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CREDIT AGREEMENT
among
MARKETING SPECIALISTS CORPORATION
and certain of its subsidiaries,
as Borrowers,
THE CHASE MANHATTAN BANK,
as Agent,
and
the banks named herein
30 March 2000
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[LOGO] CHASE
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TABLE OF CONTENTS
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<S> <C> <C>
ARTICLE 1 Definitions.............................................................................................1
Section 1.1 Definitions............................................................................1
Section 1.2 Other Definitional Provisions.........................................................16
Section 1.3 Accounting Terms and Determinations...................................................16
Section 1.4 Time of Day...........................................................................16
ARTICLE 2 Revolving Credit Facility..............................................................................17
Section 2.1 Commitments...........................................................................17
Section 2.2 Notes.................................................................................17
Section 2.3 Repayment of Loans....................................................................17
Section 2.4 Use of Proceeds.......................................................................17
Section 2.5 Commitment Fee........................................................................17
Section 2.6 Termination or Reduction of Commitments...............................................17
Section 2.7 Letters of Credit.....................................................................18
ARTICLE 3 Interest and Fees......................................................................................20
Section 3.1 Interest Rate.........................................................................20
Section 3.2 Determinations of Margins and Fees....................................................20
Section 3.3 Payment Dates.........................................................................21
Section 3.4 Default Interest......................................................................21
Section 3.5 Conversions and Continuations of Accounts.............................................21
Section 3.6 Computations..........................................................................22
ARTICLE 4 Administrative Matters.................................................................................22
Section 4.1 Borrowing Procedure...................................................................22
Section 4.2 Minimum Amounts.......................................................................22
Section 4.3 Certain Notices.......................................................................23
Section 4.4 Prepayments...........................................................................23
Section 4.5 Method of Payment.....................................................................24
Section 4.6 Weekly Settlement Among Banks; Pro Rata Treatment.....................................25
Section 4.7 Sharing of Payments...................................................................26
Section 4.8 Non-Receipt of Funds by the Agent.....................................................26
Section 4.9 Withholding Taxes.....................................................................26
Section 4.10 Withholding Tax Exemption.............................................................27
Section 4.11 Participation and Settlement Obligations Absolute; Failure to Fund Participation
or Settlement.........................................................................27
Section 4.12 Borrowers' Acknowledgment of Benefit and Liability....................................28
Section 4.13 Limitation of Borrower Liability......................................................28
Section 4.14 Contribution; Subrogation.............................................................28
Section 4.15 Joint and Several Obligations Absolute................................................29
Section 4.16 Subordination.........................................................................29
ARTICLE 5 Yield Protection and Illegality........................................................................30
Section 5.1 Additional Costs......................................................................31
Section 5.2 Limitation on Libor Accounts..........................................................32
Section 5.3 Illegality............................................................................32
Section 5.4 Treatment of Affected Loans...........................................................32
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Section 5.5 Compensation..........................................................................33
Section 5.6 Capital Adequacy......................................................................33
Section 5.7 Replacement of a Bank.................................................................34
ARTICLE 6 Conditions Precedent...................................................................................34
Section 6.1 Initial Loan and Letter of Credit.....................................................34
Section 6.2 All Loans and Letters of Credit.......................................................36
ARTICLE 7 Representations and Warranties.........................................................................37
Section 7.1 Corporate Existence...................................................................37
Section 7.2 Financial Statements..................................................................37
Section 7.3 Corporate Action; No Breach...........................................................37
Section 7.4 Operation of Business.................................................................38
Section 7.5 Litigation and Judgments..............................................................38
Section 7.6 Rights in Properties; Liens...........................................................38
Section 7.7 Enforceability........................................................................38
Section 7.8 Approvals.............................................................................38
Section 7.9 Debt..................................................................................38
Section 7.10 Taxes.................................................................................39
Section 7.11 Margin Securities.....................................................................39
Section 7.12 ERISA.................................................................................39
Section 7.13 Disclosure............................................................................39
Section 7.14 Subsidiaries; Borrower Capitalization.................................................39
Section 7.15 Agreements............................................................................40
Section 7.16 Compliance with Laws..................................................................40
Section 7.17 Investment Company Act................................................................40
Section 7.18 Public Utility Holding Company Act....................................................40
Section 7.19 Environmental Matters.................................................................40
Section 7.20 Solvency..............................................................................41
Section 7.21 Perishable Agricultural Commodities Act...............................................41
Section 7.22 Packers and Stockyards Act............................................................41
Section 7.23 Common Enterprise; Benefit Received...................................................41
Section 7.24 Year 2000.............................................................................41
Section 7.25 Indenture.............................................................................42
ARTICLE 8 Positive Covenants.....................................................................................42
Section 8.1 Reporting Requirements................................................................42
Section 8.2 Maintenance of Existence; Conduct of Business.........................................44
Section 8.3 Maintenance of Properties.............................................................44
Section 8.4 Taxes and Claims......................................................................44
Section 8.5 Insurance.............................................................................44
Section 8.6 Inspection Rights; Receivable Verification............................................44
Section 8.7 Keeping Books and Records.............................................................45
Section 8.8 Compliance with Laws..................................................................45
Section 8.9 Compliance with Agreements............................................................45
Section 8.10 Further Assurance.....................................................................45
Section 8.11 ERISA.................................................................................46
ARTICLE 9 Negative Covenants.....................................................................................46
Section 9.1 Debt..................................................................................46
Section 9.2 Limitation on Liens and Restrictions on Subsidiaries..................................47
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Section 9.3 Mergers, Etc..........................................................................48
Section 9.4 Restricted Junior Payments............................................................49
Section 9.5 Investments...........................................................................49
Section 9.6 Limitation on Issuance of Capital Stock...............................................50
Section 9.7 Transactions With Affiliates..........................................................50
Section 9.8 Disposition of Assets.................................................................50
Section 9.9 Sale and Leaseback....................................................................51
Section 9.10 Lines of Business.....................................................................51
Section 9.11 Prepayment of Debt....................................................................51
Section 9.12 First Union Loan Agreement............................................................51
Section 9.13 Modifications to Senior Note Documents................................................51
Section 9.14 Designation of Senior Debt............................................................51
ARTICLE 10 Financial Covenants...................................................................................52
Section 10.1 Minimum Fixed Charges Coverage Ratio..................................................52
Section 10.2 Maximum Debt to EBITDA Ratio..........................................................52
Section 10.3 Deleted...............................................................................52
Section 10.4 Minimum Interest Coverage Ratio.......................................................52
Section 10.5 Minimum EBITDA........................................................................52
Section 10.6 Capital Expenditure Limits............................................................53
ARTICLE 11 Default...............................................................................................53
Section 11.1 Events of Default.....................................................................53
Section 11.2 Remedies..............................................................................57
Section 11.3 Cash Collateral.......................................................................58
Section 11.4 Performance by the Agent..............................................................58
Section 11.5 Setoff................................................................................58
Section 11.6 Continuance of Default................................................................59
ARTICLE 12 The Agent.............................................................................................59
Section 12.1 Appointment, Powers and Immunities....................................................59
Section 12.2 Rights of Agent as a Bank.............................................................59
Section 12.3 Defaults..............................................................................60
Section 12.4 Indemnification.......................................................................60
Section 12.5 Independent Credit Decisions..........................................................60
Section 12.6 Several Commitments...................................................................61
Section 12.7 Successor Agent.......................................................................61
Section 12.8 Administrative Fee....................................................................61
ARTICLE 13 Miscellaneous.........................................................................................61
Section 13.1 Expenses..............................................................................61
Section 13.2 Indemnification.......................................................................62
Section 13.3 Limitation of Liability...............................................................62
Section 13.4 No Duty...............................................................................63
Section 13.5 No Fiduciary Relationship.............................................................63
Section 13.6 Equitable Relief......................................................................63
Section 13.7 No Waiver; Cumulative Remedies........................................................63
Section 13.8 Successors and Assigns................................................................63
Section 13.9 Survival..............................................................................65
Section 13.10 ENTIRE AGREEMENT......................................................................65
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Section 13.11 Amendments............................................................................65
Section 13.12 Maximum Interest Rate.................................................................66
Section 13.13 Notices...............................................................................66
Section 13.14 Governing Law, Etc....................................................................66
Section 13.15 Counterparts..........................................................................67
Section 13.16 Severability..........................................................................67
Section 13.17 Headings..............................................................................67
Section 13.18 Non-Application of Chapter 346 of Texas Finance Code..................................67
Section 13.19 Construction..........................................................................67
Section 13.20 Independence of Covenants.............................................................67
Section 13.21 WAIVER OF JURY TRIAL..................................................................67
Section 13.22 Confidentiality.......................................................................68
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INDEX TO EXHIBITS
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EXHIBIT DESCRIPTION OF EXHIBIT
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"A" Note
"B" Compliance Certificate
"C" Borrowing Base Report
"D" Security Agreement
"E" Assignment and Acceptance
"F" Guaranty Agreement
"G" Receivables Report
INDEX TO SCHEDULES
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SCHEDULE DESCRIPTION OF SCHEDULE
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1.1(a) Previous Senior Debt
1.1(b) Monroe Litigation
7.9 Debt Levels
7.14 List of Subsidiaries; List of Parent's
Shareholders
9.1 Debt
9.2 Existing Liens
9.5 Existing Investments
9.7 Permitted Affiliate Transactions
INDEX TO EXHIBITS AND SCHEDULES, Solo Page
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT (the "AGREEMENT"), dated as of March 30, 2000, is
among MARKETING SPECIALISTS CORPORATION, a corporation duly organized and
validly existing under the laws of the State of Delaware (the "PARENT"), PAUL
INMAN ASSOCIATES, INC. ("PIA"), a corporation duly organized and validly
existing under the laws of the State of Michigan, MARKETING SPECIALISTS SALES
COMPANY ("MSSC"), a corporation duly organized and validly existing under the
laws of the State of Texas, BROMAR, INC. ("BROMAR"), a corporation duly
organized and validly existing under the laws of the State of California,
(Parent, PIA, MSSC, and Bromar, collectively, the "BORROWERS"), each of the
banks or other lending institutions which is or which may from time to time
become a signatory hereto or any successor or assignee thereof pursuant to
SECTION 13.8 hereof (individually, a "BANK" and, collectively, the "BANKS"), and
THE CHASE MANHATTAN BANK, individually as a Bank and as agent for itself and the
other Banks (in its capacity as agent, together with its successors in such
capacity, the "AGENT").
R E C I T A L S:
The Borrowers have requested that the Banks extend credit to the Borrowers
in the form of a revolving credit facility. The Banks are willing to extend such
credit to the Borrowers upon the terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 DEFINITIONS. As used in this Agreement, the following terms
have the following meanings:
"ACCOUNT" means either a Base Rate Account or a Libor Account.
"ADDITIONAL COSTS" has the meaning specified in SECTION 5.1 hereof.
"ADDITIONAL DEBT" has the meaning specified in SECTION 9.1 hereof.
"ADJUSTED EBITDA" has the meaning specified in SECTION 10.2 hereof.
"ADJUSTED LIBOR RATE" means, for any Libor Account for any Interest Period
therefor, the rate per annum determined by the Agent to be equal to the Libor
Rate for such Libor Account for such Interest Period divided by 1 minus the
Reserve Requirement for such Libor Account for such Interest Period.
"ADJUSTED MAXIMUM AMOUNT" has the meaning specified in SECTION 4.14 hereof.
"ADJUSTMENT DATE" has the meaning specified in SECTION 3.2 hereof.
"AFFILIATE" means, as to any Person, any other Person (a) that directly or
indirectly, through one or more intermediaries, controls or is controlled by, or
is under common control with, such Person; (b) that directly or indirectly
beneficially owns or holds ten percent (10%) or more of any class of voting
stock of
CREDIT AGREEMENT - Page 1
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such Person; or (c) ten percent (10%) or more of the voting stock of which is
directly or indirectly beneficially owned or held by the Person in question.
The term "control" means the possession, directly or indirectly, of the power
to direct or cause direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract, or
otherwise; PROVIDED, HOWEVER, in no event shall the Agent or any Bank be
deemed an Affiliate of any Borrower.
"AGENT" has the meaning set forth in the introductory paragraph of this
Agreement.
"AGGREGATE BORROWING AVAILABILITY" means the sum of all the Borrowers'
Borrowing Availability.
"AGGREGATE PAYMENTS" has the meaning specified in SECTION 4.14 hereof.
"AGREEMENT" has the meaning set forth in the introductory paragraph of this
Agreement.
"APPLICABLE LENDING OFFICE" means for each Bank and each Type of Account,
the lending office of such Bank (or of an Affiliate of such Bank) designated for
such Account below its name on the signature pages hereof or such other office
of such Bank (or of an Affiliate of such Bank) as such Bank may from time to
time specify to the Borrower and the Agent as the office by which its Loans
subject to Accounts of such Type are to be made and maintained.
"APPLICABLE RATE" has the meaning specified in SECTION 3.1 hereof.
"ASSIGNEE" has the meaning specified in SECTION 13.8 hereof.
"ASSIGNING BANK" has the meaning specified in SECTION 13.8 hereof.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered into
by a Bank and its assignee and accepted by the Agent pursuant to SECTION 13.8
hereof, in substantially the form of EXHIBIT "E" hereto.
"AVAILABLE CASH" has the meaning specified in SECTION 4.4(b).
"BANK" has the meaning set forth in the introductory paragraph of this
Agreement.
"BANKRUPTCY CODE " has the meaning specified in SECTION 11.1 hereof.
"BASE MARGIN" has the meaning specified in SECTION 3.2 hereof.
"BASE RATE" means, for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greater of (a) the Prime Rate
(computed on the basis of the actual number of days elapsed over a year of 365
or 366 days, as the case may be) in effect on such day, (b) the Federal Funds
Effective Rate (computed on the basis of the actual number of days elapsed over
a 360-day year) in effect for such day plus one-half of one percent (0.5%), or
(c) the Base CD Rate in effect for such day plus one percent (1%). For purposes
of this Agreement, any change in the Base Rate due to a change in the Prime
Rate, Federal Funds Effective Rate or the Base CD Rate shall be effective on the
effective date of such change in the Prime Rate, Federal Funds Effective Rate or
the Base CD Rate, respectively. If for any reason the Agent shall have
determined (which determination shall be conclusive and binding, absent manifest
error) that it is unable to ascertain the Federal Funds Effective Rate or Base
CD Rate, or both, for any reason, including the inability or failure of the
Agent to obtain sufficient quotations in accordance with the terms hereof, the
Base Rate shall be determined without regard to clause (b) or (c), or both, as
CREDIT AGREEMENT - Page 2
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appropriate, until the circumstances giving rise to such inability no longer
exist. As used in this definition, the following terms shall have the following
meanings:
"ASSESSMENT RATE" shall mean the annual assessment rate (net of
refunds and rounded upwards, if necessary, to the next 1/16 of 1%)
estimated by the Agent (in good faith, but in no event in excess of
statutory or regulatory maximums) to be payable by the Agent to the Federal
Deposit Insurance Corporation (or any successor) for insurance by such
Corporation (or such successor) of time deposits made in Dollars at the
Agent's domestic offices during the current calendar year.
"BASE CD RATE" shall mean the sum of (a) the product of (i) the
Three-Month Secondary CD Rate and (ii) Statutory Reserves and (b) the
Assessment Rate.
"PRIME RATE" shall mean the rate of interest per annum publicly
announced from time to time by The Chase Manhattan Bank, or its successor
financial institution, at the Principal Office as its prime rate in effect
at such time. Without notice to any Borrower or any other Person, the Prime
Rate shall change automatically from time to time as and in the amount by
which said prime rate shall fluctuate, with each such change to be
effective as of the date of each change in such prime rate. THE PRIME RATE
IS A REFERENCE RATE AND DOES NOT NECESSARILY REPRESENT THE LOWEST OR BEST
RATE ACTUALLY CHARGED BY THE CHASE MANHATTAN BANK OR SUCH SUCCESSOR
FINANCIAL INSTITUTION TO ANY OF ITS CUSTOMERS. THE CHASE MANHATTAN BANK OR
SUCH SUCCESSOR FINANCIAL INSTITUTION MAY MAKE COMMERCIAL LOANS OR OTHER
LOANS AT RATES OF INTEREST AT, ABOVE AND BELOW THE PRIME RATE.
"STATUTORY RESERVES" shall mean a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is
the number one minus the aggregate of the maximum reserve percentage
(including without limitation, any marginal, special, emergency or
supplemental reserves) expressed as a decimal, established by the Board of
Governors of the Federal Reserve System of the United States or any banking
authority to which The Chase Manhattan Bank is subject with respect to the
Base CD Rate for new negotiable non-personal time deposits in Dollars of
over One Hundred Thousand Dollars ($100,000) with maturities approximately
equal to three months. Statutory Reserves shall be adjusted automatically
on and as of the effective date of any change in any applicable reserve
percentage.
"THREE-MONTH SECONDARY CD RATE" shall mean, for any day, the secondary
market rate for three-month certificates of deposit reported as being in
effect on such day (or, if such day shall not be a Business Day, the next
preceding Business Day) by the Board of Governors of the Federal Reserve
System of the United States through the public information telephone line
of the Federal Reserve Bank of New York (which rate will, under the current
practices of such Board of Governors, be published in Federal Reserve
Statistical Release H.15(519) during the week following such day), or, if
such rate shall not be so reported on such day or such next preceding
Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New York
City received at approximately 10:00 a.m. on such day (or, if such day
shall not be a Business Day, on the next preceding Business Day) by the
Agent from three New York City negotiable certificate of deposit dealers of
recognized standing selected by the Agent.
CREDIT AGREEMENT - Page 3
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"BASE RATE ACCOUNT" means a portion of a Loan that bears interest at a rate
based upon the Base Rate.
"BORROWERS" has the meaning set forth in the introductory paragraph of this
Agreement.
"BROMAR" has the meaning set forth in the introductory paragraph of this
Agreement.
"BORROWING AVAILABILITY" means, at any date of determination, the amount by
which the lesser of the Commitments or the Borrowing Base exceed the Outstanding
Revolving Credit or, when determined with respect to a Borrower, the amount that
such Borrower's Borrowing Base exceeds the Outstanding Revolving Credit
applicable to such Borrower.
"BORROWING BASE" means, with respect to a Borrower, at any time and
calculated without duplication based on the Borrowing Base Report most recently
delivered at such time pursuant to SECTION 8.1(d) (or pursuant to SECTION
6.1(k)), an amount equal to the sum of the following (calculated separately for
each Borrower):
(a) the sum of (i) aggregate amount of Eligible Accounts MINUS (ii)
the aggregate amount of all of such Borrower's cash collections on
Receivables which have not been applied to the Receivables as of the date
of the preparation of the Borrowing Base Report; multiplied by the Advance
Percent; PLUS
(b) the amount of cash or cash equivalents that are, in the Agent's
sole judgment, pledged to the Agent as collateral for the Obligations;
MINUS
(c) the aggregate amount of the reserves established by the Agent at
any time and from time to time after the Closing Date, that the Agent
determines are necessary to protect the Banks' interests, such
determination to be made in the Agent's sole judgment, in good faith and
based on information which, in its judgment, supports such determination;
PROVIDED, THAT, at any time after the Agent has established a reserve, such
reserve may only be released in an amount greater than $2,000,000 upon the
consent of the Required Banks.
As used in this definition, the term "ADVANCE PERCENT" means eighty-two
percent (82%) or such other percent as the Agent may, at any time hereafter,
determine is necessary to protect its interests, such determination to be made
in the Agent's sole judgment, in good faith and based on information which, in
its judgment, supports such determination. Any change in the Advance Percent and
any establishment of reserves shall be effective on the date Parent receives
Agent's written notice of such. The Eligible Accounts attributable to any
Subsidiary acquired in the Pending Acquisition shall not be included in any
calculation of the Borrowing Base until such time as such Subsidiary is included
as a "Borrower" under this Agreement pursuant to the terms of SECTION 13.11.
"BORROWING BASE REPORT" means a report in substantially the form of EXHIBIT
"C" hereto properly completed and executed by the chief executive officer,
treasurer or chief financial officer of Parent.
"BUSINESS DAY" means (a) any day excluding Saturday, Sunday and any day
which either is a legal holiday under the laws of the States of New York or
Texas or is a day on which banking institutions located in any such States are
closed, and (b) with respect to all borrowings, payments, Conversions,
Continuations, Interest Periods, and notices in connection with Loans subject to
Libor Accounts, any day which is a Business Day described in clause (a) above
and which is also a day on which dealings in Dollar deposits are carried out in
the London interbank market.
CREDIT AGREEMENT - Page 4
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"CALCULATION PERIOD" has the meaning specified in SECTION 3.2 hereof.
"CAPITAL EXPENDITURES" means, for any period, all expenditures which are
classified as capital expenditures in accordance with GAAP including all such
expenditures associated with Capital Lease Obligations.
"CAPITAL EXPENDITURE LIMITS" has the meaning specified in SECTION 10.6
hereof.
"CAPITAL LEASE OBLIGATIONS" means, as to any Person, the obligations of
such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) real and/or personal property, which obligations are
required to be classified and accounted for as a capital lease on a balance
sheet of such Person under GAAP. For purposes of this Agreement, the amount of
such Capital Lease Obligations shall be the capitalized amount thereof,
determined in accordance with GAAP.
"CLOSING DATE" means March 30, 2000.
"CODE" means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated and rulings issued thereunder.
"COLLATERAL" means the property in which Liens have been granted pursuant
to the Security Agreement, whether such Liens are now existing or hereafter
arise.
"COMMITMENT" means, as to each Bank, the obligation of such Bank to make
advances of funds and purchase participation interests in (or with respect to
the Agent as a Bank, hold other interests in) Letters of Credit in an aggregate
principal amount at any one time outstanding up to but not exceeding the amount
set forth opposite the name of such Bank on the signature pages hereto under the
heading "Commitment" or, if applicable, in its most recent Assignment and
Acceptance. The Commitment of a Bank and the Commitments of all the Banks may be
reduced or terminated pursuant to SECTION 2.6 or SECTION 11.2 hereof. The
aggregate amount of the Commitments of all Banks is Fifty Million Dollars
($50,000,000).
"COMMITMENT PERCENTAGE" means, as to any Bank, the percentage equivalent of
a fraction the numerator of which is the amount of such Bank's Commitment and
the denominator of which is the aggregate amount of the Commitments for all of
the Banks.
"COMPLIANCE CERTIFICATE" means a certificate in substantially the form of
EXHIBIT "B" hereto, properly completed and executed by the chief executive
officer, treasurer or chief financial officer of Parent.
"CONCENTRATION ACCOUNT" shall mean a deposit account established at the
Agent by the Borrowers and controlled by the Agent for the benefit of the Banks
in which all funds received through the Lockbox Accounts shall be deposited.
"CONTINUE", "CONTINUATION", and "CONTINUED" shall refer to the continuation
pursuant to SECTION 3.5 or ARTICLE 5 hereof of a Libor Account as a Libor
Account from one Interest Period to the next Interest Period.
"CONTRACT RATE" has the meaning specified in SECTION 13.12 hereof.
"CONTRIBUTING OBLIGORS " has the meaning specified in SECTION 4.14 hereof.
CREDIT AGREEMENT - Page 5
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"CONVERT", "CONVERSION", and "CONVERTED" shall refer to a conversion
pursuant to SECTION 3.5 or ARTICLE 5 hereof of one Type of Account into the
other Type of Account.
"DEBT" means as to any Person at any time (without duplication): (a) all
obligations of such Person for borrowed money, including, without limitation,
any notes payable to the seller in connection with any acquisition and the
Loans; (b) all obligations of such Person evidenced by bonds, notes, debentures,
or other similar instruments; (c) all obligations of such Person to pay the
deferred purchase price of property or services, except trade accounts payable
of such Person arising in the ordinary course of business that are not past due
by more than ninety (90) days or that are being contested in good faith by
appropriate proceedings diligently pursued and for which adequate reserves have
been established; (d) all Capital Lease Obligations of such Person; (e) all Debt
or other obligations of others Guaranteed by such Person; (f) all obligations
secured by a Lien existing on property owned by such Person, whether or not the
obligations secured thereby have been assumed by such Person or are non-recourse
to the credit of such Person; (g) all reimbursement obligations of such Person
(whether contingent or otherwise) in respect of letters of credit, bankers'
acceptances, surety or other bonds and similar instruments (including those
outstanding with respect to Letters of Credit); (h) all liabilities of such
Person in respect of unfunded vested benefits under any Plan; (i) all
liabilities of such Person under Hedging Agreements; (j) all obligations of such
Person, contingent or otherwise, for the payment of money under any noncompete,
consulting or any other similar arrangements providing for the deferred payment
of the purchase price for an acquisition; and (k) all other amounts which are,
in accordance with GAAP, required to be reflected as liabilities on a
consolidated balance sheet of such Person other than accruals and deferred
taxes.
"DEFAULT" means an Event of Default or the occurrence of an event or
condition which with notice or lapse of time or both would become an Event of
Default.
"DEFAULT RATE" means, with respect to a Loan subject to a Libor Account, a
per annum rate equal to the sum of two percent (2%) plus the interest rate for
such Loan as provided in SECTION 3.1 hereof and, for all other purposes, a per
annum rate equal to the sum of two percent (2%) plus the Applicable Rate for
Base Rate Accounts under the Loans as in effect from time to time.
"DESIGNATED INFORMATION" has the meaning specified in SECTION 13.22 hereof.
"DG" has the meaning set forth in the introductory paragraph of this
Agreement.
"DISBURSEMENT ACCOUNTS" means the controlled disbursement accounts of any
Borrower which are designated by the Agent in writing as "Disbursement
Accounts".
"DOLLARS" and "$" mean lawful money of the United States of America.
"EBITDA" means, for any period and any Person, the total of the following,
each calculated without duplication for such Person on a consolidated basis for
such period: (a) Net Income; PLUS (b) any provision for (or less any benefit
from) income or franchise taxes included in determining Net Income; PLUS (c)
interest expense deducted in determining Net Income; PLUS (d) amortization and
depreciation expense deducted in determining Net Income; PLUS (e) other noncash
charges deducted in determining consolidated net income and not already deducted
in accordance with clauses (b) and (c) of the definition of Net Income.
CREDIT AGREEMENT - Page 6
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"ELIGIBLE ACCOUNT" means an account of a Borrower created from the
performance of services or the sale of goods by such Borrower in the ordinary
course of business (herein a "RECEIVABLE") which at all times comply with all of
the following requirements:
(i) The Receivable and the transaction giving rise thereto each comply
with all applicable laws, rules, and regulations, including, without
limitation, usury laws;
(ii) The Receivable has been billed and invoiced in a timely fashion
and in the normal course of business, has not been outstanding for more
than one hundred and twenty (120) days past the original date of invoice
and is not more than ninety (90) days past due;
(iii) The Receivable arises from an enforceable contract and the
applicable Borrower is not in default of the terms thereof;
(iv) The services reflected on the applicable invoice have been
completely performed by the applicable Borrower or, if arising from the
sale of goods, the goods reflected on the applicable invoice have been
delivered to the account debtor and, in each case, the applicable account
debtor has not objected to such account debtor's liability thereon;
(v) The applicable Borrower has good and indefeasible title to the
Receivable and the Receivable is not subject to any Lien except Liens in
favor of the Agent;
(vi) The Receivable is subject to a first priority, perfected Lien in
favor of the Agent and is payable to a Lockbox Account covered by an
agreement of the type described in SECTION 6.1(g)(iii) of this Agreement;
(vii) The account debtor or other obligor thereunder is not insolvent
or the subject of any bankruptcy or insolvency proceeding and has not made
an assignment for the benefit of creditors, suspended normal business
operations, dissolved, liquidated, terminated its existence, ceased to pay
its debts as they become due, or suffered a receiver or trustee to be
appointed for any of its assets or affairs;
(viii) The Receivable is not evidenced by chattel paper or an
instrument;
(ix) The applicable Borrower's performance of the contract to which
the Receivable relates is not assured by a performance, completion, or
other bond;
(x) The Receivable is not owed by an Affiliate of the applicable
Borrower or a director, officer, agent, stockholder or employee of such
Borrower or by such Borrower to another Borrower;
(xi) The Receivable is payable in Dollars by the account debtor or
other obligor thereunder;
(xii) The account debtor or other Person obligated on such Receivable
is domiciled in the United States of America or, if not so domiciled, the
Receivable is backed by a satisfactory letter of credit that is issued or
confirmed by a bank located in the United States of America that has been
delivered to the agent as Collateral and is
CREDIT AGREEMENT - Page 7
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otherwise acceptable to the Agent or insured by credit insurance acceptable
to the Agent in which the Agent has been named as a loss payee;
(xiii) Not more than fifty percent (50%) of the aggregate amount of
the Receivables owed by the account debtor or other Person obligated
thereon and its Affiliates to any Borrower, on an aggregate basis, are more
than ninety (90) days past due or have been outstanding for more than
one-hundred twenty (120) days past the original invoice date;
(xiv) The account debtor or other Person obligated thereon is not a
Government Authority unless the Federal Assignment of Claims Act of 1940,
as amended, or any similar statute shall have been complied with to the
satisfaction of the Agent;
(xv) The Receivable has not been and is not required to be charged or
written off as uncollectible in accordance with GAAP;
(xvi) If the Receivable is owing by an account debtor for which the
applicable Borrower must have filed a "Notice of Business Activities
Report" or similar report in a state or states where failure to comply with
such filing of notice precludes bringing suit against the applicable
account debtor, the applicable Borrower must have filed such requisite
activities report or other similar report and otherwise be in full
compliance with such legal requirement;
(xvii) The Receivable does not arise from the sale of perishable
agricultural commodities (as that term is defined in the Perishable
Agricultural Commodities Act, as amended (7 U.S.C. Section 499e(c)) and the
regulations promulgated thereunder) purchased and owned by the Borrower or
livestock (as that term is defined in the Packers and Stockyards Act, as
amended (7 U.S.C. Section 181-229) and the regulations thereunder)
purchased and owned by the Borrower;
(xviii) The goods of sale which gave rise to such Receivable (a) were
owned solely by the Borrower free and clear of all Liens other than the
Liens of the Agent and First Union National Bank therein, (b) were
delivered to the account debtor on an absolute sale basis and not on
consignment, a sale or return basis, a guaranteed sale basis, a bill and
hold basis, or on the basis of any similar understanding and (c) have not
been returned, rejected, repossessed, lost or damaged; and
(xix) The Receivable is not an Excluded Account. The term "Excluded
Account" means a Receivable that has been identified by the Agent (by a
notice to Parent) as being unacceptable for inclusion in the Borrowing Base
because the Agent has determined that the credit standing of the applicable
account debtor in relation to the amount of credit extended has become
unsatisfactory, the account debtor or other Person obligated on such
Receivable is not otherwise creditworthy or the Agent might not otherwise
be able to receive the full amount of the Receivable within a reasonable
period of time and at a reasonable cost of collection if it sought to
realize on its security interest therein, such determination to be made in
the Agent's judgment, in good faith and based on information which, in its
judgment, supports such determination.
The aggregate amount of the Eligible Accounts owed by an account debtor or other
Person to any Borrower shall be reduced by the amount of all "contra accounts"
and other obligations owed by such
CREDIT AGREEMENT - Page 8
<PAGE>
Borrower to such account debtor or other Person. The amount of the Eligible
Accounts owed by an account debtor or other Person shall be reduced by the
amount thereof which is subject to any setoff, counterclaim, defense,
dispute, recoupment, chargeback or other adjustment. The portion of any
Receivable constituting retainage that has been withheld by the account
debtor or other obligor shall not constitute an Eligible Account. If the
aggregate amount of the Receivables due from a single account debtor or other
Person obligated thereon exceeds an aggregate amount equal to ten percent
(10%) of the aggregate of all Receivables of a Borrower at the time of
determination, the amount of the excess shall be subtracted from all Eligible
Accounts of such Borrower unless such excess is backed by a letter of credit
acceptable to the Agent or secured by credit insurance under which the Agent
has been named as loss payee and which is issued on terms acceptable to the
Agent. Notwithstanding anything to the contrary contained in this Agreement
or any other Loan Document, no Receivables of any Borrower who has been sold
or substantially all of whose assets have been sold after the Closing Date
shall be included within Eligible Accounts, unless and until the Agent shall
have conducted a field examination (at the Borrowers' cost and expense) of
such Borrower's books, records and operations in order to reasonably satisfy
the Agent that the Receivables of such Borrower generally satisfy the
above-described standards of eligibility.
"ELIGIBLE ASSIGNEE " has the meaning specified in SECTION 13.8 hereof.
"ENVIRONMENTAL LAWS" means any and all federal, state, and local laws,
regulations, and requirements pertaining to health, safety, or the environment,
as such laws, regulations, and requirements may be amended or supplemented from
time to time.
"ENVIRONMENTAL LIABILITIES" means, as to any Person, all liabilities,
obligations, responsibilities, Remedial Actions, losses, damages, punitive
damages, consequential damages, treble damages, costs, and expenses (including,
without limitation, all fees, disbursements and expenses of counsel, expert and
consulting fees and costs of investigation and feasibility studies), fines,
penalties, sanctions, and interest incurred as a result of any claim or demand,
by any Person, whether based in contract, tort, implied or express warranty,
strict liability, criminal or civil statute, including any Environmental Law,
permit, order or agreement with any Governmental Authority or other Person,
arising from environmental, health or safety conditions or the Release or
threatened Release of a Hazardous Material into the environment.
"EQUITY INTERESTS" means shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person and any option, warrant or
other right relating thereto.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations and published interpretations
thereunder.
"ERISA AFFILIATE" means any corporation or trade or business which is a
member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as any Borrower or is under common control (within
the meaning of Section 414(c) of the Code) with any Borrower.
"EVENT OF DEFAULT" has the meaning specified in SECTION 11.1 hereof.
"FAIR SHARE " has the meaning specified in SECTION 4.14 hereof.
"FAIR SHARE SHORTFALL" has the meaning specified in SECTION 4.14 hereof.
"FEDERAL FUNDS EFFECTIVE RATE" shall mean, for any day, a rate per annum
equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System
CREDIT AGREEMENT - Page 9
<PAGE>
arranged by Federal funds brokers, as published on the next succeeding
Business Day by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day which is a Business Day, the average of the
quotations for the day of such transactions received by the Agent from three
Federal funds brokers of recognized standing selected by it.
"FIRST UNION LOAN" means the term loan in the original principal amount of
$35,000,000 outstanding under the First Union Loan Agreement.
"FIRST UNION LOAN AGREEMENT" means that certain Second Amended and Restated
Credit Agreement dated the Closing Date, among the Parent certain lenders and
First Union National Bank, as agent for the lenders as the same exists on the
Closing Date, without giving effect to any modification thereto unless modified
in a transaction that does not violate SECTION 9.12.
"FISCAL QUARTERS" means the three (3) month periods falling in each Fiscal
Year ending March 31, June 30, September 30, and December 31.
"FISCAL YEAR" means a twelve (12) month period ending December 31.
"FIXED CHARGES " has the meaning specified in SECTION 10.1 hereof.
"FRAUDULENT TRANSFER LAWS " has the meaning specified in SECTION 4.13
hereof.
"FUNDING OBLIGOR " has the meaning specified in SECTION 4.14 hereof.
"GAAP" means generally accepted accounting principles, applied on a
consistent basis, as set forth in Opinions of the Accounting Principles Board of
the American Institute of Certified Public Accountants and/or in statements of
the Financial Accounting Standards Board and/or their respective successors and
which are applicable in the circumstances as of the date in question. Accounting
principles are applied on a "consistent basis" when the accounting principles
applied in a current period are comparable in all material respects to those
accounting principles applied in a preceding period.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory, or administrative functions of or pertaining to
government.
"GUARANTEE" by any Person means any obligation, contingent or otherwise, of
such Person directly or indirectly guaranteeing any Debt or other obligation of
any other Person or indemnifying such other Person from a liability or other
obligation and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (a) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt or other obligation (whether arising by virtue of partnership arrangements,
by agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise) or (b)
entered into for the purpose of assuring in any other manner the obligee of such
Debt or other obligation of the payment thereof or to protect the obligee
against loss in respect thereof (in whole or in part), provided that the term
Guarantee shall not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"HAZARDOUS MATERIAL" means any substance, product, waste, pollutant,
material, chemical, contaminant, constituent, or other material which is or
becomes listed, regulated, or addressed under any Environmental Law.
CREDIT AGREEMENT - Page 10
<PAGE>
"HEDGING AGREEMENT" means any interest rate swap, interest rate caps,
interest rate collars or other similar agreements, or any foreign exchange,
currency hedging, commodity hedging or other similar agreement, including
without limitation or in addition, any Synthetic Purchase Agreement.
"INDENTURE" means the Indenture dated December 19, 1997 among Richmont
Marketing Specialists, Inc. (who has merged with and into Parent), certain of
its subsidiaries and Texas Commerce Bank National Association (now known as
Chase Bank of Texas, National Association), as trustee, as the same exists on
the Closing Date, without giving effect to any modification thereto unless
modified in a transaction that does not violate SECTION 9.13.
"INTERCREDITOR AGREEMENT" means that certain Intercreditor Agreement dated
as of March 30, 2000 among the Borrowers, the Agent and First Union National
Bank, as agent, as the same may be amended or otherwise modified from time to
time.
"INTEREST COVERAGE RATIO" means the ratio calculated in accordance with
SECTION 10.2 hereof.
"INTEREST PERIOD" means with respect to any Libor Accounts, each period
commencing on the date such Account is established or Converted from a Base Rate
Account or the last day of the next preceding Interest Period with respect to
such Libor Account, and ending on the numerically corresponding day in the
first, second, third or sixth calendar month thereafter, as Parent may select as
provided in SECTION 3.5 or 4.1 hereof, except that each such Interest Period
which commences on the last Business Day of a calendar month (or on any day for
which there is no numerically corresponding day in the appropriate subsequent
calendar month) shall end on the last Business Day of the appropriate subsequent
calendar month. Notwithstanding the foregoing: (a) each Interest Period which
would otherwise end on a day which is not a Business Day shall end on the next
succeeding Business Day (or if such succeeding Business Day falls in the next
succeeding calendar month, on the next preceding Business Day); (b) any Interest
Period which would otherwise extend beyond the Termination Date shall end on the
Termination Date; (c) no more than five (5) Interest Periods shall be in effect
at the same time; and (d) no Interest Period for any Libor Account shall have a
duration of less than one (1) month and, if the Interest Period would otherwise
be a shorter period, the related Libor Account shall not be available hereunder.
"LENDING PARTY " has the meaning specified in SECTION 13.22 hereof.
"LETTER OF CREDIT LIABILITIES" means, at any time, the aggregate amount
available for drawing under all outstanding Letters of Credit and all
unreimbursed drawings under Letters of Credit.
"LETTERS OF CREDIT" has the meaning specified in SECTION 2.7(a) hereof.
"LEVERAGE RATIO" means, as of the end of any Fiscal Quarter, the ratio of
(a) the principal amount of all Debt of the Parent and the Subsidiaries
outstanding as of such date determined on a consolidated basis which is not
subordinated in right of payment to any other Debt of the Parent and the
Subsidiaries to (b) the consolidated Adjusted EBITDA of the Parent and the
Subsidiaries calculated for the four (4) Fiscal Quarter period ending on the
last day of such Fiscal Quarter.
