or otherwise, between the Company and any
Swap Provider, which Swap Contract is or was intended by the Company
to have been entered into, in part or entirely, for purposes of
mitigating interest rate or currency exchange risk relating to any
Loan (which intent shall conclusively be deemed to exist if the
Company so represents to the Swap Provider in writing), and as to
which the final scheduled payment by the Company is not later than the
Revolving Termination Date.
"Standby Letter of Credit" means a Letter of Credit other than
a Commercial Letter of Credit.
"Standby L/C Fee Rate" means (a) during the period from the
Closing Date through the date the Compliance Certificate with respect
to the Company's financial statements for the period ending March 31,
1998 is delivered to the Lenders pursuant to subsection 7.02(b), the
greater of 1% per annum and the rate per annum determined as of the
Closing Date in accordance with Schedule 1.01 attached hereto, and (b)
thereafter the rate per annum determined in accordance with Schedule
1.01 attached hereto.
"Subordinated Indebtedness" means Indebtedness of the 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 reasonably satisfactory to the
Agent and the Majority Lenders.
"Subsidiary" of a Person means any corporation, association,
partnership, limited liability company, joint venture or other
business entity of which more than 50% of the voting stock, membership
interests or other equity interests (in the case of Persons other than
corporations), is owned or controlled directly or indirectly by the
Person, or one or more of the Subsidiaries of the Person, or a
28
<PAGE> 37
combination thereof. Unless the context otherwise clearly requires,
references herein to a "Subsidiary" refer to a Subsidiary of the
Company.
"Subsidiary Guarantor" means each Subsidiary of the Company
which executes and delivers a Subsidiary Guaranty pursuant to Section
7.14.
"Subsidiary Guaranty" means the Subsidiary Guaranty, in
substantially the form of Exhibit H attached hereto, executed and
delivered by the Subsidiary Guarantors, as amended, supplemented or
otherwise modified from time to time.
"Subsidiary Security Agreement" means the Subsidiary Security
Agreement, in substantially the form of Exhibit J attached hereto,
executed and delivered by the Subsidiary Guarantors, as amended,
supplemented or otherwise modified from time to time.
"Surety Instruments" means all letters of credit (including
standby and commercial), banker's acceptances, bank guaranties,
shipside bonds, surety bonds and similar instruments.
"Swap Contract" means any agreement, whether or not in
writing, relating to any transaction that is a rate swap, basis swap,
forward rate transaction, commodity swap, commodity option, equity or
equity index swap or option, bond, note or bill option, interest rate
option, forward foreign exchange transaction, cap, collar or floor
transaction, currency swap, cross-currency rate swap, swaption,
currency option or any other, similar transaction (including any
option to enter into any of the foregoing) or any combination of the
foregoing, and, unless the context otherwise clearly requires, any
master agreement relating to or governing any or all of the foregoing.
"Swap Provider" means any Lender, or any Affiliate of any
Lender, that is at the time of determination a party to a Swap
Contract with the Company.
"Swap Termination Value" means, in respect of any one or more
Swap Contracts, after taking into account the effect of any legally
enforceable netting agreement relating to such Swap Contracts, (a) for
any date on or after the date such Swap Contracts have been closed out
and termination value(s) determined in accordance therewith, such
termination value(s), and (b) for any date prior to the date
referenced in clause (a) the amount(s) determined as the
mark-to-market value(s) for such Swap Contracts, as determined by the
Company based upon one or more mid-market or other readily available
quotations provided by any
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recognized dealer in such Swap Contracts (which may include any
Lender.)
"Taxes" means any and all present or future taxes, levies,
assessments, imposts, duties, deductions, fees, withholdings or
similar charges, and all liabilities with respect thereto, excluding,
in the case of each Lender and the Agent, respectively, taxes imposed
on or measured by its net income by the jurisdiction (or any political
subdivision thereof) under the laws of which such Lender or the Agent,
as the case may be, is organized or maintains a lending office.
"Term Loan" means a Loan made by a Lender to the Company
pursuant to subsections 2.01(a) or (b).
"Term Loan Amortization Dates" means the scheduled dates set
forth in subsection 2.08(a) for repayment of installments of the Term
Loans.
"Term Loan Commitment" means the commitment of a Lender to
make Term Loans to the Company pursuant to subsections 2.01(a) and
(b), and "Term Loan Commitments" means such commitments of all Lenders
in the aggregate.
"Term Loan Exposure" means, with respect to any Lender as of
any date of determination (i) prior to the funding of any Term Loan,
that Lender's Term Loan Commitment, (ii) after the funding of any Term
Loan or Term Loans, but prior to the Draw Period Termination Date, the
outstanding principal amount of the Term Loans of that Lender plus
that Lender's remaining Term Loan Commitment, if any and (iii) after
the Draw Period Termination Date, the outstanding principal amount of
the Term Loans of that Lender.
"Term Loan Final Maturity Date" means October 29, 2001 or such
later date as may be determined pursuant to Section 2.16.
"Term Notes" means (i) the promissory notes of Company issued
pursuant to subsection 2.02(b) on the Closing Date and (ii) any
promissory notes issued by the Company pursuant to subsection 11.08(c)
in connection with assignments of the Term Loan Commitments or Term
Loans of any Lenders, in each case substantially in the form of
Exhibit D annexed hereto, as they may be amended, supplemented or
otherwise modified from time to time.
"Total Consideration" means the total amount of (a) cash paid
in connection with any Acquisition, plus (b) Indebtedness payable to
the seller in connection with such Acquisition, plus (c) the present
value of covenants not to
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<PAGE> 39
compete entered into in connection with such Acquisition or other
future payments which are required to be made over a period of time
and are not contingent upon the Company meeting financial performance
objectives (discounted at the Base Rate), but only to the extent not
included in clause (a) or (b) above, plus (d) the amount of
Indebtedness assumed in connection with such Acquisition.
"Transaction Costs" means the fees, costs and expenses payable
by Holdings and/or the Company in connection with the transactions
contemplated by the IPO, the Loan Documents and the Related
Agreements.
"Type" has the meaning specified in the definition of "Loan."
"UCC" means the Uniform Commercial Code as in effect in the
State of California.
"Unfunded Pension Liability" means the excess of a Plan's
benefit liabilities under Section 4001(a)(16) of ERISA, over the
current value of that Plan's assets, determined in accordance with the
assumptions used for funding the Pension Plan pursuant to Section 412
of the Code for the applicable plan year.
"United States" and "U.S." each means the United States of
America.
"Viking" means Viking Distributing Co., a California
corporation, which has been merged with and into the Company.
"Voting Stock" means securities of any class or classes, the
holders of which are ordinarily, in the absence of contingencies,
entitled to elect a majority of the corporate directors (or Persons
performing similar functions).
"Wholly-Owned Subsidiary" means any corporation in which
(other than directors' qualifying shares required by law) 100% of the
capital stock of each class having ordinary voting power, and 100% of
the capital stock of every other class, in each case, at the time as
of which any determination is being made, is owned, beneficially and
of record, by the Company, or by one or more of the other Wholly-Owned
Subsidiaries, or both.
1.02 Other Interpretive Provisions.
(a) The meanings of defined terms are equally applicable
to the singular and plural forms of the defined terms.
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<PAGE> 40
(b) The words "hereof", "herein", "hereunder" and similar
words refer to this Agreement as a whole and not to any particular provision of
this Agreement; and subsection, Section, Schedule and Exhibit references are to
this Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all
instruments, documents, agreements, certificates, indentures, notices
and other writings, however evidenced.
(ii) The term "including" is not limiting and
means "including without limitation."
(iii) In the computation of periods of time from a
specified date to a later specified date, the word "from" means "from
and including"; the words "to" and "until" each mean "to but
excluding", and the word "through" means "to and including."
(iv) The term "property" includes any kind of
property or asset, real, personal or mixed, tangible or intangible.
(d) Unless otherwise expressly provided herein, (i)
references to agreements (including this Agreement) and other contractual
instruments shall be deemed to include all subsequent amendments and other
modifications thereto, but only to the extent such amendments and other
modifications are not prohibited by the terms of any Loan Document, and (ii)
references to any statute or regulation are to be construed as including all
statutory and regulatory provisions consolidating, amending, replacing,
supplementing or interpreting the statute or regulation.
(e) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
(f) This Agreement and other Loan Documents may use
several different limitations, tests or measurements to regulate the same or
similar matters. All such limitations, tests and measurements are cumulative
and shall each be performed in accordance with their terms. Unless otherwise
expressly provided, any reference to any action of the Agent or the Lenders by
way of consent, approval or waiver shall be deemed modified by the phrase "in
its/their sole discretion."
(g) This Agreement and the other Loan Documents are the
result of negotiations among and have been reviewed by counsel to the Agent,
the Company and the other parties, and are the products of all parties.
Accordingly, they shall not be construed against the Lenders or the Agent
merely because of the Agent's or Lenders' involvement in their preparation.
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<PAGE> 41
1.03 Accounting Principles. (a) Unless the context otherwise
clearly requires, all accounting terms not expressly defined herein shall be
construed, and all financial computations required under this Agreement shall
be made, in accordance with GAAP, consistently applied.
(b) References herein to "fiscal year" and "fiscal
quarter" refer to such fiscal periods of the Company.
ARTICLE II
THE CREDITS
2.01 Amounts and Terms of Commitments. (a) Closing Date Term
Loans. Subject to the terms and conditions of this Agreement, each Lender
severally agrees to lend to the Company at the time of Closing on the Closing
Date an amount not exceeding its Pro Rata Share of the lesser of $20,000,000
and the aggregate amount of the Term Loan Commitments to be used for the
purpose of paying a portion of the Recapitalization Financing Requirements.
The amount of each Lender's Term Loan Commitment is set forth opposite its name
on Schedule 2.01 annexed hereto and the aggregate amount of the Term Loan
Commitments is $75,000,000; provided that the Term Loan Commitments of the
Lenders shall be adjusted to give effect to any assignments of the Term Loan
Commitments pursuant to subsection 11.08. Each Lender's Term Loan Commitment
shall expire immediately and without further action on November 14, 1997 if the
Closing Date Term Loans are not made on or before that date. Amounts borrowed
under this subsection 2.01(a) and subsequently repaid or prepaid may not be
reborrowed.
(b) Delayed Draw Term Loans. Subject to the terms and
conditions of this Agreement, each Lender severally agrees to lend to the
Company from time to time during the period from and excluding the Closing Date
to and including the Draw Period Termination Date an amount not exceeding its
Pro Rata Share of the aggregate amount of the Term Loan Commitments less (i)
the aggregate amount of Closing Date Term Loans made pursuant to subsection
2.01(a), to be used for the purpose of paying a portion of the cost of
Permitted Acquisitions and (ii) the aggregate amount of Delayed Draw Term Loans
previously made pursuant to this subsection. Amounts borrowed under this
subsection 2.01(b) shall be for the amount of cash paid in connection with any
Permitted Acquisition plus reasonable transaction fees and expenses itemized by
the Company in the Permitted Acquisition Certificate, as required under Section
5.02(a), such fees and expenses to be paid at the closing of the Permitted
Acquisition or within 30 days thereafter. Amounts borrowed under this
subsection 2.01(b) and subsequently repaid or prepaid may not be reborrowed.
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<PAGE> 42
(c) Revolving Loans. Subject to the terms and conditions
of this Agreement, each Lender 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 lend to the Company from time to time
during the period from the time of Closing on the Closing Date to but excluding
the Revolving 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 7.12; provided that the aggregate amount
of Revolving Loans made on the Closing Date shall not exceed $5,000,000; and
provided further that for at least 30 consecutive days during each period
beginning each December 31 and ending the following March 31, the sum of the
Effective Amount of all Revolving Loans plus the Effective Amount of all L/C
Obligations shall not exceed at any time the Revolving Clean-Down Amount. The
original amount of each Lender's Revolving Loan Commitment is set forth
opposite its name on Schedule 2.01 annexed hereto and the aggregate original
amount of the Revolving Loan Commitments is $25,000,000; provided that the
Revolving Loan Commitments of the Lenders shall be adjusted to give effect to
any assignments of the Revolving Loan Commitments pursuant to subsection 11.08;
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 Section 2.05. Each Lender's Revolving Loan Commitment shall expire
on the Revolving 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; provided that each
Lender's Revolving Loan Commitment shall expire immediately and without further
action on November 14, 1997 if the Closing Date Term Loans and the initial
Revolving Loans are not made on or before that date, provided, however, that,
after giving effect to any Borrowing of Revolving Loans, the Effective Amount
of all outstanding Revolving Loans and the Effective Amount of all L/C
Obligations, shall not at any time exceed the combined Revolving Loan
Commitments; and provided further, that the Effective Amount of the Revolving
Loans of any Lender plus the participation of such Lender in the Effective
Amount of all L/C Obligations shall not at any time exceed such Lender's
Revolving Loan Commitment. Amounts borrowed under this subsection 2.01(c) may
be repaid and reborrowed to but excluding the Revolving Termination Date.
2.02 Register; Notes.
(a) The Register.
(i) The Agent shall maintain, at its address referred to
in Section 11.02, a register for the recordation of the names and
addresses of Lenders and the Commitments and Loans of each Lender from
time to time (the "Register"). The Register shall be available for
inspection by the Company or
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<PAGE> 43
any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(ii) The Agent shall record in the Register the Term Loan
Commitment and Revolving Loan Commitment and the Term Loans and
Revolving Loans from time to time of each Lender, and each repayment
or prepayment in respect of the principal amount of the Term Loans or
Revolving Loans of each Lender. Any such recordation shall be
conclusive and binding on the 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 Commitments
or the Company's obligations in respect of any applicable Loans.
(iii) Each Lender shall record on its internal records
(including, without limitation, the Notes held by such Lender) the
amount of each Term Loan and each Revolving Loan made by it and each
payment in respect thereof. Any such recordation shall be conclusive
and binding on the Company, absent manifest error; provided that
failure to make any such recordation, or any error in such
recordation, shall not affect any Lender's Commitments or the
Company's obligations in respect of any applicable Loans; and
provided, furtherthat in the event of any inconsistency between the
Register and any Lender's records, the recordations in the Register
shall govern.
(iv) The Company, Agent and the Lenders shall deem and
treat the Persons listed as Lenders in the Register as the holders and
owners of the corresponding Commitments and Loans listed therein for
all purposes hereof, and no assignment or transfer of any such
Commitment or Loan shall be effective, in each case unless and until
an Assignment Agreement effecting the assignment or transfer thereof
shall have been accepted by Agent and recorded in the Register as
provided in subsection 11.08(b). Prior to such recordation, all
amounts owed with respect to the applicable Commitment or 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
Commitments or Loans.
(b) Notes. The Company shall execute and deliver on the
Closing Date (i) to each Lender (or to the Agent for that Lender) (a) a Term
Note substantially in the form of Exhibit D annexed hereto to evidence that
Lender's Term Loans, in the principal amount of that Lender's Term Loan
Commitment and with other appropriate insertions, and (b) a Revolving Note
substantially in the form of Exhibit E annexed hereto to evidence
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<PAGE> 44
that Lender's Revolving Loans, in the principal amount of that Lender's
Revolving Loan Commitment and with other appropriate insertions.
The Agent may deem and treat the payee of any Note as the
owner thereof for all purposes hereof unless and until an Assignment and
Acceptance effecting the assignment or transfer thereof shall have been
accepted by Agent as provided in subsection 11.08. Until the Company receives
written notice of such assignment, the Company may deem and treat such payee as
the owner of such Note. Any request, authority or consent of any person or
entity who, at the time of making such request or giving such authority or
consent, is the holder of any Note shall be conclusive and binding on any
subsequent holder, assignee or transferee of that Note or of any Note or Notes
issued in exchange therefor.
2.03 Procedure for Borrowing. (a) Each Borrowing shall be made
upon the Company's irrevocable written notice delivered to the Agent in the
form of a Notice of Borrowing which notice must be received by the Agent prior
to (i) 10:00 a.m. (San Francisco time) three Business Days prior to the
requested Borrowing Date, in the case of Offshore Rate Loans; and (ii) 9:00
a.m. (San Francisco time) on the requested Borrowing Date, in the case of Base
Rate Loans, specifying:
(A) the amount of the Borrowing, which
shall be in an aggregate minimum amount of $2,000,000 in the
case of Offshore Rate Loans and $1,000,000 in the case of Base
Rate Loans or any multiple of $100,000 in excess thereof;
(B) the requested Borrowing Date, which
shall be a Business Day;
(C) the Type of Loans comprising the
Borrowing; and
(D) the duration of the Interest Period
applicable to such Loans included in such notice;
provided, however, that with respect to the Borrowing to be made on the Closing
Date, the Notice of Borrowing shall be delivered to the Agent not later than
9:00 a.m. (San Francisco time) on the Closing Date and such Borrowing will
consist of Base Rate Loans only; and further provided that if so requested by
the Agent, all Borrowings during the first 60 days following the Closing Date
shall have the same Interest Period and shall be Offshore Rate Loans for
Interest Periods of one month or, at the Company's option, Base Rate Loans.
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<PAGE> 45
(b) The Agent will promptly notify each Lender of its
receipt of any Notice of Borrowing and of the amount of such Lender's Pro Rata
Share of that Borrowing.
(c) Each Lender will make the amount of its Pro Rata
Share of each Borrowing available to the Agent for the account of the Company
at the Agent's Payment Office by 11:00 a.m. (San Francisco time) on the
Borrowing Date requested by the Company in funds immediately available to the
Agent. The proceeds of all such Loans will then be made available to the
Company by the Agent at such office by crediting the account of the Company on
the books of BofA with the aggregate of the amounts made available to the Agent
by the Lenders and in like funds as received by the Agent.
(d) After giving effect to any Borrowing, unless the
Agent shall otherwise consent, there may not be more than eight different
Interest Periods in effect.
2.04 Conversion and Continuation Elections. (a) The Company may,
upon irrevocable written notice to the Agent in accordance with subsection
2.04(b):
(i) elect, as of any Business Day, in
the case of Base Rate Loans, or as of the last day of the applicable
Interest Period, in the case of Offshore Rate Loans, to convert any
such Loans (or any part thereof in an amount not less than $2,000,000,
or that is in an integral multiple of $100,000 in excess thereof) into
Loans of any other Type; or
(ii) elect, as of the last day of the
applicable Interest Period, to continue any Loans having Interest
Periods expiring on such day (or any part thereof in an amount not
less than $2,000,000, or that is in an integral multiple of $100,000
in excess thereof);
provided, that if at any time the aggregate amount of Offshore Rate Loans in
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $2,000,000, such Offshore Rate Loans shall
automatically convert into Base Rate Loans, and on and after such date the
right of the Company to continue such Loans as, and convert such Loans into,
Offshore Rate Loans shall terminate.
(b) The Company shall deliver a Notice of
Conversion/Continuation to be received by the Agent not later than 9:00 a.m.
(San Francisco time) at least (i) three Business Days in advance of the
Conversion/Continuation Date, if the Loans are to be converted into or
continued as Offshore Rate Loans; and (ii) one Business Day in advance of the
Conversion/Continuation Date, if the Loans are to be converted into Base Rate
Loans, specifying:
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<PAGE> 46
(A) the proposed Conversion/Continuation
Date;
(B) the aggregate amount of Loans to be
converted or continued;
(C) the Type of Loans resulting from the
proposed conversion or continuation; and
(D) other than in the case of
conversions into Base Rate Loans, the duration of the
requested Interest Period.
(c) If upon the expiration of any Interest Period
applicable to Offshore Rate Loans, the Company has failed to select timely a
new Interest Period to be applicable to such Offshore Rate Loans, the Company
shall be deemed to have elected an Interest Period of one month for such
Offshore Rate Loans effective as of the expiration date of such Interest
Period.
(d) The Agent will promptly notify each Lender of its
receipt of a Notice of Conversion/Continuation, or, if no timely notice is
provided by the Company, the Agent will promptly notify each Lender of the
details of any automatic conversion. All conversions and continuations shall
be made ratably according to the respective outstanding principal amounts of
the Loans with respect to which the notice was given held by each Lender.
(e) Unless the Majority Lenders otherwise consent, during
the existence of a Default or Event of Default, the Company may not elect to
have a Revolving Loan or Term Loan converted into or continued as an Offshore
Rate Loan.
(f) After giving effect to any conversion or continuation
of Loans, unless the Agent shall otherwise consent, there may not be more than
eight different Interest Periods in effect.
2.05 Voluntary Termination or Reduction of Commitments. The
Company may, upon not less than five Business Days' prior notice to the Agent,
(a) terminate all (and not less than all) of the Commitments prior to the
Closing Date, and (b) terminate the Term Loan Commitment and the Revolving
Commitments, or from time to time permanently reduce the Term Loan Commitments
and/or the Revolving Commitments by an aggregate minimum amount of $3,000,000
or any multiple of $100,000 in excess thereof; unless, after giving effect
thereto and to any prepayments of Loans made on the effective date thereof, (a)
the Effective Amount of all Term Loans would exceed the Term Loan Commitments
then in effect (b) the Effective Amount of all Revolving Loans and L/C
Obligations together would exceed the amount of the Revolving Loan Commitments
then in effect, or (c) the Effective Amount of all L/C Obligations then
outstanding would exceed the L/C
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<PAGE> 47
Commitment then in effect. Once terminated or reduced in accordance with this
Section, the Commitments may not be increased. Any termination or reduction of
the Commitments shall be applied to each Lender according to its Pro Rata
Share. All accrued commitment fees to, but not including the effective date of
any reduction or termination of Commitments, shall be paid on the effective
date of such reduction or termination.
2.06 Optional Prepayments. Subject to Section 4.04, the Company
may, at any time or from time to time, upon not less than three Business Days'
irrevocable notice (in the case of Offshore Rate Loans) or one Business Day's
irrevocable notice (in the case of Base Rate Loans) to the Agent, ratably
prepay Revolving Loans in whole or in part, in minimum amounts of $2,000,000
(in the case of Offshore Rate Loans) or $1,000,000 (in the case of Base Rate
Loans) or in each case any multiple of $1,000,000 in excess thereof and ratably
prepay Term Loans in whole or in part, in minimum amounts of $2,000,000 or any
multiple of $1,000,000 in excess thereof; provided that the Company may not
prepay any Term Loans under this Section 2.06 unless after giving effect to
such prepayment no Default or Event of Default then exists or would occur as a
result of such prepayment. Such notice of prepayment shall specify the date
and amount of such prepayment and the Type(s) of Loans to be prepaid. The
Agent will promptly notify each Lender of its receipt of any such notice, and
of such Lender's Pro Rata Share of such prepayment. If such notice is given by
the Company, the Company shall make such prepayment and the payment amount
specified in such notice shall be due and payable on the date specified
therein, together with accrued interest to each such date on the amount prepaid
and any amounts required pursuant to Section 4.04. Optional prepayments of
Term Loans made prior to the Draw Period Termination Date shall be applied to
reduce the outstanding principal amount of the Term Loans. Optional
prepayments of Term Loans made after the Draw Period Termination Date shall be
applied to reduce the installments of principal set forth in Section 2.08(a)
(as such installments may have been previously reduced) on a pro rata basis.
