FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest
Event Reported): November 30, 1999
GIBSON GREETINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-11902 52-1242761
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
2100 Section Road, Cincinnati, Ohio 45237
(Address of principal executive offices)
Registrant's telephone number, including area code:(606)815-6000
INFORMATION TO BE INCLUDED IN THE REPORT
Items 1, 2, 3, 4, 6 and 8 are not applicable and are omitted from
this report.
Item 5. Other Events.
On November 30, 1999, Gibson Greetings, Inc. (the
"Company") and its wholly owned subsidiaries, Gibson Greetings
International Limited and GGIP, Inc., entered into a Credit
Agreement (the "Credit Agreement") with General Electric Capital
Corporation ("GECC"), as Agent and Lender. The Credit Agreement
provides for a revolving credit facility of up to $50 million
through November 30, 2002, subject to earlier termination in
certain events. The maximum amount which the Company may borrow
from time to time will be based upon the amount of its eligible
accounts receivable and inventory, subject to certain reserves.
At November 30, 1999, maximum availability under the Credit
Agreement was approximately $39.4 million, with actual borrowings
of approximately $20.8 million. Loans will bear interest at
a rate equal to high grade 30-day commercial paper plus a margin
of 1.75% to 2.75% depending upon the Company's financial
performance. The Company's obligations under the Credit
Agreement are secured by a lien in favor of GECC on substantially
all of the Company's assets. The Credit Agreement contains
customary covenants restricting, among other things, the
Company's ability to incur additional debt, make investments,
incur liens, merge or sell its assets or pay dividends. The
Company is also required to comply with certain covenants
including maximum capital expenditures, minimum fixed charge
coverage ratio, minimum EBITDA, minimum tangible net worth and
minimum interest coverage ratio. Simultaneously with entering
into the Credit Agreement, the Company repaid all amounts
outstanding under its prior loan agreement with a group of banks
led by Bank One, N.A.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Businesses Acquired.
Not Applicable.
(b) Pro Forma Financial Information.
Not Applicable.
<PAGE>
(c) Exhibits
Number Description
1 Credit Agreement dated as of November 30,
1999 among Gibson Greetings, Inc., as
Borrower, the other Credit Parties signatory
thereto, as Credit Parties, the Lenders
signatory thereto from time to time, as
lenders, and General Electric Capital
Corporation, as Agent and Lender.
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
Date: December 3, 1999 GIBSON GREETINGS, INC.
By /s/ James T. Wilson
James T. Wilson
Executive Vice President -
Finance & Operations and
Chief Financial Officer
CREDIT AGREEMENT
Dated as of November 30, 1999
among
GIBSON GREETINGS, INC.,
as Borrower,
THE OTHER CREDIT PARTIES SIGNATORY HERETO,
as Credit Parties,
THE LENDERS SIGNATORY HERETO
FROM TIME TO TIME,
as Lenders,
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender
<PAGE>
TABLE OF CONTENTS
Page
1. AMOUNT AND TERMS OF CREDIT. . . . . . . . . . . . . . . . 1
1.1 Credit Facilities . . . . . . . . . . . . . . . 1
1.2 Letters of Credit . . . . . . . . . . . . . . . 2
1.3 Reductions/Prepayments. . . . . . . . . . . . . 2
1.4 Use of Proceeds . . . . . . . . . . . . . . . . 4
1.5 Interest and Applicable Margins . . . . . . . . 4
1.6 Eligible Accounts . . . . . . . . . . . . . . . 8
1.7 Eligible Inventory . . . . . . . . . . . . . . 11
1.8 Cash Management Systems. . . . . . . . . . . . 12
1.9 Fees . . . . . . . . . . . . . . . . . . . . . 12
1.10 Receipt of Payments. . . . . . . . . . . . . . 13
1.11 Application and Allocation of Payments . . . . 14
1.12 Loan Account and Accounting. . . . . . . . . . 14
1.13 Indemnity. . . . . . . . . . . . . . . . . . . 15
1.14 Access . . . . . . . . . . . . . . . . . . . . 15
1.15 Taxes. . . . . . . . . . . . . . . . . . . . . 16
1.16 Capital Adequacy; Increased Costs; Illegality. 17
1.17 Single Loan. . . . . . . . . . . . . . . . . . 18
2. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . 18
2.1 Conditions to the Initial Loans. . . . . . . . 18
2.2 Further Conditions to Each Loan. . . . . . . . 19