"LIBOR ACCOUNT" means a portion of a Loan that bears interest at a rate
based upon the Adjusted Libor Rate.
"LIBOR RATE" means, for any Libor Account for any Interest Period therefor,
the rate per annum (rounded upwards, if necessary, to the nearest 1/16 of 1%)
offered to the Agent at approximately 11:00 a.m. London time (or as soon
thereafter as practicable) two Business Days prior to the first day of
CREDIT AGREEMENT - Page 11
<PAGE>
such Interest Period by leading banks in the London interbank market of
Dollar deposits in immediately available funds having a term comparable to
such Interest Period.
"LIBOR RATE MARGIN" has the meaning specified in SECTION 3.2 hereof.
"LIEN" means any lien, mortgage, security interest, tax lien, financing
statement, pledge, charge, hypothecation, assignment, preference, priority, or
other encumbrance of any kind or nature whatsoever (including, without
limitation, any conditional sale or title retention agreement), whether arising
by contract, operation of law, or otherwise.
"LOANS" means, as to any Bank, the advances made by such Bank pursuant to
SECTION 2.1 hereof.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Security Agreement,
the Intercreditor Agreement and all other promissory notes, security agreements,
deeds of trust, assignments, guaranties, letters of credit, and other
instruments, agreements and other documentation executed and delivered pursuant
to or in connection with this Agreement, as such instruments, agreements and
other documentation may be amended or otherwise modified.
"LOCKBOX ACCOUNTS" shall mean the lockbox accounts described in the
Security Agreement and any other accounts established pursuant to the Lockbox
Agreements in which all funds received pursuant to the Lockbox Agreements shall
be deposited.
"LOCKBOX AGREEMENTS" shall mean the lockbox or other agreements described
in the Security Agreement and any lockbox or other agreement entered into by a
Borrower with the Agent, any Bank or any other depository institution acceptable
to the Agent, pursuant to which a lockbox and deposit account shall be
established for such Borrower into which payments on such Borrower's accounts or
other Collateral shall be sent and deposited, each in form and substance
satisfactory to the Agent, as the same may be amended or otherwise modified.
"MSSC" has the meaning set forth in the introductory paragraph of this
Agreement.
"MATERIAL ADVERSE EFFECT" means (a) a material adverse effect on the
business, condition (financial or otherwise), operations or properties of the
Borrowers taken as a whole; or (b) a material adverse effect on the ability of
the Borrowers and the Obligated Parties, taken as a whole, to perform the
obligations arising under the Loan Documents; or (c) a material adverse effect
on the validity, perfection, or priority of the Agent's Lien on the Collateral
or the ability of the Agent to enforce the Agent's Lien on the Collateral (other
than from a circumstance arising as a result of the fault of the Agent or the
release of any such Lien in accordance with the Loan Documents) or of the
ability of the Agent or any Bank to enforce a material provision of the Loan
Documents (other than from a circumstance arising as a result of the fault of
the Agent or any Bank). In determining whether any individual event could
reasonably be expected to result in a Material Adverse Effect, notwithstanding
that such event does not itself have such effect, a Material Adverse Effect
shall be deemed to have occurred if the cumulative effect of such event and all
other then existing events could reasonably be expected to result in a Material
Adverse Effect.
"MAXIMUM RATE" means, at any time and with respect to any Bank, the maximum
rate of nonusurious interest under applicable law that such Bank may charge the
Borrowers. The Maximum Rate shall be calculated in a manner that takes into
account any and all fees, payments, and other charges contracted for, charged or
received in connection with the Loan Documents that constitute interest under
applicable law. Each change in any interest rate provided for herein based upon
the Maximum Rate resulting from a change in the Maximum Rate shall take effect
without notice to any Borrower at the time of such change in the Maximum Rate.
For purposes of determining the Maximum Rate under Texas law,
CREDIT AGREEMENT - Page 12
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if applicable, the applicable rate ceiling shall be the indicated rate
ceiling described in, and computed in accordance with, Section 303 of the
Texas Finance Code.
"MODIFIED EBITDA" has the meaning set forth in SECTION 10.1 hereof.
"MONROE LITIGATION" means the litigation identified on SCHEDULE 1.1(b).
"MULTIEMPLOYER PLAN" means a multiemployer plan defined as such in Section
3(37) of ERISA to which contributions have been made by any Borrower or any
ERISA Affiliate and which is covered by Title IV of ERISA.
"NET INCOME" means, for any period and any Person, such Person's
consolidated net income (or loss), but excluding: (a) the income of any other
Person (other than its subsidiaries) in which such Person or any of it
subsidiaries has an ownership interest, unless received by such Person or its
subsidiary in a cash distribution; (b) any after-tax gains or losses
attributable to asset disposition; (c) to the extent not included in clauses (a)
and (b) above, any after-tax extraordinary, non-cash or nonrecurring gains or
losses; and (d) non-cash or nonrecurring charges due to changes in accounting
principles required by GAAP.
"NOTES" means the promissory notes provided for by SECTION 2.2 hereof and
all amendments or other modifications thereof.
"OBLIGATED PARTY" means any Person (exclusive of the Borrowers) who is or
becomes party to any agreement that guarantees or secures payment and
performance of the Obligations or any part thereof.
"OBLIGATED PARTY OBLIGATIONS" has the meaning specified in SECTION 4.16
hereof.
"OBLIGATION" means all obligations, indebtedness, and liabilities of the
Borrowers or any of them to the Agent and the Banks arising pursuant to any of
the Loan Documents, pursuant to any Hedging Agreement entered into with any
Borrower for the purpose of enabling such Borrower to fix or limit its actual
interest expense or the market risk of holding currency or a commodity in either
the cash or futures market, or pursuant to any deposit, lockbox, cash management
or similar agreement entered into with any Borrower, whether now existing or
hereafter arising, whether direct, indirect, related, unrelated, fixed,
contingent, liquidated, unliquidated, joint, several, or joint and several,
including, without limitation, the obligation of the Borrowers to repay the
Loans, the Reimbursement Obligations, interest on the Loans and Reimbursement
Obligations, and all fees, costs, and expenses (including attorneys' fees)
provided for in the Loan Documents, such Hedging Agreements or such deposit and
similar agreements.
"OUTSTANDING REVOLVING CREDIT" means, at any time of determination, the sum
of (a) the aggregate amount of Loans then outstanding; plus (b) the aggregate
amount of Letter of Credit Liabilities (or when calculated with respect to a
Bank, including the Agent as a Bank, such Bank's participation or other interest
in such Letter of Credit Liabilities); plus (c) all interest, expenses, fees or
other amounts accrued and owed to the Agent or the other Banks under any Loan
Document.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to all or any of its functions under ERISA.
"PH" has the meaning set forth in the introductory paragraph of this
Agreement.
"PIA" has the meaning set forth in the introductory paragraph of this
Agreement.
CREDIT AGREEMENT - Page 13
<PAGE>
"PARENT" has the meaning set forth in the introductory paragraph of this
Agreement.
"PENDING ACQUISITION" means the acquisition by MSSC of SFC pursuant to such
documentation as are satisfactory to the Agent.
"PERSON" means any individual, corporation, business trust, association,
company, partnership, joint venture, Governmental Authority, or other entity.
"PLAN" means any employee benefit plan established or maintained by any
Borrower or any ERISA Affiliate and which is covered by Title IV of ERISA.
"PREVIOUS SENIOR DEBT" means all the obligations, indebtedness and
liability of any Borrower arising under or pursuant to Debt described in
SCHEDULE 1.1(a).
"PRINCIPAL OFFICE" means the principal office of the Agent, located at 633
Third Avenue New York, New York 10017-6764.
"PROHIBITED TRANSACTION" means any transaction set forth in Section 406 or
407 of ERISA or Section 4975(c)(1) of the Code for which there does not exist a
statutory or administrative exemption.
"RECEIVABLE" has the meaning specified in the definition of Eligible
Accounts.
"REGISTER " has the meaning specified in SECTION 13.8 hereof.
"REGULATION D" means Regulation D of the Board of Governors of the Federal
Reserve System as the same may be amended or supplemented from time to time.
"REGULATORY CHANGE" means, with respect to any Bank, any change after the
date of this Agreement in United States federal, state, or foreign laws or
regulations (including Regulation D) or the adoption or making after such date
of any interpretations, directives, or requests applying to a class of banks
including such Bank of or under any United States federal or state, or any
foreign, laws or regulations (whether or not having the force of law) by any
court or governmental or monetary authority charged with the interpretation or
administration thereof.
"REIMBURSEMENT OBLIGATION" means the obligation of the Borrowers to
reimburse the Agent for any demand for payment or drawing under a Letter of
Credit.
"RELEASE" means, as to any Person, any release, spill, emission, leaking,
pumping, injection, deposit, disposal, disbursement, leaching, or migration of
Hazardous Materials into the indoor or outdoor environment or into or out of
property owned by such Person, including, without limitation, the movement of
Hazardous Materials through or in the air, soil, surface water, ground water, or
property in violation of Environmental Laws.
"REMEDIAL ACTION" means all actions required to (a) cleanup, remove, treat,
or otherwise address Hazardous Materials in the indoor or outdoor environment,
(b) prevent the Release or threat of Release or minimize the further Release of
Hazardous Materials so that they do not migrate or endanger or threaten to
endanger public health or welfare or the indoor or outdoor environment, or (c)
perform pre-remedial studies and investigations and post-remedial monitoring and
care.
"REPORT DATE " has the meaning specified in SECTION 8.1 hereof.
CREDIT AGREEMENT - Page 14
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"REQUIRED BANKS" means Banks having (a) sixty-six and two-thirds percent
(66 2/3%) or more of the Commitments or (b) if all Commitments have terminated,
sixty-six and two-thirds percent (66 2/3%) or more of the outstanding principal
amount of the Loans and participations in the Letters of Credit.
"REPORTABLE EVENT" means any of the events set forth in Section 4043 of
ERISA for which the 30-day notice requirement has not been waived by the PBGC.
"RESERVE REQUIREMENT" means, for any Libor Account for any Interest Period
therefor, the aggregate of the maximum reserve percentage (including without
limitation, any marginal, special, emergency or supplemental reserves) expressed
as a decimal, established by the Board of Governors of the Federal Reserve
System of the United States and any other banking authority to which any Bank is
subject with respect to the Adjusted Libor Rate for Eurocurrency Liabilities (as
defined in Regulation D), including without limitation, those reserve
percentages imposed under Regulation D. Reserve Requirement shall be adjusted
automatically on and as of the effective date of any change in any applicable
reserve percentage. For purposes hereof, Libor Accounts shall be deemed to
constitute Eurocurrency Liabilities (as defined in Regulation D) and as such,
shall be deemed to be subject to such reserve requirements of Regulation D
without benefit of or credit for proration, exceptions or offsets which may be
available from time to time to any Bank under Regulation D. Without limiting the
effect of the foregoing, the Reserve Requirement shall reflect any other
reserves required to be maintained by such member banks by reason of any
Regulatory Change against any category of liabilities which includes deposits by
reference to which the Adjusted Libor Rate is to be determined or any category
of extensions of credit or other assets which include Libor Accounts.
"SFC" has the meaning set forth in the introductory paragraph of this
Agreement.
"SPC" has the meaning specified in Section 13.8(a).
"SECURITY AGREEMENT" means the security agreement among the Borrowers and
the Agent for the benefit of itself and the Banks, in substantially the form of
EXHIBIT "D" hereto, as the same may be amended or otherwise modified.
"SENIOR NOTE DOCUMENTS" means the Indenture, the Senior Subordinated Notes
and all note purchase agreements, exchange and registration agreements,
guaranties and other documentation executed and delivered pursuant to or in
connection with the Senior Subordinated Notes as the same exists on the Closing
Date without giving effect to any amendment or other modification thereto unless
modified in a transaction that does not violate SECTION 9.13; excluding,
however, the Loan Documents.
"SENIOR SUBORDINATED NOTES" means the senior subordinated notes due 2007
issued by Richmont Marketing Specialist, Inc. (and assumed by Parent in
connection with the merger of Richmont Marketing Specialist, Inc. with and into
Parent) pursuant to the Indenture in an aggregate original principal amount
equal to One Hundred Million Dollars ($100,000,000), including all such notes
issued on substantially the same terms in exchange for the notes issued on
October 14, 1997 pursuant to the exchange and registration provisions of the
Senior Note Documents.
"SUBSIDIARY" means any corporation (or other entity) of which at least a
majority of the outstanding shares of stock (or other ownership interests)
having by the terms thereof ordinary voting power to elect a majority of the
board of directors (or similar governing body) of such corporation (or other
entity) (irrespective of whether or not at the time stock (or other ownership
interests) of any other class or classes of such corporation (or other entity)
shall have or might have voting power by reason of the happening of any
contingency) is at the time directly or indirectly owned or controlled by Parent
or one or more of the Subsidiaries or by Parent and one or more of the
Subsidiaries.
CREDIT AGREEMENT - Page 15
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"SUBORDINATED INDEBTEDNESS" has the meaning specified in SECTION 4.16
hereof.
"SUBORDINATION PARTY" has the meaning specified in SECTION 4.16 hereof.
"SYNTHETIC PURCHASE AGREEMENT" means any agreement pursuant to which a
Person is or may become obligated to make any payment (i) in connection with the
purchase by any third party of any Equity Interest or Indebtedness that is
subordinated to the Obligations or other senior obligations or (ii) the amount
of which is determined by reference to the price or value at any time of any
Equity Interest or Indebtedness that is subordinated to the Obligations or other
senior obligations; PROVIDED that no phantom stock or similar plan providing for
payments only to current or former directors, officers or employees of Parent or
any Subsidiaries shall be deemed to be a Synthetic Purchase Agreement.
"TERMINATION DATE" means March 30, 2002 or such earlier date on which the
Commitments terminate as provided in this Agreement.
"TYPE" means either type of Account (i.e., either a Base Rate Account or
Libor Account).
"UCC" means the Uniform Commercial Code as in effect in the State of New
York.
Section 1.2 OTHER DEFINITIONAL PROVISIONS. All definitions contained
in this Agreement are equally applicable to the singular and plural forms of the
terms defined. The words "hereof", "herein", and "hereunder" and words of
similar import referring to this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement. Unless otherwise
specified, all Article and Section references pertain to this Agreement. Terms
used herein that are defined in the UCC, unless otherwise defined herein, shall
have the meanings specified in the UCC.
Section 1.3 ACCOUNTING TERMS AND DETERMINATIONS. Except as otherwise
expressly provided herein, all accounting terms used herein shall be
interpreted, and all financial statements and certificates and reports as to
financial matters required to be delivered to the Agent and the Banks hereunder
shall be prepared, in accordance with GAAP, on a basis consistent with those
used in the preparation of the financial statements referred to in SECTION 7.2
hereof. All calculations made for the purposes of determining compliance with
the provisions of this Agreement shall be made by application of GAAP, on a
basis consistent with those used in the preparation of the financial statements
referred to in SECTION 7.2 hereof. To enable the ready and consistent
determination of compliance by the Borrowers with their obligations under this
Agreement, no Borrower will change the manner in which either the last day of
its Fiscal Year or the last days of the first three Fiscal Quarters of its
Fiscal Years is calculated. In the event any changes in accounting principles
required by GAAP or recommended by Parent's certified public accountants and
implemented by the Borrowers occur and such changes result in a change in the
method of the calculation of financial covenants, standards or terms under this
Agreement, then each Borrower, the Agent and the Banks agree to enter into
negotiations in order to amend such provisions of this Agreement so as to
equitably reflect such changes with the desired result that the criteria for
evaluating such covenants, standards or terms shall be the same after such
changes as if such changes had not been made. Until such time as such an
amendment shall have been executed and delivered by the Agent, the Borrowers and
the Required Banks, all financial covenants, standards and terms in this
Agreement shall continue to be calculated or construed as if such changes had
not occurred.
Section 1.4 TIME OF DAY. Unless otherwise indicated, all references in
this Agreement to times of day shall be references to New York, New York time.
CREDIT AGREEMENT - Page 16
<PAGE>
ARTICLE 2
REVOLVING CREDIT FACILITY
Section 2.1 COMMITMENTS. Subject to the terms and conditions of this
Agreement, each Bank severally agrees to make advances to the Borrowers from
time to time from and including the Closing Date to but excluding the
Termination Date in an aggregate principal amount at any time outstanding up to
but not exceeding the amount of such Bank's Commitment as then in effect;
PROVIDED, HOWEVER, (a) the Outstanding Revolving Credit applicable to a Bank
(except, with respect to the Agent as a Bank, as may otherwise result from the
operation of SECTION 4.6) shall not at any time exceed such Bank's Commitment;
(b) the aggregate Outstanding Revolving Credit shall not at any time exceed the
lesser of (i) the aggregate Commitments or (ii) the aggregate Borrowing Base;
and (c) the Outstanding Revolving Credit applicable to a Borrower shall at no
time exceed such Borrower's Borrowing Base. Subject to the foregoing
limitations, and the other terms and provisions of this Agreement, the Borrowers
may borrow, prepay, and reborrow hereunder the amount of the Commitments and may
establish Base Rate Accounts and Libor Accounts thereunder and, until the
Termination Date, the Borrowers may Continue Libor Accounts established under
the Loans or Convert Accounts established under the Loans of one Type into
Accounts of the other Type. Accounts of each Type under the Loans made by each
Bank shall be established and maintained at such Bank's Applicable Lending
Office for Loans of such Type.
Section 2.2 NOTES. The Loans made by a Bank shall be evidenced by a
single promissory note of the Borrowers in substantially the form of EXHIBIT "A"
hereto, payable to the order of such Bank in a principal amount equal to its
Commitment and otherwise duly completed.
Section 2.3 REPAYMENT OF LOANS. The Borrowers agree, jointly and
severally, to pay to the Agent, for the account of the Banks, the outstanding
principal amount of all of the Loans on the Termination Date.
Section 2.4 USE OF PROCEEDS. The proceeds of the Loans shall be used
by the Borrowers to repay the Previous Senior Debt, to finance the Pending
Acquisition, and to finance Borrowers' working capital and capital expenditure
requirements in the ordinary course of business, including, without limitation,
the satisfaction of Reimbursement Obligations in accordance with
SUBSECTION 2.7(b) hereof, the payment of fees and expenses relating to the
closing of the Loan Documents and the payment of principal and interest on
the First Union Loan in accordance with the terms of the First Union Loan
Agreement.
Section 2.5 COMMITMENT FEE. The Borrowers agree, jointly and
severally, to pay to the Agent for the account of each Bank a commitment fee on
the daily average unused amount of such Bank's Commitment for the period from
and including the Closing Date to and including the Termination Date, at a per
annum rate equal to one-half of one percent (0.50%). Accrued commitment fees
under this SECTION 2.5 shall be payable in arrears on the first day of each
month beginning April 1, 2000, and on the Termination Date.
Section 2.6 TERMINATION OR REDUCTION OF COMMITMENTS. Parent shall have
the right to terminate fully or to reduce in part the unused portion of the
Commitments at any time and from time to time, PROVIDED that: (a) Parent shall
give the Agent at least three (3) Business Days notice of each such termination
or reduction as provided in SECTION 4.3 hereof; and (b) each partial reduction
shall be in an aggregate amount at least equal to One Million Dollars
($1,000,000) or a greater multiple of One Hundred Thousand Dollars ($100,000),
and (c) each termination in full shall be accompanied by all amounts due under
SECTION 4.4(C). The Commitments may not be reinstated after they have been
terminated or reduced.
CREDIT AGREEMENT - Page 17
<PAGE>
Section 2.7 LETTERS OF CREDIT.
(a) COMMITMENT TO ISSUE. The Borrowers may utilize the
Commitments by requesting that the Agent issue, and the Agent, subject to the
terms and conditions of this Agreement, shall issue, letters of credit for a
Borrower's account (such letters of credit being hereinafter referred to as the
"LETTERS OF CREDIT"); PROVIDED, HOWEVER, (i) the aggregate amount of outstanding
Letter of Credit Liabilities shall not at any time exceed Two Million Five
Hundred Thousand Dollars ($2,500,000); (ii) the Outstanding Revolving Credit
shall not at any time exceed the lesser of (A) the aggregate Commitments or
(B) the Borrowing Base; (iii) the Outstanding Revolving Credit applicable to
a Bank shall not at any time exceed such Bank's Commitment (except with
respect to the Agent as a Bank, as may otherwise result from the operation of
SECTION 4.6); and (iv) the Outstanding Revolving Credit applicable to a
Borrower shall at no time exceed such Borrower's Borrowing Base. Upon the
date of issue of a Letter of Credit, the Agent shall be deemed, without
further action by any party hereto, to have sold to each other Bank, and each
other Bank shall be deemed, without further action by any party hereto, to
have purchased from the Agent a participation to the extent of such Bank's
Commitment Percentage in such Letter of Credit and the related Letter of
Credit Liabilities.
(b) LETTER OF CREDIT REQUEST PROCEDURE. Parent shall give the
Agent at least three (3) Business Days irrevocable prior notice (effective upon
receipt) specifying the date of each Letter of Credit, the Borrower for whose
account such Letter of Credit is to be issued and the nature of the transactions
to be supported thereby. The Agent shall notify each other Bank of the contents
of the Letter of Credit and of such Bank's Commitment Percentage of the amount
of the proposed Letter of Credit in accordance with SECTION 4.6. Each Letter of
Credit shall have an expiration date that does not extend beyond the earlier of
(i) one (1) year from the date of its issuance, PROVIDED that any Letter of
Credit may provide for the renewal of the expiration date thereof for additional
one-year periods (which shall in no event extend the expiration date thereof
beyond the date provided for in the next clause (ii)) or (ii) a date which is
thirty (30) days prior to the Termination Date. Each Letter of Credit shall be
payable in Dollars, must support a transaction entered into in the ordinary
course of a Borrower's business, must be satisfactory in form and substance to
the Agent, and shall be issued pursuant to such documentation as the Agent may
require, including, without limitation, the Agent's standard form letter of
credit request and reimbursement agreement; PROVIDED, that, in the event of any
conflict between the terms of such agreement and the other Loan Documents, the
terms of the other Loan Documents shall control.
(c) LETTER OF CREDIT FEES. The Borrowers agree, jointly and
severally, to pay to the Agent for the account of each Bank a letter of credit
fee on such Bank's Commitment Percentage of the amount available for drawings
under each Letter of Credit, such letter of credit fee (i) to be paid monthly in
arrears on the last day of each month following the date of the issuance of the
Letter of Credit and on last day of each month thereafter until the date of
expiration or termination thereof (each such date herein a "PAYMENT DATE") and
(ii) to be calculated for the period from and including one Payment Date (or
with respect to the first such payment, from and including the date of issuance
of the Letter of Credit) to and excluding the earlier of the next Payment Date
or the date of expiration or termination of the Letter of Credit at a rate equal
to the Libor Rate Margin per annum. After receiving any payment of any letter of
credit fees under this clause (c), the Agent will promptly pay to each Bank the
letter of credit fees then due such Bank. With respect to each Letter of Credit,
the Borrowers also agree, jointly and severally, to pay to the Agent for its
account only and on the date of issuance of such Letter of Credit, a fronting
fee equal to one-eighth of one percent (0.125%) of the maximum amount available
to be drawn under the Letter of Credit, plus the Agent's reasonable expenses
incurred in issuing the Letter of Credit.
(d) FUNDING OF DRAWINGS. Upon receipt from the beneficiary of any
Letter of Credit of any demand for payment or other drawing under such Letter of
Credit, the Agent shall promptly notify
CREDIT AGREEMENT - Page 18
<PAGE>
Parent and, except as may otherwise be required as a result of the operation
of SECTION 4.6, each Bank as to the amount to be paid as a result of such
demand or drawing and the respective payment date. Except as may otherwise be
required as a result of the operation of SECTION 4.6, not later than 11:00
a.m. on the applicable payment date, each Bank will make available to the
Agent, at the Principal Office, in immediately available funds, an amount
equal to such Bank's Commitment Percentage of the amount to be paid as a
result of such demand or drawing even if the conditions to a Loan under
ARTICLE 6 hereof have not been satisfied.
(e) REIMBURSEMENTS. The Borrowers shall be irrevocably and
unconditionally obligated, jointly and severally, to immediately reimburse
the Agent for any amounts paid by the Agent upon any demand for payment or
drawing under any Letter of Credit, without (except as specifically set forth
in this clause (e)) presentment, demand, protest, or other formalities of any
kind. All payments on the Reimbursement Obligations shall be made: (i) if no
Default has occurred or the Agent otherwise elects, by Loans in the amount of
such Reimbursement Obligations being made automatically as Base Rate Accounts
or (ii) if a Default has occurred and the Agent has not made the election
under clause (i), to the Agent at the Principal Office for the account of the
Agent in Dollars and in immediately available funds, without setoff,
deduction or counterclaim not later than 3:00 p.m. on the date of the
corresponding payment under the Letter of Credit; provided, that in the case
of this clause (ii) only, Agent has provided notice to Parent prior to 12:00
noon on such day that such payment is due. In the event such notice is
received after 12:00 noon on a Business Day, such payment shall be due not
later than 3:00 p.m. on the next succeeding Business Day. The Agent will pay
to each Bank such Bank's Commitment Percentage of all amounts received from
any Borrower for application in payment, in whole or in part, to the
Reimbursement Obligation in respect of any Letter of Credit, but only to the
extent such Bank has made payment to the Agent in respect of such Letter of
Credit pursuant to clause (d) of this SECTION 2.7 and subject to the
operation of SECTION 4.6.
(f) REIMBURSEMENT OBLIGATIONS ABSOLUTE. The Reimbursement
Obligations of the Borrowers under this Agreement shall be absolute,
unconditional, and irrevocable, and shall be performed strictly in accordance
with the terms of the Loan Documents under all circumstances whatsoever and
each Borrower hereby waives any defense to the payment of the Reimbursement
Obligations based on any circumstance whatsoever, including without
limitation, in either case, the following circumstances: (i) any lack of
validity or enforceability of any Letter of Credit or any other Loan
Document; (ii) any amendment or waiver of or any consent to departure from
any Loan Document; (iii) the existence of any claim, set-off, counterclaim,
defense or other rights which any Borrower, any Obligated Party, or any other
Person may have at any time against any beneficiary of any Letter of Credit,
the Agent, any Bank, or any other Person, whether in connection with any Loan
Document or any unrelated transaction; (iv) any statement, draft, or other
documentation 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 whatsoever; (v) payment by the
Agent under any Letter of Credit against presentation of a draft or other
document that does not comply with the terms of such Letter of Credit; or
(vi) any other circumstance whatsoever, whether or not similar to any of the
foregoing; PROVIDED that Reimbursement Obligations with respect to a Letter
of Credit may be subject to avoidance by a Borrower if the Borrower proves in
a final non-appealable judgment that it was damaged and that such damage
arose directly from the Agent's willful misconduct or gross negligence.
(g) ISSUER RESPONSIBILITY. Each Borrower assumes all risks of the
acts or omissions of any beneficiary of any Letter of Credit with respect to its
use of such Letter of Credit. Neither the Agent, any Bank nor any of their
respective officers or directors shall have any responsibility or liability to
any Borrower or any other Person for: (a) the failure of any draft to bear any
reference or adequate reference to any Letter of Credit, or the failure of any
documents to accompany any draft at negotiation, or the failure of any Person to
surrender or to take up any Letter of Credit or to send documents apart
CREDIT AGREEMENT - Page 19
<PAGE>
from drafts as required by the terms of any Letter of Credit, or the failure
of any Person to note the amount of any instrument on any Letter of Credit,
each of which requirements, if contained in any Letter of Credit itself, it
is agreed may be waived by the Agent; (b) errors, omissions, interruptions,
or delays in transmission or delivery of any messages; (c) the validity,
sufficiency, or genuineness of any draft or other document, or any
endorsement(s) thereon, even if any such draft, document or endorsement
should in fact prove to be in any and all respects invalid, insufficient,
fraudulent, or forged or any statement therein is untrue or inaccurate in any
respect; (d) the payment by the Agent to the beneficiary of any Letter of
Credit against presentation of any draft or other document that does not
comply with the terms of the Letter of Credit; or (e) any other circumstance
whatsoever in making or failing to make any payment under a Letter of Credit.
Notwithstanding the forgoing, a Borrower shall have a claim against the
Agent, and the Agent shall be liable to such Borrower, to the extent of any
direct, but not indirect, consequential or punitive, damages suffered by such
Borrower which such Borrower proves in a final non-appealable judgment were
caused by the Agent's willful misconduct or gross negligence. The Agent 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.
ARTICLE 3
INTEREST AND FEES
Section 3.1 INTEREST RATE. The Borrowers agree, jointly and severally,
to pay to the Agent for the account of each Bank interest on the unpaid
principal amount of each Loan made by such Bank for the period commencing on the
date of such Loan to but excluding the date such Loan is due, at a fluctuating
rate per annum equal to the Applicable Rate. The term "APPLICABLE RATE" means
(i) during the period that Loans or portions thereof are subject to a Base Rate
Account, the Base Rate plus the Base Margin and (ii) during the period that
Loans or portions thereof are subject to a Libor Account, the Adjusted Libor
Rate plus the Libor Rate Margin.
Section 3.2 DETERMINATIONS OF MARGINS AND FEES. The margins identified
in SECTION 3.1 hereof shall be defined and determined as follows:
(a) "BASE MARGIN" shall mean (i) during the period commencing on
the Closing Date and ending on but not including the first Adjustment Date (as
defined below), two percent (2.0%) per annum and (ii) during each period, from
and including one Adjustment Date to but excluding the next Adjustment Date
(herein a "CALCULATION PERIOD"), the percent per annum set forth in the table
below in this SECTION 3.2 under the heading "Base Margin", and opposite the
Leverage Ratio calculated as of the most recent Fiscal Quarter end which
immediately preceded the beginning of the applicable Calculation Period.
(b) "LIBOR RATE MARGIN" shall mean (i) during the period
commencing on the Closing Date and ending on but not including the first
Adjustment Date (as defined below), three and one-fourth of one percent (3.25%)
per annum, and (ii) during each Calculation Period, the percent per annum set
forth in the table below in this SECTION 3.2 under the heading "Libor Margin",
and opposite the Leverage Ratio calculated as of the most recent Fiscal Quarter
end which immediately preceded the beginning of the applicable Calculation
Period.
The following is the table referred to in clauses (a) and (b) of this
SECTION 3.2:
CREDIT AGREEMENT - Page 20
<PAGE>
<TABLE>
<CAPTION>
========================================================
Base Libor
Leverage Ratio Margin Margin
========================================================
<S> <C> <C>
>6.5 to 1.0 2.25% 3.50%
--------------------------------------------------------
Less than or equal to
6.5 to 1.0 but >5.0 to 1.0 2.00% 3.25%
--------------------------------------------------------
Less than or equal to
5.0 to 1.0 but >3.5 to 1.0 1.75% 3.00%
--------------------------------------------------------
Less than or equal to
3.5 to 1.0 1.50% 2.75%
========================================================
</TABLE>
Upon delivery of the Compliance Certificate pursuant to
SUBSECTION 8.1(c) hereof in connection with the financial statements of
Parent and the Subsidiaries required to be delivered pursuant to
SUBSECTION 8.1(b) hereof commencing with such Compliance Certificate
delivered at the end of the Fiscal Quarter ending on March 31, 2001, the Base
Margin and the Libor Rate Margin (for Interest Periods commencing after the
applicable Adjustment Date, as defined below) shall automatically be adjusted
in accordance with the Leverage Ratio set forth therein and the tables set
forth above, such automatic adjustment to take effect as of the first
Business Day after the receipt by the Agent of the related Compliance
Certificate pursuant to SUBSECTION 8.1(c) hereof. The term "ADJUSTMENT DATE"
shall mean each such Business Day when such margins or fees change pursuant
to the immediately prior sentence or the next following sentence. If Parent
fails to deliver such Compliance Certificate which so sets forth the Leverage
Ratio within the period of time required by SUBSECTION 8.1(c) hereof or if
any Event of Default occurs and the Agent provides Parent written notice:
(i) the Base Margin shall automatically be adjusted to two and one quarter
percent (2.25%) per annum; and (ii) the Libor Rate Margin (for Interest
Periods commencing after the applicable Adjustment Date) shall automatically
be adjusted to three and one half percent (3.50%) per annum, such automatic
adjustments (a) to take effect as of the first Business Day after the last
day on which Parent was required to deliver the applicable Compliance
Certificate in accordance with SUBSECTION 8.1(c) hereof or in the case of an
Event of Default, on the date the written notice is given to Borrower and (b)
to remain in effect until subsequently adjusted in accordance herewith upon
the delivery of such Compliance Certificate or, in the case of an Event of
Default, when such Event of Default has been cured to the satisfaction of the
Agent or waived by the Required Banks.
Section 3.3 PAYMENT DATES. Accrued interest on the Loans shall be due
and payable as follows: (i) on the first day of each month beginning April 1,
2000, and on the Termination Date; and (ii) in the case of Loans subject to
Libor Accounts and with respect to each such Account, in addition to the
payments required by clause (i) of this SECTION 3.3, on the last day of the
Interest Period with respect thereto.
Section 3.4 DEFAULT INTEREST. Notwithstanding the foregoing, the
Borrowers agree, jointly and severally, to pay to the Agent for the account of
the party entitled thereto interest at the applicable Default Rate: (i) on the
principal amount of the Loans whenever an Event of Default exists and the Agent
provides notice to Parent that the Loans will accrue interest at the Default
Rate for the period from and including the date of such notice until such Event
of Default no longer exists, and (ii) on any principal of any Loan made by such
Bank, any Reimbursement Obligation, and (to the fullest extent permitted by law)
any other amount payable by any Borrower under any Loan Document to or for the
account of the Agent or such Bank, that is not paid in full when due (whether at
stated maturity, by acceleration, or otherwise), for the period from and
including the due date thereof to but excluding the date the same is paid in
full. Interest payable at the Default Rate shall be payable from time to time on
demand.
Section 3.5 CONVERSIONS AND CONTINUATIONS OF ACCOUNTS. Subject to
SECTION 4.2 hereof, Parent shall have the right from time to time to Convert all
or part of any Base Rate Account into a Libor Account or to Continue Libor
Accounts as Libor Accounts, PROVIDED that: (a) Parent shall give the Agent
notice of each such Conversion or Continuation as provided in SECTION 4.3
hereof; (b) a Libor Account may only be Converted on the last day of the
Interest Period therefore; and (c) except for Conversions
CREDIT AGREEMENT - Page 21
<PAGE>
into Base Rate Accounts, no Conversions or Continuations shall be made while
a Default has occurred and is continuing.
Section 3.6 COMPUTATIONS. All interest and fees (including the
Commitment Fee) will be computed on the basis of a year of 360 days and actual
days elapsed (including the first day but excluding the last day) occurring in
the period for which payable, unless in the case of interest such calculation
would result in a usurious rate, in which case interest shall be calculated on
the basis of a year of 365 or 366 days, as the case may be.
ARTICLE 4
ADMINISTRATIVE MATTERS
Section 4.1 Borrowing Procedure.
(a) FORMAL BORROWING REQUEST. Parent shall give the Agent, and
the Agent will give the Banks, notice of each borrowing under the Commitments in
accordance with SECTION 4.3, but subject to SECTION 4.6 and SUBSECTIONS 2.7 (e)
AND 4.1(b). Subject to the operation of SECTION 4.6, not later than 1:00 p.m. on
the date specified for each borrowing under the Commitment, each Bank will make
available the amount of the Loan to be made by it on such date to the Agent, at
the Principal Office, in immediately available funds, for the account of the
applicable Borrower. The amounts received by the Agent shall, subject to the
terms and conditions of this Agreement, be made available to such Borrower at
Parent's direction by transferring the same, in immediately available funds by
wire transfer, automated clearinghouse debit or interbank transfer, to (a) one
of the Disbursement Accounts as directed by Parent or (b) any of the other bank
accounts described on SCHEDULE 1.1(a) hereto or hereafter established in
accordance with the restrictions set forth in the Security Agreement or (c) a
Person or Persons designated by Parent in writing.
(b) AUTOMATIC BORROWING. No notice of a request for Loan in
accordance with SUBSECTION 4.1(a) or SECTION 4.3 hereof shall be required to be
presented by Parent to the Agent if no Default exists and a check, checks or
other debit shall be presented for payment against a Disbursement Account on a
Business Day when funds are not otherwise available therein to honor such
debits. In such event, the Agent shall, subject to SECTION 4.6 and provided no
Default exists, promptly advise the Banks of the amount of the Loans necessary
to be credited to such Disbursement Account on such day to permit such debits to
be honored. Except as otherwise provided in SECTION 4.6 hereof and subject in
all cases to SECTION 2.1, not later than 3:00 p.m. on such day each Bank will
make available the amount of the Loan to be made by it on such date to the
Agent, at the Principal Office, in immediately available funds, for the account
of the applicable Borrower. The amounts so received by Agent, shall, subject to
the terms and conditions of this Agreement, be made available to such Borrower
by crediting the same to such Borrower's Disbursement Account. Loans made under
this SUBSECTION 4.1(b) shall be made as Base Rate Accounts.
Section 4.2 MINIMUM AMOUNTS. Except for prepayments pursuant to
ARTICLE 5 hereof and Loans made pursuant to SUBSECTIONS 2.7 (e) AND 4.1(b), each
Base Rate Account and each prepayment of principal of a Loan shall be in an
amount at least equal to One Dollar ($1.00). Except for Conversions pursuant to
ARTICLE 5 hereof, each Libor Account shall be in a minimum principal amount of
Five Hundred Thousand Dollars ($500,000) per Bank or any larger amount in
increments of One Hundred Thousand Dollars ($100,000) per Bank.