2.07 Mandatory Prepayments of Loans. (a) Asset Dispositions;
Events of Loss. If the Company or any Subsidiary shall at any time or from
time to time make or agree to make a Disposition or shall suffer an Event of
Loss resulting in aggregate Net Proceeds in excess of $500,000 in any fiscal
year of the Company, then (i) the Company shall promptly notify the Agent of
such proposed Disposition or Event of Loss (including the amount of the
estimated Net Proceeds to be received by the Company or such Subsidiary in
respect thereof) and (ii) promptly upon, and in no event later than five days
after, receipt by the Company or the Subsidiary of the Net Proceeds of such
Disposition or Event of Loss, the Company shall prepay the Term Loans in
accordance with Subsection 2.07(c) in an aggregate amount equal to 100% of the
amount of such Net Proceeds in the case of a
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Disposition and in an aggregate amount equal to 100% of such Net Proceeds in
the case of an Event of Loss; provided in the case of each Disposition and
Event of Loss, if the Company states in its notice of such event that the
Company or the applicable Subsidiary intends to reinvest, within 90 days of the
applicable Disposition or receipt of Net Proceeds from an Event of Loss, the
Net Proceeds thereof in assets similar to the assets which were subject to such
Disposition or Event of Loss, then the Company shall not be required to make a
mandatory prepayment under this subsection 2.07(a) in respect of such Net
Proceeds to the extent such Net Proceeds are actually reinvested in such
similar assets within a 180-day period; provided, that as a result of giving
effect to such reinvestment no Default or Event of Default then exists or would
occur as a result of such reinvestment. Promptly after the end of such 180-day
period, the Company will notify the Agent whether it has reinvested such Net
Proceeds in such similar assets, and to the extent such Net Proceeds have not
been so reinvested, the Company will promptly prepay the Term Loans in the
amount of such Net Proceeds not so reinvested.
(b) Equity Issuance. If after the Closing Date the
Company or Holdings shall issue new common or preferred equity, other than
common stock issued in connection with the exercise of employee stock options
and other than equity securities issued in connection with Acquisitions, the
Company shall promptly notify the Agent of the estimated Net Issuance Proceeds
of such issuance to be received by the Company in respect thereof. Promptly
upon, and in no event later than five days after, receipt by the Company of Net
Issuance Proceeds of such issuance, the Company shall prepay the Term Loans in
an aggregate amount equal to 50% of the amount of such Net Issuance Proceeds.
(c) Application of Mandatory Prepayments. All
prepayments of Term Loans required by subsections (a) and (b) above shall be
applied to reduce the outstanding principal amount thereof and prepayments made
after the Draw Period Termination Date shall be applied as follows: 50% of each
such prepayment shall be applied to reduce the installments of principal set
forth in subsection 2.08(a) (as such installments may have been previously
reduced) on a pro rata basis and 50% of each such prepayment shall be applied
to reduce the installments of principal set forth in subsection 2.08(a) (as
such installments may have been previously reduced) in the inverse order of the
maturity thereof.
(d) General. Any prepayments pursuant to subsections
2.07(a) or (b) shall be applied first to any Base Rate Loans then outstanding
and then to Offshore Rate Loans with the shortest Interest Periods remaining;
provided, however, that if the amount of Base Rate Loans then outstanding is
not sufficient to satisfy the entire prepayment requirement, the Company may,
at its option, place any amounts which it would otherwise be required to use to
prepay Offshore Rate Loans on a day other than the last
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<PAGE> 49
day of the Interest Period therefor in an interest-bearing account pledged to
the Agent for the benefit of the Lenders until the end of such Interest Period
at which time such pledged amounts will be applied to prepay such Offshore Rate
Loans. The Company shall pay, together with each prepayment under subsections
2.07(a) or (b), accrued interest on the amount prepaid and any amounts required
pursuant to Section 4.04.
(e) Clean Down. The Company shall ensure that for at
least 30 consecutive days during each period beginning each December 31 and
ending the following March 31, the sum of the Effective Amount of all Revolving
Loans plus the Effective Amount of all L/C Obligations does not exceed the
Revolving Clean-Down Amount.
2.08 Repayment.
(a) Scheduled Payments of Term Loans. The Company shall
make principal payments on the aggregate amount of the Term Loans that is
outstanding on the Draw Period Termination Date, in installments on the dates
set forth below, the amount of each such installment being equal to the
percentage shown for the applicable repayment date of the aggregate amount of
the Term Loans outstanding on the Draw Period Termination Date:
<TABLE>
<CAPTION>
Date Percentage
------ ----------
<S> <C>
December 31, 1999 4.25%
March 31, 2000 4.25%
June 30, 2000 4.25%
September 30, 2000 4.25%
December 31, 2000 4.25%
March 31, 2001 4.25%
June 30, 2001 4.50%
Term Loan Final Maturity Date 70.00%
</TABLE>
; provided that the scheduled installments of principal of the Term Loans
determined as set forth above shall be reduced in connection with any voluntary
or mandatory prepayments of the Term Loans in accordance with Sections 2.06 and
2.07; and provided, further that the Term Loans and all other amounts owed
hereunder with respect to the Term Loans shall be paid in full no later than
the Term Loan Final Maturity Date, and the final installment payable by the
Company in respect of the Term Loans on such date shall be in an amount, if
such amount is different from that specified above, sufficient to repay all
amounts owing by the Company under this Agreement with respect to the Term
Loans, and provided further that the Term Loan Amortization Dates set forth
above are subject to extension pursuant to Section 2.16.
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<PAGE> 50
(b) The Revolving Credit. The Company shall repay to the
Lenders on the Revolving Termination Date the aggregate principal amount of
Revolving Loans outstanding on such date.
2.09 Interest.
(a) Subject to subsection 2.09(d), the Term Loans shall
bear interest on the outstanding principal amount thereof from the applicable
Borrowing Date at a rate per annum equal to the Offshore Rate plus the Offshore
Rate Margin or the Base Rate plus the Base Rate Margin, as the case may be (and
subject to the Company's right to convert to another Type of Loan under Section
2.04).
(b) Subject to subsection 2.09(d), each Revolving Loan
shall bear interest on the outstanding principal amount thereof from the
applicable Borrowing Date at a rate per annum equal to the Offshore Rate plus
the Offshore Rate Margin or the Base Rate plus the Base Rate Margin, as the
case may be (and subject to the Company's right to convert to other Types of
Loans under Section 2.04).
(c) Interest on each Loan shall be paid in arrears on
each Interest Payment Date. Interest shall also be paid on the date of any
prepayment of Loans under Section 2.06 or 2.07 for the portion of the Loans so
prepaid and upon payment (including prepayment) in full thereof and, during the
existence of any Event of Default, interest shall be paid on demand of the
Agent at the request or with the consent of the Majority Lenders.
(d) Notwithstanding subsections (a) and (b) of this
Section and Section 2.04, while any Event of Default exists or after
acceleration, the Company shall pay interest (after as well as before entry of
judgment thereon to the extent permitted by law) on the principal amount of all
outstanding Obligations, at a rate per annum which is determined by adding 2%
per annum to the Offshore Rate plus the Offshore Rate Margin or the Base Rate
plus the Base Rate Margin, as applicable, then in effect for such Loans and
fees and, in the case of Obligations not subject to the Offshore Rate Margin or
the Base Rate Margin, at a rate per annum equal to the rate per annum otherwise
applicable thereto plus 2%; provided, however, that, on and after the
expiration of any Interest Period applicable to any Term Loan or Revolving Loan
that is an Offshore Rate Loan outstanding on the date of occurrence of such
Event of Default or acceleration, the principal amount of such Loan shall,
during the continuation of such Event of Default or after acceleration, bear
interest at a rate per annum equal to the Base Rate plus the Base Rate Margin
plus 2%, and provided, further, that in the absence of acceleration, any
adjustments pursuant to this subsection 2.09(d) shall be made at the election
of the Majority Lenders and with written notice to the Company.
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(e) Anything herein to the contrary notwithstanding, the
obligations of the Company to any Lender hereunder shall be subject to the
limitation that payments of interest shall not be required for any period for
which interest is computed hereunder, to the extent (but only to the extent)
that contracting for or receiving such payment by such Lender would be contrary
to the provisions of any law applicable to such Lender limiting the highest
rate of interest that may be lawfully contracted for, charged or received by
such Lender, and in such event the Company shall pay such Lender interest at
the highest rate permitted by applicable law.
2.10 Fees. (a) Facility Underwriting Fee; Agency Fee. The
Company shall pay a facility underwriting fee to BofA and BARS for BofA and
BARS's own account, a portion of which shall be distributed by BARS to the
Lenders in accordance with separate agreements between each Lender and BARS,
and shall pay an agency fee to the Agent for the Agent's own account, as
required by the letter agreement ("Fee Letter") between the Company, BofA and
BARS dated September 11, 1997.
(b) Commitment Fees. (i) Revolving Commitments. The
Company shall pay to the Agent for the account of each Lender having a
Revolving Loan Commitment a commitment fee calculated at a rate per annum equal
to the Commitment Fee Rate on the average daily unused portion of such Lender's
Revolving Loan Commitment, computed on a quarterly basis in arrears on the last
Business Day of each calendar quarter based upon the daily utilization for that
quarter as calculated by the Agent. For purposes of calculating utilization
under this subsection, the Revolving Loan Commitments shall be deemed used to
the extent of the Effective Amount of Revolving Loans then outstanding, plus
the Effective Amount of L/C Obligations then outstanding. Such commitment fee
shall accrue from the Closing Date to the Revolving Termination Date and shall
be due and payable quarterly in arrears on the last Business Day of each March,
June, September and December commencing on December 31, 1997 through the
Revolving Termination Date, with the final payment to be made on the Revolving
Termination Date; provided that, in connection with any reduction or
termination of Commitments under Section 2.05, the accrued commitment fee
calculated for the period ending on such date shall also be paid on the date of
such reduction or termination, with the following quarterly payment being
calculated on the basis of the period from such reduction or termination date
to such quarterly payment date. The commitment fees provided in this
subsection shall accrue at all times after the above-mentioned commencement
date, including at any time during which one or more conditions in Article V
are not met.
(ii) Term Loan Commitments. The Company shall pay
to the Agent for the account of each Lender having a Term Loan Commitment a
commitment fee calculated at a rate per annum equal to the Commitment Fee Rate
on the average daily unused portion of
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such Lender's Term Loan Commitment, computed on a quarterly basis in arrears on
the last Business Day of each calendar quarter based upon the daily utilization
for that quarter as calculated by the Agent. Each Lender's Term Loan
Commitment shall be deemed to be used at the time a Term Loan is made by such
Lender, and such Term Loan Commitment shall not be reinstated upon prepayment,
whether optional or mandatory, of such Term Loan. Such commitment fee shall
accrue from the Closing Date to the Draw Period Termination Date and shall be
due and payable quarterly in arrears on the last Business Day of each March,
June, September and December commencing on December 31, 1997 through the Draw
Period Termination Date, with the final payment to be made on the Revolving
Termination Date; provided that, in connection with any reduction or
termination of Commitments under Section 2.05, the accrued commitment fee
calculated for the period ending on such date shall also be paid on the date of
such reduction or termination, with the following quarterly payment being
calculated on the basis of the period from such reduction or termination date
to such quarterly payment date. The commitment fees provided in this
subsection shall accrue at all times after the above- mentioned commencement
date, including at any time during which one or more conditions in Article V
are not met.
2.11 Computation of Fees and Interest. (a) All computations of
fees and computations of interest based on the Offshore Rate shall be made on
the basis of a 360-day year and actual days elapsed (which results in more
interest being paid than if computed on the basis of a 365-day year). All
computations of interest based on the Base Rate shall be made on the basis of a
365 or 366-day year, as applicable, and actual days elapsed. Interest and fees
shall accrue during each period during which interest or such fees are computed
from the first day thereof to the last day thereof.
(b) Each determination of an interest rate or fee by the
Agent shall be presumed to be correct unless within a reasonable period of time
the Company or any Lender establishes that an error has been made.
(c) The Reference Lender shall use its best efforts to
furnish quotations of rates to the Agent as contemplated hereby.
2.12 Payments by the Company. (a) All payments to be made by the
Company shall be made without set-off, recoupment or counterclaim. Except as
otherwise expressly provided herein, all payments by the Company shall be made
to the Agent for the account of the Lenders at the Agent's Payment Office, and
shall be made in dollars and in immediately available funds, no later than
10:00 a.m. (San Francisco time) on the date specified herein. The Agent will
promptly distribute to each Lender its Pro Rata Share (or other applicable
share as expressly provided herein) of such payment in like funds as received.
Any payment
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received by the Agent later than 10:00 a.m. (San Francisco time) shall be
deemed to have been received on the following Business Day and any applicable
interest or fee shall continue to accrue.
(b) Subject to the provisions set forth in the definition
of "Interest Period" herein, whenever any payment is due on a day other than a
Business Day, such payment shall be made on the following Business Day, and
such extension of time shall in such case be included in the computation of
interest or fees, as the case may be.
(c) Unless the Agent receives notice from the Company
prior to the date on which any payment is due to the Lenders that the Company
will not make such payment in full as and when required, the Agent may assume
that the Company has made such payment in full to the Agent on such date in
immediately available funds and the Agent may (but shall not be so required),
in reliance upon such assumption, distribute to each Lender on such due date an
amount equal to the amount then due such Lender. If and to the extent the
Company has not made such payment in full to the Agent, each Lender shall repay
to the Agent on demand such amount distributed to such Lender, together with
interest thereon at the Federal Funds Rate for each day from the date such
amount is distributed to such Lender until the date repaid.
2.13 Payments by the Lenders to the Agent. (a) Unless the Agent
receives notice from a Lender on or prior to the Closing Date or, with respect
to any Borrowing after the Closing Date, at least one Business Day prior to the
date of such Borrowing, that such Lender will not make available as and when
required hereunder to the Agent for the account of the Company the amount of
that Lender's Pro Rata Share of the Borrowing, the Agent may assume that each
Lender has made such amount available to the Agent in immediately available
funds on the Borrowing Date and the Agent may (but shall not be so required),
in reliance upon such assumption, make available to the Company on such date a
corresponding amount. If and to the extent any Lender shall not have made its
full amount available to the Agent in immediately available funds and the Agent
in such circumstances has made available to the Company such amount, that
Lender shall on the Business Day following such Borrowing Date make such amount
available to the Agent, together with interest at the Federal Funds Rate for
each day during such period. A notice of the Agent submitted to any Lender
with respect to amounts owing under this subsection (a) shall be conclusive,
absent manifest error. If such amount is so made available, such payment to
the Agent shall constitute such Lender's Loan on the date of Borrowing for all
purposes of this Agreement. If such amount is not made available to the Agent
on the Business Day following the Borrowing Date, the Agent will notify the
Company of such failure to fund and, upon demand by the Agent, the Company
shall pay such amount to the Agent for the Agent's account, together with
interest thereon for each day elapsed since the date of such
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Borrowing, at a rate per annum equal to the interest rate applicable at the
time to the Loans comprising such Borrowing.
(b) The failure of any Lender to make any Loan on any
Borrowing Date shall not relieve any other Lender of any obligation hereunder
to make a Loan on such Borrowing Date, but no Lender shall be responsible for
the failure of any other Lender to make the Loan to be made by such other
Lender on any Borrowing Date.
2.14 Sharing of Payments, Etc. If, other than as expressly
provided elsewhere herein, any Lender shall obtain on account of the
Obligations in its favor any payment (whether voluntary, involuntary, through
the exercise of any right of set-off, or otherwise) in excess of its ratable
share (or other share contemplated hereunder), such Lender shall immediately
(a) notify the Agent of such fact, and (b) purchase from the other Lenders such
participations in the Loans made by them as shall be necessary to cause such
purchasing Lender to share the excess payment pro rata with each of them;
provided, however, that if all or any portion of such excess payment is
thereafter recovered from the purchasing Lender, such purchase shall to that
extent be rescinded and each other Lender shall repay to the purchasing Lender
the purchase price paid therefor, together with an amount equal to such paying
Lender's ratable share (according to the proportion of (i) the amount of such
paying Lender's required repayment to (ii) the total amount so recovered from
the purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered. The Company
agrees that any Lender so purchasing a participation from another Lender may,
to the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off, but subject to Section 10.10) with respect to
such participation as fully as if such Lender were the direct creditor of the
Company in the amount of such participation. The Agent will keep records
(which shall be conclusive and binding in the absence of manifest error) of
participations purchased under this Section and will in each case notify the
Lenders following any such purchases or repayments.
2.15 Security and Guaranties. (a) All Obligations of the Company
and the Guarantors under this Agreement, the Notes and all other Loan Documents
shall be secured in accordance with the Collateral Documents.
(b) All Obligations of the Company under this Agreement,
each of the Notes and all other Loan Documents shall be unconditionally
guaranteed by the Guarantors pursuant to the Guaranties.
2.16 Extension of Revolving Termination Date, Term Loan Final
Maturity Date, Draw Period Termination Date and Term Loan Amortization Dates at
Option of Company.
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(a) Provided that no Event of Default or Default shall
have occurred and be continuing, and subject to the conditions set forth in
this subsection 2.16, the Company shall have the option to request the
extension of the Revolving Termination Date, the Term Loan Final Maturity Date,
the Draw Period Termination Date, the Term Loan Amortization Dates and the
Fixed Charge Coverage Ratio Step Down Dates for a period of one year. The
Company may exercise such option by delivering to the Agent a written notice
(an "Extension Notice") in substantially the form of Exhibit P hereto, no
earlier than 18 months from the Closing Date and no later than 20 months from
the Closing Date. The Agent shall notify each Lender promptly of its receipt
of an Extension Notice. Each Lender shall have the right, in its sole
discretion, to consent or not to consent to such extension, and each Lender
shall notify the Agent within 45 days of its receipt of such notice from the
Agent (or if any such day is not a Business Day, the next succeeding Business
Day) whether it agrees to so extend the Revolving Termination Date, the Term
Loan Final Maturity Date, the Draw Period Termination Date, the Term Loan
Amortization Dates and the Fixed Charge Coverage Ratio Step Down Dates; the
failure by any Lender to make such notification shall be deemed to be a
decision by such Lender not to consent to the extension. The Agent shall
notify the Company and each Lender within 60 days of the receipt by the Agent
of an Extension Notice as to whether or not Lenders holding 100% of the
Commitments and Loans have approved the extension (identifying any Lenders that
have not approved the extension) and, if such Lenders have approved the
extension, upon the giving of such notice by the Agent, the Revolving
Termination Date, the Term Loan Final Maturity Date, the Draw Period
Termination Date, the Term Loan Amortization Dates and the Fixed Charge
Coverage Ratio Step Down Dates shall each be extended automatically by one
year.
(b) The Revolving Termination Date, the Term Loan Final
Maturity Date, the Draw Period Termination Date and the Term Loan Amortization
Dates shall not be extended if any Lender shall not so consent to such
extension.
ARTICLE III
THE LETTERS OF CREDIT
3.01 The Letter of Credit Subfacility. (a) On the terms and
conditions set forth herein (i) the Issuing Lender agrees, (A) from time to
time on any Business Day during the period from the Closing Date to the
Revolving Termination Date to issue Letters of Credit for the account of the
Company, and to amend or renew Letters of Credit previously issued by it, in
accordance with subsections 3.02(c) and 3.02(d), and (B) to honor drafts under
the Letters of Credit; and (ii) the Lenders severally agree to participate in
Letters of Credit Issued for the account of the Company; provided, that the
Issuing Lender shall not be obligated
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to Issue, and no Lender shall be obligated to participate in, any Letter of
Credit if as of the date of Issuance of such Letter of Credit (the "Issuance
Date") (1) the Effective Amount of all L/C Obligations plus the Effective
Amount of all Revolving Loans exceeds the Revolving Loan Commitments, (2) the
participation of any Lender in the Effective Amount of all L/C Obligations plus
the Effective Amount of the Revolving Loans of such Lender exceeds such
Lender's Revolving Loan Commitment, or (3) the Effective Amount of L/C
Obligations exceeds the L/C Commitment. Within the foregoing limits, and
subject to the other terms and conditions hereof, the Company's ability to
obtain Letters of Credit shall be fully revolving, and, accordingly, the
Company may, during the foregoing period, obtain Letters of Credit to replace
Letters of Credit which have expired or which have been drawn upon and
reimbursed.
(b) The Issuing Lender will not Issue any Letter of
Credit if:
(i) The Issuing Lender has actual knowledge that
any order, judgment or decree of any Governmental Authority or
arbitrator shall by its terms purport to enjoin or restrain the
Issuing Lender from Issuing such Letter of Credit, or any Requirement
of Law applicable to the Issuing Lender or any request or directive
(whether or not having the force of law) from any Governmental
Authority with jurisdiction over the Issuing Lender shall prohibit, or
request that the Issuing Lender refrain from, the Issuance of letters
of credit generally or such Letter of Credit in particular or shall
impose upon the Issuing Lender with respect to such Letter of Credit
any restriction, reserve or capital requirement (for which the Issuing
Lender is not otherwise compensated hereunder) not in effect on the
Closing Date, or shall impose upon the Issuing Lender any unreimbursed
loss, cost or expense which was not applicable on the Closing Date and
which the Issuing Lender in good faith deems material to it;
(ii) the Issuing Lender has received written
notice from any Lender, the Agent or the Company, on or prior to the
Business Day prior to the requested date of Issuance of such Letter of
Credit, that one or more of the applicable conditions contained in
Article V is not then satisfied;
(iii) the expiry date of any requested Letter of
Credit is (A) more than 365 days after the date of Issuance, unless
the Required Revolving Lenders have approved such expiry date in
writing, or (B) more than 90 days after the Revolving Termination
Date, unless all of Lenders with a Revolving Loan Commitment have
approved such expiry date in writing;
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(iv) the Issuing Lender has received written
notice that the expiry date of any requested Letter of Credit is prior
to the maturity date of any financial obligation to be supported by
the requested Letter of Credit;
(v) any requested Letter of Credit is denominated
in a currency other than Dollars, does not provide for drafts, or is
not otherwise in form and substance acceptable to the Issuing Lender,
or the Issuance of a Letter of Credit shall violate any applicable
policies of the Issuing Lender; or
(vi) the Issuing Lender has received written
notice that any standby Letter of Credit is for the purpose of
supporting the issuance of any letter of credit by any other Person.