CREDIT AGREEMENT - Page 22
<PAGE>
Section 4.3 CERTAIN NOTICES. Notices by Parent to the Agent of
terminations or reductions of Commitments, of borrowings and prepayments of
Loans and of Conversion and Continuations of Accounts shall be irrevocable
and shall be effective only if received by the Agent not later than (a) 1:00
p.m. on the Business Day of any repayment of Loans, (b) 12:00 noon on the
Business Day of the requested borrowing under the Loans subject to Base Rate
Accounts, or (c) 1:00 p.m. on the Business Day prior to the date of the
relevant termination, reduction, borrowing, Conversion, Continuation or other
prepayment specified below:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
Notice Number of Business
Days Prior
-----------------------------------------------------------------------------------------------------------
<S> <C>
Termination or reduction of Commitments 3
-----------------------------------------------------------------------------------------------------------
Prepayment or repayment of Loans subject to Base Rate Accounts, or
Conversions into Base Rate Accounts 1
-----------------------------------------------------------------------------------------------------------
Borrowing, prepayment or repayment of Loans subject to Libor Accounts,
Conversions into or Continuations as Libor Accounts 3
-----------------------------------------------------------------------------------------------------------
</TABLE>
Any notices of the type described in this SECTION 4.3 which are received by the
Agent after the applicable time set forth above on a Business Day shall be
deemed to be received and shall be effective on the next Business Day. Each such
notice of termination or reduction shall specify the amount of the Commitments
to be terminated or reduced. Each such notice of borrowing, Conversion,
Continuation, or prepayment shall specify (a) the Accounts to be Converted or
Continued; (b) the amount (subject to SECTION 4.2 hereof) to be borrowed,
Converted, Continued or prepaid; (c) in the case of a Conversion, the Type of
Account to result from such Conversion; (d) in the case of a borrowing, the Type
of Account or Accounts to be applicable to such borrowing and the amounts
thereof; (e) in the event a Libor Account is selected, the duration of the
Interest Period therefor; and (f) the date of borrowing, Conversion,
Continuation, or prepayment (which shall be a Business Day). Except as may
otherwise be provided by SECTION 4.6, the Agent shall notify the Banks of the
contents of each such notice on the date of its receipt of the same or, if
received on or after the applicable time set forth above on a Business Day, on
the next Business Day. In the event Parent fails to select the Type of Account
or the duration of any Interest Period for any Libor Account, within the time
period and otherwise as provided in this SECTION 4.3, such Account (if
outstanding as a Libor Account) will be automatically Converted into a Base Rate
Account on the last day of the preceding Interest Period for such Account or (if
outstanding as a Base Rate Account) will remain as, or (if not then outstanding)
will be made as, a Base Rate Account. The Borrowers may not borrow any Loans
subject to a Libor Account, Convert any Base Rate Accounts into Libor Accounts,
or Continue any Libor Account as a Libor Account if the Applicable Rate for such
Libor Accounts would exceed the Maximum Rate or if a Default exists.
Section 4.4 PREPAYMENTS.
(a) MANDATORY. If on any date (i) the aggregate Outstanding
Revolving Credit exceeds the aggregate Borrowing Base or (ii) the Outstanding
Revolving Credit applicable to a Borrower exceeds the Borrowing Base for such
Borrower, then the Borrowers shall, jointly and severally, on or before 1:00
p.m. on such date, prepay the outstanding Loans by the amount of the excess or
if no Loans are outstanding and the applicable Outstanding Revolving Credit
exceeds the applicable Borrowing Base, immediately pledge to the Agent cash or
cash equivalents in an amount equal to the excess as security for the
Obligations.
(b) CONTROL OF CASH AND APPLICATION TO OBLIGATIONS. Under the
terms of the Security Agreement, the Borrowers have instructed all customers and
other Persons making payment on Receivables and other Collateral to make all
payments thereon to a post office box or boxes established in accordance with
the Lockbox Agreements. The funds on deposit in the Lockbox Accounts are
required
CREDIT AGREEMENT - Page 23
<PAGE>
under the terms of the Security Agreement to be paid to the Agent on a daily
basis by automated clearinghouse debit for credit to the Concentration
Account or by wire transfer. The funds deposited into the Concentration
Account (over which no Borrower shall have any control) or wire transferred
to Agent from the Lockbox Accounts (the "Available Cash") shall, be applied
by the Agent for the benefit of the Banks as follows:
(1) if no Event of Default exists, first, as a payment of
the outstanding principal amount of the Loans, second, as a
payment of accrued and unpaid interest on the Loans, and third,
to the repayment of any other Obligations which are due and
outstanding in connection with the Loans, and if after the
foregoing applications, Available Cash remains available to be
disbursed, the Agent shall deposit such remaining amount to one
of the Borrowers' Disbursement Accounts or transfer such funds as
Parent shall otherwise direct; or
(2) if an Event of Default exists, the Available Cash shall
be applied by the Agent for the benefit of the Banks to the
Obligations in accordance with SECTION 4.5 hereof.
(c) OPTIONAL PREPAYMENT; PREPAYMENT PENALTY. Subject to SECTION
4.2 hereof and the provisions of this CLAUSE (c), the Borrowers may, at any time
and from time to time without premium or penalty upon prior notice to the Agent
as specified in SECTION 4.3 hereof, prepay or repay any Loan in full or in part.
Loans subject to a Libor Account may be prepaid or repaid only on the last day
of the Interest Period applicable thereto unless (i) the Borrowers pay to the
Agent for the account of the applicable Banks any amounts due under SECTION 5.5
hereof as a result of such prepayment or repayment or (ii) after giving effect
to such prepayment or repayment the aggregate principal amount of the Libor
Accounts applicable to the Loan being prepaid or repaid having Interest Periods
that end after such payment date shall be equal to or less than the principal
amount of such Loan after such prepayment or repayment. In the event the
Borrowers prepay the Loans in full and all the Commitments are terminated on or
before the first anniversary of the Closing Date (whether voluntarily or as a
result of the occurrence of an Event of Default), the Borrowers agree, jointly
and severally, to pay to the Agent for the benefit of each Bank a prepayment fee
for each Bank equal to one-half of one percent (0.5%) of the sum of the
Commitments held by such Bank as calculated immediately prior to giving effect
to such prepayment and termination. Such prepayment fee shall be due and payable
on the first date after the Loans have been prepaid in full and the Commitments
have been terminated.
Section 4.5 METHOD OF PAYMENT. Except as otherwise expressly provided
herein, all payments of principal, interest, and other amounts to be made by any
Borrower or any Obligated Party under the Loan Documents shall be made to the
Agent at the Principal Office for the account of each Bank's Applicable Lending
Office in Dollars and in immediately available funds, without setoff, deduction,
or counterclaim, not later than 1:00 p.m. on the date on which such payment
shall become due (each such payment made after such time on such due date to be
deemed to have been made on the next succeeding Business Day). Each Borrower and
each Obligated Party shall, at the time of making each such payment, specify to
the Agent the sums payable under the Loan Documents to which such payment is to
be applied (and in the event that a Borrower fails to so specify, or if an Event
of Default has occurred and is continuing, the Agent may apply such payment and
any proceeds of any Collateral to the Obligations in such order and manner as it
may elect in its sole discretion, subject to SECTION 4.6 hereof). Except as
otherwise provided in SECTION 4.6, each payment received by the Agent under any
Loan Document for the account of a Bank shall be paid to such Bank by 3:00 p.m.
on the date the payment is deemed made to the Agent in immediately available
funds, for the account of such Bank's Applicable Lending Office. Whenever any
payment under any Loan Document shall be stated to be due on a day that is not a
Business Day, such payment may be made on the next succeeding Business Day, and
such
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extension of time shall in such case be included in the computation of the
payment of interest and commitment fee, as the case may be.
Section 4.6 WEEKLY SETTLEMENT AMONG BANKS; PRO RATA TREATMENT.
Notwithstanding anything herein to the contrary, the arrangements between the
Agent and the Banks with respect to making and advancing the Loans and making
payments under Letters of Credit may, in the Agent's discretion, be handled on
the following basis: no less than once a week (but otherwise as frequently as
the Agent may determine is necessary in its discretion), the Agent will provide
each Bank on or before 11:00 a.m. on a Business Day with a statement showing,
for the period of time since the date of the most recent of such statements
previously provided, the aggregate principal amount of new Loans made to any
Borrower by the Agent as a Bank, the aggregate amount of drawings on Letters of
Credit which have not been reimbursed, the aggregate face amount of new Letters
of Credit issued for the account of any Borrower, the amount of remittances and
payments actually collected and applied by the Agent to reduce the outstanding
principal balance of the Loans and to reimburse Letter of Credit Liabilities
during such period and the outstanding principal balances of the Loans and the
aggregate Letter of Credit Liabilities outstanding at the end of such period. If
as of the date of the delivery of such statement, the Agent in its capacity as a
Bank holds an interest in the Loans and the unreimbursed Reimbursement
Obligations outstanding as of such statement date in excess of its pro rata
share based on its Commitment Percentage, each Bank shall be obligated to
advance to the Agent its pro-rata (based on such Bank's Commitment Percentage)
or other share of such excess so that after giving effect to all such advances,
the Banks shall hold the Loans and the unreimbursed Reimbursement Obligations
outstanding as of such statement date pro rata in accordance with their
respective Commitment Percentages. If as of the date of the delivery of such
statement, the Agent in its capacity as a Bank holds an interest in the Loans
and the unreimbursed Reimbursement Obligations outstanding as of such statement
date in an amount less than its pro rata share based on its Commitment
Percentage, then the Agent in its capacity as a Bank shall be obligated to
advance to the other Banks such amounts as will be necessary so that after
giving effect thereto the Banks shall hold the Loans and the unreimbursed
Reimbursement Obligations outstanding as of such statement date pro rata in
accordance with their respective Commitment Percentages. Advances made pursuant
to this weekly settlement procedure by the Agent or any Bank must be made on or
before 3:00 p.m. on the date of the Bank's receipt of such statement to the
Agent at the Principal Office, in immediately available funds. Until funded by
the Banks in accordance with the forgoing, the Agent as a Bank shall be entitled
to any interest on amounts it advanced to or on behalf of any Borrower as a
result of the forgoing weekly settlement procedures and interest and commitment
fees shall be calculated and paid to give effect to the actual amounts
outstanding to each Bank. In between dates when the statement by the Agent is
delivered under this SECTION 4.6, repayments received shall be applied to the
Loans made by the Agent as a Bank. If as a result of the foregoing such Loans
are repaid in full, then to the extent any further amounts are available for
repayment on such day hereunder, Agent shall, on such day, settle with the Banks
in accordance with this SECTION 4.6. Except as a result of the forgoing or to
the extent otherwise provided herein: (a) each Loan shall be made by the Banks,
each payment of commitment fees under SECTION 2.5 and letter of credit fees
under SUBSECTION 2.7(c) hereof shall be made for the account of the Banks, and
each termination or reduction of the Commitments shall be applied to the
Commitments of the Banks, pro rata according to their respective Commitment
Percentages; (b) the making, Conversion, and Continuation of Accounts of a
particular Type (other than Conversions provided for by SECTION 5.4 hereof)
shall be made pro rata among the Banks holding Accounts of such Type according
to their respective Commitment Percentages; (c) each payment and prepayment of
principal of or interest on Loans or Reimbursement Obligations by any Borrower
shall be made to the Agent for the account of the Agent or the Banks holding
such Loans or Reimbursement Obligations (or participation interests therein) pro
rata in accordance with the respective unpaid principal amounts of such Loans or
participation interests held by the Agent or such Banks; PROVIDED that as long
as no default in the payment of interest exists, payments of interest made when
the Banks are holding different Types of Accounts applicable to the same Loan as
a result of the application of SECTION 5.4, shall be made to the Banks in
accordance with
CREDIT AGREEMENT - Page 25
<PAGE>
the amount of interest actually owed to each; (d) proceeds of Collateral
shall be shared by the Agent and the Banks pro rata in accordance with the
respective unpaid principal amounts of and interest on the Obligations then
due the Agent and the Banks; and (e) the Banks (other than the Agent) shall
purchase from the Agent participations in the Letters of Credit to the extent
of their respective Commitment Percentages. If at any time payment, in whole
or in part, of any amount distributed by the Agent hereunder is rescinded or
must otherwise be restored or returned by Agent as a preference, fraudulent
conveyance or otherwise under any bankruptcy, insolvency or similar law, then
each Person receiving any portion of such amount agrees, upon demand, to
return the portion of such amount it has received to the Agent.
Section 4.7 SHARING OF PAYMENTS. If a Bank shall obtain payment of any
principal of or interest on any of the Obligations due to such Bank hereunder
directly (and not through the Agent) through the exercise of any right of
set-off, banker's lien, counterclaim or similar right, or otherwise, it shall
promptly purchase from the other Banks participations in the Obligations held by
the other Banks in such amounts, and make such other adjustments from time to
time as shall be equitable to the end that all the Banks shall share the benefit
of such payment pro rata in accordance with the unpaid principal of and interest
on the Obligations then due to each of them. To such end, all of the Banks shall
make appropriate adjustments among themselves (by the resale of participations
sold or otherwise) if all or any portion of such excess payment is thereafter
rescinded or must otherwise be restored. Each Borrower agrees, to the fullest
extent it may effectively do so under applicable law, that any Bank so
purchasing a participation in the Obligations held by the other Banks may
exercise all rights of set-off, banker's lien, counterclaim, or similar rights
with respect to such participation as fully as if such Bank were a direct holder
of Obligations in the amount of such participation. Nothing contained herein
shall require any Bank to exercise any such right or shall affect the right of
any Bank to exercise, and retain the benefits of exercising, any such right with
respect to any other indebtedness or obligation of the any Borrower.
Section 4.8 NON-RECEIPT OF FUNDS BY THE AGENT. Unless the Agent shall
have been notified by a Bank or Parent (the "PAYOR") prior to the date on which
such Bank is to make payment to the Agent hereunder or the Borrowers are to make
a payment to the Agent for the account of one or more of the Banks, as the case
may be (such payment being herein called the "REQUIRED PAYMENT"), which notice
shall be effective upon receipt, that the Payor does not intend to make the
Required Payment to the Agent, the Agent may assume that the Required Payment
has been made and may, in reliance upon such assumption (but shall not be
required to), make the amount thereof available to the intended recipient on
such date and, if the Payor has not in fact made the Required Payment to the
Agent, (a) the recipient of such payment shall, on demand, pay to the Agent the
amount made available to it together with interest thereon in respect of the
period commencing on the date such amount was so made available by the Agent
until the date the Agent recovers such amount at a rate per annum equal to the
Federal Funds Effective Rate for such period and (b) Agent shall be entitled to
offset against any and all sums to be paid to such recipient, the amount
calculated in accordance with the foregoing CLAUSE (a).
Section 4.9 WITHHOLDING TAXES. To the extent permitted by applicable
law, all payments by any Borrower of amounts payable under any Loan Document
shall be payable without deduction for or on account of any present or future
taxes, duties or other charges levied or imposed by the United States of America
or by the government of any jurisdiction outside the United States of America or
by any political subdivision or taxing authority of or in any of the foregoing
through withholding or deduction with respect to any such payments (but
excluding franchise taxes and any tax or other charge imposed on or measured by
the income or profit of a Bank pursuant to the laws of the jurisdiction in which
it is organized or in which the principal office or Applicable Lending Office of
such Bank is located or any subdivision thereof or therein). If any such taxes,
duties or other charges are so levied or imposed, the Borrowers agree, jointly
and severally, to make additional payments in such amounts so that every net
payment of amounts payable by it under any Loan Document, after withholding or
deduction for or on
CREDIT AGREEMENT - Page 26
<PAGE>
account of any such present or future taxes, duties or other charges, will
not be less than the amount provided for herein or therein, provided that the
Borrowers may withhold to the extent required by law and shall have no
obligation to pay such additional amounts to any Bank to the extent that such
taxes, duties, or other charges are levied or imposed by reason of the
failure or inability of such Bank to comply with the provisions of SECTION
4.10 hereof. Parent shall furnish promptly to the Agent for distribution to
each affected Bank, as the case may be, official receipts evidencing any such
withholding or reduction.
Section 4.10 WITHHOLDING TAX EXEMPTION. Each Bank that is not
incorporated under the laws of the United States of America or a state thereof
agrees that it will deliver to Parent and the Agent two duly completed copies of
United States Internal Revenue Service Form 1001 or 4224 (or any substitute or
replacement thereof), certifying in either case that such Bank is entitled to
receive payments from any Borrower under any Loan Document without deduction or
withholding of any United States federal income taxes. Each Bank which so
delivers such a form further undertakes to deliver to Parent and the Agent two
(2) additional copies of such form (or a successor form) on or before the date
such form expires or becomes obsolete or after the occurrence of any event
requiring a change in the most recent form so delivered by it, and such
amendments thereto or extensions or renewals thereof as may be reasonably
requested by Parent or the Agent, in each case certifying that such Bank is
entitled to receive payments from any Borrower under any Loan Document without
deduction or withholding of any United States federal income taxes, unless an
event (including without limitation any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Bank from duly completing and delivering any such form with respect to it and
such Bank advises Parent and the Agent that it is not capable of receiving such
payments without any deduction or withholding of United States federal income
tax.
Section 4.11 PARTICIPATION AND SETTLEMENT OBLIGATIONS ABSOLUTE;
FAILURE TO FUND PARTICIPATION OR SETTLEMENT. The obligations of a Bank to fund
its participation in the Letters of Credit in accordance with the terms hereof
and settle with the Agent in accordance with SECTION 4.6 is absolute,
unconditional and irrevocable and shall be performed strictly in accordance with
the terms of the Loan Documents under all circumstances whatsoever, including
without limitation, the following circumstances: (a) any lack of validity of any
Loan Document; (b) the occurrence of any Default; (c) the existence of any
claim, set-off, counterclaim, defenses or other rights which such Bank, any
Borrower, any Obligated Party, or any other Person may have; (d) the occurrence
of any event that has or could reasonably be expected to have a Material Adverse
Effect; (e) the failure of any condition to a Loan or the issuance of a Letter
of Credit under ARTICLE 6 hereof to be satisfied; (f) the fact that after giving
effect to the funding of the participation or settlement the Outstanding
Revolving Credit may exceed the Borrowing Base in the aggregate or individually
with respect to any one Borrower; or (g) any other circumstance whatsoever,
whether or not similar to any of the foregoing; provided that, the obligations
of a Bank to fund its participation in a Letter of Credit or fund a settlement
under SECTION 4.6 may be subject to avoidance by a Bank if such Bank proves in a
final non-appealable judgment that it was damaged and that such damage arose
directly from the Agent's willful misconduct or gross negligence in determining
whether (i) the conditions set forth in ARTICLE 6 hereof to the issuance of the
Letter of Credit or the making of the Loan in question were satisfied at the
time of such issuance or Loan or (ii) with respect to a Letter of Credit, the
documentation presented under the Letter of Credit in question complied with the
terms thereof. If a Bank fails to fund its participation in a Letter of Credit
or fund a settlement under SECTION 4.6 as required hereby, such Bank shall,
subject to the foregoing proviso, remain obligated to pay to the Agent the
amount it failed to fund on demand together with interest thereon in respect of
the period commencing on the date such amount should have been funded until the
date the amount was actually funded to the Agent at a rate per annum equal to
the Federal Funds Effective Rate for such period and the Agent shall be entitled
to offset against any and all sums to be paid to such Bank hereunder the amount
due the Agent under this sentence.
CREDIT AGREEMENT - Page 27
<PAGE>
Section 4.12 BORROWERS' ACKNOWLEDGMENT OF BENEFIT AND LIABILITY. Each
Borrower expressly acknowledges that it has benefited and will benefit, directly
and indirectly, from each and every Loan and Letter of Credit, whether or not
such Borrower is or was the actual borrower in respect of such Loan or account
party with respect to such Letter of Credit, and hereby acknowledges and
undertakes, together with each other Borrower, joint and several liability for
the punctual payment when due, whether at stated maturity, by acceleration or
otherwise, of all Obligations. Each Borrower hereby acknowledges that this
Agreement is the independent and several obligation of each Borrower and may be
enforced against each Borrower separately, whether or not enforcement of any
right or remedy hereunder has been sought against any other Borrower. Each
Borrower further agrees that its liability hereunder and under any other Loan
Document shall be absolute, unconditional, continuing and irrevocable. Each
Borrower expressly waives any requirement that the Agent or any Bank exhaust any
right, power or remedy and proceeds against any other Borrower under this
Agreement, or any other Loan Document, or against any other Person under any
guaranty of, or security for, any of the Obligations.
Section 4.13 LIMITATION OF BORROWER LIABILITY. Anything contained in
this Agreement to the contrary notwithstanding, if any Fraudulent Transfer Law
(as hereinafter defined) is determined by a court of competent jurisdiction to
be applicable to the obligations of any Borrower under this Agreement, such
obligations of such Borrower hereunder shall be limited to a maximum aggregate
amount equal to the largest amount that would not render its obligations
hereunder subject to avoidance as a fraudulent transfer or conveyance under
Section 544 of the United States Bankruptcy Code or any applicable provisions of
comparable state law (collectively, the "FRAUDULENT TRANSFER LAWS"), in each
case after giving effect to all other liabilities of such Borrower, contingent
or otherwise, that are relevant under the Fraudulent Transfer Laws (specifically
excluding, however, any liabilities of such Borrower in respect of intercompany
indebtedness to any other Borrower or other Affiliates of the Borrowers to the
extent that such indebtedness would be discharged in an amount equal to the
amount paid by such Borrower hereunder) and after giving effect, as assets, to
the value (as determined under the applicable provisions of the Fraudulent
Transfer Laws) of any rights to subrogation, reimbursement, indemnification or
contribution of such Borrower pursuant to applicable law or pursuant to the
terms of any agreement (including without limitation any such rights of
contribution under SECTION 4.14).
Section 4.14 CONTRIBUTION; SUBROGATION. The Borrowers together desire
to allocate among themselves (the "CONTRIBUTING OBLIGORS"), in a fair and
equitable manner, their obligations arising under this Agreement. Accordingly,
in the event any payment or distribution is made by a Borrower under this
Agreement (a "FUNDING OBLIGOR") that exceeds its Fair Share (as defined below),
that Funding Obligor shall be entitled to a contribution from each of the other
Contributing Obligors in the amount of such other Contributing Obligor's Fair
Share Shortfall (as defined below), with the result that all such contributions
will cause each Contributing Obligor's Aggregate Payments (as defined below) to
equal its Fair Share. "FAIR SHARE" means, with respect to a Contributing Obligor
as of any date of determination, an amount equal to (i) the ratio of (x) the
Adjusted Maximum Amount (as defined below) with respect to such Contributing
Obligor to (y) the aggregate of the Adjusted Maximum Amounts with respect to all
Contributing Obligors, MULTIPLIED BY (ii) the aggregate amount paid or
distributed on or before such date by all Funding Obligors under this Agreement
in respect of the Obligations. "FAIR SHARE SHORTFALL" means, with respect to a
Contributing Obligor as of any date of determination, the excess, if any, of the
Fair Share of such Contributing Obligor over the Aggregate Payments of such
Contributing Obligor. "ADJUSTED MAXIMUM AMOUNT" means, with respect to a
Contributing Obligor as of any date of determination, the maximum aggregate
amount of the obligations of such Contributing Obligor under this Agreement
determined in accordance with the provisions hereof; PROVIDED that, solely for
purposes of calculating the "Adjusted Maximum Amount" with respect to any
Contributing Obligor for purposes of this SECTION 4.14, the assets or
liabilities arising by virtue of any rights to or obligations of contribution
hereunder shall not be considered as assets or liabilities of such Contributing
Obligor. "AGGREGATE
CREDIT AGREEMENT - Page 28
<PAGE>
PAYMENTS" means, with respect to a Contributing Obligor as of any date of
determination, the aggregate amount of all payments and distributions made on
or before such date by such Contributing Obligor in respect of this Agreement
(including, without limitation, in respect of this SECTION 4.14). The amounts
payable as contributions hereunder shall be determined as of the date on
which the related payment or distribution is made by the applicable Funding
Obligor. The allocation among Contributing Obligors of their obligations as
set forth in this SECTION 4.14 shall not be construed in any way to limit the
liability of any Contributing Obligor hereunder. In the event a payment is
made by a Borrower in excess of its Fair Share, then such Borrower shall be
subrogated to the rights then held by Agent and any Bank with respect to the
Obligations to the extent to which the Obligations was discharged by such
Borrower and, in addition, upon payment by such Borrower of any sums to Agent
and any Bank hereunder in excess of its Fair Share, all rights of such
Borrower against the other Borrowers or against any Collateral arising as a
result therefrom by way of right of subrogation, reimbursement, or otherwise
shall in all respects be subordinate and junior in right of payment to the
prior indefeasible payment in full of the Obligations.
Section 4.15 JOINT AND SEVERAL OBLIGATIONS ABSOLUTE. If
acceleration of the time for payment of any amount payable by a Borrower
under the Obligations is stayed upon the insolvency, bankruptcy, or
reorganization of another Borrower, all such amounts otherwise subject to
acceleration under the terms of this Agreement shall nonetheless be payable
by the other Borrowers hereunder forthwith on demand by Agent or any Bank.
Each Borrower hereby agrees that its joint and several liability for the
Obligations of the other Borrowers (the "OTHER OBLIGATIONS") under this
Agreement shall not be released, discharged, diminished, impaired, reduced,
or affected for any reason or by the occurrence of any event, including,
without limitation, one or more of the following events, whether or not with
notice to or the consent of any Borrower: (a) the taking or accepting of
collateral as security for any or all of the Other Obligations or the
release, surrender, exchange, or subordination of any collateral now or
hereafter securing any or all of the Other Obligations; (b) any partial
release of the liability of any other Borrower hereunder; (c) any disability
of any other Borrower, or the dissolution, insolvency, or bankruptcy of any
other Borrower or any other party at any time liable for the payment of any
or all of the Other Obligations; (d) any renewal, extension, modification,
waiver, amendment, or rearrangement of any or all of the Other Obligations or
any instrument, document, or agreement evidencing, securing, or otherwise
relating to any or all of the Other Obligations; (e) any adjustment,
indulgence, forbearance, waiver, or compromise that may be granted or given
by Agent or any Bank to any other Borrower or any other party ever liable for
any or all of the Other Obligations; (f) any neglect, delay, omission,
failure, or refusal of Agent or any Bank to take or prosecute any action for
the collection of any of the Other Obligations or to foreclose or take or
prosecute any action in connection with any instrument, document, or
agreement evidencing, securing, or otherwise relating to any or all of the
Other Obligations; (g) the unenforceability or invalidity of any or all of
the Other Obligations or of any instrument, document, or agreement
evidencing, securing, or otherwise relating to any or all of the Other
Obligations; (h) any payment by any other Borrower or any other party to
Agent or any Bank is held to constitute a preference under applicable
bankruptcy or insolvency law or if for any other reason Agent or any Bank is
required to refund any payment or pay the amount thereof to someone else;
(i) the settlement or compromise of any of the Other Obligations; (j) the
non-perfection of any security interest or lien securing any or all of the
Other Obligations; (k) any impairment of any collateral securing any or all
of the Other Obligations; (l) the failure of Agent or any Bank to sell any
collateral securing any or all of the Other Obligations in a commercially
reasonable manner or as otherwise required by law; (m) any change in the
corporate existence, structure, or ownership of any other Borrower; or (n)
any other circumstance which might otherwise constitute a defense available
to, or discharge of, any other Borrower (other than payment of the Other
Obligations).
Section 4.16 SUBORDINATION. Each Borrower hereby agrees that the
Subordinated Indebtedness (as defined below) shall be subordinate and junior in
right of payment to the prior payment in full of all Obligated Party Obligations
as herein provided. The Subordinated Indebtedness shall not be payable, and no
payment of principal, interest or other amounts on account thereof, and no
property or guarantee of
CREDIT AGREEMENT - Page 29
<PAGE>
any nature to secure or pay the Subordinated Indebtedness shall be made or
given, directly or indirectly by or on behalf of any Subordination Party
(hereafter defined) or received, accepted, retained or applied by any
Borrower unless and until the Obligated Party Obligations shall have been
paid in full in cash; EXCEPT THAT prior to the occurrence and continuance of
a Default, a Borrower shall have the right to receive, accept, retain and
apply payments on the Subordinated Indebtedness made in the ordinary course
of business. After the occurrence and during the continuance of a Default, no
payments of principal or interest may be made or given, directly or
indirectly, by or on behalf of any Subordination Party or received, accepted,
retained or applied by any Borrower unless and until the Obligated Party
Obligations shall have been paid in full in cash. If any sums shall be paid
to a Borrower by any Subordination Party or any other Person on account of
the Subordinated Indebtedness when such payment is not permitted hereunder,
such sums shall be held in trust by such Borrower for the benefit of Agent
and the Banks and shall forthwith be paid to Agent without affecting the
liability of any Borrower under this Agreement and may be applied by Agent
against the Obligated Party Obligations in accordance with this Agreement as
if such payments were Collateral. Upon the request of Agent, a Borrower shall
execute, deliver, and endorse to Agent such documentation as Agent may
request to perfect, preserve, and enforce its rights hereunder. For purposes
of this Agreement and with respect to a Borrower, the term "SUBORDINATED
INDEBTEDNESS" means all indebtedness, liabilities, and obligations of any
other Borrower or any Obligated Party (herein a "SUBORDINATION PARTY") to
such Borrower, whether such indebtedness, liabilities, and obligations now
exist or are hereafter incurred or arise, or are direct, indirect,
contingent, primary, secondary, several, joint and several, or otherwise, and
irrespective of whether such indebtedness, liabilities, or obligations are
evidenced by a note, contract, open account, or otherwise, and irrespective
of the Person or Persons in whose favor such indebtedness, obligations, or
liabilities may, at their inception, have been, or may hereafter be created,
or the manner in which they have been or may hereafter be acquired by such
Borrower. The term "OBLIGATED PARTY OBLIGATIONS" means, with respect to any
Subordination Party, all obligations, indebtedness and liability of such
Subordination Party to the Agent and the Banks under the Loan Documents
(including, without limitation, any and all post-petition interest and
expenses whether or not allowed under any bankruptcy, insolvency or other
similar law). Each Borrower agrees that any and all Liens (including any
judgment liens) upon any Subordination Party's assets securing payment of any
Subordinated Indebtedness shall be and remain inferior and subordinate to any
and all Liens upon any Subordination Party's assets securing payment of the
Obligated Party Obligations or any part thereof, regardless of whether such
Liens in favor of a Borrower, Agent or any Bank presently exist or are
hereafter created or attached. Without the prior written consent of Agent, no
Borrower shall (i) file suit against any Subordination Party or exercise or
enforce any other creditor's right it may have against any Subordination
Party, or (ii) foreclose, repossess, sequester, or otherwise take steps or
institute any action or proceedings (judicial or otherwise, including without
limitation the commencement of, or joinder in, any liquidation, bankruptcy,
rearrangement, debtor's relief or insolvency proceeding) to enforce any
obligations of any Subordination Party to such Borrower or any Liens held by
such Borrower on assets of any Subordination Party. In the event of any
receivership, bankruptcy, reorganization, rearrangement, debtor's relief, or
other insolvency proceeding involving any Subordination Party as debtor,
Agent shall have the right to prove and vote any claim under the Subordinated
Indebtedness and to receive directly from the receiver, trustee or other
court custodian all dividends, distributions, and payments made in respect of
the Subordinated Indebtedness until the Obligated Party Obligations have been
paid in full in cash. Agent may apply any such dividends, distributions, and
other payments against the Obligated Party Obligations in accordance with
this Agreement as if such payments were Collateral.
CREDIT AGREEMENT - Page 30
<PAGE>
ARTICLE 5
YIELD PROTECTION AND ILLEGALITY
Section 5.1 ADDITIONAL COSTS.
(a) The Borrowers agree, jointly and severally, to pay directly
to each Bank from time to time such amounts as such Bank may reasonably
determine to be necessary to compensate it for any costs incurred by such Bank
which such Bank determines are attributable to its making or maintaining of any
Loans subject to Libor Accounts or Letters of Credit hereunder or its obligation
to make any of such Loans hereunder or issue or participate in any Letter of
Credit, or any reduction in any amount receivable by such Bank hereunder in
respect of any such Loans or Letters of Credit or such obligation (such
increases in costs and reductions in amounts receivable being herein called
"ADDITIONAL COSTS"), resulting from any Regulatory Change which:
(i) changes the basis of taxation of any amounts payable to
such Bank under this Agreement or its Notes in respect of any of
such Loans (other than franchise taxes and other taxes or charges
imposed on the overall income or profit of such Bank or its
Applicable Lending Office for any of such Loans by the United
States of America or the jurisdiction in which such Bank has its
Principal Office or such Applicable Lending Office);
(ii) imposes or modifies any reserve, special deposit,
minimum capital, capital ratio, or similar requirement relating
to any extensions of credit or other assets of, or any deposits
with or other liabilities or commitments of, such Bank (including
any of such Loans or any deposits referred to in the definition
of "Libor Rate" in SECTION 1.1 hereof but excluding any Reserve
Requirement already taken into account in calculating the
Adjusted Libor Rate); or
(iii) imposes any other condition affecting this Agreement
or the Notes or any of such extensions of credit or liabilities
or commitments.
Each Bank will notify Parent (with a copy to the Agent) of any event occurring
after the date of this Agreement which will entitle such Bank to compensation
pursuant to this SUBSECTION 5.1(a) as promptly as practicable after it obtains
knowledge thereof and determines to request such compensation, and will
designate a different Applicable Lending Office for the Loans affected by such
event if such designation will avoid the need for, or reduce the amount of, such
compensation and will not, in the sole opinion of such Bank, violate any law,
rule, or regulation or be in any way disadvantageous to such Bank. Each Bank
will furnish Parent with a certificate setting forth the basis and the amount of
each request of such Bank for compensation under this SUBSECTION 5.1(a). If any
Bank requests compensation from the Borrowers under this SUBSECTION 5.1(a),
Parent may, by notice to such Bank (with a copy to the Agent) suspend the
obligation of such Bank to issue or participate in Letters of Credit or to make
Loans subject to Libor Accounts or Continue Libor Accounts as Libor Accounts or
Convert Base Rate Accounts into Libor Accounts until the Regulatory Change
giving rise to such request ceases to be in effect (in which case the provisions
of SECTION 5.4 hereof shall be applicable with respect to such Libor Accounts).
A Bank may only request compensation under this SUBSECTION 5.1(a) for Additional
Costs which it incurred at any time after the date six (6) months prior to the
date the Bank requests such compensation.
(b) Without limiting the effect of the foregoing provisions of
this SECTION 5.1, in the event that, by reason of any Regulatory Change, any
Bank either (i) incurs Additional Costs based on or measured by the excess above
a specified level of the amount of a category of deposits or other liabilities
of such Bank which includes deposits by reference to which the interest rate on
the Loans subject to Libor Accounts is determined as provided in this Agreement
or a category of extensions of credit or other assets of such Bank which
includes Loans subject to Libor Accounts or (ii) becomes subject to restrictions
on the amount of such a category of liabilities or assets which it may hold,
then, if such Bank so elects by
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notice to Parent (with a copy to the Agent), the obligation of such Bank to
make Loans subject to Libor Accounts or Continue Libor Accounts as Libor
Accounts or Convert Base Rate Accounts into Libor Accounts hereunder shall be
suspended until the Regulatory Change giving rise to such request ceases to
be in effect (in which case the provisions of SECTION 5.4 hereof shall be
applicable).
(c) Determinations and allocations by any Bank for purposes of
this SECTION 5.1 of the effect of any Regulatory Change on its costs of
maintaining its obligation to make Loans or issue or participate in Letters of
Credit or of making or maintaining Loans or issuing or participating in Letters
of Credit or on amounts receivable by it in respect of Loans or Letters of
Credit, and of the additional amounts required to compensate such Bank in
respect of any Additional Costs, shall, absent manifest error, constitute prima
facie evidence of the accuracy thereof, provided that such determinations and
allocations are made on a reasonable basis. Additionally, each Bank shall, upon
request by Parent, take requested measures to mitigate the Additional Costs
which the Borrowers are required to pay to any Bank if such measures can, in the
sole and absolute opinion of such Bank be taken without such Bank suffering any
economic, legal, regulatory or other disadvantage (provided, however, that no
such Bank shall be required to designate a funding office that is not located in
the United States of America).
Section 5.2 LIMITATION ON LIBOR ACCOUNTS. Anything herein to the
contrary notwithstanding, if with respect to any Libor Accounts under a Loan for
any Interest Period therefor:
(a) The Agent determines (which determination shall be
conclusive) that quotations of interest rates for the relevant deposits referred
to in the definition of "Libor Rate" in SECTION 1.1 hereof are not being
provided in the relative amounts or for the relative maturities for purposes of
determining the rate of interest for the Loans subject to such Libor Accounts as
provided in this Agreement; or
(b) Required Banks determine (which determination shall be
conclusive) and notify the Agent that the relevant rates of interest referred to
in the definition of "Adjusted Libor Rate" in SECTION 1.1 hereof on the basis of
which the rate of interest for such Loans for such Interest Period is to be
determined do not accurately reflect the cost to the Banks of making or
maintaining such Loans for such Interest Period;
then the Agent shall give Parent prompt notice thereof specifying the relevant
Libor Account and the relevant amounts or periods, and so long as such condition
remains in effect, the Banks shall be under no obligation to make additional
Loans subject to a Libor Account or to Convert Base Rate Accounts into Libor
Accounts and the Borrowers shall, on the last day(s) of the then current
Interest Period(s) for the outstanding Libor Accounts, either prepay the Loans
subject to such Libor Accounts or Convert such Libor Accounts into Base Rate
Accounts in accordance with the terms of this Agreement. Determinations made
under this SECTION 5.2 shall be made on a reasonable basis.
Section 5.3 ILLEGALITY. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Bank or its Applicable
Lending Office to (a) honor its obligation to make Loans subject to a Libor
Account hereunder or (b) maintain Loans subject to a Libor Account hereunder,
then such Bank shall promptly notify Parent (with a copy to the Agent) thereof
and such Bank's obligation to make or maintain Loans subject to a Libor Account
and to Convert Base Rate Accounts into Libor Accounts hereunder shall be
suspended until such time as such Bank may again make and maintain Loans subject
to a Libor Account (in which case the provisions of SECTION 5.4 hereof shall be
applicable).
Section 5.4 TREATMENT OF AFFECTED LOANS. If the Accounts applicable to
a Loan of any Bank (hereinafter called "AFFECTED ACCOUNTS") are affected by
SECTION 5.1 or SECTION 5.3 hereof, the Bank's Affected Accounts shall be
automatically Converted into Base Rate Accounts on the last day(s) of the then
current Interest Period(s) (or, in the case of a Conversion required by
SUBSECTION 5.1(b) or SECTION 5.3
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hereof, on such earlier date as such Bank may specify to Parent with a copy
to the Agent) and, unless and until such Bank gives notice as provided below
that the circumstances specified in SECTION 5.1 or 5.3 hereof which gave rise
to such Conversion no longer exist: (a) to the extent that such Bank's
Affected Accounts have been so Converted, all payments and prepayments of
principal which would otherwise be applied to such Bank's Affected Accounts
shall be applied instead to its Base Rate Accounts; and (b) all Accounts
which would otherwise be established or Continued by such Bank as Libor
Accounts shall be made as or Converted into Base Rate Accounts and all
Accounts of such Bank which would otherwise be Converted into Libor Accounts
shall be Converted instead into (or shall remain as) Base Rate Accounts. If
such Bank gives notice to Parent (with a copy to the Agent) that the
circumstances specified in SECTION 5.1 or 5.3 hereof which gave rise to the
Conversion of such Bank's Affected Accounts pursuant to this SECTION 5.4 no
longer exist (which such Bank agrees to do promptly upon such circumstances
ceasing to exist) at a time when Libor Accounts are outstanding, such Bank's
Base Rate Accounts shall be automatically Converted, on the first day(s) of
the next succeeding Interest Period(s) for such outstanding Libor Accounts to
the extent necessary so that, after giving effect thereto, all Accounts held
by the Banks holding Libor Accounts and by such Bank are held pro rata (as to
principal amounts, Types, and Interest Periods) in accordance with their
respective Commitment Percentages.