3.02 Issuance, Amendment and Renewal of Letters of Credit. (a)
Each Letter of Credit shall be issued upon the irrevocable written request of
the Company received by the Issuing Lender (with a copy sent by the Company to
the Agent) at least four days (or such shorter time as the Issuing Lender may
agree in a particular instance in its sole discretion) prior to the proposed
date of issuance. Each such request for issuance of a Letter of Credit shall
be by facsimile, confirmed promptly in an original writing, in the form of an
L/C Application, and shall specify in form and detail satisfactory to the
Issuing Lender: (i) the proposed date of issuance of the Letter of Credit
(which shall be a Business Day); (ii) the face amount of the Letter of Credit;
(iii) the expiry date of the Letter of Credit; (iv) the name and address of the
beneficiary thereof; (v) the documents to be presented by the beneficiary of
the Letter of Credit in case of any drawing thereunder; (vi) the full text of
any certificate to be presented by the beneficiary in case of any drawing
thereunder; and (vii) such other matters as the Issuing Lender may require.
(b) At least two Business Days prior to the Issuance of
any Letter of Credit, the Issuing Lender will confirm with the Agent (by
telephone or in writing) that the Agent has received a copy of the L/C
Application or L/C Amendment Application from the Company and, if not, the
Issuing Lender will provide the Agent with a copy thereof. Unless the Issuing
Lender has received notice on or before the Business Day immediately preceding
the date the Issuing Lender is to issue a requested Letter of Credit from the
Agent (A) directing the Issuing Lender not to issue such Letter of Credit
because such issuance is not then permitted under subsection 3.01(a) as a
result of the limitations set forth in clauses (1) through (3) thereof or
subsection 3.01(b)(ii); or (B) that one or more conditions specified in Article
V are not then satisfied; then, subject to the terms and conditions hereof, the
Issuing Lender shall, on the requested date, issue a Letter
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of Credit for the account of the Company in accordance with the Issuing
Lender's usual and customary business practices.
(c) From time to time while a Letter of Credit is
outstanding and prior to the Revolving Termination Date, the Issuing Lender
will, upon the written request of the Company received by the Issuing Lender
(with a copy sent by the Company to the Agent) at least four days (or such
shorter time as the Issuing Lender may agree in a particular instance in its
sole discretion) prior to the proposed date of amendment, amend any Letter of
Credit issued by it. Each such request for amendment of a Letter of Credit
shall be made by facsimile, confirmed promptly in an original writing, made in
the form of an L/C Amendment Application and shall specify in form and detail
satisfactory to the Issuing Lender: (i) the Letter of Credit to be amended;
(ii) the proposed date of amendment of the Letter of Credit (which shall be a
Business Day); (iii) the nature of the proposed amendment; and (iv) such other
matters as the Issuing Lender may require. The Issuing Lender shall be under
no obligation to amend any Letter of Credit if: (A) the Issuing Lender would
have no obligation at such time to issue such Letter of Credit in its amended
form under the terms of this Agreement; or (B) the beneficiary of any such
Letter of Credit does not accept the proposed amendment to the Letter of
Credit. The Agent will promptly notify the Lenders of the receipt by it of any
L/C Application or L/C Amendment Application.
(d) The Issuing Lender and the Lenders agree that, while
a Letter of Credit is outstanding and prior to the Revolving Termination Date,
at the option of the Company and upon the written request of the Company
received by the Issuing Lender (with a copy sent by the Company to the Agent)
at least four days (or such shorter time as the Issuing Lender may agree in a
particular instance in its sole discretion) prior to the proposed date of
notification of renewal, the Issuing Lender shall be entitled to authorize the
renewal of any Letter of Credit issued by it. Each such request for renewal of
a Letter of Credit shall be made by facsimile, confirmed promptly in an
original writing, in the form of an L/C Amendment Application, and shall
specify in form and detail satisfactory to the Issuing Lender: (i) the Letter
of Credit to be renewed; (ii) the proposed date of notification of renewal of
the Letter of Credit (which shall be a Business Day); (iii) the revised expiry
date of the Letter of Credit; and (iv) such other matters as the Issuing Lender
may require. The Issuing Lender shall be under no obligation so to renew any
Letter of Credit if: (A) the Issuing Lender would have no obligation at such
time to issue or amend such Letter of Credit in its renewed form under the
terms of this Agreement; or (B) the beneficiary of any such Letter of Credit
does not accept the proposed renewal of the Letter of Credit. If any
outstanding Letter of Credit shall provide that it shall be automatically
renewed unless the beneficiary thereof receives notice from the Issuing Lender
that such Letter of Credit shall not be renewed,
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and if at the time of renewal the Issuing Lender would be entitled to authorize
the automatic renewal of such Letter of Credit in accordance with this
subsection 3.02(d) upon the request of the Company but the Issuing Lender shall
not have received any L/C Amendment Application from the Company with respect
to such renewal or other written direction by the Company with respect thereto,
the Issuing Lender shall nonetheless be permitted to allow such Letter of
Credit to renew, and the Company and the Lenders hereby authorize such renewal,
and, accordingly, the Issuing Lender shall be deemed to have received an L/C
Amendment Application from the Company requesting such renewal.
(e) The Issuing Lender may, at its election (or as
required by the Agent at the direction of the Required Revolving Lenders),
deliver any notices of termination or other communications to any Letter of
Credit beneficiary or transferee, and take any other action as necessary or
appropriate, at any time and from time to time, in order to cause the expiry
date of a Letter of Credit that provides for automatic renewal to be a date not
later than the Revolving Termination Date.
(f) This Agreement shall control in the event of any
conflict with any L/C-Related Document (other than any Letter of Credit).
(g) The Issuing Lender will also deliver to the Agent,
concurrently or promptly following its delivery of a Letter of Credit, or
amendment to or renewal of a Letter of Credit, to an advising bank or a
beneficiary, a true and complete copy of each such Letter of Credit or
amendment to or renewal of a Letter of Credit.
3.03 Risk Participations, Drawings and Reimbursements. (a)
[Intentionally omitted].
(b) Immediately upon the Issuance of each Letter of
Credit, each Lender shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the Issuing Lender a participation in
such Letter of Credit and each drawing thereunder in an amount equal to the
product of (i) the Pro Rata Share of such Lender, times (ii) the maximum amount
available to be drawn under such Letter of Credit and the amount of such
drawing, respectively. For purposes of subsection 2.01(c), each Issuance of a
Letter of Credit shall be deemed to utilize the Revolving Loan Commitment of
each Lender by an amount equal to the amount of such participation.
(c) In the event of any request for a drawing under a
Letter of Credit by the beneficiary or transferee thereof, the Issuing Lender
will promptly notify the Company. The Company shall reimburse the Issuing
Lender prior to 10:00 a.m. (San Francisco time), on each date that any amount
is paid by the
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Issuing Lender under any Letter of Credit (each such date, an "Honor Date"), in
an amount equal to the amount so paid by the Issuing Lender. In the event the
Company fails to reimburse the Issuing Lender for the full amount of any
drawing under any Letter of Credit by 10:00 a.m. (San Francisco time) on the
Honor Date, the Issuing Lender will promptly notify the Agent and the Agent
will promptly notify each Lender thereof, and the Company shall be deemed to
have requested that Base Rate Loans be made by the Lenders to be disbursed on
the Honor Date under such Letter of Credit, subject to the amount of the
unutilized portion of the Revolving Loan Commitment and subject to the
conditions set forth in Section 5.02. Any notice given by the Issuing Lender
or the Agent pursuant to this subsection 3.03(c) may be oral if promptly
confirmed in writing (including by facsimile); provided that the lack of such a
prompt confirmation shall not affect the conclusiveness or binding effect of
such notice.
(d) Each Lender shall upon any notice pursuant to
subsection 3.03(c) make available to the Agent for the account of the relevant
Issuing Lender an amount in Dollars and in immediately available funds equal to
its Pro Rata Share of the amount of the drawing, whereupon the participating
Lenders shall (subject to subsection 3.03(e)) each be deemed to have made a
Revolving Loan consisting of a Base Rate Loan to the Company in that amount.
If any Lender so notified fails to make available to the Agent for the account
of the Issuing Lender the amount of such Lender's Pro Rata Share of the amount
of the drawing by no later than 12:00 noon (San Francisco time) on the Honor
Date, then interest shall accrue on such Lender's obligation to make such
payment, from the Honor Date to the date such Lender makes such payment, at a
rate per annum equal to the Federal Funds Rate in effect from time to time
during such period. The Agent will promptly give notice of the occurrence of
the Honor Date, but failure of the Agent to give any such notice on the Honor
Date or in sufficient time to enable any Lender to effect such payment on such
date shall not relieve such Lender from its obligations under this Section
3.03.
(e) With respect to any unreimbursed drawing that is not
converted into Revolving Loans consisting of Base Rate Loans to the Company in
whole or in part, because of the Company's failure to satisfy the conditions
set forth in Section 5.02 or for any other reason, the Company shall be deemed
to have incurred from the Issuing Lender an L/C Borrowing in the amount of such
drawing, which L/C Borrowing shall be due and payable on demand (together with
interest) and shall bear interest at a rate per annum equal to the Base Rate
plus 2% per annum, and each Lender's payment to the Issuing Lender pursuant to
subsection 3.03(d) shall be deemed payment in respect of its participation in
such L/C Borrowing and shall constitute an L/C Advance from such Lender in
satisfaction of its participation obligation under this Section 3.03.
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(f) Each Lender's obligation in accordance with this
Agreement to make the Revolving Loans or L/C Advances, as contemplated by this
Section 3.03, as a result of a drawing under a Letter of Credit, shall be
absolute and unconditional and without recourse to the Issuing Lender and shall
not be affected by any circumstance, including (i) any set-off, counterclaim,
recoupment, defense or other right which such Lender may have against the
Issuing Lender, the Company or any other Person for any reason whatsoever; (ii)
the occurrence or continuance of a Default, an Event of Default or a Material
Adverse Effect; or (iii) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing; provided, however, that each
Lender's obligation to make Revolving Loans under this Section 3.03 is subject
to the conditions set forth in Section 5.02.
3.04 Repayment of Participations. (a) Upon (and only upon)
receipt by the Agent for the account of the Issuing Lender of immediately
available funds from the Company (i) in reimbursement of any payment made by
the Issuing Lender under the Letter of Credit with respect to which any Lender
has paid the Agent for the account of the Issuing Lender for such Lender's
participation in the Letter of Credit pursuant to Section 3.03 or (ii) in
payment of interest thereon, the Agent will pay to each Lender, in the same
funds as those received by the Agent for the account of the Issuing Lender, the
amount of such Lender's Pro Rata Share of such funds, and the Issuing Lender
shall receive the amount of the Pro Rata Share of such funds of any Lender that
did not so pay the Agent for the account of the Issuing Lender.
(b) If the Agent or the Issuing Lender is required at any
time to return to the Company, or to a trustee, receiver, liquidator,
custodian, or any official in any Insolvency Proceeding, any portion of the
payments made by the Company to the Agent for the account of the Issuing Lender
pursuant to subsection 3.04(a) in reimbursement of a payment made under the
Letter of Credit or interest or fee thereon, each Lender shall, on demand of
the Agent, forthwith return to the Agent or the Issuing Lender the amount of
its Pro Rata Share of any amounts so returned by the Agent or the Issuing
Lender plus interest thereon from the date such demand is made to the date such
amounts are returned by such Lender to the Agent or the Issuing Lender, at a
rate per annum equal to the Federal Funds Rate in effect from time to time.
3.05 Role of the Issuing Lender. (a) Each Lender and the Company
agree that, in paying any drawing under a Letter of Credit, the Issuing Lender
shall not have any responsibility to obtain any document (other than any sight
draft and certificates expressly required by the Letter of Credit) or to
ascertain or inquire as to the validity or accuracy of any such document or the
authority of the Person executing or delivering any such document.
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(b) No Agent-Related Person nor any of the respective
correspondents, participants or assignees of the Issuing Lender shall be liable
to any Lender for: (i) any action taken or omitted in connection herewith at
the request or with the approval of the Lenders (including the Majority
Lenders); (ii) any action taken or omitted in the absence of gross negligence
or willful misconduct; or (iii) the due execution, effectiveness, validity or
enforceability of any L/C-Related Document.
(c) The Company hereby assumes all risks of the acts or
omissions of any beneficiary or transferee with respect to its use of any
Letter of Credit; provided, however, that this assumption is not intended to,
and shall not, preclude the Company's pursuing such rights and remedies as it
may have against the beneficiary or transferee at law or under any other
agreement. No Agent-Related Person, nor any of the respective correspondents,
participants or assignees of the Issuing Lender, shall be liable or responsible
for any of the matters described in clauses (i) through (vii) of Section 3.06;
provided, however, anything in such clauses to the contrary notwithstanding,
that the Company may have a claim against the Issuing Lender, and the Issuing
Lender may be liable to the Company, to the extent, but only to the extent, of
any direct, as opposed to consequential or exemplary, damages suffered by the
Company which the Company proves were caused by the Issuing Lender's willful
misconduct or gross negligence or the Issuing Lender's willful failure to pay
under any Letter of Credit after the presentation to it by the beneficiary of a
sight draft and certificate(s) strictly complying with the terms and conditions
of a Letter of Credit. In furtherance and not in limitation of the foregoing:
(i) the Issuing Lender may accept documents that appear on their face to be in
order, without responsibility for further investigation, regardless of any
notice or information to the contrary; and (ii) the Issuing Lender shall not be
responsible for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a 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.
3.06 Obligations Absolute. The obligations of the Company under
this Agreement and any L/C-Related Document to reimburse the Issuing Lender for
a drawing under a Letter of Credit, and to repay any L/C Borrowing and any
drawing under a Letter of Credit converted into Revolving Loans, shall be
unconditional and irrevocable, and shall be paid strictly in accordance with
the terms of this Agreement and each such other L/C-Related Document under all
circumstances, including the following:
(i) any lack of validity or enforceability of this
Agreement or any L/C-Related Document;
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(ii) any change in the time, manner or place of
payment of, or in any other term of, all or any of the obligations of
the Company in respect of any Letter of Credit or any other amendment
approved by the Company or waiver of or any consent to departure from
all or any of the L/C-Related Documents;
(iii) the existence of any claim, set-off, defense
or other right that the Company may have at any time against any
beneficiary or any transferee of any Letter of Credit (or any Person
for whom any such beneficiary or any such transferee may be acting),
the Issuing Lender or any other Person, whether in connection with
this Agreement, the transactions contemplated hereby or by the
L/C-Related Documents or any unrelated transaction;
(iv) any draft, demand, certificate 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; or any loss or
delay in the transmission or otherwise of any document required in
order to make a drawing under any Letter of Credit;
(v) any payment by the Issuing Lender under any
Letter of Credit against presentation of a draft or certificate that
does not strictly comply with the terms of any Letter of Credit; or
any payment made by the Issuing Lender under any Letter of Credit to
any Person purporting to be a trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of creditors,
liquidator, receiver or other representative of or successor to any
beneficiary or any transferee of any Letter of Credit, including any
arising in connection with any Insolvency Proceeding;
(vi) any exchange, release or non-perfection of
any collateral, or any release or amendment or waiver of or consent to
departure from any other guarantee, for all or any of the obligations
of the Company in respect of any Letter of Credit; or
(vii) any other circumstance or happening
whatsoever, whether or not similar to any of the foregoing, including
any other circumstance that might otherwise constitute a defense
available to, or a discharge of, the Company or a guarantor.
3.07 Cash Collateral Pledge. Upon (i) the request of the Agent,
(A) if the Issuing Lender has honored any full or partial drawing request on
any Letter of Credit and such drawing has resulted in an L/C Borrowing
hereunder, or (B) if, as of the Revolving Termination Date, any Letters of
Credit may for any reason remain outstanding and partially or wholly undrawn,
or
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(ii) the occurrence of the circumstances described in subsection 3.10 requiring
the Company to Cash Collateralize Letters of Credit, then, the Company shall
immediately Cash Collateralize the Obligations in an amount equal to the L/C
Obligations.
3.08 Letter of Credit Fees. (a) Standby Letters of Credit. The
Company shall pay to the Agent for the ratable account of each of the Lenders
with a Revolving Loan Commitment a letter of credit fee with respect to the
Standby Letters of Credit equal to the Standby L/C Fee Rate, subject to
subsection 2.09(d) (provided that the minimum fee for each Standby Letter of
Credit shall be $500 per annum) in each case on the average daily maximum
amount available to be drawn of the outstanding Standby Letters of Credit,
computed and payable on a quarterly basis in arrears on the last Business Day
of each calendar quarter, commencing December 31, 1997, through the Revolving
Termination Date (or such later date upon which the outstanding Letters of
Credit shall expire), with the final payment to be made on the Revolving
Termination Date (or such later expiration date).
(b) Fronting Fee; Processing Fees. The Company shall pay
to the Issuing Lender for its own account a letter of credit fronting fee for
each Standby Letter of Credit Issued by the Issuing Lender equal to 0.25% of
the face amount (or increased face amount, as the case may be) of such Letter
of Credit. Such Letter of Credit fronting fee shall be due and payable on each
date of Issuance of a Standby Letter of Credit. The Company shall also pay to
the Issuing Lender for its own account, from time to time on demand, the
Issuing Lender's standard processing fees, costs and charges with respect to
Standby Letters of Credit.
(c) Commercial Letters of Credit. The Company shall pay
to the Issuing Lender for its own account from time to time on demand, with
respect to Commercial Letters of Credit the Issuing Lender's normal issuance,
negotiation, presentation, amendment and other processing fees, and other
standard costs and charges, relating to Commercial Letters of Credit as from
time to time in effect. In addition, the Company shall pay to the Agent for
the ratable account of each of the Lenders with a Revolving Loan Commitment a
letter of credit fee with respect to Commercial Letters of Credit equal to 50%
of the Standby L/C Fee Rate, subject to Section 2.09(d), in each case on the
average daily maximum amount available to be drawn on the outstanding
Commercial Letters of Credit, computed and payable on a quarterly basis in
arrears on the last Business Day of each calendar quarter, commencing December
31, 1997, through the Revolving Termination Date (or such later date upon which
the outstanding Letters of Credit shall expire), with the final payment to be
made on the Revolving Termination Date (or such later expiration date).
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3.09 Uniform Customs and Practice. The Uniform Customs and
Practice for Documentary Credits as published by the International Chamber of
Commerce most recently at the time of issuance of any Letter of Credit shall
(unless otherwise expressly provided in the Letters of Credit) apply to the
Letters of Credit.
3.10 Mandatory Prepayments of L/C Obligations. If on any date the
Effective Amount of L/C Obligations exceeds the L/C Commitment, the Company
shall Cash Collateralize on such date the outstanding Letters of Credit in an
amount equal to the excess of the maximum amount then available to be drawn
under the Letters of Credit over the Aggregate L/C Commitment. Subject to
Section 4.04, if on any date after giving effect to any Cash Collateralization
made on such date pursuant to the preceding sentence, the Effective Amount of
all Revolving Loans then outstanding plus the Effective Amount of all L/C
Obligations exceeds the Revolving Loan Commitments, the Company shall
immediately, and without notice or demand, prepay the outstanding principal
amount of the Revolving Loans and L/C Advances by an amount equal to the
applicable excess.
ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY
4.01 Taxes. (a) Any and all payments by the Company to each
Lender or the Agent under this Agreement and any other Loan Document shall be
made free and clear of, and without deduction or withholding for, any Taxes.
In addition, the Company shall pay all Other Taxes.
(b) If the Company shall be required by law to deduct or
withhold any Taxes, Other Taxes or Further Taxes from or in respect of any sum
payable hereunder to any Lender or the Agent, then:
(i) the sum payable shall be increased as
necessary so that, after making all required deductions and
withholdings (including deductions and withholdings applicable to
additional sums payable under this Section), such Lender or the Agent,
as the case may be, receives and retains an amount equal to the sum it
would have received and retained had no such deductions or
withholdings been made;
(ii) the Company shall make such deductions and
withholdings;
(iii) the Company shall pay the full amount
deducted or withheld to the relevant taxing authority or other
authority in accordance with applicable law; and
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(iv) the Company shall also pay to each Lender or
the Agent for the account of such Lender, at the time interest is
paid, Further Taxes in the amount that the respective Lender specifies
as necessary to preserve the after-tax yield the Lender would have
received if such Taxes, Other Taxes or Further Taxes had not been
imposed.
(c) The Company agrees to indemnify and hold harmless
each Lender and the Agent for the full amount of i) Taxes, ii) Other Taxes, and
iii) Further Taxes in the amount that the respective Lender specifies as
necessary to preserve the after-tax yield the Lender would have received if
such Taxes, Other Taxes or Further Taxes had not been imposed, and any
liability (including penalties, interest, additions to tax and expenses)
arising therefrom or with respect thereto, whether or not such Taxes, Other
Taxes or Further Taxes were correctly or legally asserted. Payment under this
indemnification shall be made within 30 days after the date the Lender or the
Agent makes written demand therefor.
(d) Within 30 days after the date of any payment by the
Company of Taxes, Other Taxes or Further Taxes, the Company shall furnish to
each Lender or the Agent the original or a certified copy of a receipt
evidencing payment thereof, or other evidence of payment satisfactory to such
Lender or the Agent.
(e) If the Company is required to pay any amount to any
Lender or the Agent pursuant to subsection (b) or (c) of this Section, then
such Lender shall use reasonable efforts (consistent with legal and regulatory
restrictions) to change the jurisdiction of its Lending Office so as to
eliminate any such additional payment by the Company which may thereafter
accrue, if such change in the sole judgment of such Lender is not otherwise
disadvantageous to such Lender.
(f) Nothing contained in this Section 4.01 shall override
any term or provision of any Specified Swap Contract regarding withholding
taxes relating to Swap Contracts.
4.02 Illegality. (a) If any Lender determines that the
introduction of any Requirement of Law, or any change in any Requirement of
Law, or in the interpretation or administration of any Requirement of Law, has
made it unlawful, or that any central bank or other Governmental Authority has
asserted that it is unlawful, for any Lender or its applicable Lending Office
to make Offshore Rate Loans, then, on notice thereof by the Lender to the
Company through the Agent, any obligation of that Lender to make Offshore Rate
Loans shall be suspended until the Lender notifies the Agent and the Company
that the circumstances giving rise to such determination no longer exist.
(b) If a Lender determines that it is unlawful to
maintain any Offshore Rate Loan, the Company shall, upon its
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receipt of notice of such fact and demand from such Lender (with a copy to the
Agent), prepay in full such Offshore Rate Loans of that Lender then
outstanding, together with interest accrued thereon and amounts required under
Section 4.04, either on the last day of the Interest Period thereof, if the
Lender may lawfully continue to maintain such Offshore Rate Loans to such day,
or immediately, if the Lender may not lawfully continue to maintain such
Offshore Rate Loan. If the Company is required to so prepay any Offshore Rate
Loan, then concurrently with such prepayment, the Company shall borrow from the
affected Lender, in the amount of such repayment, a Base Rate Loan.
(c) If the obligation of any Lender to make or maintain
Offshore Rate Loans has been so terminated or suspended, the Company may elect,
by giving notice to the Lender through the Agent that all Loans which would
otherwise be made by the Lender as Offshore Rate Loans shall be instead Base
Rate Loans.
(d) Before giving any notice to the Agent under this
Section, the affected Lender shall designate a different Lending Office with
respect to its Offshore Rate Loans if such designation will avoid the need for
giving such notice or making such demand and will not, in the judgment of the
Lender, be illegal or otherwise disadvantageous to the Lender.
4.03 Increased Costs and Reduction of Return. (a) If any Lender
determines that, due to either (i) the introduction of or any change (other
than any change by way of imposition of or increase in reserve requirements
included in the calculation of the Offshore Rate) in or in the interpretation
of any law or regulation or (ii) the compliance by that Lender with any
guideline or request from any central bank or other Governmental Authority
(whether or not having the force of law), there shall be any increase in the
cost to such Lender of agreeing to make or making, funding or maintaining any
Offshore Rate Loans, then the Company shall be liable for, and shall from time
to time, upon demand (with a copy of such demand to be sent to the Agent), pay
to the Agent for the account of such Lender, additional amounts as are
sufficient to compensate such Lender for such increased costs.
(b) If any Lender shall have determined that (i) the
introduction of any Capital Adequacy Regulation, (ii) any change in any Capital
Adequacy Regulation, (iii) any change in the interpretation or administration
of any Capital Adequacy Regulation by any central bank or other Governmental
Authority charged with the interpretation or administration thereof, or (iv)
compliance by the Lender (or its Lending Office) or any corporation controlling
the Lender with any Capital Adequacy Regulation, affects or would affect the
amount of capital required or expected to be maintained by the Lender or any
corporation controlling the Lender and (taking into consideration such Lender's
or such corporation's policies with respect to
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capital adequacy and such Lender's desired return on capital) determines that
the amount of such capital is increased as a consequence of its Commitments,
loans, credits or obligations under this Agreement, then, upon demand of such
Lender to the Company through the Agent, the Company shall pay to the Lender,
from time to time as specified by the Lender, additional amounts sufficient to
compensate the Lender for such increase.
4.04 Funding Losses. The Company shall reimburse each Lender and
hold each Lender harmless from any loss or expense which the Lender may sustain
or incur as a consequence of:
(a) the failure of the Company to make on a timely basis
any payment of principal of any Offshore Rate Loan;
(b) the failure of the Company to borrow, continue or
convert a Loan after the Company has given (or is deemed to have given) a
Notice of Borrowing or a Notice of Conversion/Continuation;
(c) the failure of the Company to make any prepayment in
accordance with any notice delivered under Section 2.06;
(d) the prepayment (including pursuant to Section 2.07)
or other payment (including after acceleration thereof) of an Offshore Rate
Loan on a day that is not the last day of the relevant Interest Period; or
(e) the automatic conversion under Section 2.04 of any
Offshore Rate Loan to a Base Rate Loan on a day that is not the last day of the
relevant Interest Period;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Offshore Rate Loans or from fees
payable to terminate the deposits from which such funds were obtained. For
purposes of calculating amounts payable by the Company to the Lenders under
this Section and under subsection 4.03(a), each Offshore Rate Loan made by a
Lender (and each related reserve, special deposit or similar requirement) shall
be conclusively deemed to have been funded at the LIBOR used in determining the
Offshore Rate for such Offshore Rate Loan by a matching deposit or other
borrowing in the interbank eurodollar market for a comparable amount and for a
comparable period, whether or not such Offshore Rate Loan is in fact so funded.
4.05 Inability to Determine Rates. If the Reference Lender
determines that for any reason adequate and reasonable means do not exist for
determining the Offshore Rate for any requested Interest Period with respect to
a proposed Offshore Rate Loan, or that the Offshore Rate applicable pursuant to
subsection 2.09(a) for any requested Interest Period with respect to a proposed
Offshore Rate Loan does not adequately and fairly reflect the
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cost to the Lenders of funding such Loan, the Agent will promptly so notify the
Company and each Lender. Thereafter, the obligation of the Lenders to make or
maintain Offshore Rate Loans, as the case may be, hereunder shall be suspended
until the Agent upon the instruction of the Majority Lenders revokes such
notice in writing. Upon receipt of such notice, the Company may revoke any
Notice of Borrowing or Notice of Conversion/Continuation then submitted by it.
If the Company does not revoke such Notice, the Lenders shall make, convert or
continue the Loans, as proposed by the Company, in the amount specified in the
applicable notice submitted by the Company, but such Loans shall be made,
converted or continued as Base Rate Loans instead of Offshore Rate Loans, as
the case may be.
4.06 Certificates of Lenders. Any Lender claiming reimbursement or
compensation under this Article IV shall deliver to the Company (with a copy to
the Agent) a certificate setting forth in reasonable detail the amount payable
to the Lender hereunder and such certificate shall be conclusive and binding on
the Company in the absence of manifest error.
4.07 Substitution of Lenders. Upon the receipt by the Company of
(a) a claim from any Lender for compensation under Sections 4.01 or 4.03, (b)
notice by any Lender to the Company of any illegality pursuant to Section 4.02
or (c) notice from the Agent pursuant to subsection 2.16(a) that a Lender or
Lenders have not approved an extension of the Revolving Termination Date, the
Term Loan Final Maturity Date, the Draw Period Termination Date and the Loan
Amortization Dates pursuant to subsection 2.16(a) (any such Lender referred to
in clause (a), (b) or (c) being an "Affected Lender"), the Company may: (i)
request one or more of the other Lenders to acquire and assume all of such
Affected Lender's Loans and Commitment and if such Affected Lender or any
Affiliate thereof is a Swap Provider, all Specified Swap Contracts of such
Affected Lender and Affiliate; or (ii) designate a replacement bank or
financial institution (a "Replacement Lender") to acquire and assume all of
such Affected Lender's Loans and Commitment and if such Affected Lender or any
Affiliate thereof is a Swap Provider, all Specified Swap Contracts of such
Affected Lender and Affiliate. Any such designation of a Replacement Lender
under clause (ii) shall be subject to the prior written consent of the Agent
(which consent shall not be unreasonably withheld).
4.08 Survival. The agreements and obligations of the Company in
this Article IV shall survive the payment of all other Obligations.
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ARTICLE V
CONDITIONS PRECEDENT
5.01 Conditions of Initial Credit Extension. The obligation of each
Lender to make its initial Credit Extension hereunder is subject to the
satisfaction of the following conditions:
(a) Documents. The Agent shall have received at or
before the time of Closing on the Closing Date all of the following, in form
and substance satisfactory to the Agent and each Lender, and in sufficient
copies for each Lender:
(i) Credit Agreement and Notes. This Agreement
and the Notes executed by each party thereto;
(ii) Resolutions; Incumbency Certificates.
(A) Copies of the resolutions of the
board of directors of Holdings and the Company, authorizing
this Agreement, the Notes, the other Loan Documents, the
Related Documents and the transactions contemplated hereby and
thereby, certified as of the Closing Date by the Secretary or
an Assistant Secretary of such Person; and
(B) A certificate of the Secretary or
Assistant Secretary of Holdings and the Company, certifying
the names and true signatures of the officers of such Person
authorized to execute, deliver and perform, as applicable,
this Agreement, the Notes, all other Loan Documents and the
Related documents;
(iii) Organization Documents; Good Standing. Each
of the following documents:
(A) the articles or certificate of
incorporation and the bylaws of Holdings and the Company as in
effect on the Closing Date, certified by the Secretary or
Assistant Secretary of such Person as of the Closing Date; and
(B) a good standing certificate for
Holdings and the Company from the Secretary of State (or
similar, applicable Governmental Authority) of its state of
incorporation and each state where such Person is qualified to
do business as a foreign corporation as of a recent date;
(iv) Legal Opinions.
(A) an opinion of Dorsey & Whitney LLP,
counsel to Holdings and the Company and addressed to
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the Agent and the Lenders, substantially in the form of
Exhibit N; and
(B) a favorable opinion of O'Melveny &
Myers LLP, special counsel to the Agent, substantially in the
form of Exhibit O.
(v) Payment of Fees. Evidence of payment by the
Company of all accrued and unpaid fees, costs and expenses to the
extent then due on the Closing Date and payable on the date of the
Initial Credit Extension (provided that such payment shall not be
later than October 31, 1997), together with Attorney Costs of BofA to
the extent invoiced prior to or on the Closing Date, plus such
additional amounts of Attorney Costs as shall constitute BofA's
reasonable estimate of Attorney Costs incurred or to be incurred by it
through the closing proceedings (provided that such estimate shall not
thereafter preclude final settling of accounts between the Company and
BofA); including any such costs, fees and expenses arising under or
referenced in Sections 2.10 and 11.04;
(vi) Guaranties and Collateral Documents. The
Holdings Guaranty and the Collateral Documents, executed by Holdings
and the Company, as applicable, in appropriate form for recording,
where necessary, together with:
(A) executed copies of all UCC-l
financing statements and trademark filings in proper form for
filing or recording to perfect the security interests of the
Agent for the benefit of the Lenders;
(B) written advice relating to such
Liens and judgment searches as the Agent shall have requested,
and such termination statements or other documents as may be
necessary to confirm that the assets of Holdings and the
Company are subject to no other Liens in favor of any Persons
(other than Permitted Liens);
(C) all certificates and instruments
representing the Pledged Collateral and stock transfer powers
executed in blank, except for the share certificate of the
Company held by Churchill Capital Partners II, which shall be
delivered no later than October 31, 1997;
(D) evidence that all other actions
necessary or, in the reasonable opinion of the Agent,
desirable to perfect and protect the first priority security
interest created by the Collateral Documents have been taken;
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(E) funds sufficient to pay any filing
or recording tax in connection with any and all UCC-1
financing statements; and
(F) evidence that all other actions
necessary or, in the reasonable opinion of the Agent,
desirable to perfect and protect the first priority Lien
created by the Collateral Documents have been taken;
(vii) Evidence of Insurance. Instruments or
documents evidencing insurance coverage in accordance with Section
7.06;
(viii) Environmental Questionnaire. A completed
environmental questionnaire completed by the Company with respect to
any real property owned or leased by the Company or any of its
Subsidiaries dated as of a recent date prior to the Closing Date,
showing among other things, that the status of such real property and
the operations thereon are in material compliance with all
Environmental Laws;
(ix) Certificate. A certificate signed by a
Responsible Officer of each of Holdings and the Company dated as of
the Closing Date, stating that:
(A) the representations and warranties
contained in Article VI are true and correct on and as of such
date, as though made on and as of such date; and
(B) no Default or Event of Default
exists or would result from the initial Borrowing.
(x) Other Documents. Such other approvals,
opinions, documents or materials as the Agent or any Lender may
request.
(b) No Material Adverse Effect. Since March 31, 1997, no
Material Adverse Effect (in the sole opinion of the Majority Lenders) shall
have occurred.
(c) Corporate and Capital Structure, Ownership, Tax
Structure, Management, Contracts, Etc.
(i) Corporate Structure. The corporate
organizational structure of Holdings and the Company, both before and
after giving effect to the Recapitalization, shall be satisfactory to
the Agent and the Majority Lenders;
(ii) Capital Structure and Ownership. The capital
structure and ownership of Holdings and the Company, after
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giving effect to the Recapitalization, shall be satisfactory to the
Agent and the Majority Lenders; and
(iii) Tax Structure. The tax structure of Holdings
and the Company, after giving effect to the Recapitalization, shall be
reasonably satisfactory to the Agent and the Majority Lenders;
(iv) Management. The management and management
structure of Holdings and the Company shall be satisfactory to the
Agent and the Majority Lenders;
(v) Contracts and Plans. The Agent shall have
received copies of, and shall be satisfied with the form and substance
of, (A) the KRG Transaction Advisory Agreement, (B) any and all
employment contracts with senior management of Holdings and/or the
Company, (C) documentation related to the change of the Company's name
from White Cap Industries, Inc. and the designation of any trade names
to be used by the Company in any jurisdiction, (D) the Company's 1997
Long-Term Equity Incentive Plan, and (E) all other material contracts
of Holdings and/or the Company; and
(vi) Schedule of Leases. The Agent shall have
received a schedule setting forth in reasonable detail a description
of all capital leases and operating leases of the Company in effect on
the Closing Date.
(d) Termination of Existing Credit Agreements. At or
before the time of Closing, Holdings and the Company shall have (i) repaid in
full all Indebtedness outstanding under the Existing Credit Agreements, (ii)
terminated any commitments to lend or make other extensions of credit
thereunder, and (iii) obtained an enforceable termination agreement in form and
substance satisfactory to the Agent providing for the immediate termination and
release of all Liens securing such Indebtedness under the Existing Credit
Agreements upon the payment referred to in clause (i) above.
(e) Consummation of IPO. At or before the time of
Closing, Holdings shall have received at least $50,000,000 in Net Issuance
Proceeds from the sale by Holdings of its common stock pursuant to the IPO and
Holdings shall have contributed at least $50,000,000 of such Net Issuance
Proceeds to the Company as equity, and there shall have been no material
modifications to the statements made in the Registration Statement on Form S-1
filed with the SEC on August 15, 1997 which are, in the reasonable opinion of
the Majority Lenders, adverse to the Lenders.
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(f) Related Agreements.
(i) Approval of Related Agreements. Each of the
Related Agreements shall be reasonably satisfactory in form and
substance to the Agent and the Majority Lenders; and
(ii) Related Agreements in Full Force and Effect.
The Agent shall have received a fully executed or conformed copy of
each Related Agreement and any documents executed in connection
therewith, and each Related Agreement shall be in full force and
effect and no provision thereof shall have been modified or waived in
any respect determined by the Agent to be material, in each case
without the consent of Agent and the Majority Lenders.
(g) Necessary Governmental Authorizations, Etc. Holdings
and the 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 Recapitalization, the other transactions contemplated by
the Loan Documents and the Related Agreements, and the continued operation of
the business conducted by the Company and its Subsidiaries in substantially the
same manner as conducted prior to the consummation of the Recapitalization, 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 Recapitalization 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.
(h) Financial Statements; Pro Forma Balance Sheet and
Projections. On or before the Closing Date, the Lenders shall have received
from the Company (i) audited financial statements of Holdings and its
Subsidiaries for the fiscal year ended March 31, 1997, consisting of a balance
sheet and the related consolidated statement of income, shareholders' equity
and cash flows for such fiscal year, (ii) unaudited financial statements of
Holdings and its Subsidiaries as at June 30, 1997, consisting of a balance
sheet and the related consolidated statements of income, shareholders' equity
and cash flows for the three-month and six-month periods ending on such dates,
all in reasonable detail and certified by the chief financial officer of
Holdings that they fairly present the financial condition of Holdings 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
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adjustments, (iii) pro forma consolidated balance sheets of Holdings and its
Subsidiaries as at the Closing Date, prepared in accordance with GAAP and
reflecting the consummation of the Recapitalization, the related financings and
the other transactions contemplated by the Loan Documents and the Related
Agreements, (iv) current financial projections of Holdings and its
Subsidiaries, and (v) a detailed listing of all material contingent
liabilities; each of which financial statements, pro forma balance sheets,
projections and listing shall be in form and substance reasonably satisfactory
to the Agent and the Majority Lenders.
(i) Since September 11, 1997, there shall have been no
material adverse change in the syndication markets for credit facilities
similar in nature to the credit facilities provided under this Agreement and
there shall not have occurred and be continuing a material disruption of or
material adverse change in financial, banking or capital markets that would
have an adverse effect on such syndication market, in each case as determined
by BARS in its sole discretion.
5.02 Conditions to All Credit Extensions. The obligation of each
Lender to make any Loan to be made by it (including its initial Loan) or to
continue or convert any Loan under Section 2.04 and the obligation of the
Issuing Lender to Issue any Letter of Credit (including the initial Letter of
Credit) is subject to the satisfaction of the following conditions precedent on
the relevant Borrowing Date or Conversion/Continuation Date or Issuance Date:
(a) Notice, Application. The Agent shall have received
(with, in the case of the initial Loans only, a copy for each Lender) (i) a
Notice of Borrowing or a Notice of Conversion/Continuation, as applicable, or
(ii) in the case of any Issuance of any Letter of Credit, the Issuing Lender
and the Agent shall have received an L/C Application or L/C Amendment
Application, as required under Section 3.02 or (iii) in the case of any Delayed
Draw Term Loan, (A) a Notice of Borrowing and (B) a Permitted Acquisition
Certificate, certifying that the transaction for which the borrowing is
requested is in compliance with the definition of Permitted Aqcuisition as
provided for in this Agreement;
(b) Continuation of Representations and Warranties. The
representations and warranties in Article VI shall be true and correct on and
as of such Borrowing Date or Conversion/Continuation Date or Issuance Date with
the same effect as if made on and as of such Borrowing Date or
Conversion/Continuation Date or Issuance Date (except to the extent such
representations and warranties expressly refer to an earlier date, in which
case they shall be true and correct as of such earlier date); and
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(c) No Existing Default. No Default or Event of Default
shall exist or shall result from such Borrowing or continuation or conversion
or Issuance.
Each Notice of Borrowing, Notice of Conversion/Continuation, L/C Application
and L/C Amendment Application submitted by the Company hereunder shall
constitute a representation and warranty by the Company hereunder, as of the
date of each such notice and as of each Borrowing Date, Conversion/Continuation
Date, or Issuance Date as applicable, that the conditions in this Section 5.02
are satisfied.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Each of Holdings and the Company jointly and severally represents and
warrants to the Agent and each Lender that:
6.01 Corporate Existence and Power. Each of Holdings, the Company
and its Subsidiaries:
(a) is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation;
(b) has the power and authority and all governmental
licenses, authorizations, consents and approvals to own its assets, carry on
its business and to execute, deliver, and perform its obligations under the
Loan Documents;
(c) is duly qualified as a foreign corporation and is
licensed and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification or license; and
(d) is in compliance with all Requirements of Law;
except, in each case referred to in clause (c) or clause (d), to the extent
that the failure to do so could not reasonably be expected to have a Material
Adverse Effect.
6.02 Corporate Authorization; No Contravention. The execution,
delivery and performance by each Loan Party of this Agreement and each other
Loan Document and Related Agreement to which such Person is party, have been
duly authorized by all necessary corporate action, and do not and will not:
(a) contravene the terms of any of that Person's
Organization Documents;
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(b) conflict with or result in any breach or
contravention of, or the creation of any Lien under, any document evidencing
any Contractual Obligation to which such Person is a party or any order,
injunction, writ or decree of any Governmental Authority to which such Person
or its property is subject; or
(c) violate in any material respect any Requirement of
Law.
6.03 Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority (except for recordings or filings in connection with the
Liens granted to the Agent under the Collateral Documents) is necessary or
required in connection with the execution, delivery or performance by, or
enforcement against, any Loan Party of this Agreement or any other Loan
Document or Related Agreement.
6.04 Binding Effect. This Agreement and each other Loan Document
and Related Agreement to which each Loan Party is a party constitute the legal,
valid and binding obligations of such Person in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of creditors'
rights generally or by equitable principles relating to enforceability.
6.05 Litigation. Except as specifically disclosed in Schedule
6.05, there are no actions, suits, proceedings, claims or disputes pending, or
to the best knowledge of the Company, threatened in writing, at law, in equity,
in arbitration or before any Governmental Authority, against any Loan Party or
its Subsidiaries or any of their respective properties which:
(a) as of the Closing Date, purport to affect or pertain
to this Agreement or any other Loan Document or any Related Agreement, or any
of the transactions contemplated hereby or thereby; or
(b) could reasonably be expected to have a Material
Adverse Effect. No injunction, writ, temporary restraining order or any order
of any nature has been issued by any court or other Governmental Authority
purporting to enjoin or restrain the execution, delivery or performance of this
Agreement or any other Loan Document of Related Agreement, or directing that
the transactions provided for herein or therein not be consummated as herein or
therein provided.
6.06 No Default. No Default or Event of Default exists or would
result from the incurring of any Obligations by the Loan Parties or from the
grant or perfection of the Liens of the Agent and the Lenders on the
Collateral. Neither a Loan Party nor any
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Subsidiary is in default under or with respect to any Contractual Obligation in
any respect which, individually or together with all such defaults, could
reasonably be expected to have a Material Adverse Effect, or that would, if
such default had occurred after the Closing Date, create an Event of Default
under subsection 9.01(e).