Section 5.5 COMPENSATION. The Borrowers agree, jointly and severally,
to pay to the Agent for the account of each Bank, upon the request of such Bank,
such amount or amounts as shall be sufficient (in the reasonable opinion of such
Bank) to compensate it for any loss, cost, or expense incurred by it as a result
of:
(a) Any payment or prepayment of a Loan subject to a Libor
Account or Conversion of a Libor Account for any reason (including, without
limitation, the repayment of such a Loan held by the Agent as a Bank resulting
from the operation of SECTION 4.6 or the repayment of such a Loan resulting from
the acceleration of the outstanding Loans pursuant to SUBSECTION 11.2(a) hereof)
on a date other than the last day of an Interest Period for the applicable Libor
Account; or
(b) Any failure by any Borrower for any reason (including,
without limitation, the failure of any conditions precedent specified in
ARTICLE 6 to be satisfied but excluding any failure by a Bank to honor its
obligations hereunder) to borrow or prepay a Loan subject to a Libor Account,
or Convert a Base Rate Account to a Libor Account on the date for such
borrowing, Conversion, or prepayment specified in the relevant notice of
borrowing, prepayment, or Conversion under this Agreement.
Without limiting the effect of the preceding sentence, such compensation shall
include an amount equal to the excess, if any, of (i) the amount of interest
which otherwise would have accrued on the principal amount so paid or Converted
or not borrowed for the period from the date of such payment, Conversion, or
failure to borrow to the last day of the Interest Period for such Libor Account
(or, in the case of a failure to borrow, the Interest Period for such Libor
Account which would have commenced on the date specified for such borrowing) at
the applicable rate of interest for such Libor Account provided for herein over
(ii) the interest component of the amount such Bank would have bid in the London
interbank market for Dollar deposits of leading banks and amounts comparable to
such principal amount and with maturities comparable to such period.
Section 5.6 CAPITAL ADEQUACY. If after the date hereof, any Bank shall
have determined that any Regulatory Change or any change in the compliance by
such Bank (or its parent) with any guideline, request, or directive regarding
capital adequacy (whether or not having the force of law) of any central bank or
other Governmental Authority has or would have the effect of reducing the rate
of return on such Bank's (or its parent's) capital as a consequence of its
obligations hereunder or the transactions contemplated hereby to a level below
that which such Bank (or its parent) could have achieved but for
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such Regulatory Change or change in compliance by an amount deemed by such
Bank to be material, then from time to time, within ten (10) Business Days
after demand by such Bank (with a copy to the Agent), the Borrowers agree,
jointly and severally, to pay to such Bank such additional amount or amounts
as will compensate such Bank (or its parent) for such reduction. A
certificate of such Bank claiming compensation under this SECTION and setting
forth the additional amount or amounts to be paid to it hereunder shall
constitute prima facie evidence of the accuracy thereof, provided that the
determination thereof is made on a reasonable basis. In determining such
amount or amounts, such Bank may use any reasonable averaging and attribution
methods. With respect to each demand by a Bank under this SECTION 5.6, no
Bank shall have the right to demand compensation for amounts attributable to
any reduction in such Bank's rate of return occurring at any time before the
date which is six (6) months prior to the date the Bank gives such demand for
compensation to Parent.
Section 5.7 REPLACEMENT OF A BANK. If (i) the obligation of a Bank
(other than the Agent as a Bank) to make or Continue Loans subject to Libor
Accounts has been suspended pursuant to SECTIONS 5.2 or 5.3 or (ii) a Bank
(other than the Agent as a Bank) has demanded compensation under SECTIONS 5.1 or
5.6, Parent shall have the right to require such Bank to assign to a Person
selected by Parent and reasonably satisfactory to the Agent (which may be one or
more of the Banks) the Notes and participation interests in the Letter of Credit
Liabilities held by such Bank pursuant to the terms of an appropriately
completed Assignment and Acceptance in accordance with SUBSECTION 13.8(b);
PROVIDED that, neither the Agent nor any Bank shall have any obligation to any
Borrower to find any such Person and in order for Parent to replace a Bank,
Parent must require such replacement within three (3) months of the date such
obligations of the Bank were suspended or the date the Bank demanded such
compensation. Each Bank (other than the Agent as a Bank) agrees to its
replacement at the option of Parent pursuant to this SECTION 5.7; PROVIDED that
the Person selected by Parent shall purchase such Bank's interest in the
Obligations of the Borrowers to such Bank for immediately available funds in an
aggregate amount equal to the aggregate unpaid principal thereof, all unpaid
interest accrued thereon, all unpaid commitment and letter of credit fees
accrued for the account of such Bank, any breakage costs incurred by the selling
Bank because of the prepayment of any Libor Accounts, all other fees (if any)
applicable thereto and all other amounts (including any amounts due under
SECTIONS 5.1 or 5.6) then owing to such Bank hereunder or under any other Loan
Document.
ARTICLE 6
CONDITIONS PRECEDENT
Section 6.1 INITIAL LOAN AND LETTER OF CREDIT. The obligation of each
Bank to make its initial Loan and the obligation of the Agent to issue the
initial Letter of Credit are subject to the condition precedent that the Agent
shall have received on or before, or shall receive simultaneously with, the day
of any such Loan or Letter of Credit all of the following, each dated (unless
otherwise indicated) the date hereof, in form and substance satisfactory to the
Agent:
(a) RESOLUTIONS; AUTHORITY. Resolutions of the Board of Directors
of each Borrower and each Obligated Party certified by its Secretary or an
Assistant Secretary which authorize its execution, delivery, and performance of
the Loan Documents to which it is or is to be a party.
(b) INCUMBENCY CERTIFICATE. A certificate of incumbency certified
by the Secretary or an Assistant Secretary of each Borrower and each Obligated
Party certifying the names of its officers (i) who are authorized to sign the
Loan Documents to which it is or is to be a party (including the certificates
contemplated herein) together with specimen signatures of each such officer and
(ii) who will, until replaced by other officers duly authorized for that
purpose, act as its representative for the purposes
CREDIT AGREEMENT - Page 34
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of signing documentation and giving notices and other communications in
connection with this Agreement and the transactions contemplated hereby.
(c) ORGANIZATIONAL DOCUMENTS. The articles of incorporation of
each Borrower and each Obligated Party certified by the Secretary of State of
the state of its incorporation and dated a current date.
(d) BYLAWS. The bylaws of each Borrower and each Obligated Party
certified by its Secretary or an Assistant Secretary.
(e) GOVERNMENTAL CERTIFICATES. Certificates of the appropriate
government officials of the state of incorporation of each Borrower and each
Obligated Party as to its existence and, to the extent applicable, good standing
and certificates of the appropriate government officials of each state in which
each Borrower and each Obligated Party is required to qualify to do business and
where failure to so qualify could reasonably be expected to have a Material
Adverse Effect, as to such Person's qualification to do business and good
standing in such state, all dated a current date.
(f) NOTES. The Notes executed by each Borrower.
(g) COLLATERAL DOCUMENTS AND COLLATERAL. The Security Agreement
executed by each of the Borrowers; UCC, tax and judgment Lien search reports
listing all documentation on file against each Borrower in each jurisdiction in
which such Borrower is organized and has its chief executive office and each
jurisdiction in which any of its inventory is located; and such executed
documentation as the Agent may deem necessary to perfect or protect its Liens,
including, without limitation: (i) financing statements under the UCC and other
applicable documentation under the laws of any jurisdiction with respect to the
perfection of Liens; (ii) a lien subordination from the landlord of Parent's
office located at 17855 Dallas Parkway, Suite 200, Dallas, Texas 75287,
containing such access agreements and subordinations as the Agent may require;
(iii) agreements from each institution where any Borrower maintains a deposit
account in form and substance satisfactory to the Agent, pursuant to which such
institutions recognize the Agent's Lien in such account and agree to transfer
the collected balances in all Lockbox Accounts to the Concentration Account on a
daily basis; and (iv) waivers, subordinations or acknowledgments from all other
third parties who have possession or control of any Collateral; PROVIDED,
HOWEVER, that Agent shall not require that any Borrower deliver lien
acknowledgements and related UCC financing statements from third-parties in
possession of any Borrower's inventory, except as set forth in SECTION 8.10.
(h) TERMINATION OF LIENS. Duly executed UCC-3 termination
statements, mortgage releases and such other documentation as shall be necessary
to terminate or release all Liens other than those permitted by SECTION 9.2
hereof.
(i) INSURANCE POLICIES. Certificates of insurance summarizing the
insurance policies of the Borrowers required by this Agreement and reflecting
the Agent as additional insured under all liability policies and as loss payee
with respect to all policies covering Collateral.
(j) OPINION OF COUNSEL. A favorable opinion of legal counsel to
the Borrowers and the Obligated Parties as to such matters as the Agent may
reasonably request.
(k) BORROWING BASE REPORT. An initial Borrowing Base Report dated
as of the Closing Date, together with the receivable reports and information
required thereby, verifying that the initial, Aggregate Borrowing Availability
calculated as of March 17, 2000, is equal to or greater than Eighteen Million
Dollars ($18,000,000).
CREDIT AGREEMENT - Page 35
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(l) FIRST UNION LOAN AGREEMENT. A fully executed copy of
the First Union Loan Agreement and such other documents relating thereto as
Agent may request, and evidence, satisfactory to the Agent, that the First
Union Loan has been (or will be simultaneously with the first Loan funded
hereunder) funded by the lenders thereto.
(m) INTERCREDITOR AGREEMENT. The Intercreditor Agreement,
executed by each of the parties thereto.
(n) LOCKBOX AGREEMENTS. The Lockbox Agreements.
(o) EQUITY CAPITAL. Evidence that Parent has received capital
contributions in an amount equal to or greater than Ten Million Dollars
($10,000,000) on the Closing Date.
(p) PROJECTIONS. A forecasted consolidated balance sheet
and statements of income and cash flow of Parent and the Subsidiaries on a
quarter by quarter basis, including the assumptions utilized in the preparation
of such projections (in narrative form) for the Fiscal Year ending on
December 31, 2000, a pro forma projection of Parent's compliance with the
financial covenants in this Agreement for the same period and a forecasted
consolidated balance sheet and statements of income and cash flow of Parent
and the Subsidiaries for the Fiscal Years ending December 31, 2000 and
December 31, 2001.
(q) INDENTURE. Evidence satisfactory to the Agent that (i)
the holders of the Senior Subordinated Notes shall have consented to the
departure from Section 4.03 of the Indenture to permit the incurrence of the
Obligations and the First Union Loan and (ii) the Obligations are "Senior
Indebtedness" and are "Designated Senior Indebtedness" under the Indenture.
(r) FEES. Evidence that the arrangement fee payable to The
Chase Manhattan Bank in the amount of $625,000 and the initial installment of
the administrative fee payable to the Agent in the amount of $10,000 have
been, or will be with the proceeds of the initial Loan, paid in full.
(s) ATTORNEYS' FEES AND EXPENSES. Evidence that the costs
and expenses (including attorneys' fees) referred to in SECTION 13.1 hereof,
to the extent incurred and invoiced, have been, or will be with the proceeds
of the initial Loan, paid in full.
(t) GUARANTY. A limited guaranty agreement executed by
Richmont Capital Partners I, Ltd. in the form of Exhibit "F."
Section 6.2 ALL LOANS AND LETTERS OF CREDIT. The obligation of each
Bank to make any Loan (including the initial Loan) and the obligation of the
Agent to issue any Letter of Credit (including the initial Letter of Credit) are
subject to the following additional conditions precedent:
(a) NO DEFAULT. No Default shall have occurred and be
continuing, or would result from such Loan or Letter of Credit;
(b) REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties contained in ARTICLE 7 hereof and in the other
Loan Documents shall be true and correct on and as of the date of such Loan
or Letter of Credit with the same force and effect as if such representations
and warranties had been made on and as of such date except to the extent that
such representations and warranties relate specifically to another date; and
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(c) ADDITIONAL DOCUMENTATION. The Agent shall have received such
additional approvals, opinions, or documents as the Agent may reasonably
request.
Each notice of borrowing by any Borrower hereunder, each request for a
borrowing under SUBSECTIONS 2.7(e) AND 4.1(b), and each request for the
issuance of a Letter of Credit, shall constitute a representation and
warranty by each Borrower that the conditions precedent set forth in
SUBSECTIONS 6.2(a) and (b) hereof have been satisfied (both as of the date of
such notice and, unless Parent otherwise notifies the Agent prior to the date
of such borrowing or Letter of Credit, as of the date of such borrowing or
Letter of Credit).
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Banks to enter into this Agreement, each Borrower
represents and warrants to the Agent and the Banks that:
Section 7.1 CORPORATE EXISTENCE. Parent and each Subsidiary (a) is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation; (b) has all requisite power and
authority to own its assets and carry on its business as now being or as
proposed to be conducted; and (c) is qualified to do business in all
jurisdictions in which the nature of its business makes such qualification
necessary and where failure to so qualify would have a Material Adverse Effect.
Each Borrower and each Obligated Party has the power and authority to execute,
deliver, and perform their respective obligations under the Loan Documents to
which it is or may become a party.
Section 7.2 FINANCIAL STATEMENTS. Parent has delivered to the Agent
and the Banks (i) audited consolidated financial statements of Parent and the
Subsidiaries for the Fiscal Year ended December 31, 1998, (ii) unaudited
consolidated financial statements of Parent and the Subsidiaries for the one (1)
month period ended January 31, 2000, and (iii) unaudited consolidated financial
statements of Parent and the Subsidiaries for the four (4) Fiscal Quarters ended
December 31, 1999. Such financial statements have been prepared in accordance
with GAAP (subject in the case of the unaudited financial statements to audit
adjustments and the fact that such financial statements do not contain
footnotes), and present fairly, on a consolidated and consolidating basis, the
financial condition of Parent and the Subsidiaries as of the respective dates
indicated therein and the results of operations for the respective periods
indicated therein. None of Parent nor any Subsidiary has any material contingent
liabilities, liabilities for taxes, unusual forward or long-term commitments, or
unrealized or anticipated losses from any unfavorable commitments except as
referred to or reflected in such financial statements. There has been no
Material Adverse Effect since the effective date of the audited consolidated
financial statements of Parent for the Fiscal Year ended December 31, 1998.
Section 7.3 CORPORATE ACTION; NO BREACH. The execution, delivery, and
performance by each Borrower and each Obligated Party of the Loan Documents to
which each is or may become a party and compliance with the terms and provisions
hereof and thereof have been duly authorized by all requisite action on the part
of each Borrower and each Obligated Party and do not and will not (a) violate or
conflict with, or result in a breach of, or require any consent under (i) the
articles of incorporation or bylaws of any Borrower or any Obligated Party, (ii)
any applicable law, rule, or regulation or any order, writ, injunction, or
decree of any Governmental Authority or arbitrator, or (iii) any agreement or
instrument to which any Borrower or any Obligated Party is a party or by which
any of them or any of their property is bound or subject (including without
limitation, the Indenture and the First Union Loan Agreement) or (b) constitute
a material default under any such agreement or instrument, or result in the
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creation or imposition of any Lien (except as provided herein or Liens in
favor of Agent) upon any of the revenues or assets of any Borrower or any
Obligated Party.
Section 7.4 OPERATION OF BUSINESS. Parent and each Subsidiary
possesses all licenses, permits, franchises, patents, copyrights, trademarks,
and trade names, or rights thereto, necessary to conduct its businesses
substantially as now conducted and as presently proposed to be conducted, and
neither Parent nor any Subsidiary is in violation, in any material respect,
of any valid rights of others with respect to any of the foregoing.
Section 7.5 LITIGATION AND JUDGMENTS. Other than the Monroe
Litigation, there is no action, suit, investigation, or proceeding before or by
any Governmental Authority or arbitrator pending, or to the knowledge of any
Borrower, threatened against or affecting Parent or any Subsidiary that could
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect. There are no outstanding judgments against Parent or
any Subsidiary.
Section 7.6 RIGHTS IN PROPERTIES; LIENS. Parent and each Subsidiary
has good title to or valid leasehold interests in their respective properties
and assets, real and personal, including the properties, assets, and leasehold
interests reflected in the financial statements described in SECTION 7.2 hereto,
and none of the properties, assets, or leasehold interests of Parent or any
Subsidiary is subject to any Lien, except as permitted by SECTION 9.2 hereto.
Section 7.7 ENFORCEABILITY. The Loan Documents to which any Borrower
or any Obligated Party is party, when delivered, shall constitute the legal,
valid, and binding obligations of the applicable Borrower or Obligated Party,
enforceable against the applicable Borrower or Obligated Party in accordance
with their respective terms, except as limited by bankruptcy, insolvency, or
other laws of general application relating to the enforcement of creditors'
rights and general principles of equity.
Section 7.8 APPROVALS. No authorization, approval, or consent of, and
no filing or registration with, any Governmental Authority or third party is or
will be necessary for the execution, delivery, or performance by any Borrower or
any Obligated Party of the Loan Documents to which each is or may become a party
or for the validity or enforceability thereof except for such authorizations,
approvals, consents, filings and registrations which have been made or obtained.
Without limiting the generality of the forgoing, all approvals and consents
required under the terms of the Indenture necessary for the execution, delivery,
or performance by any Borrower or any Obligated Party of the Loan Documents to
which each is or may become a party or for the validity or enforceability
thereof have been obtained.
Section 7.9 DEBT. Neither Parent nor each Subsidiary has any Debt,
except as of the Closing Date, the Debt outstanding under the Indenture and the
other Debt as disclosed on SCHEDULE 9.1 and, at all times after the Closing
Date, as permitted by SECTION 9.1 hereto. As of the Closing Date, the aggregate
amount of the Debt which is equal in right of payment to any unsecured portion
of the Obligations is as set forth on SCHEDULE 7.9 hereto. None of the Debt
disclosed on SCHEDULE 9.1 is senior in right of payment to the Obligations nor
is any such Debt secured by any Lien (except as reflected on SCHEDULE 9.2) or
otherwise entitled to any administrative or other priority in any liquidation or
bankruptcy proceedings of Parent and each Subsidiary; provided that certain
employees of Parent and each Subsidiary who hold such Debt may be entitled to
the priority distribution under Section 507(a)(3) or 507(a)(4) of the United
States Bankruptcy Code (11 U.S.C. Section 507) to the extent, and only to the
extent as set forth in such Sections, as a result of their claims relating to
such Debt being characterized either as claims for wages, salaries or
contributions to employee benefit plans. The amount of such Debt, as of the
Closing Date, is $1,375,795.
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Section 7.10 TAXES. Parent and each Subsidiary has filed all
material tax returns (federal, state, and local) required to be filed,
including all income, franchise, employment, property, and sales tax returns,
and have paid all of their respective liabilities for taxes, assessments,
governmental charges, and other levies that are due and payable other than
those being contested in good faith by appropriate proceedings diligently
pursued for which adequate reserves have been established. Except as
disclosed in writing to Agent, no Borrower know of any pending investigation
of Parent or any Subsidiary by any taxing authority or of any pending but
unassessed tax liability of Parent or any Subsidiary.
Section 7.11 MARGIN SECURITIES. Neither Parent nor any Subsidiary
is engaged principally, or as one of its important activities, in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulations T, U, or X of the Board of Governors
of the Federal Reserve System), and no part of the proceeds of any Loan will
be used to purchase or carry any margin stock or to extend credit to others
for the purpose of purchasing or carrying margin stock.
Section 7.12 ERISA. Parent and each Subsidiary is in compliance in
all material respects with all applicable provisions of ERISA. Neither a
Reportable Event nor a Prohibited Transaction has occurred and is continuing
with respect to any Plan. No notice of intent to terminate a Plan has been
filed, nor has any Plan been terminated. No circumstances exist which
constitute grounds entitling the PBGC to institute proceedings to terminate,
or appoint a trustee to administer, a Plan, nor has the PBGC instituted any
such proceedings. Neither Parent nor any Subsidiary nor any ERISA Affiliate
has completely or partially withdrawn from a Multiemployer Plan. Parent and
each Subsidiary and each ERISA Affiliate has met its minimum funding
requirements under ERISA with respect to all of their Plans. The present
value of all vested benefits under each Plan do not exceed the fair market
value of all Plan assets allocable to such benefits, as determined on the
most recent valuation date of the Plan and in accordance with ERISA. Neither
Parent nor any Subsidiary nor any ERISA Affiliate has incurred any liability
to the PBGC under ERISA in an amount that will have a Material Adverse Effect.
Section 7.13 DISCLOSURE. All factual information furnished by or on
behalf of Parent and each Subsidiary in writing to the Agent or any Bank
(including, without limitation, all information contained in the Loan
Documents) for purposes of or in connection with this Agreement, the other
Loan Documents or any transaction contemplated herein or therein is, and all
other such factual information hereafter furnished by or on behalf of Parent
and each Subsidiary to the Agent or any Bank, will be true and accurate in
all material respects taken as a whole on the date as of which such
information is dated or certified and not incomplete by omitting to state any
fact necessary to make such information not misleading in any material
respect at such time.
Section 7.14 SUBSIDIARIES; BORROWER CAPITALIZATION. As of the
Closing Date, Parent has no Subsidiaries other than those listed on SCHEDULE
7.14 hereto. As of the Closing Date, SCHEDULE 7.14 sets forth the
jurisdiction of incorporation or organization of each such Subsidiary, the
percentage of Parent's ownership of the outstanding Equity Interests of each
Subsidiary directly owned by Parent, the percentage of each Subsidiary's
ownership of the outstanding Equity Interests of each other Subsidiary and
the authorized, issued and outstanding Equity Interests of Parent and each
Subsidiary. All of the outstanding capital stock of Parent and each
Subsidiary has been validly issued, is fully paid, and is nonassessable.
Except as permitted to be issued or created pursuant to the terms hereof or
as reflected on SCHEDULE 7.14, there are no outstanding subscriptions,
options, warrants, calls, or rights (including preemptive rights) to acquire,
and no outstanding securities or instruments convertible into any Equity
Interests of Parent or any Subsidiary. Each Subsidiary that is not a Borrower
is either (i) inactive without any assets or (ii) has total assets that do
not exceed two percent (2%) of the total assets of Parent determined on a
consolidated
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basis. The combined value of the total assets of all Subsidiaries that are
not Borrowers does not exceed an amount equal to two percent (2%) of the
total assets of Parent determined on a consolidated basis.
Section 7.15 AGREEMENTS. Neither Parent nor any Subsidiary is a
party to any indenture, loan, or credit agreement, or to any lease or other
agreement or instrument, or subject to any charter or corporate restriction
that could reasonably be expected to have a Material Adverse Effect. Neither
Parent nor any Subsidiary is in default in any respect in the performance,
observance, or fulfillment of any of the obligations, covenants, or
conditions contained in any agreement or instrument to which it is a party
other than defaults which will not have a Material Adverse Effect.
Section 7.16 COMPLIANCE WITH LAWS. Neither Parent nor any
Subsidiary are in violation of any law, rule, regulation, order, or decree of
any Governmental Authority or arbitrator other than violations which will not
have a Material Adverse Effect.
Section 7.17 INVESTMENT COMPANY ACT. Neither Parent nor any
Subsidiary is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
Section 7.18 PUBLIC UTILITY HOLDING COMPANY ACT. Neither Parent nor
any Subsidiary is a "holding company" or a "subsidiary company" of a "holding
company" or an "affiliate" of a "holding company" or a "public utility"
within the meaning of the Public Utility Holding Company Act of 1935, as
amended.
Section 7.19 ENVIRONMENTAL MATTERS.
(a) Parent and each Subsidiary and all of their respective
properties, assets, and operations are in compliance in all material respects
with all Environmental Laws. No Borrower is aware of, nor has any Borrower
received notice of, any past, present, or future conditions, events,
activities, practices, or incidents which may interfere with or prevent the
material compliance or continued material compliance of Parent and each
Subsidiary with all Environmental Laws;
(b) Parent and each Subsidiary has obtained all permits,
licenses, and authorizations that are required under applicable Environmental
Laws the failure of which to obtain would result in a Material Adverse
Effect. All such permits are in good standing and Parent and each Subsidiary
are in compliance in all material respects with all of the terms and
conditions of such permits;
(c) No Hazardous Materials exist on, about, or within or have
been used, generated, stored, transported, disposed of on, or Released from
any of the properties or assets of Parent or any Subsidiary except in
compliance in all material respects with Environmental Laws. The use which
Parent and each Subsidiary make and intend to make of their respective
properties and assets will not result in the use, generation, storage,
transportation, accumulation, disposal, or Release of any Hazardous Material
on, in, or from any of their properties or assets except in compliance in all
material respects with Environmental Laws;
(d) Neither Parent nor any Subsidiary nor any of their
respective currently or previously owned or leased properties or operations
is subject to any outstanding or, to the best of its knowledge, threatened
order from or agreement with any Governmental Authority or subject to any
judicial or administrative proceeding with respect to (i) failure to comply
with Environmental Laws, (ii) Remedial Action, or (iii) any Environmental
Liabilities arising from a Release or threatened Release;
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(e) There are no conditions or circumstances associated with
the currently or previously owned or leased properties or operations of
Parent or any Subsidiary that could reasonably be expected to give rise to
any material Environmental Liabilities;
(f) Neither Parent nor any Subsidiary are a treatment,
storage, or disposal facility requiring a permit under the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901 ET SEQ., regulations
thereunder or any comparable provision of state law. Parent and each
Subsidiary are in compliance with all applicable financial responsibility
requirements of all Environmental Laws in all material respects;
(g) Neither Parent nor any Subsidiary have filed or failed to
file any notice required under applicable Environmental Law reporting a
Release; and
(h) No Lien arising under any Environmental Law has attached
to any property or revenues of Parent or any Subsidiary.
Section 7.20 SOLVENCY. As of and from and after the date of this
Agreement and after giving effect to the consummation of the Pending
Acquisition, each Borrower and each Obligated Party individually and on a
consolidated basis: (a) owns and will own assets (including contribution
rights, if any) the fair saleable value of which are (i) greater than the
total amount of liabilities (including contingent liabilities) and (ii)
greater than the amount that will be required to pay the probable liabilities
of its then existing debts as they become absolute and matured considering
all financing alternatives and potential asset sales reasonably available to
it; (b) has capital that is not unreasonably small in relation to its
business as presently conducted or any contemplated or undertaken
transaction; and (c) does not intend to incur and does not believe that it
will incur debts beyond its ability to pay such debts as they become due.
Section 7.21 PERISHABLE AGRICULTURAL COMMODITIES ACT. In the
ordinary course of its business, neither Parent nor any Subsidiary purchases
or sells for its own account perishable agricultural commodities (as that
term is defined in the Perishable Agricultural Commodities Act, as amended (7
U.S.C. Section 499e(c)) and the regulations promulgated thereunder) nor does
any such party directly receive any proceeds from the sale of such
commodities. As a result, the statutory trust arising under such act for the
benefit of unpaid cash sellers does not attach to any property of Parent or
any Subsidiary.
Section 7.22 PACKERS AND STOCKYARDS ACT. In the ordinary course of
its business, neither Parent nor any Subsidiary purchases, sells for its own
account or receives the proceeds from the sale of livestock as that term is
defined in the Packers and Stockyards Act, as amended (7 U.S.C. Section
181-229) and the regulations thereunder. As a result, the statutory trust
arising under such act for the benefit of unpaid cash sellers does not attach
to any property of Parent or any Subsidiary.
Section 7.23 COMMON ENTERPRISE; BENEFIT RECEIVED. The Borrowers are
each a member of an affiliated group and are collectively engaged in a common
enterprise with one another. Each Borrower will receive reasonably equivalent
value in exchange for the obligations incurred under the Loan Documents to
which it is a party. Each Borrower will derive substantial benefit from the
credit extended pursuant hereto in an amount at least equal to its
obligations under the Loan Documents to which it is a party.
Section 7.24 YEAR 2000. Any reprogramming required to permit the
proper functioning, in and following the year 2000, of (i) Parent's and the
Subsidiaries' computer systems and (ii) equipment containing embedded
microchips (including systems and equipment supplied by others or with which
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Parent's or the Subsidiaries' systems interface) and the testing of all such
systems and equipment, as so reprogrammed, has been completed. The computer
and management information systems of Parent and the Subsidiaries are and,
with ordinary course upgrading and maintenance, will continue for the term of
this Agreement to be, sufficient to permit Parent and the Subsidiaries to
conduct their respective businesses without a Material Adverse Effect.
Section 7.25 INDENTURE. The Obligations have been (and hereby are)
designated as "Designated Senior Indebtedness" (as defined in the Indenture)
for all purposes under the Indenture.
ARTICLE 8
POSITIVE COVENANTS
Parent covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or Agent or any Bank has any commitment
hereunder, it will perform and observe the following positive covenants:
Section 8.1 REPORTING REQUIREMENTS. Parent will furnish to the
Agent and each Bank:
(a) ANNUAL FINANCIAL STATEMENTS. As soon as available, and in
any event within ninety (90) days after the end of each Fiscal Year of
Parent, beginning with the Fiscal Year ending December 31, 1999, a copy of
the annual audit report of Parent and the Subsidiaries for such Fiscal Year
containing, on a consolidated and consolidating basis, balance sheets and
statements of income, retained earnings, and cash flow as at the end of such
Fiscal Year and for the Fiscal Year then ended, in each case setting forth in
comparative form the figures for the preceding Fiscal Year, all in reasonable
detail and audited and certified on an unqualified basis by independent
certified public accountants of recognized standing acceptable to the Agent,
to the effect that such report has been prepared in accordance with GAAP;
(b) MONTHLY FINANCIAL STATEMENTS. As soon as available, and in
any event within forty-five (45) days after the end of each Fiscal Quarter
that is not the Fiscal Year end and within thirty-five (35) days after the
end of each month that is not a Fiscal Year end or a Fiscal Quarter end, (i)
a copy of an unaudited financial report of Parent and the Subsidiaries as of
the end of such period and for the portion of the Fiscal Year then ended
containing, on a consolidated and consolidating basis, balance sheets and
statements of income, retained earnings, and cash flow, in each case setting
forth in comparative form the figures submitted in the most recent
projections delivered to Agent pursuant to either SECTION 6.1(o) or SECTION
8.1(f), all in reasonable detail certified by the chief executive officer,
treasurer or chief financial officer of Parent to have been prepared in
accordance with GAAP (but excluding footnotes) and to fairly present (subject
to year-end audit adjustments) the financial condition and results of
operations of Parent and the Subsidiaries, on a consolidated and
consolidating basis, at the date and for the periods indicated therein, and
(ii) trade accounts payable aging reports.
(c) COMPLIANCE CERTIFICATE. Within forty-five (45) days after
the end of each Fiscal Quarter of each Fiscal Year and accompanying the
annual financial statements delivered in accordance with SECTION 8.1(a), a
Compliance Certificate, together with the schedules thereto setting forth the
calculations supporting the computations therein as well as the list of
assets disposed, as set forth in SECTION 9.8;
(d) BORROWING BASE REPORT. Within twenty (20) days after the
last day of each month, or within one (1) Business Day of any other date the
Agent may select in its discretion by written
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notice to Parent (each such day or date a "REPORT DATE"), a Borrowing Base
Report together with a Receivable aging report, sales report summary,
collections report (including lockbox activity statements) and customer
credit report (reflecting all journal entries and adjustments) for each
Borrower as of the applicable Report Date;
(e) RECEIVABLE REPORTING. On each Monday (unless Monday is not
a Business Day, then on the following Tuesday) or, if the Agent requests,
within one (1) Business Day of any other date the Agent may select in its
discretion by written notice to Parent, Parent shall furnish to the Agent, a
Receivable Report in the form of Exhibit "G." For purposes of preparing the
Receivables Reports under this clause (e), it shall be assumed that each
Business Day ends at 2:00 p.m., with any other activity occurring on such
Business Day after such 2:00 p.m. deadline to be deemed to have occurred on
the next succeeding Business Day;
(f) PROJECTIONS. As soon as available and in any event within
forty-five (45) days after the beginning of each Fiscal Year of Parent,
Parent will deliver (i) a forecasted consolidated balance sheet and
statements of income and cash flow of Parent and the Subsidiaries on a
quarter by quarter basis, including the assumptions utilized in the
preparation of such projections (in narrative form) for the forthcoming
Fiscal Year and a pro forma projection of Parent's compliance with the
financial covenants in this Agreement for the same period and (ii) a
forecasted consolidated balance sheet and statements of income and cash flow
of Parent and the Subsidiaries for the next succeeding Fiscal Year;
(g) MANAGEMENT LETTERS. Promptly upon receipt thereof, a copy
of any management letter or written report submitted to Parent or any
Subsidiary by independent certified public accountants with respect to the
business, condition (financial or otherwise), operations, prospects, or
properties of Parent or any Subsidiary;
(h) NOTICE OF LITIGATION. Promptly after the commencement
thereof, notice of all actions, suits, and proceedings before any
Governmental Authority or arbitrator affecting Parent or any Subsidiary
which, if determined adversely to Parent or such Subsidiary, could reasonably
be expected to have a Material Adverse Effect;
(i) NOTICE OF DEFAULT. As soon as possible and in any event
within five (5) Business Days after an officer of Parent has knowledge of the
occurrence of each Default, a written notice setting forth the details of
such Default and the action that Parent have taken and proposes to take with
respect thereto;
(j) ERISA REPORTS. If requested by the Agent, promptly after
the filing or receipt thereof, copies of all reports, including annual
reports, and notices which Parent or any Subsidiary files with or receives
from the PBGC or the U.S. Department of Labor under ERISA; and as soon as
possible and in any event within five (5) Business Days after Parent knows or
has reason to know that any Reportable Event or Prohibited Transaction has
occurred with respect to any Plan or that the PBGC or Parent or any
Subsidiary has instituted or will institute proceedings under Title IV of
ERISA to terminate any Plan, a certificate of the chief financial officer of
Parent setting forth the details as to such Reportable Event or Prohibited
Transaction or Plan termination and the action that Parent proposes to take
with respect thereto;
(k) NOTICE OF MATERIAL ADVERSE EFFECT. As soon as possible and
in any event within five (5) Business Days of the occurrence thereof, written
notice of any matter that could reasonably be expected to have a Material
Adverse Effect;
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(l) PROXY STATEMENTS, ETC. As soon as available, one copy of
each financial statement, report, notice or proxy statement sent by Parent or
any Subsidiary to its stockholders generally and one copy of each regular,
periodic or special report, registration statement, or prospectus filed by
Parent or any Subsidiary with any securities exchange or the Securities and
Exchange Commission or any successor agency; and
(m) GENERAL INFORMATION. Promptly, such other information
concerning Parent or any Subsidiary as the Agent or any Bank may from time to
time reasonably request.
Section 8.2 MAINTENANCE OF EXISTENCE; CONDUCT OF BUSINESS. Except
as otherwise permitted by SECTION 9.3, Parent will, and will cause each
Subsidiary to, preserve and maintain its corporate existence and all of its
leases, privileges, licenses, permits, franchises, qualifications, and rights
that are necessary or desirable in the ordinary conduct of its business.
Parent will, and will cause each Subsidiary to, conduct its business in an
orderly and efficient manner in accordance with good business practices.
Section 8.3 MAINTENANCE OF PROPERTIES. Parent will, and will cause
each Subsidiary to, maintain, keep, and preserve all of its material
properties necessary in the conduct of its business in good working order and
condition ordinary wear and tear excepted.
Section 8.4 TAXES AND CLAIMS. Parent will, and will cause each
Subsidiary to, pay or discharge at or before maturity or before becoming
delinquent (a) all taxes, levies, assessments, and governmental charges
imposed on it or its income or profits or any of its property, and (b) all
lawful claims for labor, material, and supplies, which, if unpaid, might
become a Lien upon any of its property; provided, however, that neither
Parent nor any Subsidiary shall be required to pay or discharge any tax,
levy, assessment, or governmental charge which is being contested in good
faith by appropriate proceedings diligently pursued, and for which adequate
reserves have been established in accordance with GAAP.
Section 8.5 INSURANCE. Parent will, and will cause each Subsidiary
to, maintain insurance with financially sound and reputable insurance
companies in such amounts and covering such risks as are usually carried by
corporations engaged in similar businesses and owning similar properties in
the same general areas in which it operates, provided that in any event
Parent and each Subsidiary will maintain workmen's compensation insurance,
property insurance and comprehensive general liability insurance reasonably
satisfactory to the Agent. Each general liability insurance policy shall name
the Agent as additional insured. Each insurance policy covering Collateral
shall name the Agent as loss payee and shall provide that such policy will
not be canceled or materially changed without thirty (30) days prior written
notice to the Agent.
Section 8.6 INSPECTION RIGHTS; RECEIVABLE VERIFICATION. Parent
will, and will cause each Subsidiary to, permit any authorized representative
designated by the Agent to (a) visit and inspect its Receivables records on
the eleventh (11th) Business Day of each month, (b) make extracts from such
records and (c) discuss such records with Parent's and any Subsidiary's
officers and employees. In addition, upon reasonable notice (which may be
telephonic notice), at any other reasonable time and as often as the Agent
may request, Parent will and will cause each Subsidiary to, permit any
authorized representative designated by the Agent, together with any
authorized representatives of any Bank desiring to accompany the Agent, to
(a) visit and inspect its properties and financial records (including those
records relating to the existence and condition of the Receivables), (b) make
extracts from such financial records, and (c) discuss the affairs, finances
and condition of Parent and any Subsidiary with its officers and employees
and its independent public accountants. The Agent agrees that it shall
schedule any meeting with any such independent public accountant through
Parent and a financial officer of Parent
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shall have the right to be present at any such meeting. The Agent shall also
have the right to verify with any and all customers of Parent or any
Subsidiary the existence and condition of the Receivables, as often as the
Agent may require, without prior notice to or consent of Parent or any
Subsidiary and whether or not a Default exists.
Section 8.7 KEEPING BOOKS AND RECORDS. Parent will, and will cause
each Subsidiary to, maintain proper books of record and account in which
full, true, and correct entries in conformity with GAAP shall be made of all
dealings and transactions in relation to its business and activities.
Section 8.8 COMPLIANCE WITH LAWS. Parent will, and will cause each
Subsidiary to, comply with all applicable laws (including, without
limitation, all Environmental Laws), rules, regulations, orders, and decrees
of any Governmental Authority or arbitrator other than for such noncompliance
that will not have a Material Adverse Effect.
Section 8.9 COMPLIANCE WITH AGREEMENTS. Parent will, and will cause
each Subsidiary to, comply in all material respects with all agreements,
contracts, and instruments binding on it or affecting its properties or
business.
Section 8.10 FURTHER ASSURANCE.
(a) Parent will, and will cause each Subsidiary to, execute
and deliver such further documentation and take such further action as may be
requested by the Agent to carry out the provisions and purposes of the Loan
Documents and to create, preserve, protect and perfect the Liens of the Agent
for the benefit of itself and the Banks in the Collateral; provided that
prior to the occurrence of a Perfection Event (as defined below):
(i) No Borrower shall be required to obtain any landlord or
mortgagee waivers or subordinations except as specifically required
by SECTION 6.1(G)(II) with respect to Parent's chief executive
office; and
(ii) No Borrower shall be required to obtain lien
acknowledgements from any third-party in possession of any inventory
nor shall any Borrower be required to show evidence that it has
perfected and protected its interest in its inventory held by third
parties (by the filing of financing statements under the UCC, by
sending notices to such third parties secured creditors or
otherwise).