6.07 ERISA Compliance.
(a) Each Plan is in compliance in all material respects
with the applicable provisions of ERISA, and the Code. Each Plan which is
intended to qualify under Section 401(a) of the Code has received a favorable
determination letter from the IRS and to the best knowledge of the Company,
nothing has occurred which would cause the loss of such qualification. The
Company and each ERISA Affiliate has made all required contributions to any
Plan subject to Section 412 of the Code, and no application for a funding
waiver or an extension of any amortization period pursuant to Section 412 of
the Code has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of
Company, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan which has resulted or could reasonably be
expected to result in a Material Adverse Effect. There has been no prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan which has resulted or could reasonably be expected to result in a
Material Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably
expected to occur; (ii) no Pension Plan has any Unfunded Pension Liability;
(iii) neither the Company nor any ERISA Affiliate has incurred, or reasonably
expects to incur, any liability under Title IV of ERISA with respect to any
Pension Plan (other than premiums due and not delinquent under Section 4007 of
ERISA); (iv) neither the Company nor any ERISA Affiliate has incurred, or
reasonably expects to incur, any liability (and no event has occurred which,
with the giving of notice under Section 4219 of ERISA, would result in such
liability) under Section 4201 or 4243 of ERISA with respect to a Multiemployer
Plan; and (v) neither the Company nor any ERISA Affiliate has engaged in a
transaction that could be subject to Section 4069 or 4212(c) of ERISA.
6.08 Use of Proceeds; Margin Regulations. The proceeds of the
Loans are to be used solely for the purposes set forth in and permitted by
Section 7.12 and Section 8.07. Neither the Company nor any Subsidiary is
generally engaged in the business of purchasing or selling Margin Stock or
extending credit for the purpose of purchasing or carrying Margin Stock.
6.09 Title to Properties. The Company and each Subsidiary have
good record and marketable title in fee simple to, or valid
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leasehold interests in, all real property necessary or used in the ordinary
conduct of their respective businesses, except for such defects in title as
could not, individually or in the aggregate, have a Material Adverse Effect.
As of the Closing Date, the property of the Company and its Subsidiaries is
subject to no Liens, other than Permitted Liens. No Subsidiary owns any
trademarks or tradenames. Holdings has no assets other than common stock of
the Company and cash and cash equivalents not exceeding $100,000.
6.10 Taxes. Holdings, the Company and their respective
Subsidiaries have filed all Federal and other material tax returns and reports
required to be filed, and have paid all Federal and other material taxes,
assessments, fees and other governmental charges levied or imposed upon them or
their properties, income or assets otherwise due and payable, except those
which are being contested in good faith by appropriate proceedings and for
which adequate reserves have been provided in accordance with GAAP. There is no
proposed tax assessment against Holdings, the Company or any of their
Subsidiaries that would, if made, have a Material Adverse Effect.
6.11 Financial Condition. (a) The audited and unaudited
consolidated financial statements of Holdings and its Subsidiaries, dated
December 31, 1996, March 31, 1997, and June 30, 1997, respectively, and the
related consolidated statements of income or operations, shareholders' equity
and cash flows for the fiscal year and quarters ended on each of such dates:
(i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein, subject in the case of such
unaudited financial statements to ordinary, good faith year end audit
adjustments;
(ii) fairly present the financial condition of
Holdings and its Subsidiaries as of the date thereof and results of
operations for the period covered thereby; and
(iii) except as specifically disclosed in Schedule
6.11, show all material indebtedness and other liabilities, direct or
contingent, of Holdings and its Subsidiaries as of the date thereof,
including liabilities for taxes, material commitments and Contingent
Obligations.
(b) Since March 31 1997, there has been no Material
Adverse Effect.
(c) After giving effect to the Recapitalization, Holdings
has no Indebtedness or other liabilities, direct or contingent, except
liabilities for taxes which are not yet due and payable, liabilities under the
Holdings Guaranty and the
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Holdings Pledge Agreement, and liabilities under the KRG Transaction Advisory
Agreement.
6.12 Environmental Matters. (a) Except as specifically disclosed
in Schedule 6.12, the on-going operations of the Company and each of its
Subsidiaries comply in all respects with all Environmental Laws, except such
non-compliance which would not (if enforced in accordance with applicable law)
result in a Material Adverse Effect.
(b) Except as specifically disclosed in Schedule 6.12,
the Company and each of its Subsidiaries have obtained all material licenses,
permits, authorizations and registrations required under any Environmental Law
("Environmental Permits") and necessary for their respective ordinary course
operations, all such Environmental Permits are in good standing, and the
Company and each of its Subsidiaries are in compliance with all material terms
and conditions of such Environmental Permits.
(c) Except as specifically disclosed in Schedule 6.12,
none of the Company, any of its Subsidiaries or any of their respective present
property or operations, is subject to any outstanding written order from or
agreement with any Governmental Authority, nor subject to any judicial or
docketed administrative proceeding, respecting any Environmental Law,
Environmental Claim or Hazardous Material that could reasonably be expected to
have a Material Adverse Effect.
(d) Except as specifically disclosed in Schedule 6.12,
there are no Hazardous Materials or other conditions or circumstances existing
with respect to any property of the Company or any Subsidiary, or arising from
operations prior to the Closing Date, of the Company or any of its Subsidiaries
that would reasonably be expected to give rise to Environmental Claims that
could reasonably be expected to have a Material Adverse Effect. In addition,
(i) neither the Company nor any Subsidiary has any underground storage tanks
(x) that are not properly registered or permitted under applicable
Environmental Laws, or (y) that are leaking or disposing of Hazardous Materials
off-site, and (ii) the Company and its Subsidiaries have notified all of their
employees of the existence, if any, of any health hazard arising from the
conditions of their employment and have met all notification requirements under
Title III of CERCLA and all other Environmental Laws.
6.13 Collateral Documents. (a) The provisions of each of the
Collateral Documents are effective to create in favor of the Agent for the
benefit of the Lenders, a legal, valid and enforceable first priority security
interest in all right, title and interest of Holdings, the Company and its
Subsidiaries in the collateral described therein.
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(b) All representations and warranties of Holdings, the
Company and any of its Subsidiaries party thereto contained in the Collateral
Documents are true and correct.
6.14 Regulated Entities. None of Holdings, the Company, any Person
controlling Holdings, the Company, or any Subsidiary, is an "Investment
Company" within the meaning of the Investment Company Act of 1940. Neither
Holdings nor the Company is subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce
Act, any state public utilities code, or any other Federal or state statute or
regulation limiting its ability to incur Indebtedness.
6.15 No Burdensome Restrictions. Neither Holdings, the Company nor
any Subsidiary is a party to or bound by any Contractual Obligation, or subject
to any restriction in any Organization Document, or any Requirement of Law,
which could reasonably be expected to have a Material Adverse Effect.
6.16 Copyrights, Patents, Trademarks and Licenses, etc. The
Company or its Subsidiaries own or are licensed or otherwise have the right to
use all of the patents, trademarks, service marks, trade names, copyrights,
contractual franchises, authorizations and other rights that are reasonably
necessary for the operation of their respective businesses, without material
conflict with the rights of any other Person. To the best knowledge of the
Company, no slogan or other advertising device, product, process, method,
substance, part or other material now employed, or now contemplated to be
employed, by the Company or any Subsidiary infringes materially upon any rights
held by any other Person. Except as specifically disclosed in Schedule 6.05,
no claim or litigation regarding any of the foregoing is pending or threatened
in writing, and no patent, invention, device, application, principle or any
statute, law, rule, regulation, standard or code is pending or, to the
knowledge of the Company, proposed, which, in either case, could reasonably be
expected to have a Material Adverse Effect.
6.17 Subsidiaries. Holdings has no Subsidiaries (other than the
Company, which is a direct Wholly-Owned Subsidiary of Holdings) and no equity
investments in any other corporation. As of the Closing Date, the Company has
no Subsidiaries and has no equity investments in any other corporation or
entity other than those specifically disclosed in Schedule 6.17.
6.18 Insurance. Except as specifically disclosed in Schedule 6.18,
the properties of the Company and its Subsidiaries are insured with financially
sound and reputable insurance companies not Affiliates of the Company, in such
amounts, with such deductibles and covering such risks as are customarily
carried by companies engaged in similar businesses and owning similar
properties in localities where the Company or such Subsidiary operates.
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6.19 Solvency. Each of Holdings, the Company and each of its
Material Subsidiaries are Solvent.
6.20 Swap Obligations. Neither the Company nor any of its
Subsidiaries has incurred any outstanding obligations under any Swap Contracts,
other than Permitted Swap Obligations. The Company has undertaken its own
independent assessment of its consolidated assets, liabilities and commitments
and has considered appropriate means of mitigating and managing risks
associated with such matters and has not relied on any Swap Provider or any
Affiliate of any Swap Provider in determining whether to enter into any Swap
Contract.
6.21 Disclosure. No representation or warranty of Holdings or the
Company or any of its Subsidiaries contained in the Confidential Information
Memorandum dated September __, 1997 prepared in connection with the syndication
of the credit facilities evidenced by this Agreement or in any Loan Document or
Related Agreement or in any other document, certificate or written statement
(including the Registration Statement in connection with the IPO) furnished to
the Lenders or prospective Eligible Assignees by or on behalf of Holdings or
the 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 Holdings or the
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 Holdings and the Company to be reasonable
at the time made, it being recognized by the 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 will differ from the
projected results. There are no facts known (or which should upon the
reasonable exercise of diligence be known) to Holdings or the 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 the Lenders and prospective Eligible
Assignees for use in connection with the transactions contemplated hereby,
including without limitation, the Registration Statement on Form S-1 filed in
connection with the IPO.
6.22 Related Agreements.
Holdings and the Company have delivered to the Lenders
complete and correct copies of each Related Agreement and of all exhibits and
schedules thereto.
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ARTICLE VII
AFFIRMATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, or any Loan
or other Obligation shall remain unpaid or unsatisfied, unless the Majority
Lenders waive compliance in writing:
7.01 Financial Statements. The Company shall deliver to the Agent,
in form and detail reasonably satisfactory to the Agent and the Majority
Lenders, with sufficient copies for each Lender:
(a) as soon as available, but not later than 90 days
after the end of each fiscal year (commencing with the fiscal year ended March
31, 1998), a copy of the audited consolidated balance sheet of Holdings and its
Subsidiaries as at the end of such year and the related consolidated statements
of income or operations, shareholders' equity and cash flows for such year,
setting forth in each case in comparative form the figures for the previous
fiscal year, and accompanied by the opinion of a "Big Six" accounting firm or
another nationally-recognized independent public accounting firm ("Independent
Auditor") which report shall state that such consolidated financial statements
present fairly the financial position for the periods indicated in conformity
with GAAP applied on a basis consistent with prior years. Such opinion shall
not contain a "going concern" or like qualification or exception and shall not
be qualified or limited because of a restricted or limited examination by the
Independent Auditor of any material portion of Holdings', the Company's or any
Subsidiary's records; and
(b) as soon as available, but not later than 45 days
after the end of each month (commencing with the month ended September 30,
1997), a copy of the unaudited consolidated balance sheet of Holdings and its
Subsidiaries as of the end of such month and the related consolidated
statements of income, shareholders' equity and cash flows for the period
commencing on the first day and ending on the last day of such month and for
the period commencing on the first day of the then current fiscal year and
ending on the last day of such month, setting forth in each case in comparative
form the figures for the previous year, and certified by a Responsible Officer
as fairly presenting, in accordance with GAAP (subject to ordinary, good faith
year-end audit adjustments), the financial position and the results of
operations of the Company and the Subsidiaries;
(c) as soon as available, but not later than 20 days
after the Closing Date, an unaudited consolidated balance sheet of Holdings and
its Subsidiaries as of the Closing Date after giving effect to the IPO and the
other transactions consummated on the Closing Date, in form and substance
satisfactory to the Agent and the Majority Lenders, certified by a Responsible
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Officer as fairly presenting, in accordance with GAAP (subject to ordinary,
good faith audit adjustments), the financial condition of Holdings and its
Subsidiaries.
7.02 Certificates; Other Information. The Company shall furnish to
the Agent, with sufficient copies for each Lender:
(a) concurrently with the delivery of the financial
statements referred to in subsections 7.01(a) and (b) for each fiscal quarter
end, a Compliance Certificate executed by a Responsible Officer;
(b) promptly, and in any event not later than 10 days
after the sending or filing thereof, copies of all financial statements and
reports that Holdings or the Company sends to its shareholders, and copies of
all financial statements and regular, periodical or special reports (including
Forms 10K, 10Q and 8K) that Holdings or the Company or any Subsidiary may make
to, or file with, the SEC;
(c) promptly, and in any event prior to the beginning of
each fiscal year, an annual budget, including a narrative description of major
assumptions and a capital expenditures budget, in form and substance
satisfactory to the Agent, containing such projected financial information on a
monthly basis for such fiscal year;
(d) as soon as available, but not later than 45 days
after the end of each fiscal quarter (commencing with the fiscal quarter ending
March 31, 1998), a written status report, in form and substance satisfactory to
the Agent, on steps being taken by Holdings, the Company and its Subsidiaries
to correct any "Year 2000" computer problems until such time as the Majority
Lenders indicate that such report is no longer required; and
(e) promptly, such additional information regarding the
business, financial or corporate affairs of Holdings, the Company or any
Subsidiary as the Agent, at the request of any Lender, through the Agent, may
from time to time reasonably request.
7.03 Notices. The Company shall promptly notify the Agent and each
Lender:
(a) of the occurrence of any Default or Event of Default,
and of the occurrence or existence of any event or circumstance that
foreseeably will become a Default or Event of Default;
(b) of (i) any breach or non-performance of, or any
default under, any Contractual Obligation of Holdings, the Company or any of
its Subsidiaries which could result in a Material Adverse Effect; and (ii) any
dispute, litigation,
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investigation, proceeding or suspension which may exist at any time between
Holdings, the Company or any of its Subsidiaries and any Governmental Authority
and which could result in a Material Adverse Effect;
(c) of the commencement of, or any material development
in, any litigation or proceeding affecting Holdings, the Company or any
Subsidiary (i) in which the amount of damages claimed is $500,000 (or its
equivalent in another currency or currencies) or more and not covered by
insurance unless such proceeding is a products liability claim in the ordinary
course of business where the Company is not the manufacturer, in which case
such amount shall be $1,000,000, (ii) in which injunctive or similar relief is
sought and which, if adversely determined, would reasonably be expected to have
a Material Adverse Effect, or (iii) in which the relief sought is an injunction
or other stay of the performance of this Agreement or any Loan Document;
(d) upon, but in no event later than 10 days after,
becoming aware of (i) any and all enforcement, cleanup, removal or other
governmental or regulatory actions instituted, completed or threatened against
Holdings, the Company or any Subsidiary or any of their respective properties
pursuant to any applicable Environmental Laws, (ii) all other Environmental
Claims, and (iii) any environmental or similar condition on any real property
adjoining or in the vicinity of the property of the Company or any Subsidiary
that could reasonably be anticipated to cause such property or any part thereof
to be subject to any restrictions on the ownership, occupancy, transferability
or use of such property under any Environmental Laws, or which, in the case of
(i), (ii) or (iii) could result in a Material Adverse Effect;
(e) of any other litigation or proceeding affecting
Holdings, the Company or any of its Subsidiaries which the Company would be
required to report to the SEC pursuant to the Exchange Act, within four days
after reporting the same to the SEC;
(f) of the occurrence of any of the following events
affecting the Company or any ERISA Affiliate (but in no event more than 10 days
after such event), and deliver to the Agent and each Lender a copy of any
notice with respect to such event that is filed with a Governmental Authority
and any notice delivered by a Governmental Authority to the Company or any
ERISA Affiliate with respect to such event:
(i) an ERISA Event;
(ii) a material increase in the Unfunded Pension
Liability of any Pension Plan;
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(iii) the adoption of, or the commencement of
contributions to, any Plan subject to Section 412 of the Code by the
Company or any ERISA Affiliate; or
(iv) the adoption of any amendment to a Plan
subject to Section 412 of the Code, if such amendment results in a
material increase in contributions or Unfunded Pension Liability.
(g) of any material change in accounting policies or
financial reporting practices by the Company or any of its consolidated
Subsidiaries;
(h) of the entry by the Company into any Specified Swap
Contract, together with the details thereof;
(i) of the occurrence of any default, event of default,
termination event or other event under any Specified Swap Contract that after
the giving of notice, passage of time or both, would permit either counterparty
to such Specified Swap Contract to terminate early any or all trades relating
to such contract; and
(j) upon the request from time to time of the Agent, the
Swap Termination Values, together with a description of the method by which
such amounts were determined, relating to any then-outstanding Swap Contracts
to which the Company or any of its Subsidiaries is party.
Each notice under this Section shall be accompanied by a
written statement by a Responsible Officer setting forth details of the
occurrence referred to therein, and stating what action Holdings, the Company
or any affected Subsidiary proposes to take with respect thereto and at what
time. Each notice under subsection 7.03(a) shall describe with particularity
any and all clauses or provisions of this Agreement or other Loan Document that
have been (or foreseeably will be) breached or violated.
7.04 Preservation of Corporate Existence, Etc. Each of Holdings
and the Company shall, and shall cause each Subsidiary to:
(a) preserve and maintain in full force and effect its
corporate existence and good standing under the laws of its state or
jurisdiction of incorporation;
(b) preserve and maintain in full force and effect all
governmental rights, privileges, qualifications, permits, licenses and
franchises necessary or desirable in the normal conduct of its business except
in connection with transactions permitted by Section 8.03 and sales of assets
permitted by Section 8.02;
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(c) use reasonable efforts, in the ordinary course of
business, to preserve its business organization and goodwill; and
(d) preserve or renew all of its registered patents,
trademarks, trade names and service marks, the non-preservation of which could
reasonably be expected to have a Material Adverse Effect.
7.05 Maintenance of Property. The Company shall maintain, and
shall cause each Material Subsidiary to maintain, and preserve all its property
which is used or useful in its business in good working order and condition,
ordinary wear and tear excepted and make all necessary repairs thereto and
renewals and replacements thereof except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect, except as permitted
by Section 8.02. The Company and each Subsidiary shall use the standard of
care typical in the industry in the operation and maintenance of its
facilities.
7.06 Insurance. In addition to insurance requirements set forth in
the Collateral Documents, the Company shall maintain, and shall cause each of
its Subsidiaries to maintain, with financially sound and reputable independent
insurers, insurance with respect to its properties and business against loss or
damage of the kinds customarily insured against by Persons engaged in the same
or similar business, of such types and in such amounts as are customarily
carried under similar circumstances by such other Persons; including workers'
compensation insurance, public liability and property and casualty insurance in
amounts and coverages not less than those in effect on the date hereof. Upon
request of the Agent or any Lender, the Company shall furnish the Agent, with
sufficient copies for each Lender, at reasonable intervals (but not more than
once per calendar year) a certificate of a Responsible Officer of the Company
(and, if requested by the Agent, any insurance broker of the Company) setting
forth the nature and extent of all insurance maintained by the Company and its
Subsidiaries in accordance with this Section or any Collateral Documents (and
which, in the case of a certificate of a broker, were placed through such
broker).
7.07 Payment of Obligations. Holdings and the Company shall, and
shall cause each Subsidiary to, pay and discharge as the same shall become due
and payable, all their respective obligations and liabilities, including:
(a) all tax liabilities, assessments and governmental
charges or levies upon it or its properties or assets, unless the same are
being contested in good faith by appropriate proceedings and adequate reserves
in accordance with GAAP are being maintained by Holdings, the Company or such
Subsidiary;
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(b) all lawful claims which, if unpaid, would by law
become a Lien upon its property; and
(c) all indebtedness, as and when due and payable, but
subject to any subordination provisions contained in any instrument or
agreement evidencing such Indebtedness.
7.08 Compliance with Laws. Holdings and the Company shall comply,
and shall cause each Subsidiary to comply, in all material respects with all
Requirements of Law of any Governmental Authority having jurisdiction over it
or its business (including the Federal Fair Labor Standards Act), except such
as may be contested in good faith or as to which a bona fide dispute may exist.
7.09 Compliance with ERISA. The Company shall, and shall cause
each of its ERISA Affiliates to: (a) maintain each Plan in compliance in all
material respects with the applicable provisions of ERISA, the Code and other
federal or state law; (b) cause each Plan which is qualified under Section
401(a) of the Code to maintain such qualification; and (c) make all required
contributions to any Plan subject to Section 412 of the Code.
7.10 Inspection of Property and Books and Records. Holdings and
the Company shall maintain and shall cause each Subsidiary to maintain proper
books of record and account, in which full, true and correct entries in
conformity with GAAP consistently applied shall be made of all financial
transactions and matters involving the assets and business of Holdings and the
Company and such Subsidiary. Holdings and the Company shall permit, and shall
cause each Subsidiary to permit, representatives and independent contractors of
the Agent or any Lender to visit and inspect any of their respective
properties, to examine their respective corporate, financial and operating
records, and make copies thereof or abstracts therefrom, and to discuss their
respective affairs, finances and accounts with their respective directors,
officers, and independent public accountants, all at the expense of the Company
and at such reasonable times during normal business hours and as often as may
be reasonably desired, upon reasonable advance notice to the Company; provided,
however, when (i) no Event of Default exists, any inspection of the Company's
properties for purposes of examining the Company's corporate, financial or
operating records shall be conducted at the same time as any such inspection by
the Agent and (ii) an Event of Default exists the Agent or any Lender may do
any of the foregoing at the expense of the Company at any time during normal
business hours and without advance notice.
7.11 Environmental Laws. (a) The Company shall, and shall cause
each Subsidiary to, conduct its operations and keep and maintain its property
in material compliance with all Environmental Laws.
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(b) Upon the written request of the Agent or any Lender,
the Company shall submit and cause each of its Subsidiaries to submit, to the
Agent with sufficient copies for each Lender, at the Company's sole cost and
expense, at reasonable intervals, a report providing an update of the status of
any environmental, health or safety compliance, hazard or liability issue
identified in any notice or report required pursuant to subsection 7.03(d),
that could, individually or in the aggregate, result in liability in excess of
$250,000.
7.12 Use of Proceeds. The Company shall use the proceeds of the
Term Loans to pay a portion of the Recapitalization Financing Requirements and
to pay for Permitted Acquisitions, and will use the proceeds of the Revolving
Loans to pay a portion of the Recapitalization Financing Requirements, for
working capital and for other general corporate purposes in each case not in
contravention of any Requirement of Law or of any Loan Document.
7.13 Further Assurances. (a) Holdings and the Company shall
ensure that all written information, exhibits and reports furnished to the
Agent or the Lenders do not and will not contain any untrue statement of a
material fact and do not and will not omit to state any material fact or any
fact necessary to make the statements contained therein not misleading in light
of the circumstances in which made, and will promptly disclose to the Agent and
the Lenders and correct any defect or error that may be discovered therein or
in any Loan Document or in the execution, acknowledgement or recordation
thereof.
(b) Promptly upon request by the Agent or the Majority
Lenders, Holdings and the Company shall (and shall cause any of its
Subsidiaries to) do, execute, acknowledge, deliver, record, re-record, file,
re-file, register and re-register, any and all such further acts, deeds,
conveyances, security agreements, mortgages, assignments, estoppel
certificates, financing statements and continuations thereof, termination
statements, notices of assignment, transfers, certificates, assurances and
other instruments the Agent or such Lenders, as the case may be, may reasonably
require from time to time in order (i) to carry out more effectively the
purposes of this Agreement or any other Loan Document, (ii) to subject to the
Liens created by any of the Collateral Documents any of the properties, rights
or interests covered by any of the Collateral Documents, (iii) to perfect and
maintain the validity, effectiveness and priority of any of the Collateral
Documents and the Liens intended to be created thereby.
7.14 Additional Guarantors. Within ten Business Days following the
formation or Acquisition (provided that nothing in this paragraph shall be
deemed to authorize the Acquisition of any entity) of any Material Subsidiary
or the date any Subsidiary becomes a Material Subsidiary, the Company shall
cause (i) such Material Subsidiary to deliver to the Agent a supplement to the
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Subsidiary Guaranty in the form attached as Schedule I to the Subsidiary
Guaranty and a new Subsidiary Security Agreement and, if such Material
Subsidiary owns any trademarks or tradenames a new Subsidiary Trademark
Security Agreement and (ii) the parent of such Material Subsidiary to become a
pledgor under the Company Pledge Agreement (or a substantially similar pledge
agreement) if it is not already a party thereto and to deliver the stock of
such Material Subsidiary to the Agent in accordance with the terms thereof (and
accompanied by any stock powers and UCC financing statements required
thereunder), together with the following documents with respect to such
Material Subsidiary (and the pledgor of its stock), all in form and substance
reasonably satisfactory to the Agent:
(i) certified copies of resolutions of the board of
directors of such Material Subsidiary and of the board of directors of
such pledgor approving the Subsidiary Guaranty, Subsidiary Security
Agreement and a trademark security agreement to be executed by such
Material Subsidiary and such amendment to Company Pledge Agreement or
pledge agreement, as applicable;
(ii) incumbency certificates for such Material Subsidiary
and such pledgor certifying as to their respective officers who are
authorized to execute and delivery the documents required hereunder;
and
(iii) a favorable opinion of counsel with respect to (a)
the due organization, good standing and corporate power and authority
of such Material Subsidiary and such pledgor, (b) the due
authorization, execution, delivery, validity, binding effect and
enforceability as to such Material Subsidiary and such pledgor of all
documents required to be delivered by them hereunder, (c) the creation
and perfection of such security interest in the stock of such Material
Subsidiary, (d) the execution and delivery of the documents required
to be delivered by such Material Subsidiary and such pledgor hereunder
not conflicting with or creating a Lien under any other agreement of
such Material Subsidiary or such pledgor, not violating any law or
regulation, not requiring any consent or authorization of any Person;
and (e) such other matters as the Agent or the Majority Lenders may
reasonably require.
ARTICLE VIII
NEGATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, or any Loan
or other Obligation shall remain unpaid or unsatisfied, unless the Majority
Lenders waive compliance in writing:
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8.01 Limitation on Liens. The Company shall not, and shall not
suffer or permit any Subsidiary to, directly or indirectly, make, create,
incur, assume or suffer to exist any Lien upon or with respect to any part of
its property, whether now owned or hereafter acquired, other than the following
("Permitted Liens"):
(a) any Lien (other than a Lien on the Collateral)
existing on property of the Company or any Subsidiary on the Closing Date and
set forth in Schedule 8.01 securing Indebtedness outstanding on such date;
(b) any Lien created under any Loan Document;
(c) Liens for taxes, fees, assessments or other
governmental charges which are not delinquent or remain payable without
penalty, or to the extent that non-payment thereof is permitted by Section
8.07, provided that no notice of lien has been filed or recorded under the
Code;
(d) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other similar Liens arising in the ordinary
course of business which are not delinquent or remain payable without penalty
or which are being contested in good faith and by appropriate proceedings,
which proceedings have the effect of preventing the forfeiture or sale of the
property subject thereto;
(e) Liens (other than any Lien imposed by ERISA and other
than on the Collateral) consisting of pledges or deposits required in the
ordinary course of business in connection with workers' compensation,
unemployment insurance and other social security legislation;
(f) Liens (other than Liens on the Collateral), on the
property of the Company or its Subsidiary securing (i) the non- delinquent
performance of bids, trade contracts (other than for borrowed money), leases,
statutory obligations, (ii) contingent obligations on surety and appeal bonds,
and (iii) other non-delinquent obligations of a like nature; in each case,
incurred in the ordinary course of business, provided all such Liens in the
aggregate would not (even if enforced) cause a Material Adverse Effect;
(g) Liens (other than Liens on the Collateral) consisting
of judgment or judicial attachment liens, provided that the enforcement of such
Liens is effectively stayed and all such liens in the aggregate at any time
outstanding for the Company and its Subsidiaries do not exceed $250,000;
(h) easements, rights-of-way, restrictions and other
similar encumbrances incurred in the ordinary course of business which, in the
aggregate are not substantial in amount, and which do not in any case
materially detract from the value of the
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property subject thereto or interfere with the ordinary conduct of the
businesses of the Company and its Subsidiaries;
(i) Liens on assets of corporations which become
Subsidiaries after the date of this Agreement, provided, however, that such
Liens existed at the time the respective corporations became Subsidiaries and
were not created in anticipation thereof, provided that the aggregate principal
amount of Indebtedness secured by any such Liens shall not exceed the amount
permitted by subsection 8.05(e);
(j) purchase money security interests on any property
acquired or held by the Company or its Subsidiaries in the ordinary course of
business, securing Indebtedness incurred or assumed for the purpose of
financing all or any part of the cost of acquiring such property; provided that
(i) any such Lien attaches to such property concurrently with or within 20 days
after the acquisition thereof, (ii) such Lien attaches solely to the property
so acquired in such transaction, (iii) the principal amount of the debt secured
thereby does not exceed 100% of the cost of such property, and (iv) the
aggregate principal amount of the Indebtedness secured by any and all such
purchase money security interests shall not at any time exceed the amount
permitted by Section 8.05(e);
(k) Liens securing obligations in respect of capital
leases on assets subject to such leases, provided that such capital leases are
otherwise permitted hereunder and the amount of Indebtedness secured by such
Liens shall not exceed the amount permitted by subsection 8.05(e);
(l) Liens arising solely by virtue of any statutory or
common law provision relating to banker's liens, rights of set-off or similar
rights and remedies as to deposit accounts or other funds maintained with a
creditor depository institution; provided that (i) such deposit account is not
a dedicated cash collateral account and is not subject to restrictions against
access by the Company in excess of those set forth by regulations promulgated
by the FRB, and (ii) such deposit account is not intended by the Company or any
Subsidiary to provide collateral to the depository institution.
(m) purchase money security interests in inventory of the
Company or its Subsidiaries sold by a vendor and securing trade payables to
such vendor that are not delinquent, provided that (i) such security interests
shall not extend to other assets of the Company or its Subsidiaries and (ii)
the aggregate amount of trade payables secured by such security interests,
including such security interests existing on the date hereof, shall not exceed
at any time $2,000,000.
8.02 Disposition of Assets. The Company shall not, and shall not
suffer or permit any Subsidiary to, directly or
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indirectly, sell, assign, lease, convey, transfer or otherwise dispose of
(whether in one or a series of transactions) any property (including accounts
and notes receivable, with or without recourse) or enter into any agreement to
do any of the foregoing, except:
(a) dispositions of inventory, or used, worn-out or
surplus equipment, all in the ordinary course of business;
(b) the sale of equipment to the extent that such
equipment is exchanged for credit against the purchase price of similar
replacement equipment, or the proceeds of such sale are reasonably promptly
applied within 90 days of such sale to the purchase price of such replacement
equipment; and
(c) dispositions not otherwise permitted hereunder which
are made for fair market value; provided, that (i) at the time of any
disposition, no Event of Default or Default shall exist or shall result from
such disposition, (ii) the aggregate sales price from such disposition shall be
paid in cash, and (iii) the aggregate value of all assets so sold by the
Company and its Subsidiaries, together, in each fiscal year shall not exceed 5%
of the difference of (A) the total assets of the Company on a consolidated
basis in any fiscal year minus (B) those assets classified as intangible assets
in accordance with GAAP.
8.03 Consolidations and Mergers. The Company shall not, and shall
not suffer or permit any Subsidiary to, merge, consolidate with or into, or
convey, transfer, lease or otherwise dispose of (whether in one transaction or
in a series of transactions) all or substantially all of its assets (whether
now owned or hereafter acquired) to or in favor of any Person, except:
(a) any Subsidiary may merge with the Company, provided
that the Company shall be the continuing or surviving corporation, or with any
one or more Subsidiaries, provided that if any transaction shall be between a
Subsidiary and a Wholly-Owned Subsidiary, the Wholly-Owned Subsidiary shall be
the continuing or surviving corporation and if any transaction shall be between
a Subsidiary Guarantor and another Subsidiary, the Subsidiary Guarantor shall
be the surviving corporation; and
(b) any Subsidiary may sell all or substantially all of
its assets (upon voluntary liquidation or otherwise), to the Company or another
Wholly-Owned Subsidiary; provided that any Subsidiary Guarantor may sell all or
substantially all of its assets only to the Company or another Subsidiary
Guarantor.
8.04 Loans, Investments and Acquisitions. The Company shall not
purchase or acquire, or suffer or permit any Subsidiary to purchase or acquire,
or make any commitment therefor, any capital stock, equity interest, or any
obligations or other securities
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of, or any interest in, any Person (including a Joint Venture), or make or
commit to make any Acquisitions, or make or commit to make any advance, loan,
extension of credit or capital contribution to or any other investment in, any
Person including any Affiliate of the Company (together, "Investments"), except
for:
(a) Investments held by the Company or Subsidiary in the
form of cash equivalents or short term marketable securities;
(b) extensions of credit in the nature of accounts
receivable or notes receivable arising from the sale or lease of goods or
services in the ordinary course of business;
(c) extensions of credit by the Company to any of its
Wholly-Owned Subsidiaries or by any of its Wholly-Owned Subsidiaries to another
of its Wholly-Owned Subsidiaries;
(d) one or more Permitted Acquisitions; and
(e) Investments constituting Permitted Swap Obligations
or payments or advances under Swap Contracts relating to Permitted Swap
Obligations.
8.05 Limitation on Indebtedness. The Company shall not, and shall
not suffer or permit any Subsidiary to, create, incur, assume, suffer to exist,
or otherwise become or remain directly or indirectly liable with respect to,
any Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement;
(b) Indebtedness consisting of Contingent Obligations
permitted pursuant to Section 8.08;
(c) Indebtedness existing on the Closing Date and set
forth in Schedule 8.05;
(d) Unsecured Subordinated Indebtedness of the Company
payable to sellers of businesses acquired by the Company as Permitted
Acquisitions; and
(e) Indebtedness secured by Liens permitted by
subsections 8.01(i), (j) and (k) and other unsecured Indebtedness of the
Company in an aggregate principal amount at any time outstanding for all such
secured and unsecured Indebtedness not exceeding $10,000,000.
8.06 Transactions with Affiliates. The Company shall not, and
shall not suffer or permit any Subsidiary to, enter into any transaction with
any Affiliate of the Company, except (a) the KRG Transaction Advisory Agreement
and the Employment Agreements, each as in effect at the date of Closing, or (b)
upon fair and reasonable terms no less favorable to the Company or such
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Subsidiary, as determined in good faith by the board of directors of the
Company, than would obtain in a comparable arm's-length transaction with a
Person not an Affiliate of the Company or such Subsidiary.
8.07 Use of Proceeds. (a) The Company shall not, and shall not
suffer or permit any Subsidiary to, use any portion of the Loan proceeds,
directly or indirectly, (i) to purchase or carry Margin Stock, (ii) to repay or
otherwise refinance indebtedness of the Company or others incurred to purchase
or carry Margin Stock, or (iii) to extend credit for the purpose of purchasing
or carrying any Margin Stock;
(b) The Company shall not, directly or indirectly, use
any portion of the Loan proceeds (i) knowingly to purchase Ineligible
Securities from BARS during any period in which BARS makes a market in such
Ineligible Securities, (ii) knowingly to purchase during the underwriting or
placement period Ineligible Securities being underwritten or privately placed
by BARS, or (iii) to make payments of principal or interest on Ineligible
Securities underwritten or privately placed by BARS and issued by or for the
benefit of the Company or any Affiliate of the Company. BARS is a registered
broker-dealer and permitted to underwrite and deal in certain Ineligible
Securities; and "Ineligible Securities" means securities which may not be
underwritten or dealt in by member banks of the Federal Reserve System under
Section 16 of the Lendering Act of 1933 (12 U.S.C. Section 24, Seventh), as
amended.
8.08 Contingent Obligations. The Company shall not, and shall not
suffer or permit any Subsidiary to, create, incur, assume or suffer to exist
any Contingent Obligations except:
(a) endorsements for collection or deposit in the
ordinary course of business;
(b) Permitted Swap Obligations;
(c) Contingent Obligations of the Company and its
Subsidiaries existing as of the Closing Date and listed in Schedule 8.08; and
(d) (i) Contingent Obligations with respect to Letters of
Credit issued hereunder and (ii) other Surety Instruments incurred in the
ordinary course of business and not exceeding at any time $250,000 in the
aggregate in respect of the Company and its Subsidiaries together.
8.09 Capital Expenditures. The Company shall not, and shall not
permit its Subsidiaries to, make or incur Consolidated Capital Expenditures, in
any fiscal year, in an aggregate amount in excess of $5,000,000 (the "MAXIMUM
CONSOLIDATED CAPITAL EXPENDITURES AMOUNT"); provided that the Maximum
Consolidated
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Capital Expenditures Amount for any fiscal year shall be increased by an amount
equal to the excess, if any, (but in no event more than $1,500,000) of the
Maximum Consolidated Capital Expenditures Amount for the previous Fiscal Year
(as adjusted in accordance with this proviso) over the actual amount of
Consolidated Capital Expenditures for such previous fiscal year.
8.10 Lease Obligations; Sales and Leasebacks. (a) The Company
shall not, and shall not suffer or permit any Subsidiary to, create or suffer
to exist any obligations for the payment of rent for any property under any
lease or agreement to lease, whether a capital lease or an operating lease,
except for:
(i) operating leases entered into by the Company or any
Subsidiary in the ordinary course of business; and
(ii) capital leases entered into by the Company or any
Subsidiary to finance the acquisition of equipment, provided that the
Indebtedness evidenced by such capital leases shall be permitted by subsection
8.05(e).
(b) The 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 the Company or any
of its Subsidiaries has sold or transferred or is to sell or transfer to any
other Person (other than the Company or any of its Subsidiaries) or (ii) which
the 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 the Company or any of its subsidiaries to any Person (other than
the Company or any of its Subsidiaries) in connection with such lease; provided
that Company and its Subsidiaries may become and remain liable as lessee,
guarantor or other surety with respect to any such lease if and to the extent
that Company or any of its Subsidiaries would be permitted to enter into, and
remain liable under, such lease under subsection 8.10(a).
8.11 Restricted Payments. The Company shall not, and shall not
suffer or permit any Subsidiary to, declare or make any dividend payment or
other distribution of assets, properties, cash, rights, obligations or
securities on account of any shares of any class of its capital stock, or make
any prepayment of principal with respect to any Subordinated Indebtedness
(other than scheduled mandatory prepayments) or purchase, redeem or otherwise
acquire for value any shares of its capital stock or any warrants, rights or
options to acquire such shares, now or hereafter outstanding or any such
Subordinated Indebtedness; except that the Company and any Wholly-Owned
Subsidiary may:
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(a) declare and make dividend payments or other
distributions payable solely in its common stock;
(b) purchase, redeem or otherwise acquire shares of its
common stock or warrants or options to acquire any such shares with the
proceeds received from the substantially concurrent issue of new shares of its
common stock;
(c) so long as no Event of Default exists, declare and
make dividend payments to Holdings to enable Holdings to buy back restricted
stock in amounts not to exceed $100,000 per fiscal year; and
(d) declare and pay cash dividends to Holdings in amounts
sufficient (but not exceeding the amounts required) to enable Holdings to (i)
pay income and franchise taxes attributable to the income of the Company and
its Subsidiaries, and (ii) pay out-of-pocket expenses for accounting, SEC
reporting, legal and similar services.
8.12 Financial Covenants.
(a) Minimum Fixed Charge Coverage Ratio. At each fiscal
quarter end, the Company and Holdings shall not permit the ratio of (i)
Consolidated Adjusted EBITDA less Consolidated Capital Expenditures for each
four-fiscal quarter period to (ii) Consolidated Fixed Charges, in the case of
each such period ending during any of the periods set forth below, to be less
than the correlative ratio indicated:
<TABLE>
<CAPTION>
MINIMUM FIXED
PERIOD CHARGE COVERAGE RATIO
------------------------------------- ---------------------
<S> <C>
Closing Date through March 30, 1998 2.00 to 1.0
March 31, 1998 through March 30, 1999 2.50 to 1.0
March 31, 1999 through December 30, 1999 3.00 to 1.0
December 31, 1999 through March 30, 2000 2.50 to 1.0
March 31, 2000 through June 29, 2000 2.00 to 1.0
June 30, 2000 through September 29, 2000 1.50 to 1.0
September 30, 2000 and thereafter 1.25 to 1.0
</TABLE>
provided that the Fixed Charge Coverage Ratio Step Down Dates set forth above
are subject to extension pursuant to Section 2.16.
(b) Maximum Consolidated Total Debt to Adjusted EBITDA Ratio. At
each fiscal quarter end, the Company and Holdings shall not permit the
Consolidated Total Debt to Adjusted EBITDA Ratio at any time during any of the
periods set forth below to exceed the correlative ratio indicated:
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<TABLE>
<CAPTION>
MAXIMUM CONSOLIDATED
FUNDED DEBT TO
PERIOD ADJUSTED EBITDA RATIO
------------------------------------- ---------------------
<S> <C>
Closing Date through March 30, 2000 3.50 to 1.0
March 31, 2000 through March 30, 2001 3.25 to 1.0
March 31, 2001 and thereafter 3.00 to 1.0
</TABLE>
(c) Minimum Net Worth. The Company and Holdings shall
not permit Consolidated Net worth at any time to be less than the sum of (a)
80% of Consolidated Net Worth as of the Closing Date after giving effect to the
Recapitalization, plus (b) 50% of Consolidated Net Income earned after October
31, 1997 (if a positive number) for each fiscal year of the Company, such
amount to be added as of June 30 in each year with respect to Consolidated Net
Income of the previous fiscal year, plus (c) 75% of the Net Issuance Proceeds
from the issuance of any equity securities by Holdings or the Company
subsequent to the Closing Date.
(d) Minimum Asset Coverage Ratio. The Company and
Holdings shall not permit the Asset Coverage Ratio as of the last day of any
fiscal quarter ending during any of the periods set forth below to be less than
the correlative ratio indicated:
<TABLE>
<CAPTION>
MINIMUM ASSET
PERIOD COVERAGE RATIO
------------------------------------- ------------------
<S> <C>
Closing Date through March 30, 1999 0.85 to 1.00
March 31, 1999 through March 30, 2000 0.90 to 1.00
March 31, 2000 and thereafter 1.00 to 1.00
</TABLE>
8.13 ERISA. The Company shall not, and shall not suffer or permit
any of its ERISA Affiliates to: (a) engage in a prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan which
has resulted or could reasonably expected to result in liability of the Company
in an aggregate amount in excess of $250,000; or (b) engage in a transaction
that could be subject to Section 4069 or 4212(c) of ERISA.
8.14 Change in Business. The Company shall not, and shall not
suffer or permit any Subsidiary to, engage in any material line of business
substantially different from those lines of business carried on by the Company
and its Subsidiaries on the date hereof or engage in business outside of the
United States.
8.15 Accounting Changes. Holdings and the Company shall not, and
shall not suffer or permit any Subsidiary to, make any significant change in
accounting treatment or reporting practices, except as required by GAAP, or
change the fiscal year of Holdings, the Company or of any Subsidiary.
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8.16 Holdings Activities. Holdings shall not:
(a) engage in any business activity or own any assets
other than the capital stock of the Company and cash or cash equivalents not
exceeding $500,000;
(b) make, create, incur, assume or suffer to exist any
Lien (except for Permitted Liens) upon or with respect to its property, whether
now owned or hereafter acquired, other than the Lien on the capital stock of
the Company created by the Holdings Pledge Agreement;
(c) sell, assign, convey or otherwise dispose of any
capital stock of the Company;
(d) merge, consolidate with or into or convey, transfer,
lease or otherwise dispose of all or substantially all of its assets to or in
favor of any Person;
(e) purchase or acquire any Investment or make any
commitment therefor, other than the capital stock of the Company; or
(f) create, incur, assume or suffer to exist or otherwise
become or remain directly or indirectly liable with respect to any Indebtedness
or Contingent Obligation (other than the Holdings Guaranty) except
indemnification obligations in favor of directors and officers as expressly set
forth in the Bylaws of Holdings and in directors indemnity agreements for
directors of Holdings; provided, that notwithstanding the foregoing, Holdings
may (i) enter into contracts to provide D&O insurance and (ii) enter into arms
length contracts with outside directors and key employees to provide
compensation for the performance of their duties in such capacities.