For purposes of this SECTION 8.10, the term "PERFECTION EVENT" means either (i)
the occurrence of a Default or (ii) if as of the end of any month, the aggregate
book value of the Borrowers' inventory equals or exceeds Two Million Dollars
($2,000,000). If a Perfection Event occurs then Parent will, and will cause each
Subsidiary to, take such action as the Agent may request to perfect and protect
the Liens of the Agent in all Collateral, including any or all of the actions
described in clauses (a) and (b) of this SECTION 8.10.
(b) Within thirty (30) days after the Pending Acquisition is
consummated, Parent shall cause any Subsidiary acquired in such acquisition (and
existing as of such date) to execute and deliver such documents, certificates
and other instruments as requested by Agent, to evidence each such Subsidiary's
either being added as a Borrower hereunder or guaranteeing of the Obligations,
upon terms and conditions satisfactory to Agent.
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(c) Within thirty (30) days after the Closing Date, Parent and
the Subsidiaries shall enter into such Lockbox Agreements or other agreements
with Agent, as secured party, and depository banks upon such terms and
conditions as will, in Agent's sole discretion, evidence and effect Agent's
perfected, first-priority lien in the lockbox accounts maintained by Parent or
any Subsidiary.
Section 8.11 ERISA. Parent will, and will cause each Subsidiary to,
comply with all minimum funding requirements and all other requirements of
ERISA, if applicable, so as not to give rise to any liability which will have a
Material Adverse Effect.
ARTICLE 9
NEGATIVE COVENANTS
Parent covenants and agrees that, as long as the Obligations or any part
thereof are outstanding or Agent or any Bank has any commitment hereunder,
Parent will perform and observe the following negative covenants:
Section 9.1 DEBT. Parent will not, and will not permit any
Subsidiary to, incur, create, assume, or permit to exist any Debt, except:
(a) Debt to the Banks pursuant to the Loan Documents;
(b) Debt described on SCHEDULE 9.1 hereto (but excluding the
Previous Senior Debt after the Closing Date), and any extensions, renewals or
refinancings of such existing Debt so long as (i) the principal amount of such
Debt after such renewal, extension or refinancing shall not exceed the principal
amount of such Debt which was outstanding immediately prior to such renewal,
extension or refinancing, (ii) such Debt shall not be secured by any assets
other than assets securing such Debt, if any, prior to such renewal, extension
or refinancing; and (iii) to the extent any such Debt is subordinated to the
Previous Senior Debt, such Debt must be subordinated to the Obligations on
substantially the same terms;
(c) Guaranties incurred in the ordinary course of business with
respect to surety and appeal bonds, performance and return-of-money bonds and
other similar obligations;
(d) Debt (including Capital Lease Obligations) incurred after the
Closing Date not to exceed Three Million Dollars ($3,000,000) in the aggregate
at any time outstanding secured by purchase money Liens permitted by SECTION
9.2(G); provided that such Debt is permitted by the Indenture;
(e) Debt constituting obligations to reimburse worker's
compensation insurance companies for claims paid by such companies on a Parent
or a Subsidiary's behalf in accordance with the policies issued to Parent and
the Subsidiaries;
(f) Debt of a Borrower under Hedging Agreements entered into to
enable such Borrower to fix or limit its interest expense or to limit the market
risk of holding currency or a commodity in either the cash or futures markets;
PROVIDED THAT, in the case of any Synthetic Purchase Agreement related to any
subordinated Indebtedness, the obligations of the Borrower thereunder must be
subordinated to the Obligations to at least the same extent as the subordinated
Indebtedness to which such Synthetic Purchase Agreement relates (the Borrower
shall promptly deliver to the Agent a copy of any Synthetic Purchase Agreement
to which it becomes party);
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(g) Guarantees by Parent or any Subsidiary of Debt of another
Subsidiary, provided that such Debt is permitted hereby;
(h) indemnifications entered into by a Borrower in connection
with asset dispositions and acquisitions and in connection with other
transactions entered into in the ordinary course of business;
(i) Debt evidenced by the Senior Subordinated Notes and any
refinancings or replacements of all or a portion of such Debt so long as (i)
the maturity of such refinancing or replacement Debt is after the Termination
Date, (ii) such refinancing or replacement Debt is subordinated to the
Obligations to the same or greater extent as the Senior Subordinated Notes
are so subordinated, (iii) the covenants contained in any agreement
evidencing such refinancing or replacement Debt are not materially more
restrictive, taken as a whole, to Parent and each Subsidiary than the
covenants relating to the Senior Subordinated Notes, (iv) the principal
amount of such refinancing or replacement Debt shall not exceed the principal
amount of the Senior Subordinated Notes outstanding immediately prior to such
refinancing or replacement and (v) any such refinancing or replacement Debt
shall not be secured by any Liens; and
(j) Debt (the "ADDITIONAL DEBT"), in addition to the Debt
described in the forgoing clauses (a) through (i), which may be incurred if
no Default exists or would result therefrom; PROVIDED THAT: (i) the aggregate
amount of the Additional Debt at any one time outstanding shall never
exceeding Two Million Dollars ($2,000,000) and (ii) on the date of its
incurrence, such Debt shall be permitted by the Indenture and the First Union
Loan Agreement (with Parent providing Agent evidence thereof).
Section 9.2 LIMITATION ON LIENS AND RESTRICTIONS ON SUBSIDIARIES.
Parent will not, and will not permit any Subsidiary to, incur, create,
assume, or permit to exist any Lien upon any of its property, whether now
owned or hereafter acquired, except the following, none of which shall
encumber the Collateral other than those Liens described in clauses (a), (b),
(d), (e) and (h):
(a) Liens disclosed on SCHEDULE 9.2 hereto, PROVIDED any Liens
securing the Previous Senior Debt will not be permitted after the Closing
Date, except that the Liens securing the First Union Loan encumbering the
Collateral shall only be permitted in accordance with the terms of the
Intercreditor Agreement;
(b) Liens in favor of the Agent for the benefit of itself and
the Banks pursuant to the Loan Documents;
(c) Encumbrances consisting of minor easements, zoning
restrictions, or other restrictions on the use of real property that do not
(individually or in the aggregate) materially affect the value of the assets
encumbered thereby or materially impair the ability of Parent and each
Subsidiary to use such assets in their respective businesses, and none of
which is violated in any material respect by existing or proposed structures
or land use;
(d) Liens (other than Liens relating to Environmental
Liabilities or ERISA) for taxes, assessments, or other governmental charges
that are not delinquent or which are being contested in good faith and for
which adequate reserves have been established in accordance with GAAP;
(e) Liens of mechanics, materialmen, warehousemen, carriers,
landlords (whether contractual or statutory) or other similar statutory Liens
securing obligations that are not yet due or are being contested in good
faith by appropriate proceedings diligently pursued and for which adequate
reserves have been established in accordance with GAAP and are incurred in
the ordinary course of business;
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(f) Liens resulting from good faith deposits to secure
payments of workmen's compensation or other social security programs or to
secure the performance of tenders, statutory obligations, surety and appeal
bonds, bids, contracts (other than for payment of Debt);
(g) Liens for purchase money obligations (including the rights
of lessors under capitalized leases, and all additions, accessions and
proceeds) PROVIDED that: (i) the purchase of the asset subject to any such
Lien is not otherwise prohibited by SECTION 10.6 hereto; (ii) the Debt
secured by any such Lien is permitted under SECTION 9.1 hereto; (iii) any
such Lien encumbers only the asset so purchased; (iv) the principal amount
secured by such Lien does not exceed one hundred percent (100%) of the
purchase price of the asset so purchased; and (v) no Default exists at the
time the asset is so purchased;
(h) Any attachment or judgment Lien not constituting an Event
of Default;
(i) Liens against equipment arising from precautionary UCC
financing statement filings regarding operating leases entered into by Parent
or a Subsidiary in the ordinary course of business; and
(j) Liens in favor of the trustee in its individual capacity under
the Indenture.
Parent will not, and will not permit any Subsidiary to, enter into or assume
any agreement (other than the Loan Documents, the Senior Note Documents and
the First Union Loan Agreement) prohibiting the creation or assumption of any
Lien upon its properties or assets, whether now owned or hereafter acquired
unless such agreement permits the granting of Liens to secure the
Obligations; provided that, in connection with any Debt permitted to be
existing or incurred under SECTION 9.1 which is used to finance the
acquisition of an asset and any Lien securing the payment thereof permitted
by this SECTION 9.2, the acquiring Parent or Subsidiary may agree that it
will not permit any other Liens to encumber the asset so acquired and
additions and accessions thereto and proceeds thereof. Except as provided
herein, in the Senior Note Documents and in the First Union Loan Agreement,
Parent will not permit any Subsidiary to, directly or indirectly create or
otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of such Subsidiary to:
(1) pay dividends or make any other distribution on any of its capital stock;
(2) subject to subordination provisions, pay any Debt owed to Parent or any
other Subsidiary; (3) make loans or advances to Parent or any Subsidiary; or
(4) transfer any of its property or assets to Parent or any Subsidiary;
PROVIDED, HOWEVER, that any Subsidiary may permit such restrictions to exist
within a lease of property (and only with regard to such leased property),
restrictions within agreements to sell assets in a disposition permitted
under this Agreement (and only during the time pending the disposition and
with respect to only the assets being disposed), and restrictions on assets
in connection with consensual Liens that are permitted under this SECTION 9.2.
Section 9.3 MERGERS, ETC. Parent will not, and will not permit any
Subsidiary to, become a party to a merger or consolidation, or purchase or
otherwise acquire all or a substantial part of the business or assets of any
Person or all or a substantial part of the assets of a division or branch of
a Person or any shares or other evidence of beneficial ownership of any
Person, or wind-up, dissolve, or liquidate itself; PROVIDED that the Pending
Acquisition may be consummated on terms acceptable to the Agent; and
PROVIDED, FURTHER that, if no Default exists or would result therefrom, any
Subsidiary other than MSSC may merge with and into MSSC and any Subsidiary
other than MSSC may dissolve or liquidate if all of its assets have been
transferred to MSSC; provided further that Parent may consummate the
repurchases of stock, options and warrants in accordance with SUBSECTION
9.4(C).
CREDIT AGREEMENT - Page 48
<PAGE>
Section 9.4 RESTRICTED JUNIOR PAYMENTS. Parent will not, and will
not permit any Subsidiary to, directly or indirectly declare, order, pay,
make or set apart any sum for (i) any dividend or other distribution, direct
or indirect, on account of any shares of any class of its Equity Interests
now or hereafter outstanding; (ii) any redemption, conversion, exchange,
retirement, sinking fund or similar payment, purchase or other acquisition
for value, direct or indirect, of any of its Equity Interests now or
hereafter outstanding; or (iii) any payment made to retire, or to obtain the
surrender of, any of its Equity Interests now or hereafter outstanding except:
(a) Any Subsidiary may make, declare and pay dividends and
make other distributions with respect to their Equity Interests to the extent
necessary to permit each Borrower to pay the Obligations and to pay expenses
and taxes incurred in the ordinary course of business;
(b) Parent and any Subsidiary may declare and pay dividends on
their common stock payable solely in shares of common stock;
(c) Parent and each Subsidiary may repurchase its common stock
or any warrants or options to purchase its common stock from its officers and
employees who received such stock or options from an employee stock option or
ownership plan established by Parent and each Subsidiary (including
repurchases arising as a result of the death, disability or termination of
any such officers and employees); provided that (a) the aggregate amount paid
for such repurchases by the Parent and all Subsidiaries in any Fiscal Year
does not exceed Five Hundred Thousand Dollars ($500,000), (b) no Default
exists or would result therefrom, (c) the average daily balances of the sum
of the Borrower's cash, cash equivalents and the Aggregate Borrowing
Availability for the thirty (30) day period prior to the date of the
repurchase and calculated as if the repurchase had occurred on the first
(1st) day of such period, shall equal or exceed Two Million Dollars
($2,000,000), (d) the repurchase is permitted by the Indenture and the First
Union Loan Agreement, and (e) Parent shall have provided Agent evidence of
its compliance with clause (c) preceding on the date of the proposed
repurchase.
Section 9.5 INVESTMENTS. Parent will not, and will not permit any
Subsidiary to, make or permit to remain outstanding any advance, loan,
extension of credit, or capital contribution to or investment in any Person,
or purchase or own any stocks, bonds, notes, debentures, or other securities
of any Person, or be or become a joint venturer with or partner of any
Person, except:
(a) Parent and each Subsidiary may own stock of the
Subsidiaries that it owns on the Closing Date and stock to be acquired in
connection with the Pending Acquisition, and Parent and each Subsidiary may
repurchase its own stock in accordance with the restrictions set forth in
SECTION 9.4;
(b) Parent and each Subsidiary may make loans and enter into
Guarantees, in each case, as permitted by SUBSECTION 9.1(C);
(c) readily marketable direct obligations of the United States
of America or any agency thereof with maturities of one year or less from the
date of acquisition;
(d) fully insured certificates of deposit with maturities of
one year or less from the date of acquisition issued by any commercial bank
operating in the United States of America having capital and surplus in
excess of Fifty Million Dollars ($50,000,000);
(e) commercial paper maturing not more than 90 days after the
date of acquisition, issued by a corporation (other than an Affiliate of the
Parent) organized and in existence under the laws of the United States of
America or any foreign country recognized by the United States of America
with a rating at the time as of which any investment therein is made of "P-1"
(or higher) according to Moody's
CREDIT AGREEMENT - Page 49
<PAGE>
Investors Service, Inc. or "A-1" (or higher) according to Standard and Poor's
Rating Service or securities with maturities of six months or less from the
date of acquisition issued or fully guaranteed by any state, commonwealth or
territory of the United States of America, or by any political subdivision or
taxing authority thereof, and rated at least "A" by Standard and Poor's
Rating Service or "A" by Moody's Investors Service, Inc.;
(f) loans and advances to employees for business expenses
incurred in the ordinary course of business not to exceed Three Hundred
Thousand Dollars ($300,000) in the aggregate for the Parent and all
Subsidiaries at any time outstanding;
(g) existing investments described on SCHEDULE 9.5 hereto;
(h) Parent and the Subsidiaries may acquire and own any notes,
stocks, bonds, or other equity securities of any Person received in
connection with (i) the sale of assets permitted by SUBSECTION 9.8 (e), (ii)
the bankruptcy or reorganization of suppliers and customers and (iii) the
settlement of delinquent obligations of, and disputes with, customers and
suppliers arising in the ordinary course of business;
(i) Parent and the Subsidiaries may make extensions of trade
credit in the ordinary course of business; and
(j) any advance, loan or extension of credit by a Borrower
which may arise in connection with the performance under Hedging Agreements
entered into to enable to fix or limit its interest expense or to limit its
market risk of holding currency or a commodity in either the cash or futures
markets.
Section 9.6 LIMITATION ON ISSUANCE OF CAPITAL STOCK. Parent will
not permit any Subsidiary to at any time issue, sell, assign, or otherwise
dispose of (a) any of its Equity Interests, (b) any securities exchangeable
for or convertible into or carrying any rights to acquire any of its Equity
Interests, or (c) any option, warrant, or other right to acquire any of its
Equity Interests.
Section 9.7 TRANSACTIONS WITH AFFILIATES. Parent will not, and will
not permit any Subsidiary to, enter into any transaction, including, without
limitation, the purchase, sale, or exchange of property or the rendering of
any service, with any Affiliate of Parent or any Subsidiary, except in the
ordinary course of and pursuant to the reasonable requirements of its
business and upon fair and reasonable terms no less favorable to it than
would be obtained in a comparable arms-length transaction with a Person not
one of its Affiliates, except that (a) Parent and each Subsidiary may enter
into transactions with each other to the extent not otherwise prohibited
hereby, (b) Parent and the Subsidiaries may enter into the transactions
described on SCHEDULE 9.7, and (c) Parent may pay management fees to Richmont
Capital Partners I, L.P. in an amount not to exceed Five Hundred Thousand
Dollars ($500,000) per Fiscal Year if (i) no Default exists or would result
therefrom, (ii) the average daily balances of the sum of Borrowers' cash,
cash equivalents and the Aggregate Borrowing Availability for the thirty (30)
day period prior to the payment of any portion of such fee and calculated as
if the actual amount of such fee so paid had been paid on the first (1st) day
of such period, shall equal or exceed One Dollars ($1.00), (iii) such fees
are permitted to be paid under the Indenture, and (iv) Parent shall have
provided Agent evidence of its compliance with the preceding clause (ii) on
the date of each such payment.
Section 9.8 DISPOSITION OF ASSETS. Parent will not, and will not
permit any Subsidiary to, sell, lease, assign, transfer, or otherwise dispose
of any of its assets, except (a) dispositions of inventory in the ordinary
course of business; (b) dispositions of assets reasonably and in good faith
determined by Parent and each Subsidiary to be obsolete or no longer
necessary to its business; (c) licenses, sublicenses, leases
CREDIT AGREEMENT - Page 50
<PAGE>
and subleases of intellectual property, general intangibles, or other
property (other than Receivables), in each case in the ordinary course of
business, that do not materially interfere with the business of Parent or any
Subsidiary; (d) the sale, lease or other disposition of assets of a
Subsidiary (other than MSSC) to another Subsidiary; and (e) the disposition
of assets (other than Receivables, inventory and the stock of Subsidiaries),
in addition to those set forth in clauses (a) through (d) above, if all the
following conditions are satisfied: (i) the aggregate sale price of the
assets of the Parent and all Subsidiaries disposed of in any Fiscal Year does
not exceed Five Hundred Thousand Dollars ($500,000); (ii) no Default exists
or would result therefrom; and (iii) the consideration received is at least
equal to the fair market value of such assets and is not required to be
utilized to purchase the Senior Subordinated Notes in accordance with the
Indenture. Parent agrees to deliver to Agent, simultaneously with the
Compliance Certificate delivered pursuant to SECTION 8.1(C) as of the end of
each Fiscal Quarter, a listing of all assets disposed of during such Fiscal
Quarter if the aggregate amount of the assets disposed of during such Fiscal
Quarter equaled or exceeded One Hundred Thousand Dollars ($100,000).
Section 9.9 SALE AND LEASEBACK. Parent will not, and will not
permit any Subsidiary to, enter into any arrangement with any Person pursuant
to which it leases from such Person real or personal property that has been
or is to be sold or transferred, directly or indirectly, by it to such
Person; PROVIDED that Parent or any Subsidiary may lease the real properties
that are located in California and Arizona and being leased as of the Closing
Date and the real properties owned as of the Closing Date and located in
Canton, Massachusetts and Charlotte, North Carolina, which Parent
contemplates selling and leasing back.
Section 9.10 LINES OF BUSINESS. Parent will not, and will not
permit any Subsidiary to, engage in any line or lines of business activity
other than the businesses in which they are engaged on the date hereof and
any business related, ancillary or complementary to such businesses.
Section 9.11 PREPAYMENT OF DEBT. Parent will not, and will not
permit any Subsidiary to prepay, optionally redeem or repurchase any Debt
other than the Obligations.
Section 9.12 FIRST UNION LOAN AGREEMENT. Except as permitted under
the Intercreditor Agreement, Parent will not amend or modify the terms of the
First Union Loan Agreement.
Section 9.13 MODIFICATIONS TO SENIOR NOTE DOCUMENTS. Parent will
not change or amend the terms of the Senior Note Documents if the effect of
such amendment is to: (a) increase the interest rate on the Senior
Subordinated Notes; (b) shorten the time of payments of principal or interest
due under the Senior Note Documents; (c) change any event of default or any
covenant to a materially more onerous or restrictive provision; (d) change
the subordination provisions thereof (or the subordination terms of any
guaranty thereof) in a manner adverse to Agent or any Bank as senior
creditors or the interests of the Banks under this Agreement or any other
Loan Document in any respect; or (e) change or amend any other term of any
Senior Note Document in a manner materially adverse to Agent or any Bank as
senior creditors or the interests of the Banks under this Agreement or any
other Loan Document in any respect; or (f) in any manner amend any term of
any Senior Note Document relating to the prohibition of the creation or
assumption of any Lien upon the properties or assets of Parent or any
Subsidiary or relating to the prohibition of creation, existence or
effectiveness of any consensual encumbrance or restriction of any kind on the
ability of any Subsidiary to (i) pay dividends or make any other
distribution; (ii) subject to subordination provisions, pay any Debt owed to
Parent or any Subsidiary, (iii) make loans or advances to Parent or any
Subsidiary, or (iv) transfer any of its property or assets to Parent or any
Subsidiary.
Section 9.14 DESIGNATION OF SENIOR DEBT. Parent will not designate
any Debt as "Designated Senior Indebtedness" (as defined in the Indenture).
CREDIT AGREEMENT - Page 51
<PAGE>
ARTICLE 10
FINANCIAL COVENANTS
Parent covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or Agent or any Bank has any commitment
hereunder, Parent will perform and observe the following financial covenants:
Section 10.1 MINIMUM FIXED CHARGES COVERAGE RATIO. Parent shall not
permit the ratio of its Modified EBITDA to its Fixed Charges calculated as of
the last day of each Fiscal Quarter, beginning with the Fiscal Quarter ended
March 31, 2001, for the four (4) Fiscal Quarters then ended to be less than
1.00 to 1.00. As used in this SECTION 10.1 the following terms have the
following meanings:
"MODIFIED EBITDA" means, for any period, the total of the following
for Parent calculated on a consolidated basis without duplication: (a)
EBITDA MINUS (b) Capital Expenditures.
"FIXED CHARGES" means, for any period, the total of the following for
Parent calculated on a consolidated basis without duplication: (a)
scheduled amortization of Debt plus (b) CASH interest expense PLUS (c) cash
taxes.
Section 10.2 MAXIMUM DEBT TO EBITDA RATIO. As of the last day of each
Fiscal Quarter, Parent shall not permit the ratio of (a) the principal amount of
all Debt of the Parent and the Subsidiaries outstanding as of such date
determined on a consolidated basis to (b) the Adjusted EBITDA calculated for the
four (4) Fiscal Quarter period ending on the last day of such Fiscal Quarter to
be more than: (i) 7.75 to 1.00 as of the Fiscal Quarter ending on June 30, 2000;
(ii) 6.50 to 1.00 as of the Fiscal Quarter ending on September 30, 2000; (iv)
6.00 to 1.00 as of the Fiscal Quarter ending December 31, 2000 and for each
Fiscal Quarter thereafter. As used in this SECTION 10.2, the following terms
have the following meanings:
"ADJUSTED EBITDA" means, for any period, (a) Parent's consolidated
EBITDA PLUS (b) for calculations including the Fiscal Quarter ending
September 30, 1999, $10,452,000, PLUS (c) for calculations including the
Fiscal Quarter ending December 31, 1999, $11,420,000, PLUS (d) at any time
after the Pending Acquisition is consummated, an amount equal to the lesser
of (i) the actual consolidated EBITDA for companies acquired in the Pending
Acquisition or (ii) $1,000,000, in each case under this clause (d) for each
Fiscal Quarter (or a pro-rated portion thereof for partial Fiscal Quarters)
that is included in the measurement period for Adjusted EBITDA but that is
before the Pending Acquisition is consummated.
Section 10.3 Deleted
Section 10.4 MINIMUM INTEREST COVERAGE RATIO. As of the last day of
each Fiscal Quarter during the periods set forth below, Parent shall not permit
the ratio of its EBITDA to its consolidated cash interest expense both
calculated for the period since January 1, 2000, then ended or, if 4 Fiscal
Quarters or more have elapsed since January 1, 2000, then for the four (4)
Fiscal Quarters then ended, to be less than the ratio set forth below for such
period:
<TABLE>
<CAPTION>
================================================================================
Period Ending Ratio
================================================================================
<S> <C>
CREDIT AGREEMENT - Page 52
<PAGE>
--------------------------------------------------------------------------------
April 1, 2000, through June 30, 2000 1.00 to 1.00
--------------------------------------------------------------------------------
July 1, 2000, through September 30, 2000 1.50 to 1.00
--------------------------------------------------------------------------------
October 1, 2000, through December 31, 2000 1.60 to 1.00
--------------------------------------------------------------------------------
Each quarter end beginning January 1, 2001, and through 1.75 to 1.00
Termination Date
================================================================================
</TABLE>
Section 10.5 MINIMUM EBITDA. As of the last day of each Fiscal Quarter during
the periods set forth below, Parent shall cause its EBITDA calculated for the
period since January 1, 2000, then ended or, if 4 Fiscal Quarters or more
have elapsed since January 1, 2000, then for the four (4) Fiscal Quarters
then ended, to be not less than the amount set forth below opposite the
applicable period:
<TABLE>
<CAPTION>
================================================================================
Period Ending Amount
================================================================================
<S> <C>
January 1, 2000, through March 31, 2000 $5,400,000
--------------------------------------------------------------------------------
April 1, 2000, through June 30, 2000 $14,400,000
--------------------------------------------------------------------------------
July 1, 2000, through September 30, 2000 $29,700,000
--------------------------------------------------------------------------------
October 1, 2000, through December 31, 2000 $45,000,000
--------------------------------------------------------------------------------
January 1, 2001, through March 31, 2001 $46,000,000
--------------------------------------------------------------------------------
April 1, 2001 through Termination Date $47,000,000
================================================================================
</TABLE>
Section 10.6 CAPITAL EXPENDITURE LIMITS. Parent shall not, and shall
not permit any Subsidiary to, make or incur Capital Expenditures during each
period set forth in the table below in excess of an aggregate amount for
Parent and all Subsidiaries equal to the applicable Capital Expenditure Limit
for such period. The term "CAPITAL EXPENDITURE LIMIT" means, for each period
set forth in the table below, the sum of (a) the Dollar amount set forth in
the table below opposite the applicable period (such Dollar amount as set
forth for each such period herein the "Yearly Limit") plus (b) One Hundred
percent (100%) of the portion of the Yearly Limit from the immediately
preceding period which was not expended by Parent and the Subsidiaries in
such preceding period (the amount calculated for any period under this clause
(b), herein the "CARRYOVER AMOUNT"). In calculating compliance with this
SECTION 10.6, (a) Capital Expenditures made in a period shall first be
debited against the Yearly Limit for such period then debited against the
Carryover Amount carried into such period, if any, from the preceding period
pursuant to this SECTION 10.6, and (b) the aggregate amount of all payments
due under a Capital Lease Obligation for the entire term thereof (excluding,
however, the interest portion of capitalized lease payments) shall be
considered expended in full on the date that the Capital Lease Obligation is
entered into.
<TABLE>
<CAPTION>
================================================================================
Period Amount
================================================================================
<S> <C>
Calendar year ending December 31 2000 $7,000,000
--------------------------------------------------------------------------------
Each Fiscal Year thereafter $7,500,000
================================================================================
</TABLE>
ARTICLE 11
DEFAULT
Section 11.1 EVENTS OF DEFAULT. Each of the following shall be
deemed an "Event of Default":
CREDIT AGREEMENT - Page 53
<PAGE>
(a) The Borrowers shall fail to pay (i) when due any
principal, Reimbursement Obligation, interest or fees payable under any Loan
Document or any part thereof; and (ii) within five (5) Business Days after
the date Parent receives written notice of the failure to pay when due any
other Obligation or any part thereof.
(b) Any representation, warranty or certification made or
deemed made by any Borrower or any Obligated Party (or any of their
respective officers) in any Loan Document or in any certificate, report,
notice, or financial statement furnished at any time in connection with any
Loan Document shall be false, misleading, or erroneous in any material
respect when made or deemed to have been made.
(c) Any Borrower shall fail to perform, observe, or comply
with any covenant, agreement, or term contained in ARTICLE 9 or ARTICLE 10 of
this Agreement or ARTICLE IV of the Security Agreement or of any section of
the Lockbox Agreements.
(d) Any Borrower shall fail to perform, observe or comply with
any covenant, agreement or term contained in clauses (a) through (f), (i),
(j) and (l) of SECTION 8.1 of this Agreement. Any Borrower shall fail to
perform, observe or comply with any covenant, agreement or term contained in
clauses (g) (h), (k), and (m) of SECTION 8.1 of this Agreement and such
failure shall continue for five (5) Business Days.
(e) Any Borrower or any Obligated Party shall fail to perform,
observe, or comply with any other covenant, agreement, or term contained in
any Loan Document (other than covenants to pay the Obligations and the
covenants described in SUBSECTIONS 11.1(c) and (d)) and such failure shall
continue for a period of ten (10) Business Days after the earlier of (i) the
date the Agent or any Bank provides Parent with notice thereof or (ii) the
date Parent should have notified the Agent thereof in accordance with
SUBSECTION 8.1(i) hereof.
(f) Any Borrower, any Subsidiary or any Obligated Party shall
(i) apply for or consent to the appointment of, or the taking of possession
by, a receiver, custodian, trustee, examiner, liquidator or the like of
itself or of all or a substantial part of its property, (ii) make a general
assignment for the benefit of its creditors, (iii) commence a voluntary case
under the United States Bankruptcy Code (as now or hereafter in effect, the
"Bankruptcy Code"), (iv) institute any proceeding or file a petition seeking
to take advantage of any other law relating to bankruptcy, insolvency,
reorganization, liquidation, dissolution, winding-up, or composition or
readjustment of debts, (v) fail to controvert in a timely and appropriate
manner, or acquiesce in writing to, any petition filed against it in an
involuntary case under the Bankruptcy Code, (vi) admit in writing its
inability to, or be generally unable to pay its debts as such debts become
due, or (vii) take any corporate action for the purpose of effecting any of
the foregoing.
(g) A proceeding or case shall be commenced, without the
application, approval or consent of any Borrower, any Subsidiary or any
Obligated Party, in any court of competent jurisdiction, seeking (i) its
reorganization, liquidation, dissolution, arrangement or winding-up, or the
composition or readjustment of its debts, (ii) the appointment of a receiver,
custodian, trustee, examiner, liquidator or the like of such Borrower,
Subsidiary or Obligated Party or of all or any substantial part of its
property, or (iii) similar relief in respect of such Borrower, Subsidiary or
Obligated Party under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts, and such
proceeding or case shall continue undismissed, or an order, judgment or
decree approving or ordering any of the foregoing shall be entered and
continue unstayed and in effect, for a period of sixty (60) or more days; or
an order for relief against any Borrower, any Subsidiary or any Obligated
Party shall be entered in an involuntary case under the Bankruptcy Code.
CREDIT AGREEMENT - Page 54
<PAGE>
(h) Any Borrower, any Subsidiary or any Obligated Party shall
fail to discharge (or obtain a stay of execution of) within a period of
thirty (30) days after the commencement thereof any attachment (other than
the attachment existing as of the Closing Date and related to the Monroe
Litigation), sequestration, forfeiture, or similar proceeding or proceedings
involving an aggregate amount in excess of Five Hundred Thousand Dollars
($500,000) against any of its assets or properties.
(i) A final judgment with respect to the Monroe Litigation
that is materially different from the negotiating range set forth in Schedule
1.1(b) or any other final judgment or judgments for the payment of money in
excess of Five Hundred Thousand Dollars ($500,000) in the aggregate shall be
rendered by a court or courts against any Borrower, any Subsidiary or any
Obligated Party and the same shall not be discharged (or provision shall not
be made for such discharge), or a stay of execution thereof shall not be
procured, within thirty (30) days from the date of entry thereof and the
relevant Borrower, Subsidiary or Obligated Party shall not, within said
period of thirty (30) days, or such longer period during which execution of
the same shall have been stayed, appeal therefrom and cause the execution
thereof to be stayed during such appeal.
(j) Any Borrower, any Subsidiary or any Obligated Party shall
fail to pay when due any principal of or interest on any Debt if the
aggregate principal amount of the affected Debt equals or exceeds One Million
Dollars ($1,000,000) (other than the Obligations), or the maturity of any
such Debt shall have been accelerated, or any such Debt shall have been
required to be prepaid prior to the stated maturity thereof or any event
shall have occurred with respect to any such Debt that permits any holder or
holders of such Debt or any Person acting on behalf of such holder or holders
to accelerate the maturity thereof or require any such prepayment. Without
limiting the generality of the foregoing, the occurrence of an event of
default under the terms of the Senior Note Documents or the First Union Loan
Agreement.
(k) This Agreement shall cease to be in full force and effect
or shall be declared null and void or the validity or enforceability thereof
shall be contested or challenged by any Borrower, any Subsidiary or any
Obligated Party or any Borrower, any Subsidiary or any Obligated Party shall
deny that it has any further liability or obligation under any of the Loan
Documents, or any lien or security interest created by the Loan Documents
shall for any reason (other than the negligence of the Agent or the release
thereof in accordance with the Loan Documents) cease to be a valid, first
priority (other than as a result of the Liens permitted to have priority
under SECTION 9.2) perfected (other than as may result because of the
provisions of SECTION 8.10) security interest in and lien upon any of the
Collateral purported to be covered thereby.
(l) Any of the following events shall occur or exist with
respect to any Borrower or any ERISA Affiliate: (i) any Prohibited
Transaction involving any Plan; (ii) any Reportable Event with respect to any
Plan; (iii) the filing under Section 4041 of ERISA of a notice of intent to
terminate any Plan or the termination of any Plan; (iv) any event or
circumstance that might constitute grounds entitling the PBGC to institute
proceedings under Section 4042 of ERISA for the termination of, or for the
appointment of a trustee to administer, any Plan, or the institution by the
PBGC of any such proceedings; or (v) complete or partial withdrawal under
Section 4201 or 4204 of ERISA from a Multiemployer Plan or the
reorganization, insolvency, or termination of any Multiemployer Plan; and in
each case above, such event or condition, together with all other events or
conditions, if any, have subjected or could in the reasonable opinion of
Required Banks subject any Borrower to any tax, penalty, or other liability
to a Plan, a Multiemployer Plan, the PBGC, or otherwise (or any combination
thereof) which in the aggregate exceed or could reasonably be expected to
exceed Five Hundred Thousand Dollars ($500,000).
(m) A Change of Control shall occur. As used in this clause
(m), the following terms have the following meanings:
CREDIT AGREEMENT - Page 55
<PAGE>
"CAPITAL STOCK" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person,
including any Preferred Stock, but excluding any debt securities convertible
into such equity.
"CHANGE OF CONTROL" means the occurrence of any of the
following events:
(i) the Permitted Holders either (x) cease to be the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act), directly or indirectly, of at least 35% of the
aggregate of the total voting power of the Voting Stock of the
Parent, whether as a result of issuance of securities of the
Parent, any merger, consolidation, liquidation or dissolution of
the parent, any direct or indirect transfer of securities by any
Permitted Holder or otherwise, or (y) do not have the right or
ability by voting power, contract or otherwise to elect or
designate for election a majority of the Board of Directors (for
purposes of this clause (i), the Permitted Holders shall be
deemed to own beneficially any Voting Stock of an entity (the
"specified entity") held by any other entity (the "parent
entity") so long as the Permitted Holders beneficially own (as so
defined), directly or indirectly, in the aggregate a majority of
the voting power of the Voting Stock of the parent entity);
(ii) (x) any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act), other than one or more
Permitted Holders, is or becomes the beneficial owner (as defined
in clause (i) above, except that such person shall be deemed to
have "beneficial ownership" of all shares that any such person
has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or
indirectly, of more than 35% of the total voting power of the
Voting Stock of the Parent and (y) the Permitted Holders
"beneficially own" (as defined in clause (i) above), directly or
indirectly, in the aggregate a lesser percentage of the total
voting power of the Voting Stock of the Parent than such other
Person and do not have the right or ability by voting power,
contract or otherwise to elect or designate for election a
majority of the Board of Directors (for the purposes of this
clause ii), such other Person shall be deemed to own beneficially
any Voting Stock of a specified corporation held by a parent
corporation, if such other person "beneficially owns" (as defined
in this clause (ii)), directly or indirectly, more than 35% of
the voting power of the Voting Stock of such parent corporation
and the Permitted Holders "beneficially own" (as defined in
clause (i) above), directly or indirectly, in the aggregate a
lesser percentage of the voting power of the Voting Stock of such
parent corporation and do not have the right or ability by voting
power, contract or otherwise to elect or designate for election a
majority of the board of directors of such parent corporation);
or
(iii) during any period of two consecutive years,
individuals who at the beginning of such period constituted the
Board of Directors (together with any new directors whose
election by such Board of Directors or whose nomination for
election by the shareholders of the Parent was approved by a vote
of a majority of the directors of the Parent then still in office
who were either directors at the beginning of such period or
whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the
Board of Directors then in office.
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"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"MANAGEMENT STOCKHOLDERS" means Ronald D. Pedersen, Gary R.
Guffey and Bruce A. Butler.
"PERMITTED HOLDERS" means Richmont Enterprises LLC, a Delaware
limited liability company controlled by certain Affiliates of Richmont
Capital Partners I, L.P., a Delaware limited partnership, JR Investment
Corp., a Delaware corporation (including John P. Rochon and the other current
stockholders of JR Investment Corp.), MS Acquisition Limited, a Delaware
limited partnership, the Management Stockholders and any of their respective
Affiliates (including any Person owned or controlled by any such Person, any
member of any such Person's family, any trust for the benefit of any such
Person (or a member of his family) or any Person owned or controlled by any
of the foregoing) and any Person acting in the capacity of an underwriter in
connection with a public or private offering of the Parent's Capital Stock.
"PREFERRED STOCK", as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however designated)
which is preferred as to the payment of dividends, or as to the distribution
of assets upon any voluntary or involuntary liquidation or dissolution of
such corporation, over shares of Capital Stock of any other class of such
corporation.
"VOTING STOCK" of a Person means all classes of Capital Stock
of such Person then outstanding that normally entitle the holders of such
interests to participate in the management or to elect those participating in
the management of such Person.
(n) A change shall occur in the financial condition of any
Borrower or in the value of the Collateral, which does, or would reasonably
be expected to, have a Material Adverse Effect.
(o) Parent shall, without the written consent of Required
Banks, enter into a settlement agreement with respect to the Monroe
Litigation in which Parent or any Subsidiary or Obligated Party agrees to pay
amounts with a net present value materially different from the negotiating
range set forth in SCHEDULE 1.1(b).
Section 11.2 REMEDIES. If any Event of Default shall occur and be
continuing, the Agent may (and if directed by Required Banks, shall) do any
one or more of the following:
(a) ACCELERATION. By notice to Parent, declare all outstanding
principal of and accrued and unpaid interest on the Notes and all other
amounts payable by the Borrowers under the Loan Documents immediately due and
payable, and the same shall thereupon become immediately due and payable,
without further notice, demand, presentment, notice of dishonor, notice of
acceleration, notice of intent to accelerate, protest, or other formalities
of any kind, all of which are hereby expressly waived by each Borrower.
(b) TERMINATION OF COMMITMENTS. Terminate the Commitments,
including, without limitation, the obligation of the Agent to issue Letters
of Credit, without notice to any Borrower.
(c) JUDGMENT. Reduce any claim to judgment.
(d) FORECLOSURE. Foreclose or otherwise enforce any Lien
granted to the Agent for the benefit of itself and the Banks to secure
payment and performance of the Obligations in accordance with the terms of
the Loan Documents.
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(e) RIGHTS. Exercise any and all rights and remedies afforded
by the laws of the State of New York or any other jurisdiction, by any of the
Loan Documents, by equity, or otherwise.
PROVIDED, HOWEVER, that upon the occurrence of an Event of Default under
SUBSECTIONS 11.1(f) or (g) hereof, the Commitments of all of the Banks shall
automatically terminate (including, without limitation, the obligation of the
Agent to issue Letters of Credit), and the outstanding principal of and
accrued and unpaid interest on the Notes and all other amounts payable by the
Borrowers under the Loan Documents shall thereupon become immediately due and
payable without notice, demand, presentment, notice of dishonor, notice of
acceleration, notice of intent to accelerate, protest, or other formalities
of any kind, all of which are hereby expressly waived by each Borrower.
Section 11.3 CASH COLLATERAL. If an Event of Default shall have
occurred and be continuing each Borrower shall, if requested by the Agent or
Required Banks, pledge to the Agent as security for the Obligations an amount
in immediately available funds equal to the then outstanding Letter of Credit
Liabilities, such funds to be held in a cash collateral account at the Agent
without any right of withdrawal by any Borrower.
Section 11.4 PERFORMANCE BY THE AGENT. If any Borrower shall fail
to perform any covenant or agreement in accordance with the terms of the Loan
Documents, the Agent may, at the direction of Required Banks, perform or
attempt to perform such covenant or agreement on behalf of such Borrower. In
such event, each Borrower, jointly and severally, shall, at the request of
the Agent, promptly pay any amount expended by the Agent or the Banks in
connection with such performance or attempted performance to the Agent at the
Principal Office, together with interest thereon at the applicable Default
Rate from and including the date of such expenditure to but excluding the
date such expenditure is paid in full. Notwithstanding the foregoing, it is
expressly agreed that neither the Agent nor any Bank shall have any liability
or responsibility for the performance of any obligation of any Borrower under
any Loan Document. Under the terms of certain of the agreements entered into
in accordance with SUBSECTION 6.1(g), Agent may be obligated to pay certain
amounts to the financial institutions party thereto from time to time,
including without limitations, fees owed to such financial institutions
arising from their lock box and other deposit account services and amounts
sufficient to reimburse such financial institutions for the amount of any
item deposited in the related account which is returned unpaid. Also, under
the terms of Section 2.22 of the Intercreditor Agreement, Agent may be
obligated to pay certain amounts to First Union National Bank with respect to
overdrafts in payroll accounts. In the event Agent is required to pay any
such amounts, Agent shall notify Parent and the Borrowers shall promptly pay,
jointly and severally, any amount so expended by Agent to the Agent at the
Principal Office, together with interest at the Default Rate from and
including the date of such expenditure to but excluding the date that such
expenditure is paid in full and if any Borrower fails to make such payment,
Agent shall have the option of automatically making a Loan in the amount so
expended as a Base Rate Account.
Section 11.5 SETOFF. If an Event of Default shall have occurred and
be continuing, each Bank is hereby authorized at any time and from time to
time, without notice to any Borrower (any such notice being hereby expressly
waived by each Borrower), to set off and apply any and all deposits (general,
time, demand, provisional or final) at any time held and other indebtedness
at any time owing by such Bank to or for the credit or the account of any
Borrower against any and all of the obligations of any Borrower now or
hereafter existing under any Loan Document, irrespective of whether or not
the Agent or such Bank shall have made any demand under such Loan Documents
and although such obligations may be unmatured. Each Bank agrees promptly to
notify Parent (with a copy to the Agent) after any such setoff and
application, provided that the failure to give such notice shall not affect
the validity of such setoff and application. The rights and remedies of each
Bank hereunder are in addition to other rights and remedies (including,
without limitation, other rights of setoff) which such Bank may have.
CREDIT AGREEMENT - Page 58
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Section 11.6 CONTINUANCE OF DEFAULT. Any Default capable of being
remedied (as determined by the Agent) shall exist and shall continue until
Agent shall have been provided evidence satisfactory to it that such Default
has been remedied. Any Default not capable of being remedied shall exist and
shall continue until waived by the number of Banks required by SECTION 13.11.
ARTICLE 12
THE AGENT
Section 12.1 APPOINTMENT, POWERS AND IMMUNITIES. Each Bank hereby
appoints and authorizes The Chase Manhattan Bank to act as its agent
hereunder and under the other Loan Documents (including, without limitation,
the Intercreditor Agreement) with such powers as are specifically delegated
to the Agent by the terms of the Loan Documents, together with such other
powers as are reasonably incidental thereto. Each Bank agrees that upon
Agent's execution of the Intercreditor Agreement it shall be bound by the
terms and restrictions set forth for the Banks in the Intercreditor
Agreement, and each Bank hereby consents to Agent's executing the
Intercreditor Agreement on its behalf. Neither the Agent nor any of its
Affiliates, officers, directors, employees, attorneys, or agents shall be
liable for any action taken or omitted to be taken by any of them hereunder
or otherwise in connection with any Loan Document or any of the other Loan
Documents except for its or their own gross negligence or willful misconduct.
Without limiting the generality of the preceding sentence, the Agent: (i) may
treat the payee of any Note as the holder thereof until it receives written
notice of the assignment or transfer thereof signed by such payee and in form
satisfactory to the Agent; (ii) shall have no duties or responsibilities
except those expressly set forth in the Loan Documents, and shall not by
reason of any Loan Document be a trustee or fiduciary for any Bank; (iii)
shall not be required to initiate any litigation or collection proceedings
under any Loan Document except to the extent requested by Required Banks;
(iv) shall not be responsible to the Banks for any recitals, statements,
representations or warranties contained in any Loan Document, or any
certificate or other documentation referred to or provided for in, or
received by any of them under, any Loan Document, or for the value, validity,
effectiveness, enforceability, or sufficiency of any Loan Document or any
other documentation referred to or provided for therein or for any failure by
any Person to perform any of its obligations thereunder; (v) may consult with
legal counsel (including counsel for the Borrowers), independent public
accountants, and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with
the advice of such counsel, accountants, or experts; and (vi) shall incur no
liability under or in respect of any Loan Document by acting upon any notice,
consent, certificate, or other instrument or writing believed by it to be
genuine and signed or sent by the proper party or parties. As to any matters
not expressly provided for by any Loan Document, the Agent shall in all cases
be fully protected in acting, or in refraining from acting, hereunder in
accordance with instructions signed by Required Banks, and such instructions
of Required Banks and any action taken or failure to act pursuant thereto
shall be binding on all of the Banks; PROVIDED, HOWEVER, that the Agent shall
not be required to take any action which exposes it to personal liability or
which is contrary to any Loan Document or applicable law.
Section 12.2 RIGHTS OF AGENT AS A BANK. With respect to its
Commitment, the Loans made by it and the Note issued to it, The Chase
Manhattan Bank (and any successor acting as Agent) in its capacity as a Bank
hereunder shall have the same rights and powers hereunder as any other Bank
and may exercise the same as though it were not acting as the Agent, and the
term "Bank" or "Banks" shall, unless the context otherwise indicates, include
the Agent in its individual capacity. The Agent and its Affiliates may
(without having to account therefor to any Bank) accept deposits from, lend
money to, act as trustee under indentures of, provide merchant banking
services to, and generally engage in any kind of banking, trust, or other
business with any Borrower, any Obligated Party, and any other Person who may
do business
CREDIT AGREEMENT-Page 59
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with or own securities of any Borrower or any Obligated Party, all as if it
were not acting as the Agent and without any duty to account therefor to the
Banks.
Section 12.3 DEFAULTS. The Agent shall not be deemed to have
knowledge or notice of the occurrence of a Default (other than the
non-payment of principal of or interest on the Loans or of commitment fees)
unless the Agent has received notice from a Bank or Parent specifying such
Default and stating that such notice is a "Notice of Default." In the event
that the Agent receives such a notice of the occurrence of a Default, the
Agent shall give prompt notice thereof to the Banks (and shall give each Bank
prompt notice of each such non-payment). The Agent shall (subject to SECTION
12.1 hereof) take such action with respect to such Default as shall be
directed by Required Banks, provided that unless and until the Agent shall
have received such directions, the Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default as it shall seem advisable and in the best interest of the Banks.
Section 12.4 INDEMNIFICATION. THE BANKS HEREBY AGREE TO INDEMNIFY
THE AGENT FROM AND HOLD THE AGENT HARMLESS AGAINST (TO THE EXTENT NOT
REIMBURSED UNDER SECTIONS 13.1 AND 13.2 HERETO, BUT WITHOUT LIMITING THE
OBLIGATIONS OF THE BORROWER UNDER SECTIONS 13.1 AND 13.2 HERETO), RATABLY IN
ACCORDANCE WITH THEIR RESPECTIVE COMMITMENT PERCENTAGES, ANY AND ALL
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS,
DEFICIENCIES, SUITS, COSTS, EXPENSES (INCLUDING ATTORNEYS' FEES), AND
DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON,
INCURRED BY, OR ASSERTED AGAINST THE AGENT IN ANY WAY RELATING TO OR ARISING
OUT OF ANY OF THE LOAN DOCUMENTS OR ANY ACTION TAKEN OR OMITTED TO BE TAKEN
BY THE AGENT UNDER OR IN RESPECT OF ANY OF THE LOAN DOCUMENTS; PROVIDED, THAT
NO BANK SHALL BE LIABLE FOR ANY PORTION OF THE FOREGOING TO THE EXTENT CAUSED
BY THE AGENT'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. WITHOUT LIMITATION OF
THE FOREGOING, IT IS THE EXPRESS INTENTION OF THE BANKS THAT THE AGENT SHALL
BE INDEMNIFIED HEREUNDER FROM AND HELD HARMLESS AGAINST ALL OF SUCH
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS,
DEFICIENCIES, SUITS, COSTS, EXPENSES (INCLUDING ATTORNEYS' FEES), AND
DISBURSEMENTS OF ANY KIND OR NATURE DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RESULTING FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE OF THE AGENT. WITHOUT
LIMITING ANY OTHER PROVISION OF THIS SECTION, EACH BANK AGREES TO REIMBURSE
THE AGENT PROMPTLY UPON DEMAND FOR ITS PRO RATA SHARE (CALCULATED ON THE
BASIS OF THE COMMITMENT PERCENTAGES) OF ANY AND ALL OUT-OF-POCKET EXPENSES
(INCLUDING ATTORNEYS' FEES) 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, THE LOAN
DOCUMENTS, TO THE EXTENT THAT THE AGENT IS NOT REIMBURSED FOR SUCH EXPENSES
BY THE BORROWER.
Section 12.5 INDEPENDENT CREDIT DECISIONS. Each Bank agrees that it
has independently and without reliance on the Agent or any other Bank, and based
on such documentation and information as it has deemed appropriate, made its own
credit analysis of the Borrowers and decision to enter into any Loan Document
and that it will, independently and without reliance upon the Agent or any other
Bank, and based upon such documents and information as it shall deem appropriate
at the time, continue to make its own analysis and decisions in taking or not
taking action under any Loan Document. Except as otherwise specifically set
forth herein, the Agent shall not be required to keep itself informed as to the
CREDIT AGREEMENT-Page 60
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performance or observance by any Borrower or any Obligated Party of any Loan
Document or to inspect the properties or books of any Borrower or any
Obligated Party. Except for notices, reports and other documents and
information expressly required to be furnished to the Banks by the Agent
hereunder or under the other Loan Documents, the Agent shall not have any
duty or responsibility to provide any Bank with any credit or other financial
information concerning the affairs, financial condition or business of any
Borrower or any Obligated Party (or any of their Affiliates) which may come
into the possession of the Agent or any of its Affiliates.
Section 12.6 SEVERAL COMMITMENTS. The Commitments and other
obligations of the Banks under any Loan Document are several. The default by
any Bank in making a Loan in accordance with its Commitment shall not relieve
the other Banks of their obligations under any Loan Document. In the event of
any default by any Bank in making any Loan, each non-defaulting bank shall be
obligated to make its Loan but shall not be obligated to advance the amount
which the defaulting Bank was required to advance hereunder. No Bank shall be
responsible for any act or omission of any other Bank.
Section 12.7 SUCCESSOR AGENT. Subject to the appointment and
acceptance of a successor Agent as provided below, the Agent may resign at
any time by giving notice thereof to the Banks and Parent and the Agent may
be removed at any time by Required Banks if it has breached its obligations
under the Loan Documents. Upon any such resignation or removal, Required
Banks will have the right to appoint a successor Agent with Parent's consent,
which shall not be unreasonably withheld. If no successor Agent shall have
been so appointed by Required Banks and shall have accepted such appointment
within thirty (30) days after the retiring Agent's giving of notice of
resignation or the Required Banks' removal of the retiring Agent, then the
retiring Agent may, on behalf of the Banks, appoint a successor Agent
approved by Parent, which approval will not be unreasonably withheld, which
shall be a commercial bank organized under the laws of the United States of
America or any State thereof and having combined capital and surplus of at
least One Hundred Million Dollars ($100,000,000). Upon the acceptance of its
appointment as successor Agent, such successor Agent shall thereupon succeed
to and become vested with all rights, powers, privileges, immunities,
contractual obligation, and duties of the resigning or removed Agent,
including all obligations under any Letters of Credit, and the resigning or
removed Agent shall be discharged from its duties and obligations under the
Loan Documents, including, without limitation, its obligations under all
Letters of Credit. After any Agent's resignation or removal as Agent, the
provisions of this ARTICLE 12 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was the
Agent.
Section 12.8 ADMINISTRATIVE FEE. The Borrowers agree, jointly and
severally, to pay to the Agent a quarterly administrative fee in an aggregate
amount equal to Ten Thousand Dollars ($10,000), such fee payable on the
Closing Date and on the last day of each Fiscal Quarter thereafter until the
Termination Date.
ARTICLE 13
MISCELLANEOUS
Section 13.1 EXPENSES. Each Borrower hereby agrees, jointly and
severally, to pay on demand: (a) all costs and expenses of the Agent arising
in connection with the preparation, negotiation, execution, and delivery of
the Loan Documents, including, without limitation, the fees and expenses of
legal counsel for the Agent; (b) all costs and expenses of the Agent arising
in connection the preparation, negotiation, execution and delivery of any and
all amendments or other modifications to the Loan Documents, including,
without limitation, the fees and expenses of legal counsel for the Agent; (c)
all fees, costs and expenses of the Agent arising in connection with any
Letter of Credit, including the
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Agent's customary fees for amendments, transfers and drawings on Letters of
Credit; (d) all costs and expenses of the Agent in connection with any
Default and the enforcement of any Loan Document, including, without
limitation, the fees and expenses of legal counsel for the Agent; (e) all
reasonable fees, costs and expenses of any Bank (including legal fees and
expenses of counsel to any Bank) arising in connection with an Event of
Default; (f) all transfer, stamp, documentary, or other similar taxes,
assessments, or charges levied by any Governmental Authority in respect of
any Loan Document; (g) all costs, expenses, assessments, and other charges
incurred in connection with any filing, registration, recording, or
perfection of any security interest or Lien contemplated by any Loan
Document; and (h) all other costs and expenses incurred by the Agent in
connection with any Loan Document, including, without limitation, all costs,
expenses, and other charges incurred in connection with any field
examination, audit or appraisal in respect of the Borrowing Base, the
Collateral or the records of the Borrowers and the Obligated Parties relating
thereto.
Section 13.2 INDEMNIFICATION. EACH BORROWER SHALL, JOINTLY AND
SEVERALLY, INDEMNIFY THE AGENT AND EACH BANK AND EACH AFFILIATE THEREOF AND
THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS, AND AGENTS FROM,
AND HOLD EACH OF THEM HARMLESS AGAINST, ANY AND ALL LOSSES, LIABILITIES,
CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES
(INCLUDING ATTORNEYS' FEES) TO WHICH ANY OF THEM MAY BECOME SUBJECT WHICH
DIRECTLY OR INDIRECTLY ARISE FROM OR RELATE TO (A) ANY BREACH BY ANY BORROWER
OR ANY OBLIGATED PARTY OF ANY REPRESENTATION, WARRANTY, COVENANT, OR OTHER
AGREEMENT CONTAINED IN ANY OF THE LOAN DOCUMENTS, (B) THE PRESENCE, RELEASE,
THREATENED RELEASE, DISPOSAL, REMOVAL, OR CLEANUP OF ANY HAZARDOUS MATERIAL
LOCATED ON, ABOUT, WITHIN, OR AFFECTING ANY OF THE PROPERTIES OR ASSETS OF
ANY BORROWER, (C) THE USE OR PROPOSED USE OF ANY LETTER OF CREDIT OR ANY
PAYMENT OR FAILURE TO PAY WITH RESPECT TO ANY LETTER OF CREDIT, (D) ANY AND
ALL TAXES, LEVIES, DEDUCTIONS, AND CHARGES (OTHER THAN FRANCHISE TAXES AND
ANY OTHER TAX OR CHARGE IMPOSED ON THE INCOME OF SUCH INDEMNIFIED PARTY)
IMPOSED ON THE AGENT OR ANY BANK IN RESPECT OF ANY LETTER OF CREDIT, OR (E)
ANY INVESTIGATION, LITIGATION, OR OTHER PROCEEDING, INCLUDING, WITHOUT
LIMITATION, ANY THREATENED INVESTIGATION, LITIGATION, OR OTHER PROCEEDING
RELATING TO ANY OF THE FOREGOING, THE LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED THEREBY; PROVIDED THAT THE PERSON ENTITLED TO BE INDEMNIFIED
UNDER THIS SECTION SHALL NOT BE INDEMNIFIED FROM OR HELD HARMLESS AGAINST ANY
LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS,
COSTS OR EXPENSES (INCLUDING ATTORNEYS' FEES) ARISING OUT OF OR RESULTING
FROM ITS GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. WITHOUT LIMITING ANY
PROVISION OF ANY LOAN DOCUMENT, IT IS THE EXPRESS INTENTION OF THE PARTIES
HERETO THAT EACH PERSON TO BE INDEMNIFIED UNDER THIS SECTION SHALL BE
INDEMNIFIED FROM AND HELD HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES,
CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES
(INCLUDING ATTORNEYS' FEES) ARISING OUT OF OR RESULTING FROM THE SOLE OR
CONTRIBUTORY NEGLIGENCE OF SUCH PERSON.
Section 13.3 LIMITATION OF LIABILITY. None of the Agent, any Bank,
or any Affiliate, officer, director, employee, attorney, or agent thereof
shall have any liability with respect to, and each Borrower and, by the
execution of the Loan Documents to which it is a party, each Obligated Party,
hereby waives, releases, and agrees not to sue any of them upon, any claim
for any special, indirect, incidental, consequential or punitive damages
suffered or incurred by any Borrower or any Obligated Party in
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connection with, arising out of, or in any way related to any of the Loan
Documents, or any of the transactions contemplated by any of the Loan
Documents.
Section 13.4 NO DUTY. Except as may otherwise be required by
SECTION 13.22, all attorneys, accountants, appraisers, and other professional
Persons and consultants retained by the Agent or any Bank shall have the
right to act exclusively in the interest of the Agent and the Banks and shall
have no duty of disclosure, duty of loyalty, duty of care, or other duty or
obligation of any type or nature whatsoever to any Borrower, any Obligated
Party, any of the Borrowers' shareholders or any other Person.
Section 13.5 NO FIDUCIARY RELATIONSHIP. The relationship between
the Borrowers and the Obligated Parties on the one hand and the Agent and
each Bank on the other is solely that of debtor and creditor, and neither the
Agent nor any Bank has any fiduciary or other special relationship with any
Borrower or any Obligated Parties, and no term or condition of any of the
Loan Documents shall be construed so as to deem the relationship between the
Borrowers and the Obligated Parties on the one hand and the Agent and each
Bank on the other and any Bank to be other than that of debtor and creditor.
Section 13.6 EQUITABLE RELIEF. Each Borrower recognizes that in the
event any Borrower or any Obligated Party fails to pay, perform, observe, or
discharge any or all of the obligations under the Loan Documents, any remedy
at law may prove to be inadequate relief to the Agent and the Banks. Each
Borrower therefore agrees that the Agent and the Banks, if the Agent or the
Required Banks so request, shall be entitled to temporary and permanent
injunctive relief in any such case without the necessity of proving actual
damages.
Section 13.7 NO WAIVER; CUMULATIVE REMEDIES. No failure on the part
of the Agent or any Bank to exercise and no delay in exercising, and no
course of dealing with respect to, any right, power, or privilege under any
Loan Document shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power, or privilege under any Loan Document
preclude any other or further exercise thereof or the exercise of any other
right, power, or privilege. The rights and remedies provided for in the Loan
Documents are cumulative and not exclusive of any rights and remedies
provided by law.
Section 13.8 SUCCESSORS AND ASSIGNS.
(a) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns. No
Borrower may assign or transfer any of its rights or obligations hereunder
without the prior written consent of the Agent and all of the Banks. Any Bank
may sell participations to one or more banks or other institutions, including
any special purpose funding vehicle (a "SPC"), identified as such in writing
from time to time by a Bank, in or to all or a portion of its rights and
obligations under the Loan Documents (including, without limitation, all or a
portion of its Commitment, the Loans owing to it and the Letter of Credit
Liabilities which it has made or in which it has a participating interest);
PROVIDED, HOWEVER, that (i) such Bank's obligations under the Loan Documents
(including, without limitation, its Commitments) shall remain unchanged, (ii)
such Bank shall remain solely responsible to the Borrowers for the
performance of such obligations, (iii) such Bank shall remain the holder of
its Notes and owner of its participation or other interests in Letter of
Credit Liabilities for all purposes of any Loan Document, (iv) the Borrowers
shall continue to deal solely and directly with such Bank in connection with
such Bank's rights and obligations under the Loan Documents, and (v) such
Bank shall not sell a participation that conveys to the participant the right
to vote or give or withhold consents under any Loan Document, other than the
right to vote upon or consent to (1) any increase of such Bank's Commitments,
(2) any reduction of the principal amount of, or interest to be paid on, the
Loans or other Obligations of such Bank, (3) any reduction of any commitment
fee, letter of credit fee, or other amount payable to such Bank under any
Loan Document, or (4) any postponement of any
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date for the payment of any amount payable in respect of the Loans or other
Obligations of such Bank. Each party hereto hereby agrees that no SPC shall
be liable for any indemnity or similar payment obligation under this
Agreement (all liability for which shall remain with the Bank granting the
participation). In furtherance of the foregoing, each party hereto hereby
agrees (which agreement shall survive the termination of this Agreement)
that, prior to the date that is one year and one day after the payment in
full of all outstanding commercial paper or other senior indebtedness of any
SPC, it will not institute against, or join any other Person in instituting
against, such SPC any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under the laws of the United States or any State
thereof.
(b) Each Borrower and each of the Banks agree that any Bank
(the "Assigning Bank") may at any time assign to one or more commercial
banks, savings and loan association, savings bank, finance company, insurance
company, pension fund, mutual fund, or other financial institution (whether a
corporation, partnership, or other entity) (herein an "Eligible Assignee")
all, or a proportionate part of all, of its rights and obligations under the
Loan Documents (including, without limitation, its Commitments and Loans and
participation interests) (each an "Assignee"); PROVIDED, HOWEVER, that (i)
each such assignment shall be of a consistent, and not a varying, percentage
of all of the assigning Bank's rights and obligations under the Loan
Documents, (ii) except in the case of an assignment of all of a Bank's rights
and obligations under the Loan Documents, the amount of the Commitment of the
assigning Bank being assigned pursuant to each assignment (determined as of
the date of the Assignment and Acceptance with respect to such assignment)
shall in no event be less than Five Million Dollars ($5,000,000), (iii) the
parties to each such assignment shall execute and deliver to the Agent for
its acceptance and recording in the Register (as defined below), an
Assignment and Acceptance, together with the Note subject to such assignment,
and a processing and recordation fee of Three Thousand Dollars ($3,000)
payable by the assignor or assignee (and not any Borrower); and (iv) Parent
and the Agent must consent to such assignment, which consent shall not be
unreasonably withheld, with such consents to be evidenced by Parent's and the
Agent's execution of the Assignment and Acceptance. Upon such execution,
delivery, acceptance, and recording, from and after the effective date
specified in each Assignment and Acceptance, which effective date shall be at
least five (5) Business Days after the execution thereof, or, if so specified
in such Assignment and Acceptance, the date of acceptance thereof by the
Agent, (x) the assignee thereunder shall be a party hereto as a "Bank" and,
to the extent that rights and obligations hereunder have been assigned to it
pursuant to such Assignment and Acceptance, have the rights and obligations
of a Bank hereunder and under the Loan Documents and (y) the Bank that is an
assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations under
the Loan Documents (and, in the case of an Assignment and Acceptance covering
all or the remaining portion of a Bank's rights and obligations under the
Loan Documents, such Bank shall cease to be a party thereto). Notwithstanding
the foregoing, at no time shall the aggregate amount of the Agent's share of
the Loans and Commitments be less than any other Bank's share of the Loans
and Commitments.
(c) The Agent shall maintain at its Principal Office a copy of
each Assignment and Acceptance delivered to and accepted by it and a register
for the recordation of the names and addresses of the Banks and the
Commitments of, and principal amount of the Loans owing to and Letter of
Credit Liabilities participated in by, each Bank from time to time (the
"Register"). The entries in the Register shall be conclusive and binding for
all purposes, absent manifest error, and the Borrowers, the Agent, and the
Banks may treat each Person whose name is recorded in the Register as a Bank
hereunder for all purposes under the Loan Documents. The Register shall be
available for inspection by Parent or any Bank at any reasonable time and
from time to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed
by an Assigning Bank and Assignee representing that it is an Eligible
Assignee, together with any Notes subject to such
CREDIT AGREEMENT-Page 64
<PAGE>
assignment, the Agent shall, if such Assignment and Acceptance has been
completed and is in substantially the form of EXHIBIT "E" hereto, (i) accept
such Assignment and Acceptance, (ii) record the information contained therein
in the Register, and (iii) give prompt written notice thereof to Parent.
Within five (5) Business Days after its receipt of such notice each Borrower,
at their expense, shall execute and deliver to the Agent in exchange for the
surrendered Note new Notes to the order of such Eligible Assignee in an
amount equal to the Commitment assumed by it pursuant to such Assignment and
Acceptance and, if the assigning Bank has retained a Commitment, a Note to
the order of the assigning Bank in an amount equal to the Commitment retained
by it hereunder (each such promissory note shall constitute a "Note" for
purposes of the Loan Documents). Such new Notes shall be in an aggregate
principal amount of the surrendered Note, shall be dated the effective date
of such Assignment and Acceptance, and shall otherwise be in substantially
the form of EXHIBIT "A" hereto.
(e) Any Bank may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this
SECTION, disclose to the assignee or participant or proposed assignee or
participant, any information relating to any Borrower furnished to such Bank
by or on behalf of such Borrower.
Section 13.9 SURVIVAL. All representations and warranties made in
any Loan Document or in any document, statement, or certificate furnished in
connection with any Loan Document shall survive the execution and delivery of
the Loan Documents and no investigation by the Agent or any Bank or any
closing shall affect the representations and warranties or the right of the
Agent or any Bank to rely upon them. Without prejudice to the survival of any
other obligation of the Borrowers hereunder, the obligations of the Borrowers
under ARTICLE 5 hereof and SECTIONS 13.1 and 13.2 hereof shall survive
repayment of the Notes and termination of the Commitments and the Letters of
Credit.
Section 13.10 ENTIRE AGREEMENT. THIS AGREEMENT, THE NOTES, AND THE
OTHER LOAN DOCUMENTS REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT
AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS,
AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR
DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
AMONG THE PARTIES THERETO.
Section 13.11 AMENDMENTS. No amendment or waiver of any provision
of any Loan Document to which any Borrower is a party, nor any consent to any
departure by any Borrower therefrom, shall in any event be effective unless
the same shall be agreed or consented to by Required Banks and each Borrower
and shall be in compliance with the Intercreditor Agreement, and each such
waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given; provided, that no amendment, waiver, or
consent shall do any of the following: (i) increase the Commitments of any
Bank without the written consent of such Bank, (ii) reduce the principal
amount of any Loan or Reimbursement Obligation or reduce the rate of interest
thereon, or reduce any fees payable hereunder, without the written consent of
each Bank affected thereby, (iii) postpone the scheduled date of payment of
the principal amount of any Loan or Reimbursement Obligation, or any interest
thereon, or any fees payable hereunder, or reduce the amount of, waive or
excuse any such payment, or postpone the scheduled date of expiration of any
Revolving Commitment, without the written consent of each Bank affected
thereby, (iv) change any of the provisions of this SECTION or the definition
of "Required Banks" or any other provision of any Loan Document specifying
the number or percentage of Banks required to waive, amend or modify any
rights thereunder or make any determination or grant any consent thereunder,
without the written consent of each Bank or (v) release any Collateral or
release any Borrower or any Obligated Party from liability without the
consent of each Bank. Notwithstanding anything to the
CREDIT AGREEMENT-Page 65
<PAGE>
contrary contained in this SECTION, no amendment waiver, or consent shall be
made with respect to SECTIONS 2.7, SECTION 4.6 or ARTICLE 12 hereof without
the prior written consent of the Agent.
Section 13.12 MAXIMUM INTEREST RATE.
(a) No interest rate specified in any Loan Document shall at
any time exceed the Maximum Rate. If at any time the interest rate (the
"CONTRACT RATE") for any Obligation shall exceed the Maximum Rate, thereby
causing the interest accruing on such Obligation to be limited to the Maximum
Rate, then any subsequent reduction in the Contract Rate for such Obligation
shall not reduce the rate of interest on such Obligation below the Maximum
Rate until the aggregate amount of interest accrued on such Obligation equals
the aggregate amount of interest which would have accrued on such Obligation
if the Contract Rate for such Obligation had at all times been in effect.
(b) No provision of any Loan Document shall require the
payment or the collection of interest in excess of the maximum amount
permitted by applicable law. If any excess of interest in such respect is
hereby provided for, or shall be adjudicated to be so provided, in any Loan
Document or otherwise in connection with this loan transaction, the
provisions of this SECTION shall govern and prevail and neither the Borrowers
nor the sureties, guarantors, successors, or assigns of the Borrowers shall
be obligated to pay the excess amount of such interest or any other excess
sum paid for the use, forbearance, or detention of sums loaned pursuant
hereto. In the event any Bank ever receives, collects, or applies as interest
any such sum, such amount which would be in excess of the maximum amount
permitted by applicable law shall be applied as a payment and reduction of
the principal of the Obligations; and, if the principal of the Obligations
has been paid in full, any remaining excess shall forthwith be paid to
Parent. In determining whether or not the interest paid or payable exceeds
the Maximum Rate, the Borrowers and each Bank shall, to the extent permitted
by applicable law, (a) characterize any non-principal payment as an expense,
fee, or premium rather than as interest, (b) exclude voluntary prepayments
and the effects thereof, and (c) amortize, prorate, allocate, and spread in
equal or unequal parts the total amount of interest throughout the entire
contemplated term of the Obligations so that interest for the entire term
does not exceed the Maximum Rate.
Section 13.13 NOTICES. All notices and other communications
provided for in any Loan Document to which any Borrower or any Obligated
Party is a party shall be given or made in writing and telecopied, mailed by
certified mail return receipt requested, or delivered to the intended
recipient at the "Address for Notices" specified below its name on the
signature pages hereof and, if to an Obligated Party, at the address for
notices for the Borrowers; or, as to any party at such other address as shall
be designated by such party in a notice to each other party given in
accordance with this SECTION. Except as otherwise provided in any Loan
Document, all such communications shall be deemed to have been duly given
when transmitted by telecopy, subject to telephone confirmation of receipt,
or when personally delivered or, in the case of a mailed notice, three (3)
Business Days after being duly deposited in the mails, in each case given or
addressed as aforesaid; provided, however, notices to the Agent pursuant to
SECTION 2.7 or 4.3 hereof shall not be effective until received by the Agent.
Section 13.14 GOVERNING LAW, ETC. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York and the
applicable laws of the United States of America. This Agreement shall be
performable for all purposes in New York City. Any action or proceeding against
any Borrower or any Obligated Party under or in connection with any of the Loan
Documents may be brought in any New York state or federal court in New York
City. Each Borrower (and by its execution of the Loan
CREDIT AGREEMENT-Page 66
<PAGE>
Documents to which it is a party, each Obligated Party) hereby irrevocably
(a) submits to the nonexclusive jurisdiction of such courts, and (b) waives
any objection it may now or hereafter have as to the venue of any such action
or proceeding brought in any such court or that any such court is an
inconvenient forum. Each Borrower (and by its execution of the Loan Documents
to which it is a party, each Obligated Party) agrees that service of process
upon it may be made by certified or registered mail, return receipt
requested, at its address specified or determined in accordance with the
provisions of SECTION 13.13. Nothing herein or in any of the other Loan
Documents shall affect the right of the Agent or any Bank to serve process in
any other manner permitted by law or shall limit the right of the Agent or
any Bank to bring any action or proceeding against any Borrower, any
Obligated Party or any of their respective property in courts in other
jurisdictions. Any action or proceeding by any Borrower or any Obligated
Party against the Agent or any Bank shall be brought only in a court located
in New York City.
Section 13.15 COUNTERPARTS. This Agreement may be executed in one
or more counterparts and on telecopy counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the
same agreement.
Section 13.16 SEVERABILITY. Any provision of any Loan Document held
by a court of competent jurisdiction to be invalid or unenforceable shall not
impair or invalidate the remainder of any Loan Document and the effect
thereof shall be confined to the provision held to be invalid or illegal.
Section 13.17 HEADINGS. The headings, captions, and arrangements
used in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement.
Section 13.18 NON-APPLICATION OF CHAPTER 346 OF TEXAS FINANCE CODE.
The provisions of Chapter 346 of the Texas Finance Code are specifically
declared by the parties hereto not to be applicable to any Loan Documents or
to the transactions contemplated thereby.
Section 13.19 CONSTRUCTION. Each Borrower, each Obligated Party (by
its execution of the Loan Documents to which its is a party) the Agent and
each Bank acknowledges that each of them has had the benefit of legal counsel
of its own choice and has been afforded an opportunity to review the Loan
Documents with its legal counsel and that the Loan Documents shall be
construed as if jointly drafted by the parties thereto.
Section 13.20 INDEPENDENCE OF COVENANTS. All covenants under the
Loan Documents shall be given independent effect so that if a particular
action or condition is not permitted by any of such covenants, the fact that
it would be permitted by an exception to, or be otherwise within the
limitations of, another covenant shall not avoid the occurrence of a Default
if such action is taken or such condition exists.
Section 13.21 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND
EXPRESSLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR
COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF
OR RELATING TO ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
THEREBY OR THE ACTIONS OF THE AGENT OR ANY BANK IN THE NEGOTIATION,
ADMINISTRATION, OR ENFORCEMENT THEREOF.
CREDIT AGREEMENT-Page 67
<PAGE>
Section 13.22 CONFIDENTIALITY. Agent and each Bank (each a "LENDING
PARTY") agrees to keep any Designated Information (as defined below)
delivered or made available by any Borrower to it confidential from anyone
other than Persons employed or retained by such Lending Party who are, or are
expected to be, engaged in evaluating, approving, structuring or
administering the credit facility provided herein; provided that nothing
herein shall prevent any Lending Party from disclosing such Designated
Information (a) to any other Lending Party, (b) to any other Person who
agrees to be bound by provisions substantially similar to those contained in
this SECTION if reasonably incidental to the administration of the credit
facility provided herein, (c) upon the order of any court or administrative
agency, (d) upon the request or demand of any regulatory agency or authority,
(e) which had been publicly disclosed other than as a result of a disclosure
by any Lending Party prohibited by this Agreement, (f) in connection with any
litigation to which such Lending Party or any of its Affiliates may be a
party to the extent such information is necessary in such litigation, (g) to
the extent necessary in connection with the exercise of any remedy hereunder,
(h) to such Lending Party's legal counsel and independent auditors who are
made aware of the provisions of this SECTION 13.22, (i) to any Affiliate of
such Lending Party solely in connection with this Agreement if such party is
made aware of the provisions of this SECTION 13.22; and (j) subject to
provisions substantially similar to those contained in this SECTION, to any
actual or proposed participant or assignee of any of its rights and
obligations under the Loan Documents in accordance with the terms hereof. The
term "DESIGNATED INFORMATION" means any information which has been designated
by Parent in writing as confidential.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
BORROWERS:
MARKETING SPECIALISTS CORPORATION
MARKETING SPECIALISTS SALES COMPANY
By:
----------------------------------------
Name:
-----------------------------------
Authorized Officer for all Borrowers
PAUL INMAN ASSOCIATES, INC.
BROMAR, INC.
By:
----------------------------------------
Name:
-----------------------------------
Authorized Officer for all Borrowers
ADDRESS FOR NOTICES TO ANY BORROWER:
17855 Dallas Parkway, Suite 200
Dallas, Texas 75287
Fax No.: 972-349-6448
Telephone No.: 972-349-____
Attention: Timothy Byrd
CREDIT AGREEMENT-Page 68
<PAGE>
Commitment: THE CHASE MANHATTAN BANK,
individually as a Bank and as the Agent
$16,666,666.67
By:
----------------------------------------
George Louis McKinley
Vice President
ADDRESS FOR NOTICES:
Asset Based Lending
633 ThiRd Avenue, 7th Floor
New YoRk, New York 10017-6764
Attention: Credit Deputy
Fax No.: 212-622-5271
Telephone No.: 212-622-5227
LENDING OFFICE FOR BASE RATE
ACCOUNTS AND LIBOR ACCOUNTS:
633 Third Avenue
New York, New York 10017-6764
Commitment: CREDIT SUISSE/FIRST BOSTON
$16,666,666.67
By:
----------------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
ADDRESS FOR NOTICES:
---------------------------------------------
---------------------------------------------
---------------------------------------------
Attention:
Fax No.:
Telephone No.:
LENDING OFFICE FOR BASE RATE
ACCOUNTS AND LIBOR ACCOUNTS:
---------------------------------------------
---------------------------------------------
---------------------------------------------
CREDIT AGREEMENT-Page 69
<PAGE>
Commitment FLEET CAPITAL BANK
$16,666,666.66
By:
----------------------------------------
Name: Hance VanBeber
Title: Senior Vice President
ADDRESS FOR NOTICES:
Fleet Capital Corporation
2711 N. Haskell Avenue
Suite 2100, LB 21
Dallas, Texas 75204
Attention: Mr. Hance VanBeber
Fax No.: (214) 828-6530
Telephone No.: (214) 828-6515
LENDING OFFICE FOR BASE RATE
ACCOUNTS AND LIBOR ACCOUNTS:
2711 N. Haskell
Suite 2100, LB 21
Dallas, Texas 75204
CREDIT AGREEMENT-Page 70
<PAGE>
INDEX TO EXHIBITS
EXHIBIT DESCRIPTION OF EXHIBIT
"A" Note
"B" Compliance Certificate
"C" Borrowing Base Report
"D" Security Agreement
"E" Assignment and Acceptance
"F" Guaranty Agreement
"G" Receivables Report
INDEX TO SCHEDULES
SCHEDULE DESCRIPTION OF SCHEDULE
1.1(a) Previous Senior Debt
1.1(b) Monroe Litigation
7.9 Debt Levels
7.14 List of Subsidiaries
9.1 Debt
9.2 Existing Liens
9.5 Existing Investments
9.7 Permitted Affiliate Transactions
INDEX TO EXHIBITS AND SCHEDULES, Solo Page
<PAGE>
EXHIBIT "A"
TO
MARKETING SPECIALISTS CORPORATION
CREDIT AGREEMENT
NOTE
Exhibit "A", Cover Page
<PAGE>
NOTE
$______________ __, 20_
FOR VALUE RECEIVED, the undersigned, MARKETING SPECIALISTS CORPORATION, a
Delaware corporation, PAUL INMAN ASSOCIATES, INC., a Michigan corporation,
MARKETING SPECIALISTS SALES COMPANY, a Texas corporation, and BROMAR, INC., a
California corporation (collectively, the "Borrowers"), hereby promise, jointly
and severally, to pay to the order of _________________________ (the "Bank"), at
Agent's Principal Office, in lawful money of the United States of America and in
immediately available funds, the principal amount of __________________________
and No/100 Dollars ($_____________) or such lesser amount as shall equal the
aggregate unpaid principal amount of the Loans made by the Bank to the
Borrowers under the Credit Agreement referred to below, on the dates and in
the principal amounts provided in the Credit Agreement, and to pay interest
on the unpaid principal amount of each such Loan, at such office, in like
money and funds, for the period commencing on the date of such Loan until
such Loan shall be paid in full, at the rates per annum and on the dates
provided in the Credit Agreement.