ARTICLE IX
EVENTS OF DEFAULT
9.01 Event of Default. Any of the following shall constitute an
"Event of Default":
(a) Non-Payment. The Company fails to make, (i) when and
as required to be made herein, payments of any amount of principal of any Loan,
or (ii) within three Business Days after the same becomes due, payment of any
interest, fee or any other amount payable hereunder or under any other Loan
Document (other than a Specified Swap Contract); or
(b) Representation or Warranty. Any representation or
warranty by Holdings, the Company or any Subsidiary made or deemed made herein,
in any other Loan Document, or which is
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contained in any certificate, document or financial or other statement by
Holdings, the Company, any Subsidiary, or any Responsible Officer, furnished at
any time under this Agreement, or in or under any other Loan Document other
than a Specified Swap Contract, is incorrect in any material respect on or as
of the date made or deemed made; or
(c) Specific Defaults. Holdings or the Company fails to
perform or observe any term, covenant or agreement contained in any of Section
7.01, 7.02, 7.03 or 7.09 or in Article VIII or in Section 5 of the Holdings
Pledge Agreement or in Section 5 of the Company Pledge Agreement or in Section
6 of the Company Security Agreement or any Guarantor fails to perform or
observe any form, covenant or agreement contained in Section 6 of the
Subsidiary Security Agreement; or
(d) Other Defaults. Holdings, the Company or any
Subsidiary party thereto fails to perform or observe any other term or covenant
contained in this Agreement or any other Loan Document, and such default shall
continue unremedied for a period of 30 days after the earlier of (i) the date
upon which a Responsible Officer knew of such failure or (ii) the date upon
which written notice thereof is given to the Company by the Agent or any
Lender; or
(e) Cross-Default. (i) The Company or any Subsidiary (A)
fails to make any payment in respect of any Indebtedness or Contingent
Obligation (other than in respect of Swap Contracts), having an aggregate
principal amount (including undrawn committed or available amounts and
including amounts owing to all creditors under any combined or syndicated
credit arrangement) of more than $250,000 when due (whether by scheduled
maturity, required prepayment, acceleration, demand, or otherwise) and such
failure continues after the applicable grace or notice period, if any,
specified in the relevant document on the date of such failure; or (B) fails to
perform or observe any other condition or covenant, or any other event shall
occur or condition exist, under any agreement or instrument relating to any
such Indebtedness or Contingent Obligation, and such failure continues after
the applicable grace or notice period, if any, specified in the relevant
document on the date of such failure if the effect of such failure, event or
condition is to cause, or to permit the holder or holders of such Indebtedness
or beneficiary or beneficiaries of such Indebtedness (or a trustee or agent on
behalf of such holder or holders or beneficiary or beneficiaries) to cause such
Indebtedness to be declared to be due and payable prior to its stated maturity,
or such Contingent Obligation to become payable or cash collateral in respect
thereof to be demanded; or (ii) there occurs under any Specified Swap Contract
an Early Termination Date (as defined in such Specified Swap Contract)
resulting from (1) any event of default under such Specified Swap Contract as
to which the Company or any Subsidiary is the Defaulting Party (as defined in
such Specified Swap
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Contract) or (2) any Termination Event (as so defined) as to which the Company
or any Subsidiary is an Affected Party (as so defined), and, in either event,
the Swap Termination Value owed by the Company or such Subsidiary as a result
thereof is greater than $250,000.
(f) Insolvency; Voluntary Proceedings. Holdings, the
Company or any Subsidiary (i) ceases or fails to be Solvent, or generally fails
to pay, or admits in writing its inability to pay, its debts as they become
due, subject to applicable grace periods, if any, whether at stated maturity or
otherwise; (ii) voluntarily ceases to conduct its business in the ordinary
course; (iii) commences any Insolvency Proceeding with respect to itself; or
(iv) takes any action to effectuate or authorize any of the foregoing; or
(g) Involuntary Proceedings. (i) Any involuntary
Insolvency Proceeding is commenced or filed against Holdings, the Company or
any Subsidiary, or any writ, judgment, warrant of attachment, execution or
similar process, is issued or levied against a substantial part of Holdings',
the Company's or any Subsidiary's properties, and any such proceeding or
petition shall not be dismissed, or such writ, judgment, warrant of attachment,
execution or similar process shall not be released, vacated or fully bonded
within 60 days after commencement, filing or levy; (ii) Holdings, the Company
or any Subsidiary admits the material allegations of a petition against it in
any Insolvency Proceeding, or an order for relief (or similar order under
non-U.S. law) is ordered in any Insolvency Proceeding; or (iii) Holdings, the
Company or any Subsidiary acquiesces in the appointment of a receiver, trustee,
custodian, conservator, liquidator, mortgagee in possession (or agent
therefor), or other similar Person for itself or a substantial portion of its
property or business; or
(h) ERISA. (i) An ERISA Event shall occur with respect
to a Pension Plan or Multiemployer Plan which has resulted or could reasonably
be expected to result in liability of the Company under Title IV of ERISA to
the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in
excess of $250,000; or (ii) the aggregate amount of Unfunded Pension Liability
among all Pension Plans at any time exceeds $250,000; or (iii) Holdings, the
Company or any ERISA Affiliate shall fail to pay when due, after the expiration
of any applicable grace period, any installment payment with respect to its
withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in
an aggregate amount in excess of $250,000; or
(i) Monetary Judgments. One or more non-interlocutory
judgments, non-interlocutory orders, decrees or arbitration awards is entered
against Holdings, the Company or any Subsidiary involving in the aggregate a
liability (to the extent not covered by independent third-party insurance as to
which the insurer does
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not dispute coverage) as to any single or related series of transactions,
incidents or conditions, of $250,000 or more, and the same shall remain
unsatisfied, unvacated and unstayed pending appeal for a period of 30 days
after the entry thereof; or
(j) Non-Monetary Judgments. Any non-monetary judgment,
order or decree is entered against Holdings, the Company or any Subsidiary
which does or would reasonably be expected to have a Material Adverse Effect,
and there shall be any period of 10 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or
(k) Change of Control. There occurs any Change of
Control; or
(l) Loss of Licenses. Any Governmental Authority revokes
or fails to renew any material license, permit or franchise of Holdings, the
Company or any Subsidiary, Holdings, the Company or any Subsidiary for any
reason loses any material license, permit or franchise, or Holdings, the
Company or any Subsidiary suffers the imposition of any restraining order,
escrow, suspension or impound of funds in connection with any proceeding
(judicial or administrative) with respect to any material license, permit or
franchise; or
(m) Adverse Change. There occurs a Material Adverse
Effect; or
(n) Guarantor Defaults. Any Guarantor fails in any
material respect to perform or observe any term, covenant or agreement in the
Guaranty to which it is a party; or any Guaranty is for any reason partially
(including with respect to future advances) or wholly revoked or invalidated,
or otherwise ceases to be in full force and effect, or a Guarantor or any other
Person contests in any manner the validity or enforceability thereof or denies
that it has any further liability or obligation thereunder; or any event
described at subsections (f) or (g) of this Section occurs with respect to a
Guarantor; or
(o) Invalidity of Subordination Provisions. The
subordination provisions of any agreement or instrument governing any
Subordinated Indebtedness is for any reason revoked or invalidated, or
otherwise cease to be in full force and effect, or any Person contests in any
manner the validity or enforceability thereof or denies that it has any further
liability or obligation thereunder, or the Indebtedness hereunder is for any
reason subordinated or does not have the priority contemplated by this
Agreement or such subordination provisions; or
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(p) Collateral.
(i) any material provision of any Collateral
Document shall for any reason cease to be valid and binding on or
enforceable against Holdings, the Company or any Subsidiary party
thereto or Holdings, the Company or any Subsidiary shall so state in
writing or bring an action to limit its obligations or liabilities
thereunder; or
(ii) any Collateral Document shall for any reason
(other than pursuant to the terms thereof) cease to create a valid
security interest in the Collateral purported to be covered thereby
having a value in excess of $250,000 or such security interest shall
for any reason cease to be a perfected and first priority security
interest subject only to Permitted Liens.
9.02 Remedies. If any Event of Default occurs, the Agent shall, at
the request of, or may, with the consent of, the Majority Lenders,
(a) declare the commitment of each Lender to make Loans
and any obligation of the Issuing Lender to Issue Letters of Credit to be
terminated, whereupon such commitments and obligation shall be terminated;
(b) declare an amount equal to the maximum aggregate
amount that is or at any time thereafter may become available for drawing under
any outstanding Letters of Credit (whether or not any beneficiary shall have
presented, or shall be entitled at such time to present, the drafts or other
documents required to draw under such Letters of Credit) to be immediately due
and payable, and declare the unpaid principal amount of all outstanding Loans,
all interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Company; and
(c) exercise on behalf of itself and the Lenders all
rights and remedies available to it and the Lenders under the Loan Documents or
applicable law;
provided, however, that upon the occurrence of any event specified in
subsection (f) or (g) of Section 9.01 (in the case of clause (i) of subsection
(g) upon the expiration of the 60-day period mentioned therein), the obligation
of each Lender to make Loans and any obligation of the Issuing Lender to Issue
Letters of Credit shall automatically terminate and the unpaid principal amount
of all outstanding Loans and all interest and other amounts as aforesaid shall
automatically become due and payable without further act of the Agent, the
Issuing Lender or any Lender.
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9.03 Specified Swap Contract Remedies. Notwithstanding any other
provision of this Article IX, each Swap Provider shall have the right, with
prior notice to the Agent, but without the approval or consent of the Agent or
the other Lenders, with respect to any Specified Swap Contract of such Swap
Provider, (a) to declare an event of default, termination event or other
similar event thereunder and to create an Early Termination Date, (b) to
determine net termination amounts in accordance with the terms of such
Specified Swap Contracts and to set-off amounts between Specified Swap
Contracts, and (c) to prosecute any legal action against the Company to enforce
net amounts owing to such Swap Provider.
9.04 Rights Not Exclusive. The rights provided for in this
Agreement and the other Loan Documents are cumulative and are not exclusive of
any other rights, powers, privileges or remedies provided by law or in equity,
or under any other instrument, document or agreement now existing or hereafter
arising.
ARTICLE X
THE AGENT
10.01 Appointment and Authorization; "Agent". (a) Each Lender
hereby irrevocably (subject to Section 10.09) appoints, designates and
authorizes the Agent to take such action on its behalf under the provisions of
this Agreement and each other Loan Document and to exercise such powers and
perform such duties as are expressly delegated to it by the terms of this
Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document, the Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall the Agent have or be deemed to have any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.
Without limiting the generality of the foregoing sentence, the use of the term
"agent" in this Agreement with reference to the Agent is not intended to
connote any fiduciary or other implied (or express) obligations arising under
agency doctrine of any applicable law. Instead, such term is used merely as a
matter of market custom, and is intended to create or reflect only an
administrative relationship between independent contracting parties.
(b) The Issuing Lender shall act on behalf of the Lenders
with respect to any Letters of Credit Issued by it and the documents associated
therewith until such time and except for so long as the Agent may agree at the
request of the Required Revolving Lenders to act for such Issuing Lender with
respect
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thereto; provided, however, that the Issuing Lender shall have all of the
benefits and immunities (i) provided to the Agent in this Article X with
respect to any acts taken or omissions suffered by the Issuing Lender in
connection with Letters of Credit Issued by it or proposed to be Issued by it
and the application and agreements for letters of credit pertaining to the
Letters of Credit as fully as if the term "Agent," as used in this Article X,
included the Issuing Lender with respect to such acts or omissions, and (ii) as
additionally provided in this Agreement with respect to the Issuing Lender.
10.02 Delegation of Duties. The Agent may execute any of its duties
under this Agreement or any other Loan Document by or through agents, employees
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.
10.03 Liability of Agent. None of the Agent-Related Persons shall
(i) be liable for any action taken or omitted to be taken by any of them under
or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or
willful misconduct), or (ii) be responsible in any manner to any of the Lenders
for any recital, statement, representation or warranty made by the Company or
any Subsidiary or Affiliate of the Company, or any officer thereof, contained
in this Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Agent under or in connection with, this Agreement or any other Loan Document,
or for the value of or title to any Collateral, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of Holdings, the Company or any other party to any
Loan Document to perform its obligations hereunder or thereunder. No
Agent-Related Person shall be under any obligation to any Lender to ascertain
or to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or
to inspect the properties, books or records of Holdings, the Company or any of
the Company's Subsidiaries or Affiliates.
10.04 Reliance by Agent. (a) The Agent shall be entitled to rely,
and shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or
telephone message, statement or other document or conversation believed by it
to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons, and upon advice and statements of legal counsel (including
counsel to the Company), independent accountants and other experts selected by
the Agent. The Agent shall be fully justified in failing or refusing to take
any
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action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Majority Lenders as it deems
appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action.
The Agent shall in all cases be fully protected in acting, or in refraining
from acting, under this Agreement or any other Loan Document in accordance with
a request or consent of the Majority Lenders and such request and any action
taken or failure to act pursuant thereto shall be binding upon all of the
Lenders.
(b) For purposes of determining compliance with the
conditions specified in Section 5.01, each Lender that has executed this
Agreement shall be deemed to have consented to, approved or accepted or to be
satisfied with, each document or other matter either sent by the Agent to such
Lender for consent, approval, acceptance or satisfaction, or required
thereunder to be consented to or approved by or acceptable or satisfactory to
the Lender.
10.05 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest and fees
required to be paid to the Agent for the account of the Lenders, unless the
Agent shall have received written notice from a Lender or the Company referring
to this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default". The Agent will notify the Lenders of its
receipt of any such notice. The Agent shall take such action with respect to
such Default or Event of Default as may be requested by the Majority Lenders in
accordance with Article IX; provided, however, that unless and until the Agent
has received any such request, the Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable or in the best interest
of the Lenders.
10.06 Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that
no act by the Agent hereinafter taken, including any review of the affairs of
the Company and its Subsidiaries, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to the Agent that it has, independently and without reliance
upon any Agent-Related Person and based on such documents and information as it
has deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Company and its Subsidiaries, the value of and title to
any Collateral, and all applicable bank regulatory laws relating to the
transactions contemplated hereby,
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and made its own decision to enter into this Agreement and to extend credit to
the Company hereunder. Each Lender also represents that it will, independently
and without reliance upon any Agent-Related Person and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Company. Except for notices, reports and other
documents expressly herein required to be furnished to the Lenders by the
Agent, the Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, prospects,
operations, property, financial and other condition or creditworthiness of the
Company which may come into the possession of any of the Agent-Related Persons.
10.07 Indemnification of Agent. Whether or not the transactions
contemplated hereby are consummated, the Lenders shall indemnify upon demand
the Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Company and without limiting the obligation of the Company to do so), pro rata,
from and against any and all Indemnified Liabilities; provided, however, that
no Lender shall be liable for the payment to the Agent-Related Persons of any
portion of such Indemnified Liabilities resulting solely from such Person's
gross negligence or willful misconduct. Without limitation of the foregoing,
each Lender shall reimburse the Agent upon demand for its ratable share of any
costs or out-of-pocket expenses (including Attorney Costs) incurred by the
Agent in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any
document contemplated by or referred to herein, to the extent that the Agent is
not reimbursed for such expenses by or on behalf of the Company. The
undertaking in this Section shall survive the payment of all Obligations
hereunder and the resignation or replacement of the Agent.
10.08 Agent in Individual Capacity. BofA and its Affiliates may
make loans to, issue letters of credit for the account of, accept deposits
from, acquire equity interests in and generally engage in any kind of banking,
trust, financial advisory, underwriting or other business with the Company and
its Subsidiaries and Affiliates as though BofA were not the Agent hereunder and
without notice to or consent of the Lenders. The Lenders acknowledge that,
pursuant to such activities, BofA or its Affiliates may receive information
regarding the Company or its Affiliates (including information that may be
subject to confidentiality obligations in favor of the Company or such
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Subsidiary) and acknowledge that the Agent shall be under no obligation to
provide such information to them. With respect to its Loans, BofA shall have
the same rights and powers under this Agreement as any other Lender and may
exercise the same as though it were not the Agent, and the terms "Lender" and
"Lenders" include BofA in its individual capacity.
10.09 Successor Agent. The Agent may resign as Agent upon 60 days'
notice to the Lenders. If the Agent resigns under this Agreement, the Majority
Lenders shall appoint from among the Lenders a successor agent for the Lenders
which successor agent shall be approved by the Company which approval shall not
be unreasonably withheld. If no successor agent is appointed prior to the
effective date of the resignation of the Agent, the Agent may appoint, after
consulting with the Lenders and the Company, a successor agent from among the
Lenders. Upon the acceptance of its appointment as successor agent hereunder,
such successor agent shall succeed to all the rights, powers and duties of the
retiring Agent and the term "Agent" shall mean such successor agent and the
retiring Agent's appointment, powers and duties as Agent shall be terminated.
After any retiring Agent's resignation hereunder as Agent, the provisions of
this Article X and Sections 11.04 and 11.05 shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was Agent under this
Agreement. If no successor agent has accepted appointment as Agent by the date
which is 30 days following a retiring Agent's notice of resignation, the
retiring Agent's resignation shall nevertheless thereupon become effective and
the Lenders shall perform all of the duties of the Agent hereunder until such
time, if any, as the Majority Lenders appoint a successor agent as provided for
above.
10.10 Withholding Tax. (a) If any Lender is a "foreign
corporation, partnership or trust" within the meaning of the Code and such
Lender claims exemption from, or a reduction of, U.S. withholding tax under
Sections 1441 or 1442 of the Code, such Lender agrees with and in favor of the
Agent, to deliver to the Agent:
(i) if such Lender claims an exemption from, or a
reduction of, withholding tax under a United States tax treaty, two
properly completed and executed copies of IRS Form 1001 before the
payment of any interest in the first calendar year and before the
payment of any interest in each third succeeding calendar year during
which interest may be paid under this Agreement;
(ii) if such Lender claims that interest paid
under this Agreement is exempt from United States withholding tax
because it is effectively connected with a United States trade or
business of such Lender, two properly completed and executed copies of
IRS Form 4224 before the payment of any interest is due in the first
taxable year of
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such Lender and in each succeeding taxable year of such Lender during
which interest may be paid under this Agreement; and
(iii) such other form or forms as may be required
under the Code or other laws of the United States as a condition to
exemption from, or reduction of, United States withholding tax.
Such Lender agrees to promptly notify the Agent of any change
in circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form 1001 and
such Lender sells, assigns, grants a participation in, or otherwise transfers
all or part of the Obligations of the Company to such Lender, such Lender
agrees to notify the Agent of the percentage amount in which it is no longer
the beneficial owner of Obligations of the Company to such Lender. To the
extent of such percentage amount, the Agent will treat such Lender's IRS Form
1001 as no longer valid.
(c) If any Lender claiming exemption from United States
withholding tax by filing IRS Form 4224 with the Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations of the
Company to such Lender, such Lender agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the Code.
(d) If any Lender is entitled to a reduction in the
applicable withholding tax, the Agent may withhold from any interest payment to
such Lender an amount equivalent to the applicable withholding tax after taking
into account such reduction. However, if the forms or other documentation
required by subsection (a) of this Section are not delivered to the Agent, then
the Agent may withhold from any interest payment to such Lender not providing
such forms or other documentation an amount equivalent to the applicable
withholding tax imposed by Sections 1441 and 1442 of the Code, without
reduction.
(e) If the IRS or any other Governmental Authority of the
United States or other jurisdiction asserts a claim that the Agent did not
properly withhold tax from amounts paid to or for the account of any Lender
(because the appropriate form was not delivered or was not properly executed,
or because such Lender failed to notify the Agent of a change in circumstances
which rendered the exemption from, or reduction of, withholding tax
ineffective, or for any other reason) such Lender shall indemnify the Agent
fully for all amounts paid, directly or indirectly, by the Agent as tax or
otherwise, including penalties and interest, and including any taxes imposed by
any jurisdiction on the
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amounts payable to the Agent under this Section, together with all costs and
expenses (including Attorney Costs). The obligation of the Lenders under this
subsection shall survive the payment of all Obligations and the resignation or
replacement of the Agent.
(f) If any Lender is organized under the laws of any
jurisdiction other than the United States or any state or other political
subdivision thereof and if such Lender is not a "bank" or other Person
described in Section 881(c)(3) of the Code and cannot deliver IRS Form 1001 or
4224 pursuant to subsection 10.10(a) above, then such Lender shall deliver to
Agent for transmission to the Company, prior to or at the time such Lender
becomes a registered holder of any Note, an IRS Form W-8 (Certificate of
Foreign Status of the U.S. Department of Treasury) (or such successor and
related forms as may from time to time be adopted by the relevant U.S. taxing
authorities), together with an annual certificate stating that (1) such Lender
is not a "bank" within the meaning of Section 881(c)(3)(A) of the Code and (2)
such Lender shall promptly notify the Agent if, at any time, such Lender
determines that it is no longer in a position to provide such certificate to
the Agent and Company (or any other form of certification adopted by the
relevant U.S. taxing authorities for such purposes).
10.11 Collateral Matters. (a) The Agent is authorized on behalf of
all the Lenders, without the necessity of any notice to or further consent from
the Lenders, from time to time to take any action with respect to any
Collateral or the Collateral Documents which may be necessary to perfect and
maintain perfected the security interest in and Liens upon the Collateral
granted pursuant to the Collateral Documents.
(b) The Lenders irrevocably authorize the Agent, at its
option and in its discretion, to release any Lien granted to or held by the
Agent upon any Collateral (i) upon termination of the Commitments and payment
in full of all Loans and all other Obligations known to the Agent and payable
under this Agreement or any other Loan Document; (ii) constituting property
sold or to be sold or disposed of as part of or in connection with any
disposition permitted hereunder; (iii) constituting property in which the
Company or any Subsidiary owned no interest at the time the Lien was granted or
at any time thereafter; (iv) constituting property leased to the Company or any
Subsidiary under a lease which has expired or been terminated in a transaction
permitted under this Agreement or is about to expire and which has not been,
and is not intended by the Company or such Subsidiary to be, renewed or
extended; (v) consisting of an instrument evidencing Indebtedness or other debt
instrument, if the indebtedness evidenced thereby has been paid in full; or
(vi) if approved, authorized or ratified in writing by the Majority Lenders or
all the Lenders, as the case may be, as provided in subsection 11.01(f). Upon
request by the Agent at any time, the
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Lenders will confirm in writing the Agent's authority to release particular
types or items of Collateral pursuant to this subsection 10.11(b), provided
that the absence of any such confirmation for whatever reason shall not affect
the Agent's rights under this Section 10.11.
(c) Each Lender agrees with and in favor of each other
(which agreement shall not be for the benefit of the Company or any Subsidiary)
that the Company's obligation to such Lender under this Agreement and the other
Loan Documents is not and shall not be secured by any real property collateral
now or hereafter acquired by such Lender.
10.12 Co-Agents. None of the financial institutions identified on
the facing page, preamble or signature pages of this Agreement as a "co-agent"
shall have any right, power, obligation, liability, responsibility or duty
under this Agreement other than those applicable to all Lenders as such.