The Borrowers hereby authorize the Bank to record in its records the
amount of each Loan and Type of Accounts established under each Loan and all
Continuations, Conversions and payments of principal in respect thereof,
which records shall, in the absence of manifest error, constitute prima facie
evidence of the accuracy thereof; PROVIDED, HOWEVER, that the failure to make
such notation with respect to any such Loan or payment shall not limit or
otherwise affect the obligations of the Borrowers under the Credit Agreement
or this Note.
This Note is one of the Notes referred to in the Credit Agreement dated
as of March 30, 2000, among the Borrowers, the Bank, the other banks party
thereto (the "Banks"), and THE CHASE MANHATTAN BANK as agent for the Banks
(in such capacity, the "Agent" and such Credit Agreement, as the same may be
amended or otherwise modified from time to time, being referred to herein as
the "Credit Agreement"), and evidences Loans made by the Bank thereunder. The
Credit Agreement, among other things, contains provisions for acceleration of
the maturity of this Note upon the happening of certain stated events and for
prepayments of Loans prior to the maturity of this Note upon the terms and
conditions specified in the Credit Agreement. Capitalized terms used in this
Note have the respective meanings assigned to them in the Credit Agreement.
This Note shall be governed by and construed in accordance with the laws
of the State of New York and the applicable laws of the United States of
America.
Except for any notices expressly required by the Loan Documents, the
Borrowers and each obligor, surety, guarantor, endorser and other party ever
liable for payment of any sums of money payable on this Note jointly and
severally waive notice, presentment, demand for payment, protest, notice of
protest and non-payment or dishonor, notice of acceleration, notice of intent
to accelerate, notice of intent to demand, diligence in collecting, grace and
all other formalities of any kind, and consent to all extensions without
notice for any period or periods of time and partial payments, before or
after maturity, and any impairment of any collateral securing this Note, all
without prejudice to the holder. The holder shall similarly have the right to
deal in any way, at any time, with one or more of the foregoing parties
without notice to any other party, and to grant any such party any extensions
of time for payment of any of said indebtedness, or to release any such party
or to release or substitute part or all of the collateral securing this Note,
or to grant any other indulgences or forbearances whatsoever, without notice
to any other party and without in any way affecting the personal liability of
any party hereunder.
Note, Page 1
<PAGE>
MARKETING SPECIALISTS CORPORATION
PAUL INMAN ASSOCIATES, INC.
MARKETING SPECIALISTS SALES COMPANY
BROMAR, INC.
By:
------------------------------------------
Name:
-------------------------------------
Authorized Officer for all Borrowers
Note, Page 2
<PAGE>
EXHIBIT "B"
TO
MARKETING SPECIALISTS CORPORATION
CREDIT AGREEMENT
COMPLIANCE CERTIFICATE
Exhibit "B", Cover Page
<PAGE>
COMPLIANCE CERTIFICATE
for the
quarter ending ________ __, ____
To: The Chase Manhattan Bank
633 Third Avenue, 7th Floor
New York, New York 10017-6764
with a copy to
2200 Ross Avenue, 4th Floor
Dallas, Texas 75201
and each Bank
Ladies and Gentlemen:
This Compliance Certificate (the "CERTIFICATE") is being delivered
pursuant to Section 8.1(c) of that certain Credit Agreement (as amended, the
"AGREEMENT") dated as of March 30, 2000 among MARKETING SPECIALISTS
CORPORATION (the "PARENT") and certain of its subsidiaries (the
"SUBSIDIARIES") and THE CHASE MANHATTAN BANK, as agent, and the Banks named
therein. All capitalized terms, unless otherwise defined herein, shall have
the same meanings as in the Agreement. All the calculations set forth below
shall be made pursuant to the terms of the Agreement.
The undersigned, an authorized financial officer of the Parent,
does hereby certify to the Agent and the Banks that:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1. DEFAULT.
No Default has occurred and is continuing or if a Default has occurred and is continuing, I have
described on the attached Exhibit "A" the nature thereof and the steps taken or proposed to remedy such
Default.
2. COMPLIANCE
(a) Annual audited financial statements of Parent and the Yes No N/A
Subsidiaries on a consolidated basis and within 90 days
after the end of each Fiscal Year.
(b) Monthly unaudited financial statements of Parent and the Yes No N/A
Subsidiaries on a consolidated basis and within the
applicable days after each month end.
(c) Weekly Receivable Reports each Monday. Yes No N/A
(d) Monthly Borrowing Base Report 20 days after each month end. Yes No N/A
(e) Annual projections within 45 days after the beginning of Yes No N/A
each Fiscal Year.
3. SECTION 9.1 - Debt
No Additional Debt except:
(a) Purchase money not to exceed: $3,000,000 Yes No
Actual Outstanding: $________
Compliance Certificate, Page 1 of 3
<PAGE>
(b) Other Debt not to exceed $2,000,000 Yes No
Actual Outstanding: $________
4. SCHEDULE 10.1 - Minimum Fixed Charges Coverage Ratio
(a) EBITDA for last 4 Fiscal Quarters
(i) Net Income $________
(ii) Plus taxes included and interest deducted $________
(iii) Plus amortization and depreciation $________
(iv) Plus other noncash charges not included in (ii) or (iii) $________
(v) Minus Capital Expenditures $________
(vi) EBITDA [4(a)(i) plus 4(a)(ii) plus 4(a)(iii) plus
4(a)(iv) minus4(a)(v)] $________
(b) Scheduled amortization of Debt for last 4 Fiscal Quarters
plus cash interest plus cash taxes $________
(c) Actual Fixed Charges Coverage Ratio: 4(a)(vi) ) 4(b) = ____:1.00
Yes No
(d) Minimum Fixed Charges Coverage Ratio: ____:1.00
5. SECTION 10.2 - Maximum Debt to EBITDA Ratio
(a) Adjusted EBITDA
(i) EBITDA $________
(ii) Plus applicable adjustments per Credit Agreement $________
(iii) Adjusted EBITDA $________
(b) Principal amount of consolidated Debt $________
(c) Actual Debt to Adjusted EBITDA Ratio: 5(a)(iii) ) 5(b) = ____:1.00
Yes No
(d) Maximum Debt to Adjusted EBITDA Ratio: ____:1.00
6. SECTION 10.4 - Minimum Interest Coverage Ratio
(a) EBITDA for applicable period
(i) Net Income $________
(ii) Plus taxes included and interest deducted $________
(iii) Plus amortization and depreciation $________
(iv) Plus other noncash charges not included in (ii) or
(iii) $________
(v) 6(a)(i) plus 6(a)(ii) plus 6(a)(iii) plus 6(a)(iv)
$________
(b) Consolidated cash interest expense for applicable period Yes No
(c) Actual Interest Coverage Ratio: 6(a) ) 6(b) = ____:1.00
(d) Minimum Interest Coverage Ratio: ____:1.00
Compliance Certificate, Page 2 of 3
<PAGE>
7. SECTION 10.5 - Minimum EBITDA
(a) Minimum Required EBITDA for period $________
Yes No
(b) Actual EBITDA $________
8. SECTION 10.6- Capital Expenditures Limit
(a) Yearly Limit for current Measurement Period $________
(b) Carryover Amount $________
(c) Capital Expenditure Limit: 8(a) plus 8(b) $________
Yes No
(d) Actual Capital Expenditures to date $________
(e) Carryover Amount (8(a)- 8(d))
$________
9. Section 3.2- Determination of Margin and Fees
(a) Leverage Ratio
(i) Non-Subordinated Debt $________
(ii) Adjusted EBITDA for last 4 Fiscal Quarters $________
(iii) Leverage Ratio (9(a) divided by 9(a)(ii)) ___:1.00
(b) Set forth below are new margins and fees in accordance
with Section 3.2:
(i) Base Margin _________%
(ii) Libor Rate Margin _________%
10. ATTACHED SCHEDULES
Attached hereto as schedules are the calculations supporting the computation set forth above in this
Certificate. All information contained herein and on the attached schedules is true and correct.
11. FINANCIAL STATEMENTS
The unaudited financial statements attached hereto were prepared in accordance with GAAP (or the
generally accepted accounting principles of the jurisdiction of organization of the applicable Person)
and fairly present (subject to year end audit adjustments) the financial conditions and the results of
the operations of the Persons reflected thereon, at the date and for the periods indicated therein.
12. In the interest of any conflict between this Compliance Certificate and the Agreement, the Agreement
shall control.
</TABLE>
IN WITNESS WHEREOF, the undersigned has executed this Certificate
effective this _______ day of ____________.
MARKETING SPECIALISTS CORPORATION
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
Compliance Certificate, Page 3 of 3
<PAGE>
EXHIBIT "C"
TO
MARKETING SPECIALISTS CORPORATION
CREDIT AGREEMENT
BORROWING BASE RQPORT
Exhibit "C" Cover Page
<PAGE>
BORROWING BASE REPORT
TO: The Chase Manhattan Bank, as agent
633 Third Avenue, 7th Floor
New York, New York 10017-6764
and each Bank
Ladies and Gentlemen:
This Borrowing Base Report for the __________ ending
____________________, 20__ (the "Period") is executed and delivered by
Marketing Specialists Corporation (the "Parent") to THE CHASE MANHATTAN BANK
(the "Agent"), pursuant to that certain Credit Agreement dated as of March
___, 2000, among the Parent and certain of its Subsidiaries, the Agent and
the Banks named therein. All terms used herein shall have the meanings
assigned to them in the Credit Agreement (as amended to the date hereof, the
"Credit Agreement").
The Parent represents and warrants to the Agent and the Banks that all
information contained herein is true, correct, and complete, and that the
total Eligible Accounts referred to below represent the Eligible Accounts
that qualify for purposes of determining the Borrowing Base under the Credit
Agreement. The Parent also represents and warrants that all figures listed
below or attached hereto have been calculated based on the provisions of the
Credit Agreement. The Parent further represents and warrants to the Agent and
the Banks that attached hereto are SCHEDULES 1-8 showing the Borrowing Base
for each Borrower and the following Receivables reports: (a) as EXHIBIT A, a
list of all Receivables of the Borrower as of the last day of the Period,
showing all Receivables aged in 30, 60, 90 and 120 day intervals and
specifying the balance due for account debtor; (b) as EXHIBIT B, a sales
report summary of the Borrower for the Period; (c) as EXHIBIT C, a
collections report (including lockbox activity statement) for the Period; and
(d) as EXHIBIT D, a customer credit report for the Period.
The Parent represents and warrants to the Agent and the Banks that the
representations and warranties of the Borrowers contained in ARTICLE 7 of the
Credit Agreement and contained in the other Loan Documents are true and
correct on and as of the date of this Borrowing Base Report as if made on and
as of the date hereof except to the extent that such representations and
warranties speak to a specific date, and that no Default has occurred and is
continuing.
BORROWING BASE SUMMARY:
Individual Borrowing Base of:
<TABLE>
<S> <C>
1. Marketing Specialists Corporation............................................... $__________
2. Paul Inman Associates, Inc...................................................... $__________
3. Marketing Specialists Sales Company............................................. $__________
4. Bromar, Inc..................................................................... $__________
Aggregate Borrowing Base........................................................ $__________
OUTSTANDING REVOLVING CREDIT SUMMARY:
Outstanding Revolving Credit of:
Borrowing Base Report, Page 1
<PAGE>
1. Marketing Specialists Corporation............................................... $__________
2. Paul Inman Associates, Inc...................................................... $__________
3. Marketing Specialists Sales Company............................................. $__________
4. Bromar, Inc..................................................................... $__________
Aggregate Borrowing Base........................................................ $__________
AGGREGATE AVAILABLE CREDIT
(Lesser of Aggregate Borrowing Base
and the Commitments LESS Aggregate
Outstanding Revolving Credit)................................................... $__________
</TABLE>
In the event of any conflict between this Borrowing Base Report and the
Credit Agreement, the Credit Agreement shall control.
Date: __________, 20__.
PARENT:
MARKETING SPECIALISTS CORPORATION
By:
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
Borrowing Base Report, Page 2
<PAGE>
Schedule ____
to
Borrowing Base Report
Marketing Specialists Corporation
Borrowing Base Report
for
[NAME OF BORROWER]
Schedule ___ to Borrowing Base Report, Cover Page
<PAGE>
ELIGIBLE ACCOUNTS:
<TABLE>
<S> <C>
1. Gross Receivables
(a) Ending balance as of prior period ending _______, 20___
(I.E., DATE OF LAST BORROWING BASE REPORT OR 12/31/99 IF
FIRST BORROWING BASE REPORT ................................................ $__________
(b) Collections on Receivables since prior period end........................... $__________
(c) Other credits on Receivables since prior period end......................... $__________
(d) Receivables generated since prior period end................................ $__________
(e) Other debits since prior period end......................................... $__________
(f) Gross Receivables for period ending ______, 20___ (the sum of
1(a) minus 1(b) minus 1(c) plus 1(d) plus 1(e)) ............................ $__________
2. Less: Ineligible Receivables (determined pursuant to the definition of Eligible
Account in the Credit Agreement, without duplication)........................... $__________
(a) Receivables not in compliance with all applicable laws, rules and regulations,
including without limitation, usury laws.................................... $__________
(b) Receivables outstanding for more than 120 days after the original date of
invoice or 90 days past due................................................. $__________
(c) Receivables arising from unenforceable contracts or where applicable Borrower is
in default..................................................................
(d) The services reflected on the applicable invoice have not been completed or
goods not delivered or amounts are not properly billable.................... $__________
(e) Receivables subject to defects in title or is subject to any Lien except Liens
in favor of the Agent....................................................... $__________
(f) Receivable is not subject to a first perfected Lien in favor of the Agent or is
not payable to a Lockbox Account covered by an agency account agreement..... $__________
(g) account debtor is insolvent or the subject of any bankruptcy or insolvency
proceeding or has made an assignment for the benefit of creditors, suspended
normal business operations, dissolved, liquidated, terminated its existence,
ceased to pay its debts as they become due,
or suffered a receiver or trustee to be appointed for any of its assets affairs $__________
(h) Receivable is evidenced by chattel paper or any instrument.................. $__________
(i) Borrower's performance of the contract to which the Receivable relates is
assured by a performance, completion, or other bond......................... $__________
(j) Receivable is owed by an Affiliate of the Borrower or a director, officer,
agent, stockholder or employee of such Borrower or by one Borrower to another $__________
(k) Receivables not payable in Dollars.......................................... $__________
(l) Account debtor or other Person obligated on such Receivable is not domiciled in $__________
the United States and the Receivable is not backed by a satisfactory letter of
credit issued or confirmed by a bank located in the United States or insured by
insurance...................................................................
(m) More than 50% of aggregate amount of Receivables owed by the account debtor to $__________
any Borrower are more than 90 days past due.................................
Schedule ___ to Borrowing Base Report, Page 1
<PAGE>
(n) Account debtor is a Government Authority and the Federal Assignment of Claims $__________
Act of 1940 or similar statute have not been complied to the satisfaction of the
Agent ......................................................................
(o) Receivable charged or written off as uncollectible in accordance with GAAP. $__________
(p) Failure to file Notice of Business Activity Report.......................... $__________
(q) Goods of sale not owned, not delivered on a absolute sale basis or returned or $__________
rejected..............................................................
(r) Receivable arises from sale of a perishable agricultural commodity or livestock
owned and purchased by the Borrower for its own account.....................
(s) Receivable is an Excluded Account........................................... $__________
3. Total Ineligible Accounts (total 2(a) through (s)).............................. $__________
4. Contra accounts................................................................. $__________
5. Setoffs, counterclaims, etc. by account debtors................................. $__________
6. Retainage by account debtors.................................................... $__________
7. Accounts subject to 10% rule.................................................... $__________
8. Accounts not eligible due to sale of Borrower................................... $__________
9. TOTAL ELIGIBLE ACCOUNTS (1(f) minus 3 through 8)................................ $__________
==========
BORROWING BASE
10. Unapplied Cash.................................................................. $__________
11. Net Eligible Accounts (Line 9 minus Line 10).................................... $__________
12. 85% (or if such other percentage as may apply as determined in accordance with the
Credit Agreement) of line 11.................................................... $__________
13. Pledged cash.................................................................... $__________
14. Reserves established by the Agent............................................... $__________
15. BORROWING BASE as of the date hereof
(line 12, plus line 13 minus line 14)........................................... $__________
AVAILABLE CREDIT:
16. Outstanding Revolving Credit.................................................... $____________
(a) Loans....................................................................... $____________
(b) Letter of Credit Liabilities................................................ $____________
(c) TOTAL (16(a) plus 16(b)).................................................... $____________
17. AVAILABLE CREDIT AMOUNT [(the lesser of the amount of the Commitments or line 15
minus line 16 (c))]............................................................. $____________
</TABLE>
Schedule ___ to Borrowing Base Report, Page 2
<PAGE>
EXHIBIT "D"
TO
MARKETING SPECIALISTS CORPORATION
CREDIT AGREEMENT
SECURITY AGREEMENT
Exhibit "D", Cover Page
<PAGE>
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement") dated as of March 30,
2000, is by and among MARKETING SPECIALISTS CORPORATION, a Delaware
corporation, PAUL INMAN ASSOCIATES, INC., a Michigan corporation, MARKETING
SPECIALISTS SALES COMPANY, a Texas corporation, and BROMAR, INC., a
California corporation (each individually a "Debtor" and collectively, the
"Debtors") and THE CHASE MANHATTAN BANK, as agent for the Banks as that term
is defined below (the "Secured Party").
R E C I T A L S:
The Debtors are entering into that certain Credit Agreement dated as of
even date herewith with the banks parties thereto (each individually a "Bank"
and collectively, the "Banks"), and the Secured Party, as agent for the Banks
(such agreement as it may be amended or otherwise modified from time to time
herein as the "Credit Agreement"). The execution and delivery of this Agreement
is a condition to Secured Party and each Bank entering into the Credit Agreement
and making the extensions of credit thereunder.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the adequacy, receipt and sufficiency of which are
hereby acknowledged, and in order to induce the Secured Party and Banks to make
the Loans and issue the Letters of Credit under the Credit Agreement, the
parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1. DEFINITIONS. As used in this Agreement, the following
terms have the following meanings:
"ACCOUNT" means any "account," as such term is defined in
Article or Chapter 9 of the UCC, now owned or hereafter acquired by
Debtor, and, in any event, shall include, without limitation, each of
the following, whether now owned or hereafter acquired by the Debtor:
(a) all rights of the Debtor to payment for goods sold or leased or
services rendered, whether or not earned by performance, (b) all
accounts receivable of the Debtor, (c) all rights of the Debtor to
receive any payment of money or other form of consideration including,
without limitation, all Payment Intangibles, (d) all security pledged,
assigned or granted to or held by the Debtor to secure any of the
foregoing, (e) all guaranties of, or indemnifications with respect to,
any of the foregoing, (f) all rights of the Debtor as an unpaid seller
of goods or services, including, but not limited to, all rights of
stoppage in transit, replevin, reclamation and resale, (g) all rights
to brokerage commissions; and (h) all other Supporting Obligations,
including any applicable Letter of Credit Rights.
"CHATTEL PAPER" means any "chattel paper," as such term is
defined in Article or Chapter 9 of the UCC, now owned or hereafter
acquired by the Debtor.
"COLLATERAL" has the meaning specified in SECTION 2.1 of this
Agreement.
"DEPOSIT ACCOUNTS" means any and all deposit accounts or other
bank accounts now owned or hereafter acquired or opened by the Debtor,
and any account which is a replacement or
Security Agreement, Page 1
<PAGE>
substitute for any of such accounts including, without limitation,
those deposit accounts identified on Schedule 3.2.
"DOCUMENT" means any "document," as such term is defined in
Article or Chapter 9 of the UCC, now owned or hereafter acquired by the
Debtor, including, without limitation, all documents of title and all
receipts covering, evidencing or representing goods now owned or
hereafter acquired by the Debtor.
"FINANCIAL ASSETS" means any "financial asset," as such term
is defined in the UCC.
"GENERAL INTANGIBLES" means any "general intangibles," as such
term is defined in Article or Chapter 9 of the UCC, now owned or
hereafter acquired by the Debtor and, (a) in any event, shall include,
without limitation, each of the following, whether now owned or
hereafter acquired by the Debtor: (i) all of the Debtor's the books and
records, including without limitation, all books and records, computer
runs, invoices, tapes, processing software, processing contracts (such
as contracts for computer time and services) and any computer prepared
information, tapes, or data of every kind and description, whether in
the possession of any Debtor or in the possession of third parties and
all of each Debtor's other data, plans, manuals, computer software,
computer tapes, computer disks, computer programs, source codes, object
codes, rights of the Debtor to retrieve data and other information from
third parties and other data of every kind and description, to the
extent that they indicate, summarize or evidence, or otherwise relate
to, the Accounts or Inventory, whether in the possession of any Debtor
or in the possession of any third party.; (ii) all of the Debtor's
contract rights, including, without limitation, all of Debtor's right,
title and interest in and to the Lockbox Agreements which include,
without limitation, the following: (A) all rights of the Debtor to
receive moneys due and to become due under or pursuant to such
agreements, (B) all rights of the Debtor to receive proceeds of any
insurance, indemnity, warranty, guaranty, or other Supporting
Obligations with respect to such agreements, (C) all claims of the
Debtor for damages arising out of or for breach of or default under
such agreements, and (D) all rights of the Debtor to terminate such
agreements, to perform thereunder and to compel performance and
otherwise exercise all rights and remedies thereunder; (iii) all rights
of the Debtor to payment under letters of credit and similar
agreements, including without limitation, all letter of credit rights;
(iv) all choses in action and causes of action of the Debtor (whether
arising in contract, tort or otherwise and whether or not currently in
litigation) and all judgments in favor of the Debtor, including without
limitation, all commercial tort claims; and (v) all rights of the
Debtor under any insurance, surety or similar contract or arrangement
and (b) shall specifically exclude any Intellectual Property.
"INSTRUMENT" means any "instrument," as such term is defined
in Article or Chapter 9 of the UCC, now owned or hereafter acquired by
the Debtor, and, in any event, shall include all promissory notes,
drafts, bills of exchange and trade acceptances of the Debtor, whether
now owned or hereafter acquired.
"INTELLECTUAL PROPERTY" means the Trademarks and Trademark
Licenses.
"INVENTORY" means any "inventory," as such term is defined in
Article or Chapter 9 of the UCC, now owned or hereafter acquired by the
Debtor, and, in any event, shall include, without limitation, each of
the following, whether now owned or hereafter acquired by the Debtor:
(a) all goods and other personal property of the Debtor that are held
for sale or lease or to be furnished under any contract of service; (b)
all raw materials, work-in-process, finished goods, inventory, supplies
and materials of such Debtor; (c) all wrapping, packaging, advertising
and shipping
Security Agreement, Page 2
<PAGE>
materials of the Debtor; (d) all goods that have been returned to,
repossessed by or stopped in transit by the Debtor; and (e) all
Documents evidencing any of the foregoing.
"INVESTMENT PROPERTY" means any "investment property" as such
term is defined in Article or Chapter 9 of the UCC, now owned or
hereafter acquired by the Debtor, and, in any event, shall include,
without limitation, each of the following, whether now owned or
hereafter acquired by the Debtor: (a) any security, whether
certificated or uncertificated; (b) any security entitlement; (c) any
securities account (including, without limitation, those described on
SCHEDULE 3.2); (d) any commodity contract; and (e) any commodity
account (including, without limitation, those described on Schedule
3.2), PROVIDED, however, that Investment Property shall not include any
Equity Interests issued by Subsidiaries.
"LETTER OF CREDIT RIGHTS" means "letter of credit rights," as
such term is defined in the UCC.
"LOCKBOX ACCOUNTS" shall mean the lockbox accounts described
on SCHEDULE 3.2 and any other accounts established pursuant to the
Lockbox Agreements in which all funds received pursuant to the Lockbox
Agreements shall be deposited.
"LOCKBOX AGREEMENTS" shall mean the lockbox or other
agreements described on SCHEDULE 3.2 and any lockbox or other agreement
entered into by a Debtor, with the Secured Party, any Bank or any other
depository institution acceptable to the Secured Party, pursuant to
which a lockbox and deposit account shall be established for a Debtor
into which payments on such Debtor's accounts or other Collateral shall
be sent and deposited, each in form and substance satisfactory to the
Secured Party, as the same may be amended or otherwise modified.
"OBLIGATIONS" means, with respect to each Debtor, all
"Obligations" (as defined in the Credit Agreement) for which such
Debtor is obligated under the terms of the Credit Agreement, as
determined in accordance with Section 4.13 of the Credit Agreement.
"PAYMENT INTANGIBLES" means "payment intangibles" as such term
is defined in the UCC.
"PROCEEDS" means any "proceeds," as such term is defined in
Article or Chapter 9 of the UCC and, in any event, shall include, but
not be limited to, (a) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to the Debtor from time to time
with respect to any of the Collateral, (b) any and all payments (in any
form whatsoever) made or due and payable to the Debtor from time to
time in connection with any requisition, confiscation, condemnation,
seizure or forfeiture of all or any part of the Collateral by any
Governmental Authority (or any Person acting, or purporting to act, for
or on behalf of any Governmental Authority), and (c) any and all other
amounts from time to time paid or payable under or in connection with
any of the Collateral and all other Payment Intangibles relating
thereto.
"SUPPORTING OBLIGATIONS" means "supporting obligations" as
such term is defined in the UCC.
"TRADEMARK LICENSE" means any written agreement now or
hereafter in existence granting to the Debtor any right to use any
Trademark, including, without limitation, the agreements identified on
SCHEDULE 3.5.
"TRADEMARKS" means all of the following: (a) all trademarks,
trade names, corporate names, company names, business names, fictitious
business names, trade styles, service marks,
Security Agreement, Page 3
<PAGE>
logos, other business identifiers, prints and labels on which any of
the foregoing appear, all registrations and recordings thereof and all
applications in connection therewith, including, without limitation,
registrations, recordings and applications in the United States Patent
and Trademark Office or in any similar office or agency of the United
States, any state thereof or any other country or any political
subdivision thereof, including, without limitation, those described in
SCHEDULE 3.5; (b) all reissues, extensions and renewals thereof; (c)
all income, royalties, damages and payments now or hereafter relating
to or payable under any of the foregoing, including, without
limitation, damages or payments for past or future infringements of
any of the foregoing; (d) the right to sue for past, present and future
infringements of any of the foregoing; (e) all rights corresponding to
any of the foregoing throughout the world; and (f) all goodwill
associated with and symbolized by any of the foregoing; in each case,
whether now owned or hereafter acquired by the Debtor.
"UCC" means the Uniform Commercial Code as in effect in the
State of New York from time to time and for purpose of the definitions
contained in this SECTION 1.1 and the last sentence of SECTION 1.2,
includes the Revised Article 9 of the Uniform Commercial Code included
in the 1998 official text of the Uniform Commercial Code as approved by
the American Law Institute in 1998 and the National Conference of
Commissioners on Uniform State Laws in 1999 ("Revised Article 9"). For
purposes of this SECTION 1.1 and the last sentence of SECTION 1.2, in
the event of any difference between the Uniform Commercial Code as in
effect in the State of New York and Revised Article 9, Revised Article
9 shall control. For purposes of all provisions of this Agreement other
than this SECTION 1.1 and the last sentence of SECTION 1.2, if, by
applicable law, the perfection or effect of perfection or
non-perfection of the security interest created hereunder in any
Collateral is governed by the Uniform Commercial Code as in effect on
or after the date hereof in any other jurisdiction, "UCC" means the
Uniform Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such perfection or the
effect of perfection or non-perfection.
Section 1.2. OTHER DEFINITIONAL PROVISIONS. Terms used herein that are
defined in the Credit Agreement and are not otherwise defined herein shall have
the meanings therefor specified in the Credit Agreement. References to
"Sections," "subsections," "Exhibits" and "Schedules" shall be to Sections,
subsections, Exhibits and Schedules, respectively, of this Agreement unless
otherwise specifically provided. All definitions contained in this Agreement are
equally applicable to the singular and plural forms of the terms defined. All
references to statutes and regulations shall include any amendments of the same
and any successor statutes and regulations. References to particular sections of
the UCC should be read to refer also to parallel sections of the Uniform
Commercial Code as enacted in each state or other jurisdiction where any portion
of the Collateral is or may be located. Terms used herein, which are defined in
the UCC, unless otherwise defined herein or in the Credit Agreement, shall have
the meanings determined in accordance with the UCC.
ARTICLE 2
SECURITY INTEREST
Section 2.1 SECURITY INTEREST. (a) As collateral security for the
prompt payment and performance in full when due of its Obligations (whether at
stated maturity, by acceleration or otherwise), each Debtor hereby pledges and
assigns to the Secured Party, and grants to the Secured Party a continuing lien
on and security interest in, all of its right, title and interest in and to the
following, whether now owned or hereafter arising or acquired and wherever
located (collectively, the "COLLATERAL"):
(i) all Accounts;
Security Agreement, Page 4
<PAGE>
(ii) all Inventory;
(iii) all Deposit Accounts and all funds, certificates, Documents,
Instruments, checks, drafts, wire transfer receipts and other
earnings, profits or other Proceeds from time to time
representing, evidencing, deposited into or held in the
Deposit Accounts; and
(iv) all Instruments, Financial Assets, other Investment Property,
Documents, Chattel Paper, General Intangibles, products and
Proceeds evidencing title to, or the right to possession of,
arising from the sale or other disposition of, necessary for
or used in connection with the production, manufacture, sale
or other disposition of, or otherwise relating to, or arising
or created out of the property described in clauses (i)
through (iii) of this SECTION 2.1.
(b) Secured Party disclaims any lien, pledge or security interest in equipment,
fixtures, Intellectual Property, real estate, insurance policies (other than
insurance specifically relating to a loss with respect to the Collateral) or
stock of subsidiaries or any Proceeds thereof (other than proceeds of insurance
specifically relating to a loss with respect to the Collateral).
Section 2.2. DEBTOR REMAINS LIABLE. Notwithstanding anything to the
contrary contained herein, (a) each Debtor shall remain liable under the
documentation included in the Collateral to the extent set forth therein to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by the Secured Party of
any of its rights or remedies hereunder shall not release any Debtor from any of
its duties or obligations under such documentation, (c) the Secured Party shall
not have any obligation under any of such documentation included in the
Collateral by reason of this Agreement, and (d) the Secured Party shall not be
obligated to perform any of the obligations of any Debtor thereunder or to take
any action to collect or enforce any claim for payment assigned hereunder.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
To induce the Secured Party and the Banks to enter into this Agreement
and the Credit Agreement, each Debtor represents and warrants to the Secured
Party and the Banks that:
Section 3.1 LOCATION OF INVENTORY; THIRD PARTIES IN POSSESSION. All of
its Inventory is located at the places specified in SCHEDULE 3.1 for such
Debtor. SCHEDULE 3.1 correctly identifies the landlords or mortgagees, if any,
of each location identified in SCHEDULE 3.1 currently leased or owned by such
Debtor. No Persons other than such Debtor and Secured Party has possession of
any of the Collateral except as disclosed on SCHEDULE 3.1 and SCHEDULE 3.2. For
each third Person in possession of Collateral identified on SCHEDULE 3.1,
SCHEDULE 3.1 identifies the Person, the address where the Collateral is held and
the capacity in which such Person holds the Collateral. None of its Collateral
has been located in any location within the past four months other than as set
forth on SCHEDULE 3.1.
Section 3.2 DEPOSIT, COMMODITY AND SECURITIES ACCOUNTS. SCHEDULE 3.2
correctly identifies all of its lockbox agreements and all deposit, commodity
and securities accounts and the institutions holding such accounts. No Person
other than such Debtor has control over any deposit, commodity or securities
account or any Investment Property.
Security Agreement, Page 5
<PAGE>
Section 3.3 OFFICE LOCATIONS; FICTITIOUS NAMES; PREDECESSOR COMPANIES.
Its chief place of business, its chief executive office and its jurisdiction of
organization is located at the places identified for it on SCHEDULE 3.1. Within
the last four months it has not had any other chief place of business, chief
executive office or jurisdiction of organization except as disclosed on SCHEDULE
3.1. It does not do business nor has it done business during the past five years
under any trade-name or fictitious business name except as disclosed on SCHEDULE
3.3. SCHEDULE 3.3 sets forth an accurate list of all names of all predecessor
companies of such Debtor including the names of any entities it acquired (by
stock purchase, asset purchase, merger or otherwise) and the chief place of
business and chief executive officer of each such predecessor company. For
purposes of the foregoing, a "predecessor company" shall mean, with respect to a
Debtor, any Person whose assets or Equity Interests are acquired by the Debtor
or who was merged with or into the Debtor within the last four months prior to
the Closing Date.
Section 3.4 DELIVERY OF COLLATERAL. Except as provided by SECTION 4.2,
it has delivered to Secured Party all Collateral the possession of which is
necessary to perfect the security interest of Secured Party therein.
ARTICLE 4
COVENANTS
Each Debtor covenants and agrees with the Secured Party that until the
Obligations are paid and performed in full, all commitments of the Secured Party
and the Banks to any Debtor have expired or have been terminated and no Letter
of Credit remains outstanding:
Section 4.1 ACCOUNTS. It shall, in accordance with its customary
business practices, endeavor to collect or cause to be collected from each
account debtor under its Accounts, as and when due, any and all amounts owing
under such Accounts. Without the prior written consent of the Secured Party, it
shall not, outside the ordinary course of business or after the occurrence and
during the continuance of an Event of Default: (a) grant any extension of time
for any payment with respect to any of the Accounts beyond 120 days after such
payment's due date, (b) compromise, compound, or settle any of the Accounts for
less than the full amount thereof, (c) release, in whole or in part, any Person
liable for payment of any of the Accounts, (d) allow any credit or discount for
payment with respect to any Account other than trade or other customary
discounts granted in the ordinary course of business, or (e) release any Lien or
guaranty securing any Account unless the Account has been paid.
Section 4.2 FURTHER ASSURANCES. At any time and from time to time, upon
the request of the Secured Party, and at its sole expense, it shall, subject to
the exceptions to the creation, perfection and/or protection of Liens permitted
by Section 8.10 of the Credit Agreement, promptly execute and deliver all such
further agreements, documents and instruments and take such further action as
the Secured Party may reasonably deem necessary or appropriate to preserve and
perfect its security interest in the Collateral and carry out the provisions and
purposes of this Agreement or to enable the Secured Party to exercise and
enforce its rights and remedies hereunder with respect to any of the Collateral.
Without limiting the generality of the foregoing, it shall upon reasonable
request by the Secured Party but subject to the exceptions to the creation,
perfection and/or protection of Liens permitted by Section 8.10 of the Credit
Agreement, (a) execute and deliver to the Secured Party such financing
statements as the Secured Party may from time to time require (Debtor also
hereby authorizes Secured Party to file such financing statements without
Debtor's signature naming it as debtor, Secured Party as secured party and
describing the Collateral as Secured Party may deem appropriate); (b) take such
action as the Security Party may request to permit the Secured Party to have
control over each deposit account and any Investment Property; (c) deliver to
the Secured Party all Collateral the possession of which is necessary to perfect
the security interest therein, duly endorsed and/or accompanied by duly executed
instruments of transfer or
Security Agreement, Page 6
<PAGE>
assignment, all in form and substance satisfactory to Secured Party; EXCEPT
THAT, prior to the occurrence of a Default and when no Default exists, a
Debtor may: (i) retain any letters of credit (other than those securing
Accounts) received in the ordinary course of business, (ii) retain and
utilize in the ordinary course of business all dividends, distributions and
interest paid in respect to any of the Investment Property, and (iii) retain
any Documents received and further negotiated in the ordinary course of
business; and (d) execute and deliver to the Secured Party such other
agreements, documents and instruments as the Secured Party may reasonably
require to perfect and maintain the validity, effectiveness and priority of
the Liens intended to be created by the Loan Documents.
Section 4.3 THIRD PARTIES IN POSSESSION OF COLLATERAL. Other than in
connection with repairs or maintenance to such Collateral, and subject to the
terms of Section 8.10 of the Credit Agreement, it shall not permit any third
Person (including any warehouseman, bailee, agent, consignee or processor) to
hold any Collateral, unless it shall: (i) notify such third Person of the
security interests created hereby; (ii) instruct such Person to hold all such
Collateral for Secured Party's account subject to Secured Party's
instructions; and (iii) take all other actions the Secured Party reasonably
deems necessary to perfect and protect its and such Debtor's interests in
such Collateral pursuant to the requirements of the UCC of the applicable
jurisdiction where the warehouseman, bailee, consignee, agent, processor or
other third Person is located (including the filing of a financing statement
in the proper jurisdiction naming the applicable third Person as debtor and
the applicable Debtor as secured party and notifying the third Person's
secured lenders of Debtor's interest in such Collateral before the third
Person receives possession of the Collateral in question).
Section 4.4 CORPORATE CHANGES. It shall not change its name,
identity, jurisdiction of organization or corporate structure in any manner
that might make any financing statement filed in connection with this
Agreement seriously misleading unless it shall have given the Secured Party
thirty (30) days prior written notice thereof and shall have taken all action
reasonably deemed necessary or desirable by the Secured Party to protect its
Liens and the perfection and priority thereof required by the Loan Documents.
It shall not change its principal place of business, chief executive office
or the place where it keeps its books and records unless it shall have given
the Secured Party thirty (30) days prior written notice thereof and shall
have taken all action reasonably deemed necessary or desirable by the Secured
Party to cause its security interest in the Collateral to be perfected with
the priority required by the Loan Documents.
Section 4.5 INVENTORY. It shall keep its Inventory at (or in transit
to) any of the locations specified on SCHEDULE 3.1 hereto as a location of
such Debtor or, upon thirty (30) days prior written notice to the Secured
Party, at such other places within the United States of America where all
action required to perfect the Secured Party's security interest in such
Collateral with the priority required by the Loan Documents shall have been
taken.
Section 4.6 WAREHOUSE RECEIPTS NON-NEGOTIABLE. It agrees that if any
warehouse receipt or receipt in the nature of a warehouse receipt is issued
in respect of any portion of the Collateral, such warehouse receipt or
receipt in the nature thereof shall not be "negotiable" (as such term is used
in Section 7.104 of the UCC) unless such warehouse receipt or receipt in the
nature thereof is delivered to the Secured Party.
Section 4.7 VOTING RIGHTS; DISTRIBUTIONS, ETC. So long as no Event
of Default exists, it shall be entitled to exercise any and all voting and
other consensual rights (including, without limitation, the right to give
consents, waivers and notifications) pertaining to any of the Investment
Property; provided, however, that no vote shall be cast or consent, waiver or
ratification given or action taken without the prior written consent of the
Secured Party which would be inconsistent with or violate any provision of
this Agreement or any other Loan Document.
Security Agreement, Page 7
<PAGE>
Section 4.8 INTELLECTUAL PROPERTY COVENANTS. Debtor shall not
abandon any trademark application or any other Intellectual Property which is
necessary for the conduct of Debtor's business without the prior written
consent of Secured Party.
Section 4.9 LOCKBOX OF PROCEEDS. It shall instruct all customers and
other Persons obligated with respect to all of its Accounts and other
Collateral to make all payments with respect thereto to a post office box or
boxes in accordance with the terms of one or more of the Lockbox Agreements.
It shall irrevocably instruct each depository bank who has entered into a
Lockbox Agreement and who receives proceeds of its Accounts to remit all
proceeds of such payments directly to Secured Party on a daily basis by
automated clearing house debit directly for credit to the Concentration
Account or by wire transfer to Secured Party for application in accordance
with the Credit Agreement. Any income received by the Secured Party with
respect to the balance from time to time standing to the credit of the
Concentration Account shall remain, or be deposited, in the Concentration
Account. In addition to the foregoing, it agrees that if any Proceeds
(including, without limitation, the payments made in respect of Accounts)
shall be received by it, it shall as promptly as possible deposit such
Proceeds into the Concentration Account. Until so deposited, all such
Proceeds shall be held in trust by such Debtor for the benefit of the Secured
Party and shall be segregated from any other funds or property of such Debtor.
Section 4.10 DEPOSIT, COMMODITY AND SECURITY ACCOUNTS. It shall not
amend or modify any Lockbox Agreement. It shall not open any new deposit,
commodity or security account or otherwise utilize any deposit account other
than the Contribution Account, the Disbursement Account and the other
deposits accounts disclosed on Schedule 3.2 unless it shall have given the
Secured Party thirty (30) days prior written notice thereof and shall have
taken all action deemed necessary or desirable by the Secured Party to cause
its security interest therein to be perfected with priority required by the
Loan Documents. Prior to the occurrence and continuance of an Event of
Default, it may make purchases and sales of Investment Property and Financial
Assets in accordance with the restrictions on investment set out in the
Credit Agreement provided that at no time shall it purchase or acquire
marketable securities or open or maintain any commodity or security accounts.
After the occurrence and during the continuance of an Event of Default it
shall not be authorized to make purchases and sales of the Investment
Property or Financial Assets and it shall take such steps as Secured Party
may reasonably request to give Secured Party control over all Investment
Property. It will not give any party control over any Investment Property or
Financial Assets.
Section 4.11 COMMERCIAL TORT CLAIMS. It will grant to Secured Party
a security interest in any commercial tort claim that arises after the date
hereof that relates to or arises out of the Collateral or the conduct of the
Debtor's business in relation thereto.
Security Agreement, Page 8
<PAGE>
ARTICLE 5
RIGHTS OF THE SECURED PARTY
Section 5.1 POWER OF ATTORNEY. EACH DEBTOR HEREBY IRREVOCABLY
CONSTITUTES AND APPOINTS THE SECURED PARTY AND ANY OFFICER OR AGENT THEREOF,
WITH FULL POWER OF SUBSTITUTION, AS ITS TRUE AND LAWFUL ATTORNEY-IN-FACT WITH
FULL IRREVOCABLE POWER AND AUTHORITY IN THE NAME OF SUCH DEBTOR OR IN ITS OWN
NAME, TO TAKE, AFTER THE OCCURRENCE AND DURING THE CONTINUANCE OF A DEFAULT, ANY
AND ALL ACTIONS AND TO EXECUTE ANY AND ALL DOCUMENTS AND INSTRUMENTS WHICH THE
SECURED PARTY AT ANY TIME AND FROM TIME TO TIME DEEMS NECESSARY OR DESIRABLE TO
ACCOMPLISH THE PURPOSES OF THIS AGREEMENT AND, WITHOUT LIMITING THE GENERALITY
OF THE FOREGOING, EACH DEBTOR HEREBY GIVES THE SECURED PARTY THE POWER AND RIGHT
ON BEHALF OF SUCH DEBTOR AND IN ITS OWN NAME TO DO ANY OF THE FOLLOWING AFTER
THE OCCURRENCE AND DURING THE CONTINUANCE OF A DEFAULT, WITH NOTICE TO SUCH
DEBTOR BUT WITHOUT THE CONSENT OF ANY DEBTOR:
(i) to demand, sue for, collect or receive, in the name of
the Debtor or in its own name, any money or property at any time payable or
receivable on account of or in exchange for any of the Collateral and, in
connection therewith, endorse checks, notes, drafts, acceptances, money orders,
documents of title or any other instruments for the payment of money under the
Collateral or any policy of insurance;
(ii) to pay or discharge taxes, Liens or other encumbrances
levied or placed on or threatened against the Collateral;
(iii) (A) to direct account debtors and any other parties
liable for any payment under any of the Collateral to make payment of any and
all monies due and to become due thereunder directly to the Secured Party or as
the Secured Party shall direct (Debtor agrees that if any Proceeds of any
Collateral (including payments made in respect of Accounts) shall be received by
it while an Event of Default exists, it shall promptly deliver such Proceeds to
the Secured Party with any necessary endorsements, and until such Proceeds are
delivered to the Secured Party, such Proceeds shall be held in trust by such
Debtor for the benefit of the Secured Party and shall not be commingled with any
other funds or property of such Debtor); (B) to receive payment of and receipt
for any and all monies, claims and other amounts due and to become due at any
time in respect of or arising out of any Collateral; (C) to sign and endorse any
invoices, freight or express bills, bills of lading, storage or warehouse
receipts, drafts against debtors, assignments, proxies, stock powers,
verifications and notices in connection with accounts and other documents
relating to the Collateral; (D) to commence and prosecute any suit, action or
proceeding at law or in equity in any court of competent jurisdiction to collect
the Collateral or any part thereof and to enforce any other right in respect of
any Collateral; (E) to defend any suit, action or proceeding brought against the
Debtor with respect to any Collateral; (F) to settle, compromise or adjust any
suit, action or proceeding described above and, in connection therewith, to give
such discharges or releases as the Secured Party may deem appropriate; (G) to
exchange any of the Collateral for other property upon any merger,
consolidation, reorganization, recapitalization or other readjustment of the
issuer thereof and, in connection therewith, deposit any of the Collateral with
any committee, depositary, transfer agent, registrar or other designated agency
upon such terms as the Secured Party may determine; (H) to add or release any
guarantor, endorser, surety or other party to any of the Collateral; (I) to
renew, extend or otherwise change the terms and conditions of any of the
Collateral; (J) to grant or issue any exclusive or nonexclusive license under or
with respect to any of the Intellectual Property (subject to the rights of third
parties under pre-existing licenses); (K) to endorse the Debtor's name on all
applications, documents,
Security Agreement, Page 9
<PAGE>
papers and instruments necessary or desirable in order for the Secured Party
to use any of the Intellectual Property; (L) to make, settle, compromise or
adjust any claims under or pertaining to any of the Collateral (including
claims under any policy of insurance); and (M) to sell, transfer, pledge,
convey, make any agreement with respect to or otherwise deal with any of the
Collateral as fully and completely as though the Secured Party were the
absolute owner thereof for all purposes, and to do, at the Secured Party's
option and the Debtors' expense, at any time, or from time to time, all acts
and things which the Secured Party deems necessary to protect, preserve,
maintain, or realize upon the Collateral and the Secured Party's security
interest therein.
THIS POWER OF ATTORNEY IS A POWER COUPLED WITH AN INTEREST AND SHALL BE
IRREVOCABLE UNTIL TERMINATION OF THIS AGREEMENT IN ACCORDANCE WITH SECTION 7.11.
The Secured Party shall be under no duty to exercise or withhold the exercise of
any of the rights, powers, privileges and options expressly or implicitly
granted to the Secured Party in this Agreement, and shall not be liable for any
failure to do so or any delay in doing so. Neither the Secured Party nor any
Person designated by the Secured Party shall be liable for any act or omission
or for any error of judgment or any mistake of fact or law, except any of the
same resulting from its or their gross negligence or willful misconduct. This
power of attorney is conferred on the Secured Party solely to protect, preserve,
maintain and realize upon its security interest in the Collateral. The Secured
Party shall not be responsible for any decline in the value of the Collateral
and shall not be required to take any steps to preserve rights against prior
parties or to protect, preserve or maintain any Lien given to secure the
Collateral.
Section 5.2 ASSIGNMENT BY THE SECURED PARTY. The Secured Party and
each Bank may at any time assign or otherwise transfer all or any portion of
their rights and obligations under this Agreement and the other Loan Documents
(including, without limitation, the Obligations) to any other Person, to the
extent permitted by, and upon the conditions contained in, the Credit Agreement,
and such Person shall thereupon become vested with all the benefits thereof
granted to the Secured Party and the Banks, respectively, herein or otherwise.
Section 5.3 POSSESSION; REASONABLE CARE. The Secured Party may,
from time to time, in its sole discretion, appoint one or more agents to hold
physical custody, for the account of the Secured Party, of any or all of the
Collateral that the Secured Party has a right to possess. The Secured Party
shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which the Secured Party accords its own
property, it being understood that the Secured Party shall not have any
responsibility for (a) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Collateral, whether or not the Secured Party has or is deemed to have knowledge
of such matters, or (b) taking any necessary steps to preserve rights against
any parties with respect to any Collateral.
ARTICLE 6
DEFAULT
Section 6.1 RIGHTS AND REMEDIES. If an Event of Default shall have
occurred and be continuing, the Secured Party shall have the following rights
and remedies:
(i) In addition to all other rights and remedies granted to
the Secured Party in this Agreement or in any other Loan Document or by
applicable law, the Secured Party shall have all of the rights and remedies of a
secured party under the UCC (whether or not the UCC applies to the affected
Collateral). Without limiting the generality of the foregoing, the Secured Party
may (A) without demand
Security Agreement, Page 10
<PAGE>
or notice to any Debtor, collect, receive or take possession of the
Collateral or any part thereof and for that purpose the Secured Party may
enter upon any premises on which the Collateral is located and remove the
Collateral therefrom or render it inoperable, and/or (B) sell, lease or
otherwise dispose of the Collateral, or any part thereof, in one or more
parcels at public or private sale or sales, at the Secured Party's offices or
elsewhere, for cash, on credit or for future delivery, and upon such other
terms as the Secured Party may deem commercially reasonable or otherwise as
may be permitted by law. The Secured Party shall have the right at any public
sale or sales, and, to the extent permitted by applicable law, at any private
sale or sales, to bid (which bid may be, in whole or in part, in the form of
cancellation of indebtedness) and become a purchaser of the Collateral or any
part thereof free of any right or equity of redemption on the part of any
Debtor, which right or equity of redemption is hereby expressly waived and
released by each Debtor. Upon the request of the Secured Party, the Debtors
shall assemble the Collateral and make it available to the Secured Party at
any place designated by the Secured Party that is reasonably convenient to
the Debtors and the Secured Party. Each Debtor agrees that the Secured Party
shall not be obligated to give more than ten (10) days prior written notice
of the time and place of any public sale or of the time after which any
private sale may take place and that such notice shall constitute reasonable
notice of such matters. The Secured Party shall not be obligated to make any
sale of Collateral if it shall determine not to do so, regardless of the fact
that notice of sale of Collateral may have been given. The Secured Party may,
without notice or publication, adjourn any public or private sale or cause
the same to be adjourned from time to time by announcement at the time and
place fixed for sale, and such sale may, without further notice, be made at
the time and place to which the same was so adjourned. The Debtors shall,
jointly and severally, be liable for all reasonable expenses of retaking,
holding, preparing for sale or the like, and all reasonable attorneys' fees,
legal expenses and other costs and expenses incurred by the Secured Party in
connection with the collection of the Obligations and the enforcement of the
Secured Party's rights under this Agreement. The Debtors shall remain liable
for any deficiency if the Proceeds of any sale or other disposition of the
Collateral applied to the Obligations are insufficient to pay the Obligations
in full. The Secured Party may apply the Collateral against the Obligations
as provided in the Credit Agreement. Each Debtor waives all rights of
marshalling, valuation and appraisal in respect of the Collateral. Any cash
held by the Secured Party as Collateral and all cash proceeds received by the
Secured Party in respect of any sale of, collection from or other realization
upon all or any part of the Collateral may, in the discretion of the Secured
Party, be held by the Secured Party as collateral for, and then or at any
time thereafter applied in whole or in part by the Secured Party against, the
Obligations in the order permitted by the Credit Agreement. Any surplus of
such cash or cash proceeds and interest accrued thereon, if any, held by the
Secured Party and remaining after payment in full of all the Obligations
shall be promptly paid over to the Debtors or to whomsoever may be lawfully
entitled to receive such surplus; PROVIDED THAT the Secured Party shall have
no obligation to invest or otherwise pay interest on any amounts held by it
in connection with or pursuant to this Agreement.
(ii) The Secured Party may cause any or all of the Collateral
held by it to be transferred into the name of the Secured Party or the name or
names of the Secured Party's nominee or nominees.
(iii) The Secured Party may exercise any and all rights and
remedies of any Debtor under or in respect of the Collateral, including, without
limitation, any and all rights of any Debtor to demand or otherwise require
payment of any amount under, or performance of any provision of, any of the
Collateral and any and all voting rights and corporate powers in respect of the
Collateral. Each Debtor shall execute and deliver (or cause to be executed and
delivered) to the Secured Party all such proxies and other instruments as the
Secured Party may reasonably request for the purpose of enabling the Secured
Party to exercise the voting and other rights which it is entitled to exercise
pursuant to this clause (iii) and to receive the dividends, interest and other
distributions which it is entitled to receive hereunder.
Security Agreement, Page 11
<PAGE>
(iv) The Secured Party may collect or receive all money or
property at any time payable or receivable on account of or in exchange for any
of the Collateral, but shall be under no obligation to do so.
(v) On any sale of the Collateral, the Secured Party is
hereby authorized to comply with any limitation or restriction with which
compliance is necessary, in the view of the Secured Party's counsel, in order
to avoid any violation of applicable law or in order to obtain any required
approval of the purchaser or purchasers by any applicable Governmental
Authority.
(vi) For purposes of enabling the Secured Party to exercise
its rights and remedies under this SECTION 6.1 and enabling the Secured Party
and its successors and assigns to enjoy the full benefits of the Collateral in
each case as the Secured Party shall be entitled to exercise its rights and
remedies under this SECTION 6.1, each Debtor hereby grants to the Secured Party
an irrevocable, nonexclusive license (exercisable only during an Event of
Default but without payment of royalty or other compensation to the Debtor) to
use any of the Intellectual Property. This license shall also inure to the
benefit of all successors, assigns and transferees of the Secured Party.
Section 6.2 PRIVATE SALES. Debtors recognize that the Secured Party
may be unable to effect a public sale of any or all of the Collateral by reason
of certain prohibitions contained in the laws of any jurisdiction outside the
United States or in the Securities Act of 1933, as amended from time to time
(the "SECURITIES ACT") and applicable state securities laws, but may be
compelled to resort to one or more private sales thereof to a restricted group
of purchasers who will be obliged to agree, among other things, to acquire such
Collateral for their own account for investment and not with a view to the
distribution or resale thereof. Each Debtor acknowledges and agrees that any
such private sale may result in prices and other terms less favorable to the
seller than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall, to the extent permitted
by law, be deemed to have been made in a commercially reasonable manner. Neither
the Secured Party nor the Banks shall be under any obligation to delay a sale of
any of the Collateral for the period of time necessary to permit the issuer of
such securities to register such securities under the laws of any jurisdiction
outside the United States, under the Securities Act or under any applicable
state securities laws ("Registration"), even if such issuer would agree to do
so. Each Debtor further agrees to do or cause to be done, to the extent that
each Debtor may do so under applicable law, all such other reasonable acts and
things as may be necessary to make such sales or resales of any portion or all
of the Collateral valid and binding and in compliance with any and all
applicable laws, regulations, orders, writs, injunctions, decrees or awards of
any and all courts, arbitrators or governmental instrumentalities, domestic or
foreign, having jurisdiction over any such sale or sales, all at Debtors'
expense, but in no event shall the Debtors be obligated to cause a Registration
to be made.
ARTICLE 7
MISCELLANEOUS
Section 7.1 NO WAIVER; CUMULATIVE REMEDIES. No failure on the part
of the Secured Party to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege under this Agreement preclude any other or further
exercise thereof or the exercise of any other right, power, or privilege. The
rights and remedies provided for in this Agreement are cumulative and not
exclusive of any rights and remedies provided by law.
Section 7.2 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the Debtors and the Secured Party and
respective successors and assigns, except that no Debtor
Security Agreement, Page 12
<PAGE>
may assign any of its rights or obligations under this Agreement without the
prior written consent of the Banks and Secured Party may not appoint a
successor Secured Party except in accordance with the Credit Agreement.
Section 7.3 AMENDMENT; ENTIRE AGREEMENT. THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES
HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS
AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER
HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES
HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO. The
provisions of this Agreement may be amended or waived only by an instrument in
writing signed by the parties hereto and the Required Banks.
Section 7.4 NOTICES. All notices and other communications provided
for in this Agreement shall be given or made in accordance with the Credit
Agreement.
Section 7.5 GOVERNING LAW. This agreement shall be governed by, and
construed in accordance with, the laws of the State of New York and applicable
laws of the United States of America.
Section 7.6 HEADINGS. The headings, captions, and arrangements used
in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement.
Section 7.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made in this Agreement or in any certificate
delivered pursuant hereto shall survive the execution and delivery of this
Agreement, and no investigation by the Secured Party shall affect the
representations and warranties or the right of the Secured Party to rely upon
them.
Section 7.8 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same agreement.
Section 7.9 WAIVER OF BOND. In the event the Secured Party seeks to
take possession of any or all of the Collateral by judicial process, each Debtor
hereby irrevocably waives any bonds and any surety or security relating thereto
that may be required by applicable law as an incident to such possession, and
waives any demand for possession prior to the commencement of any such suit or
action.
Section 7.10 SEVERABILITY. Any provision of this Agreement which is
determined by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Agreement, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 7.11 TERMINATION. If all of the Obligations shall have been
paid and performed in full, all commitments of the Secured Party and the Banks
to all Debtors shall have expired or terminated and no Letters of Credit shall
remain outstanding, the Secured Party shall, upon the written request of the
Parent, execute and deliver to the Debtors a proper instrument or instruments
acknowledging the release and termination of the security interests created by
this Agreement, and shall duly assign and deliver to the Debtors (without
recourse and without any representation or warranty) such of the Collateral as
may be in the possession of the Secured Party and has not previously been sold
or otherwise applied pursuant to this Agreement.
Security Agreement, Page 13
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first written above.
DEBTORS:
MARKETING SPECIALISTS CORPORATION
PAUL INMAN ASSOCIATES, INC.
MARKETING SPECIALISTS SALES COMPANY
BROMAR, INC.
By:
----------------------------------------
Name:
-----------------------------------
Authorized Officer of all Debtors
SECURED PARTY:
THE CHASE MANHATTAN BANK, as Agent
By:
----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Security Agreement, Page 14
<PAGE>
Schedule 3.1
to
Marketing Specialists Corporation
Security Agreement
LOCATIONS
<TABLE>
<CAPTION>
<S> <C>
-----------------------------------------------------------------------------------------------------------
A. CHIEF EXECUTIVE OFFICE FOR ALL DEBTORS:
17855 Dallas Parkway, Suite 200
Dallas, Texas 75287
Landlord:
North Arrowhead/Briargrove Place
17855 Dallas Parkway, Suite 190
Dallas, Texas 75287
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
B. JURISDICTION OF ORGANIZATION AND OTHER LOCATIONS:
-----------------------------------------------------------------------------------------------------------
1. MARKETING SPECIALISTS CORPORATION
-----------------------------------------------------------------------------------------------------------
Jurisdiction of Incorporation: Delaware
-----------------------------------------------------------------------------------------------------------
Inventory Locations: None
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
2. MARKETING SPECIALISTS SALES COMPANY
-----------------------------------------------------------------------------------------------------------
Jurisdiction of Incorporation: Texas
-----------------------------------------------------------------------------------------------------------
Inventory Locations Leased or Owned by Debtor:
-----------------------------------------------------------------------------------------------------------
Name and Address of Third Party Landlord/Mortgagee
------------------------------------------------------ ----------------------------------------------------
Stoughton Corporate Center CD-SP Realty Trust
Condominium c/o Hunneman Management Company,
1053 Turnpike Street Inc.
Stoughton, MA 02072 70-80 Lincoln Street
Boston, MA 02111
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
Third Party Inventory Locations
-----------------------------------------------------------------------------------------------------------
Name and Address of Third Party Capacity in Which Inventory is Held
------------------------------------------------------ ----------------------------------------------------
Reynolds Transfer & Storage Storage and Distribution
2302 Darwin Road
Madison, WI 53704
Contact: Cheryl Castner, Poly Cello
(207) 767-1624 (x104)
John Richgels
(608) 244-6255
---------------------------------------------------------------------------------------------------------
</TABLE>
Schedule 3.3 to Security Agreement, Page 1
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
---------------------------------------------------------------------------------------------------------
Sonoco Storage and Distribution
12851 Leyva Street
Norwalk, CA 90650
Contact: Kathy Sorenson
(562) 921-0881
------------------------------------------------------ ----------------------------------------------------
Pallestro Distribution Storage and Distribution
21118 Cabot Blvd.
Hayward, CA 94540
Contact: Cheryl Castner, Poly Cello
(207) 767-1624 (x104)
------------------------------------------------------ ----------------------------------------------------
All State Storage and Distribution
46 Rice Street
Presque Isle, ME 04769
Contact: Cheryl Castner, Poly Cello
(207) 767-1624 (x104)
------------------------------------------------------ ----------------------------------------------------
Malnove Storage and Distribution
10500 Canada Drive
Jacksonville, FL 32218
Contact: Cissy
(904) 757-5030
(800) 813-1330
------------------------------------------------------ ----------------------------------------------------
D&D Storage and Distribution
789 Kings Mill Road
York, PA 17402
Contact: Cheryl Castner, Poly Cello
(207) 767-1624 (x104)
------------------------------------------------------ ----------------------------------------------------
Holman Distribution Storage and Distribution
22430 76th Avenue South
Kent, WA 98032
Contact: Ginger
(253) 872-7143 (x303)
Sue
(253) 872-7143 (x304)
------------------------------------------------------ ----------------------------------------------------
Union Industries, Inc. Storage and Distribution
Admiral Street
Providence, RI 02908
Contact: John Wilbur
Kathy Dichristofaro
(800) 556-6454
------------------------------------------------------ ----------------------------------------------------
Graphic Packaging Corporation Packaging
3400 N. Marine Drive
P. O. Box 17128
Portland, OR 97217
Contact: June Germony
(503) 240-4623
------------------------------------------------------ ----------------------------------------------------
</TABLE>
Schedule 3.3 to Security Agreement, Page 2
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
------------------------------------------------------ ----------------------------------------------------
Mohawk Northern Plastics Storage and Distribution
701 A Street N.E.
P. O. Box 583
Auburn, WA 98071
Contact: Michelle Erpelding
(253) 939-8206
(800) 426-1100 (x214)
----------------------------------------------------------------------------------------------------------
Americold Storage and Distribution
2323 Jess Street
Los Angeles, CA 90023
Los Angeles County
------------------------------------------------------ ----------------------------------------------------
3. BROMAR, INC.
-----------------------------------------------------------------------------------------------------------
Jurisdiction of Incorporation: California
-----------------------------------------------------------------------------------------------------------
Inventory Locations: NONE
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
4. PAUL INMAN ASSOCIATES, INC.
-----------------------------------------------------------------------------------------------------------
Jurisdiction of Incorporation: Michigan
-----------------------------------------------------------------------------------------------------------
Inventory Locations: NONE
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
Prior Chief Executive Office Landlord/Mortgagee
(within last 4 months)
------------------------------------------------------ ----------------------------------------------------
Address
------------------------------------------------------ ----------------------------------------------------
30095 Northwestern Highway Paul Inman, L.L.C.
Farmington Hills, MI 48334 28899 Millbrook
Oakland County Farmington Hills, MI 48334
------------------------------------------------------ ----------------------------------------------------
</TABLE>
Schedule 3.3 to Security Agreement, Page 3
<PAGE>
Schedule 3.2
to
Marketing Specialists Corporation
Security Agreement
DEPOSIT, LOCKBOX, COMMODITY AND SECURITY ACCOUNTS
[see attached]
Schedule 3.3 to Security Agreement, Page 1
<PAGE>
Schedule 3.3
to
Marketing Specialists Corporation
Security Agreement
PRIOR NAMES AND PREDECESSOR COMPANIES
I. Prior Names
A. MARKETING SPECIALISTS CORPORATION
1. Merkert American
2. Monroe
B. PAUL INMAN ASSOCIATES, INC.
1. Creative Advertising
C. MARKETING SPECIALISTS SALES COMPANY
1. Food Service Sales
2. Marketing Specialists of Minnesota
3. Marketing Specialists of Tennessee
4. Marketing Specialists
5. Richmont Marketing
6. Merkert Enterprises
7. Atlas Marketing
8. Meatmaster
9. Rogers-American
10. Towers Marketing
D. BROMAR, INC.
1. Food Service Sales
<TABLE>
<CAPTION>
<S> <C>
============================================================================================================
PREDECESSOR COMPANIES
============================================================================================================
1. UNITED BROKERAGE COMPANY
============================================================================================================
Chief Executive Office Location
------------------------------------------------------------------------------------------------------------
Kent County, Michigan
============================================================================================================
2. BUCKEYE SALES & MARKETING, INC.
============================================================================================================
Chief Executive Office Location
------------------------------------------------------------------------------------------------------------
Summit County, Ohio
============================================================================================================
3. ATLAS MARKETING COMPANY, INC.
============================================================================================================
Chief Executive Office Location
============================================================================================================
Mecklenburg County, North Carolina
============================================================================================================
</TABLE>
Schedule 3.3 to Security Agreement, Page 1
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
============================================================================================================
4. JOHNSON - LIEBER, INC.
============================================================================================================
Chief Executive Office Location
============================================================================================================
Renton, Washington
============================================================================================================
5. MARKETING SPECIALISTS CO., INC.
============================================================================================================
Chief Executive Office Location
============================================================================================================
Canton, Massachusetts
============================================================================================================
</TABLE>
Schedule 3.3 to Security Agreement, Page 2
<PAGE>
EXHIBIT "E"
TO
MARKETING SPECIALISTS CORPORATION
CREDIT AGREEMENT
ASSIGNMENT AND ACCEPTANCE
Exhibit "E", Cover Page
<PAGE>
ASSIGNMENT AND ACCEPTANCE
Dated _____________
Reference is made to the Credit Agreement dated March 30, 2000 (as the
same may be amended and in effect from time to time, the "Credit Agreement"),
among Marketing Specialists Corporation, a Delaware corporation (the "Parent"),
certain of its subsidiaries (collectively, with the Parent, the "Borrowers"),
the banks named therein (the "Banks"), and THE CHASE MANHATTAN BANK, as agent
for the Banks (in such capacity, the "Agent") (such Credit Agreement, as it has
been or may hereafter be amended or otherwise modified from time to time, being
hereinafter referred to as the "Credit Agreement" and capitalized terms used
herein and not otherwise defined shall have the meanings assigned to such terms
in the Credit Agreement). This Assignment and Acceptance is being executed
pursuant to Section 13.8 of the Credit Agreement.
_____________________________ (the "Assignor") and ____________________
(the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee
without recourse, representation or warranty except as
specifically set forth herein, and the Assignee hereby
purchases and assumes from the Assignor as of the
Effective Date (as defined below), a ___________% interest
in and to all the Assignor's rights and obligations under
the Commitment of the Assignor on the Effective Date and
such percentage interest in the Loans owing to the
Assignor outstanding on the Effective Date together with
such percentage interest in all Letters of Credit
outstanding on the Effective Date and all unpaid interest
and fees accrued from the Effective Date relating to such
Loans and Letters of Credit. After giving effect to this
the foregoing assignment, the amount utilized to determine
(a) Assignee=s Commitment shall be $__________ and (b)
Assignor's Commitment shall be $__________.
2. The Assignor (i) represents that as of the date hereof,
its Commitment is $_____________ and the outstanding
principal balance of its Loans is $_____________ (as
unreduced by any assignments which have not yet become
effective); (ii) makes no representation or warranty and
assumes no responsibility with respect to any statements,
warranties or representations made in or in connection
with the Credit Agreement or any other Loan Document or
the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement
or any other Loan Document, other than that it is the
legal and beneficial owner of the interest being assigned
by it hereunder and that such interest is free and clear
of any adverse claim; (iii) makes no representation or
warranty and assumes no responsibility with respect to the
financial condition of the Borrowers or any Obligated
Party or the performance or observance by the Borrowers or
any Obligated Party of any of their obligations under the
Agreement or any Loan Document; and (iv) attaches the Note
held by Assignor and requests that the Agent exchange such
Note for a new Note payable to the order of (A) Assignee
in an amount equal to the Commitment assumed by the
Assignee pursuant hereto and the outstanding principal
amount of the Loans assigned to Assignee pursuant hereto,
as applicable, and (B) the Assignor in amounts equal to
the Commitment and Loans retained by the Assignor under
the Credit Agreement, as specified above.
3. The Assignee (i) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance;
(ii) confirms that it has received a copy of the Credit
Assignment and Acceptance, Page 1
<PAGE>
Agreement, together with copies of the most recent
financial statements delivered pursuant to Section 7.2 or
Section 8.1 thereof, and such other documents and
information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment
and Acceptance; (iii) agrees that it will, independently
and without reliance upon the Agent, the Assignor, or any
other Bank and based on such documents and information as
it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under
the Credit Agreement and the other Loan Documents; (iv)
confirms that it is eligible to be an Assignee; (v)
appoints and authorizes the Agent to take such action on
its behalf and to exercise such powers under the Loan
Documents as are delegated to the Agent by the terms
thereof, together with such powers as are reasonably
incidental thereto; (vi) agrees that it will perform in
accordance with their terms all obligations which by the
terms of the Credit Agreement and the other Loan Documents
are required to be performed by it as a Bank.
4. The effective date for this Assignment and Acceptance once
signed by the parties hereto and accepted by Agent and
Borrower shall be __________, 20__ (the "Effective Date").
Following the execution of this Assignment and Acceptance, it
will be delivered to the Agent for acceptance and recording.
5. Upon such acceptance and recording, from and after the
Effective Date, (i) the Assignee shall be a party to the
Credit Agreement and, to the extent provided in this
Assignment and Acceptance, shall have the rights and
obligations of a Bank thereunder and under the other Loan
Documents and (ii) the Assignor shall, to the extent provided
in this Assignment and Acceptance, relinquish its rights and
be released from its obligations under the Credit Agreement
and the other Loan Documents.
6. Upon such acceptance and recording, from and after the
Effective Date, the Agent shall make all payments in respect
of the interest assigned hereby (including payments of
principal, interest, fees, and other amounts) to the Assignee.
The Assignor and Assignee shall make all appropriate
adjustments in payments under the Credit Agreement and the
Note for periods prior to the Effective Date directly between
themselves.
7. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of New
York and applicable laws of the United States of America.
8. This Assignment and Acceptance may be executed in any number
of counterparts and on telecopy counterparts and by different
parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement
[NAME OF ASSIGNOR]
By:
------------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Assignment and Acceptance, Page 2
<PAGE>
[NAME OF ASSIGNOR]
By:
------------------------------------------
Name:
----------------------------------
Title:
---------------------------------
ADDRESS FOR NOTICES:
---------------------------------------------
---------------------------------------------
---------------------------------------------
Telecopy No.:
--------------------------------
Telephone No.
--------------------------------
LENDING OFFICE FOR BASE RATE
ACCOUNTS AND LIBOR ACCOUNTS
---------------------------------------------
---------------------------------------------
---------------------------------------------
ACCEPTED BY:
THE CHASE MANHATTAN BANK
as Agent
By:
------------------------------------------
Name:
----------------------------------
Title:
---------------------------------
MARKETING SPECIALISTS CORPORATION
as the Parent
By:
------------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Assignment and Acceptance, Page 3
<PAGE>
Schedule 1.1(a)
to
Marketing Specialists Corporation
Credit Agreement
PREVIOUS SENIOR DEBT
<TABLE>
<CAPTION>
Total Amount
Outstanding on
Lender Borrower Closing Date
------ -------- ------------
<S> <C> <C>
1. Certain Lenders including First Marketing Specialists Corporation $23,750,000
Union National Bank, as agent for
such Lenders
"Previous Senior Debt" does not
include the First Union Loan
</TABLE>
Schedule 1.1(a) - Solo Page
<PAGE>
Schedule 1.1(b)
to
Marketing Specialists Corporation
Credit Agreement
MONROE LITIGATION
MONROE & COMPANY, LLC VS. MARKETING SPECIALISTS CORPORATION, Commonwealth of
Massachusetts, Middlesex, Superior Court Department of the Trial Court, C.A. No.
99-4745, filed October 1, 1999. Marketing Specialists Corporation made an
initial settlement offer of $2 million prior to the hearing on Monroe & Company,
LLC's motion for summary judgment. Attached to this disclosure schedule is a
copy of a letter setting forth Monroe & Company, LLC's most recent settlement
proposal. The "negotiating range" as used in this Agreement, is $2,000,000 to
$2,855,000.
Schedule 1.1(b) - Solo Page
<PAGE>
Schedule 7.9
to
Marketing Specialists Corporation
Credit Agreement
DEBT LEVELS (EXCL. CREDIT FACILITY)
<TABLE>
<CAPTION>
<S> <C>
Bank Debt:
First Union Term Loan (1) 43,750,000
Mortgage Debt:
CREC (2)
MORTGAGE ON CANTON BUILDING 9,160,751
Rexham Note Payable (2) 3,612,368
--------------
MORTGAGE ON CHARLOTTE BUILDING
Total Senior Debt 56,523,119
Senior Subordinated Debt:
Senior Subordinated Notes -
Chase Securities Inc. 100,000,000
Acquisition Obligations -
Pari passu to bonds 86,120,269
--------------
Total Senior Subordinated Debt 186,120,269
Subordinated Debt:
Acquisition Obligations -
subordinated to bonds 12,068,111
--------------
Total Subordinated Debt 12,068,111
Total Debt 254,711,499
(1) Payment of $8,750,000 will be made at closing - reducing the balance to $35,000,000.
(2) In process of selling these buildings.
NOTE:
Employee related Deferred Compensation 1,375,795
NOT ORIGINATING FROM ACQUISITION
</TABLE>
Schedule 7.9 - Solo Page
<PAGE>
Schedule 7.14
to
Marketing Specialists Corporation
Credit Agreement
LIST OF SUBSIDIARIES; LIST OF BORROWER SHAREHOLDERS
<TABLE>
<CAPTION>
A. Wholly-owned Subsidiaries of Marketing Specialists Corporation.
<S> <C> <C>
1. MARKETING SPECIALISTS SALES COMPANY
Principal Address: 17855 Dallas Parkway, Suite 2000,
Dallas, Texas 75287
Location of Books and Records: 17855 Dallas Parkway, Suite 2000,
Dallas, Texas 75287
Authorized Stock: 10,000,000
Issued and Outstanding Stock: 137,635
Marketing Specialists Sales Company is not party to any
agreement providing for options, rights, rights of conversion,
redemption, purchase or repurchase, rights of first refusal
and similar rights relating to its Capital Stock.
2. PAUL INMAN ASSOCIATES, INC.
Principal Address: 17855 Dallas Parkway, Suite 2000,
Dallas, Texas 75287
Location of Books and Records: 17855 Dallas Parkway, Suite 2000,
Dallas, Texas 75287
Authorized Stock: 1,000 shares of Common Stock, $0.01 par value per
share
Issued and Outstanding Stock: 1,000 shares of Common Stock
Paul Inman Associates, Inc. is not party to any agreement providing for options, rights, rights
of conversion, redemption, purchase or repurchase, rights of first refusal and similar rights
relating to its Capital Stock.
B. Wholly-owned Subsidiaries of Marketing Specialists Sales Company
1. BROMAR, INC., a California corporation
Principal Address: 744 N. Eckhoff Street, Orange, CA 92868
Location of Books and Records: 17855 Dallas Parkway, Suite 2000,
Dallas, Texas 75287
Authorized Stock: 2,000,000 shares of Common Stock, no par value
Issued and Outstanding Stock: 1,000 shares of Common Stock
Bromar, Inc. is not party to any agreement providing for options, rights, rights of conversion,
redemption, purchase or repurchase, rights of first refusal and similar rights relating to its
Capital Stock.
</TABLE>
Schedule 7.14 - Page 1 of 1
<PAGE>
Schedule 9.1
to
Marketing Specialists Corporation
Credit Agreement
EXISTING DEBT
1. Please see attached Debt Schedule.
2. Unsecured Letter of Credit Promissory Note dated January 26,
2000 in the principal amount of $1.6 million payable to
Richmont Capital Partners I, L.P. by Marketing Specialists
Sales Company.
3. Guaranty Fee Agreement dated as of January 26, 2000 between
Marketing Specialists Sales Company and Richmont Capital
Partners I, L.P. relating to certain fee obligations.
4. Amendment No. 1 to Guaranty Fee Agreement dated as of January
26, 2000 between Marketing Specialists Sales Company and
Richmont Capital Partners I, L.P. effecting subordination
provisions for the fees payable under the Guaranty Fee
Agreement.
5. Unsecured Letter of Credit Promissory Note dated March 29,
2000 in the principal amount of $1,071,133 payable to Richmont
Capital Partners I, L.P. by Marketing Specialists Sales
Company.
6. Subordinated Promissory Note dated January 27, 2000 in the
original principal amount of $9,240,000 payable to
Johnson-Lieber, Inc. by Marketing Specialists Sales Company.
Schedule 9.1
<PAGE>
Schedule 9.2
to
Marketing Specialists Corporation
Credit Agreement
EXISTING LIENS
Schedule 9.2
<PAGE>
Schedule 9.5
to
Marketing Specialists Corporation
Credit Agreement
EXISTING INVESTMENTS
1. Texas Stadium Bonds
2. Personal Seat License in the football stadium under construction in
Nashville, Tennessee
3. Two shares of common stock of Bradford & Company Food Brokers, Inc.
4. Seats at Ericson Stadium
5. Smith Barney investment account regarding customer stocks
6. Property investment, Sesame Place, Irving, Texas
Schedule 9.7 - Solo Page