Without limiting the foregoing, none of the Lenders so identified as a
"co-agent" shall have or be deemed to have any fiduciary relationship with any
Lender. Each Lender acknowledges that it has not relied, and will not rely, on
any of the financial institutions so identified in deciding to enter into this
Agreement or in taking or not taking action hereunder.
ARTICLE XI
MISCELLANEOUS
11.01 Amendments and Waivers. No amendment or waiver of any
provision of this Agreement or any other Loan Document, and no consent with
respect to any departure by Holdings, the Company or any applicable Subsidiary
therefrom, shall be effective unless the same shall be in writing and signed by
the Majority Lenders (or by the Agent at the written request of the Majority
Lenders) and the Company and acknowledged by the Agent, and then any such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no such waiver,
amendment, or consent shall, unless in writing and signed by all the Lenders
and the Company and acknowledged by the Agent, do any of the following:
(a) increase or extend the Commitment of any Lender (or
reinstate any Commitment terminated pursuant to Section 9.02);
(b) postpone or delay any date fixed by this Agreement or
any other Loan Document for any payment of principal, interest, fees or other
amounts due to the Lenders (or any of them) hereunder or under any other Loan
Document, but not mandatory prepayments required by Section 2.07;
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(c) reduce the principal of, or the rate of interest
specified herein on any Loan, or (subject to clause (iii) below) any fees or
other amounts payable hereunder or under any other Loan Document;
(d) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which is required for the
Lenders or any of them to take any action hereunder; or
(e) amend this Section, or Section 2.14, or any provision
herein providing for consent or other action by all Lenders; or
(f) discharge any Guarantor, or release all or
substantially all of the Collateral except as otherwise may be provided in the
Collateral Document;
provided that this Section 11.01 does not apply to any Loan specific waivers,
solely administrative in nature (i.e., waivers of Interest Period tenors,
minimum borrowing amounts or integral multiples, pricing options, and notice
periods for fundings or paydowns, other than as specified in this Agreement),
for which approval may be given by Lenders having in excess of 50% of the Loan
Exposure for said specific Loan; and provided further, that (i) no amendment,
waiver or consent shall, unless in writing and signed by the Issuing Lender in
addition to the Majority Lenders or all Lenders, as the case may be, affect the
rights or duties of the Issuing Lender under this Agreement or any L/C-Related
Document relating to any Letter of Credit Issued or to be Issued by it, (ii) no
amendment, waiver or consent shall, unless in writing and signed by the Agent
in addition to the Majority Lenders or all the Lenders, as the case may be,
affect the rights or duties of the Agent under this Agreement or any other Loan
Document, and (iii) the Fee Letters and documents evidencing Specified Swap
Contracts may be amended, or rights or privileges thereunder waived, in a
writing executed by the parties thereto.
11.02 Notices. (a) All notices, requests, consents, approvals,
waivers and other communications shall be in writing (including, unless the
context expressly otherwise provides, by facsimile transmission, provided that
any matter transmitted by the Company by facsimile (i) shall be promptly
confirmed by a telephone call to the recipient at the number specified on
Schedule 11.02, and (ii) shall be followed promptly by delivery of a hard copy
original thereof) and mailed, faxed or delivered, to the address or facsimile
number specified for notices on Schedule 11.02; or, as directed to the Company
or the Agent, to such other address as shall be designated by such party in a
written notice to the other parties, and as directed to any other party, at
such other address as shall be designated by such party in a written notice to
the Company and the Agent.
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(b) All such notices, requests and communications shall,
when transmitted by overnight delivery, or faxed, be effective when delivered
for overnight (next-day) delivery, or transmitted in legible form by facsimile
machine, respectively, or if mailed, upon the third Business Day after the date
deposited into the U.S. mail, or if delivered, upon delivery; except that
notices pursuant to Article II or X to the Agent shall not be effective until
actually received by the Agent.
(c) Any agreement of the Agent and the Lenders herein to
receive certain notices by telephone or facsimile is solely for the convenience
and at the request of the Company. The Agent and the Lenders shall be entitled
to rely on the authority of any Person purporting to be a Person authorized by
the Company to give such notice and the Agent and the Lenders shall not have
any liability to the Company or other Person on account of any action taken or
not taken by the Agent or the Lenders in reliance upon such telephonic or
facsimile notice. The obligation of the Company to repay the Loans shall not
be affected in any way or to any extent by any failure by the Agent and the
Lenders to receive written confirmation of any telephonic or facsimile notice
or the receipt by the Agent and the Lenders of a confirmation which is at
variance with the terms understood by the Agent and the Lenders to be contained
in the telephonic or facsimile notice.
11.03 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Agent or any Lender, any right, remedy,
power or privilege hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege.
11.04 Costs and Expenses. The Company shall:
(a) whether or not the transactions contemplated hereby
are consummated, pay or reimburse BofA (including in its capacity as Agent)
within five Business Days after demand (subject to subsection 5.01(a)(v)) for
all reasonable out-of-pocket costs and expenses incurred by BofA (including in
its capacity as Agent) in connection with the development, preparation,
delivery, administration and execution of, and any amendment, supplement,
waiver or modification to (in each case, whether or not consummated), this
Agreement, any Loan Document and any other documents prepared in connection
herewith or therewith, and the consummation of the transactions contemplated
hereby and thereby, including reasonable Attorney Costs incurred by BofA
(including in its capacity as Agent) with respect thereto; and
(b) pay or reimburse the Agent, BARS and each Lender
within five Business Days after demand (subject to subsection 5.01(a)(v) for
all costs and expenses (including Attorney Costs)
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incurred by them in connection with the enforcement, attempted enforcement, or
preservation of any rights or remedies under this Agreement or any other Loan
Document during the existence of an Event of Default or after acceleration of
the Loans (including in connection with any "workout" or restructuring
regarding the Loans, and including in any Insolvency Proceeding or appellate
proceeding); and
(c) pay or reimburse BofA (including in its capacity as
Agent) within five Business Days after demand (subject to subsection 5.01(a)(v)
for all reasonable appraisal (including the allocated cost of internal
appraisal services), audit, environmental inspection and review (including the
allocated cost of such internal services), search and filing costs, fees and
expenses, incurred or sustained by BofA (including in its capacity as Agent) in
connection with the matters referred to under subsections (a) and (b) of this
Section.
11.05 Company Indemnification. (a) Whether or not the transactions
contemplated hereby are consummated, Holdings and the Company, jointly and
severally, shall indemnify, defend and hold the Agent-Related Persons, and each
Lender and each of its respective officers, directors, employees, counsel,
agents and attorneys-in-fact (each, an "Indemnified Person") harmless from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, charges, expenses and disbursements
(including Attorney Costs) of any kind or nature whatsoever which may at any
time (including at any time following repayment of the Loans and termination of
all Specified Swap Contracts and the termination, resignation or replacement of
the Agent or replacement of any Lender) be imposed on, incurred by or asserted
against any such Person in any way relating to or arising out of this Agreement
or any document contemplated by or referred to herein, or the transactions
contemplated hereby, or any action taken or omitted by any such Person under or
in connection with any of the foregoing, including with respect to any
investigation, litigation or proceeding (including any Insolvency Proceeding or
appellate proceeding) related to or arising out of this Agreement or the
Specified Swap Contracts or the Loans or the use of the proceeds thereof,
whether or not any Indemnified Person is a party thereto (all the foregoing,
collectively, the "Indemnified Liabilities"); provided, that Holdings and the
Company shall have no obligation hereunder to any Indemnified Person with
respect to Indemnified Liabilities resulting solely from the gross negligence
or willful misconduct of such Indemnified Person. The agreements in this
Section shall survive payment of all other Obligations.
(b) (i) The Company shall indemnify, defend and hold
harmless each Indemnified Person, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses or disbursements (including Attorney Costs and the allocated
cost of internal
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environmental audit or review services), which may be incurred by or asserted
against such Indemnified Person in connection with or arising out of any
pending or threatened investigation, litigation or proceeding, or any action
taken by any Person, with respect to any Environmental Claim. No action taken
by legal counsel chosen by the Agent or any Lender in defending against any
such investigation, litigation or proceeding or requested remedial, removal or
response action shall vitiate or any way impair the Company's obligation and
duty hereunder to indemnify and hold harmless the Agent and each Lender.
(ii) In no event shall any site visit, observation, or
testing by the Agent or any Lender (or any contractee of the Agent or any
Lender) be deemed a representation or warranty that Hazardous Materials are or
are not present in, on, or under, the site, or that there has been or shall be
compliance with any Environmental Law. Neither the Company nor any other
Person is entitled to rely on any site visit, observation, or testing by the
Agent or any Lender. Neither the Agent nor any Lender owes any duty of care to
protect the Company or any other Person against, or to inform the Company or
any other party of, any Hazardous Materials or any other adverse condition
affecting any site or property. Neither the Agent nor any Lender shall be
obligated to disclose to the Company or any other Person any report or findings
made as a result of, or in connection with, any site visit, observation, or
testing by the Agent or any Lender.
(c) Survival; Defense. The obligations in this Section
shall survive payment of all other Obligations. At the election of any
Indemnified Person, the Company shall defend such Indemnified Person using
legal counsel satisfactory to such Indemnified Person in such Person's sole
discretion, at the sole cost and expense of the Company. All amounts owing
under this Section shall be paid within 30 days after demand.
11.06 Marshalling; Payments Set Aside. Neither the Agent nor the
Lenders shall be under any obligation to marshall any assets in favor of the
Company or any other Person or against or in payment of any or all of the
Obligations. To the extent that the Company makes a payment to the Agent or
the Lenders, or the Agent or the Lenders exercise their right of set-off, and
such payment or the proceeds of such set- off or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required (including pursuant to any settlement entered into by the Agent or
such Lender in its discretion) to be repaid to a trustee, receiver or any other
party, in connection with any Insolvency Proceeding or otherwise, then (a) to
the extent of such recovery the obligation or part thereof originally intended
to be satisfied shall be revived and continued in full force and effect as if
such payment had not been made or such set-off had not occurred, and (b) each
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Lender severally agrees to pay to the Agent upon demand its pro rata share of
any amount so recovered from or repaid by the Agent.
11.07 Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Company may not assign or
transfer any of its rights or obligations under this Agreement without the
prior written consent of the Agent and each Lender.
11.08 Assignments, Participations, etc. (a) Any Lender may, with
the written consent of the Company at all times other than during the existence
of an Event of Default and of the Agent, which consents shall not be
unreasonably withheld, at any time assign and delegate to one or more Eligible
Assignees (provided that no written consent of the Company or the Agent shall
be required in connection with any assignment and delegation by a Lender to an
Eligible Assignee that is an Affiliate of such Lender or to another Lender)
(each an "Assignee") all, or any ratable part of (x) its Term Loan Commitment
and Term Loans, and (y) its Revolving Loan Commitment and Revolving Loans
(including its interest in the L/C Obligations), in each case together with the
other rights and obligations of such Lender hereunder with respect to the
Commitments and Loans being so assigned and delegated, in a minimum amount for
the Term Loan Commitment and Term Loans and for the Revolving Loan Commitment
and Revolving Loans of $10,000,000 or if less, all of such assignor Lender's
rights and obligations with respect to the Commitments and Loans being
assigned, as applicable; provided, however, that (i) the Company and the Agent
may continue to deal solely and directly with such Lender in connection with
the interest so assigned to an Assignee until (A) written notice of such
assignment, together with payment instructions, addresses and related
information with respect to the Assignee, shall have been given to the Company
and the Agent by such Lender and the Assignee; (B) such Lender and its Assignee
shall have delivered to the Company and the Agent an Assignment and Acceptance
in the form of Exhibit M ("Assignment and Acceptance") together with any Note
or Notes subject to such assignment and (C) the assignor Lender or Assignee has
paid to the Agent a processing fee in the amount of $3,000; and (ii) if the
assignor Lender or any of its Affiliates is a Swap Provider with respect to any
Specified Swap Contract, such Lender shall not assign all of its interest in
the Loans and the Commitments to an Assignee unless such Assignee, or an
Affiliate of such Assignee, shall also assume all obligations of such assignor
Lender or Affiliate with respect to such Specified Swap Contracts, with the
consent of the Company.
(b) From and after the date that the Agent notifies the
assignor Lender that it has received (and provided its consent with respect to)
an executed Assignment and Acceptance and payment of the above-referenced
processing fee, (i)
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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
and Acceptance, shall have the rights and obligations of a Lender under the
Loan Documents, and (ii) the assignor Lender shall, to the extent that rights
and obligations hereunder and under the other Loan Documents have been assigned
by it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Loan Documents. Agent will record the
information contained in the Assignment and Acceptance in the Register.
(c) Within five Business Days after its receipt of notice
by the Agent that it has received an executed Assignment and Acceptance and
payment of the processing fee, (and provided that it consents to such
assignment if such consent is required in accordance with subsection 11.08(a)),
the Company shall execute and deliver to the Agent, new Notes evidencing such
Assignee's assigned Loans and Commitment and, if the assignor Lender has
retained a portion of its Loans and its Commitment, replacement Notes in the
principal amount of the Loans retained by the assignor Lender (such Notes to be
in exchange for, but not in payment of, the Notes held by such Lender).
Immediately upon each Assignee's making its processing fee payment under the
Assignment and Acceptance, this Agreement shall be deemed to be amended to the
extent, but only to the extent, necessary to reflect the addition of the
Assignee and the resulting adjustment of the Commitments arising therefrom. The
Commitment allocated to each Assignee shall reduce such Commitments of the
assigning Lender pro tanto.
(d) Any Lender may at any time sell to one or more
commercial banks or other Persons not Affiliates of the Company (a
"Participant") participating interests in any Loans, the Commitment of that
Lender and the other interests of that Lender (the "originating Lender")
hereunder and under the other Loan Documents; provided, however, that (i) the
originating Lender's obligations under this Agreement shall remain unchanged,
(ii) the originating Lender shall remain solely responsible for the performance
of such obligations, (iii) the Company and the Agent shall continue to deal
solely and directly with the originating Lender in connection with the
originating Lender's rights and obligations under this Agreement and the other
Loan Documents, and (iv) no Lender shall transfer or grant any participating
interest under which the Participant has rights to approve any amendment to, or
any consent or waiver with respect to, this Agreement or any other Loan
Document, except to the extent such amendment, consent or waiver would require
unanimous consent of the Lenders as described in the first proviso to Section
11.01. In the case of any such participation, the Participant shall be entitled
to the benefit of Sections 4.01, 4.03 and 11.05 as though it were also a Lender
hereunder, and if amounts outstanding under this Agreement are due and unpaid,
or shall have been declared or shall have become due and payable upon the
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occurrence of an Event of Default, each Participant shall be deemed to have the
right of set-off in respect of its participating interest in amounts owing
under this Agreement to the same extent as if the amount of its participating
interest were owing directly to it as a Lender under this Agreement.
(e) Notwithstanding any other provision in this
Agreement, any Lender may at any time create a security interest in, or pledge,
all or any portion of its rights under and interest in this Agreement and the
Note held by it in favor of any Federal Reserve Bank in accordance with
Regulation A of the FRB or U.S. Treasury Regulation 31 CFR Section 203.14, and
such Federal Reserve Bank may enforce such pledge or security interest in any
manner permitted under applicable law.
11.09 Confidentiality. Each Lender agrees to take and to cause its
Affiliates to take normal and reasonable precautions and exercise due care to
maintain the confidentiality of all information identified as "confidential" or
"secret" by the Company, or otherwise known to such Lender to be non-public,
and provided to it by the Company or any Subsidiary, or by the Agent on the
Company's or such Subsidiary's behalf, under this Agreement or any other Loan
Document, and neither it nor any of its Affiliates shall use any such
information other than in connection with or in enforcement of this Agreement
and the other Loan Documents or in connection with other business now or
hereafter existing or contemplated with the Company or any Subsidiary; except
to the extent such information (i) was or becomes generally available to the
public other than as a result of disclosure by such Lender, or (ii) was or
becomes available on a non-confidential basis from a source other than the
Company, provided that such source is not bound by a confidentiality agreement
with the Company known to the Lender (all such non-excepted information being
"Confidential Information"); provided, however, that any Lender may disclose
Confidential Information (A) at the request or pursuant to any requirement of
any Governmental Authority to which the Lender is subject or in connection with
an examination of such Lender by any such authority; (B) pursuant to subpoena
or other court process; (C) when required to do so in accordance with the
provisions of any applicable Requirement of Law; (D) to the extent reasonably
required in connection with any litigation or proceeding to which the Agent,
any Lender or their respective Affiliates may be party; (E) to the extent
reasonably required in connection with the exercise of any remedy hereunder or
under any other Loan Document; (F) to such Lender's independent auditors and
other professional advisors; (G) to any Participant or Assignee, actual or
potential, provided that such Person agrees in writing to keep such information
confidential to the same extent required of the Lenders hereunder; (H) as to
any Lender or its Affiliate, as expressly permitted under the terms of any
other document or agreement regarding confidentiality to which the Company or
any
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Subsidiary is party or is deemed party with such Lender or such Affiliate; and
(I) to its Affiliates.
11.10 Set-off. In addition to any rights and remedies of the
Lenders provided by law, if an Event of Default exists or the Loans have been
accelerated, each Lender is authorized at any time and from time to time,
without prior notice to the Company, any such notice being waived by the
Company to the fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held by, and other indebtedness at any time owing by, such Lender to or
for the credit or the account of the Company against any and all Obligations
owing to such Lender, now or hereafter existing, irrespective of whether or not
the Agent or such Lender shall have made demand under this Agreement or any
Loan Document and although such Obligations may be contingent or unmatured.
Each Lender agrees promptly to notify the Company and the Agent after any such
set-off and application made by such Lender; provided, however, that the
failure to give such notice shall not affect the validity of such set-off and
application.
11.11 Automatic Debits of Fees. With respect to any commitment fee,
arrangement fee, or other fee, or any other cost or expense (including Attorney
Costs) due and payable to the Agent, BofA or BARS under the Loan Documents, the
Company hereby irrevocably authorizes BofA, to debit any deposit account of the
Company with BofA in an amount such that the aggregate amount debited from all
such deposit accounts does not exceed such fee or other cost or expense. BofA
will provide prompt written notice to the Company of any such debit. If there
are insufficient funds in such deposit accounts to cover the amount of the fee
or other cost or expense then due, such debits will be reversed (in whole or in
part, in BofA's sole discretion) and such amount not debited shall be deemed to
be unpaid. No such debit under this Section shall be deemed a set-off.
11.12 Notification of Addresses, Lending Offices, Etc. Each Lender
shall notify the Agent and the Company in writing of any changes in the address
to which notices to the Lender should be directed, of addresses of any Lending
Office, of payment instructions in respect of all payments to be made to it
hereunder and of such other administrative information as the Agent shall
reasonably request.
11.13 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.
11.14 Severability. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the
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legality or enforceability of the remaining provisions of this Agreement or any
instrument or agreement required hereunder.
11.15 No Third Parties Benefited. This Agreement is made and
entered into for the sole protection and legal benefit of the Company, the
Lenders, the Agent and the Agent-Related Persons, and their permitted
successors and assigns, and no other Person shall be a direct or indirect legal
beneficiary of, or have any direct or indirect cause of action or claim in
connection with, this Agreement or any of the other Loan Documents.
11.16 Governing Law and Jurisdiction. (a) THIS AGREEMENT AND
THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF
THE STATE OF CALIFORNIA; PROVIDED THAT THE AGENT AND THE LENDERS SHALL RETAIN
ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE
OF CALIFORNIA OR OF THE UNITED STATES FOR THE CENTRAL DISTRICT OF CALIFORNIA,
AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY, THE AGENT
AND THE LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF HOLDINGS, THE COMPANY, THE
AGENT AND THE LENDERS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION
TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN
SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO.
THE COMPANY, THE AGENT AND THE LENDERS EACH WAIVE PERSONAL SERVICE OF ANY
SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS
PERMITTED BY CALIFORNIA LAW.
(c) Nothing contained in this Section shall override any
contrary provision contained in any Specified Swap Contract.
11.17 Waiver of Jury Trial. HOLDINGS, THE COMPANY, THE LENDERS AND
THE AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE
OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN
ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE
PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR
ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE.
HOLDINGS, THE COMPANY, THE LENDERS AND THE AGENT EACH AGREE THAT ANY SUCH CLAIM
OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT
LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT
TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE
THE VALIDITY OR
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ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION
HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
11.18 Entire Agreement. This Agreement, together with the other
Loan Documents, embodies the entire agreement and understanding among Holdings,
the Company, the Lenders and the Agent, and supersedes all prior or
contemporaneous agreements and understandings of such Persons, verbal or
written, relating to the subject matter hereof and thereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered in Los Angeles, California by their proper and
duly authorized officers as of the day and year first above written.
WHITE CAP INDUSTRIES, CORP.
By: /s/ CHRIS LANE
-----------------------------
Title: CFO
--------------------------
By: [SIG]
-----------------------------
Title: TREASURER
--------------------------
WHITE CAP INDUSTRIES, CORP.
By: /s/ CHRIS LANE
-----------------------------
Title: CFO
--------------------------
By: [SIG]
-----------------------------
Title: TREASURER
--------------------------
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as Agent
By: /s/ DAVID F. MCLEESE
-----------------------------
David F. McLeese
Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as a
Lender and as Issuing Lender
By: /s/ DAVID F. MCLEESE
-----------------------------
David F. McLeese
Vice President
S-1
<PAGE> 123
BT COMMERCIAL CORPORATION
By: /s/ BRUCE W. ADDISON
---------------------------------
Bruce W. Addison
Vice President
S-2
<PAGE> 124
WELLS FARGO BANK, N.A.
By: /s/ JOHN P. MANNING
--------------------------------
John P. Manning
Vice President
S-3
<PAGE> 125
HARRIS TRUST AND SAVINGS BANK
By: /s/ DAVID HOWELL
--------------------------------
David Howell
Vice President
S-4
<PAGE> 126
HSBC BUSINESS LOANS, INC.
By: /s/ TOM SPINOGATTI
---------------------------------
Tom Spinogatti
Vice President
S-5
<PAGE> 127
SANWA BANK CALIFORNIA
By: /s/ ART DUNBAR
---------------------------------
Art Dunbar
Vice President
S-6
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SUMITOMO BANK OF CALIFORNIA
By: /s/ SAJEDA SIMJEE
---------------------------------
Sajeda Simjee
Vice President
S-7