2.3 Reaffirmation. . . . . . . . . . . . . . . . . 20
3. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . 20
3.1 Corporate Existence; Compliance with Law . . . 20
3.2 Executive Offices; FEIN. . . . . . . . . . . . 21
3.3 Corporate Power, Authorization, Enforceable
Obligations. . . . . . . . . . . . . . . . . . 21
3.4 Financial Statements and Projections . . . . . 21
3.5 Material Adverse Effect. . . . . . . . . . . . 22
3.6 Ownership of Property; Liens . . . . . . . . . 22
3.7 Labor Matters. . . . . . . . . . . . . . . . . 23
3.8 Ventures, Subsidiaries and Affiliates;
Outstanding Stock and Indebtedness . . . . . . 23
3.9 Government Regulation. . . . . . . . . . . . . 24
3.10 Margin Regulations . . . . . . . . . . . . . . 24
3.11 Taxes. . . . . . . . . . . . . . . . . . . . . 24
3.12 ERISA. . . . . . . . . . . . . . . . . . . . . 25
3.13 No Litigation. . . . . . . . . . . . . . . . . 26
3.14 Brokers. . . . . . . . . . . . . . . . . . . . 26
3.15 Intellectual Property. . . . . . . . . . . . . 26
3.16 Full Disclosure. . . . . . . . . . . . . . . . 26
3.17 Environmental Matters. . . . . . . . . . . . . 27
3.18 Insurance. . . . . . . . . . . . . . . . . . . 28
3.19 Deposit and Disbursement Accounts. . . . . . . 28
3.20 Government Contracts . . . . . . . . . . . . . 28
3.21 Customer and Trade Relations . . . . . . . . . 28
3.22 Agreements and Other Documents . . . . . . . . 28
3.23 Solvency . . . . . . . . . . . . . . . . . . . 29
3.24 Year 2000 Representations. . . . . . . . . . . 29
4. FINANCIAL STATEMENTS AND INFORMATION . . . . . . . . . . 29
4.1 Reports and Notices. . . . . . . . . . . . . . 29
4.2 Communication with Accountants . . . . . . . . 29
5. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . 29
5.1 Maintenance of Existence and Conduct
of Business. . . . . . . . . . . . . . . . . 29
5.2 Payment of Obligations . . . . . . . . . . . . 30
5.3 Books and Records. . . . . . . . . . . . . . . 30
5.4 Insurance; Damage to or Destruction
of Collateral. . . . . . . . . . . . . . . . . 30
5.5 Compliance with Laws . . . . . . . . . . . . . 32
5.6 Supplemental Disclosure. . . . . . . . . . . . 32
5.7 Intellectual Property. . . . . . . . . . . . . 33
5.8 Environmental Matters. . . . . . . . . . . . . 33
5.9 Landlords' Agreements, Mortgagee Agreements
and Bailee Letters . . . . . . . . . . . . . . 33
5.10 Further Assurances . . . . . . . . . . . . . . 34
6. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . 35
6.1 Mergers, Subsidiaries, etc . . . . . . . . . . 35
6.2 Investments; Loans and Advances. . . . . . . . 35
6.3 Indebtedness . . . . . . . . . . . . . . . . . 37
6.4 Employee Loans and Affiliate Transactions. . . 38
6.5 Capital Structure and Business . . . . . . . . 39
6.6 Guaranteed Indebtedness. . . . . . . . . . . . 39
6.7 Liens. . . . . . . . . . . . . . . . . . . . . 40
6.8 Sale of Stock and Assets . . . . . . . . . . . 40
6.9 ERISA. . . . . . . . . . . . . . . . . . . . . 41
6.10 Financial Covenants. . . . . . . . . . . . . . 41
6.11 Hazardous Materials. . . . . . . . . . . . . . 41
6.12 Sale-Leasebacks. . . . . . . . . . . . . . . . 41
6.13 Cancellation of Indebtedness . . . . . . . . . 41
6.14 Restricted Payments. . . . . . . . . . . . . . 41
6.15 Change of Corporate Name or Location;
Change of Fiscal Year. . . . . . . . . . . . . 42
6.16 No Impairment of Intercompany Transfers. . . . 42
6.17 No Speculative Transactions. . . . . . . . . . 42
6.18 Real Estate Purchases. . . . . . . . . . . . . 43
6.19 Changes Relating to Subordinated Debt. . . . . 43
6.20 IP Subsidiary. . . . . . . . . . . . . . . . . 43
7. TERM . . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.1 Termination. . . . . . . . . . . . . . . . . . 43
7.2 Survival of Obligations Upon Termination of
Financing Arrangements . . . . . . . . . . . . 43
8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES . . . . . . . . . 44
8.1 Events of Default. . . . . . . . . . . . . . . 44
8.2 Remedies . . . . . . . . . . . . . . . . . . . 46
8.3 Waivers by Credit Parties. . . . . . . . . . . 46
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT. . . 46
9.1 Assignment and Participations. . . . . . . . . 47
9.2 Appointment of Agent . . . . . . . . . . . . . 48
9.3 Agent's Reliance, Etc. . . . . . . . . . . . . 49
9.4 GE Capital and Affiliates. . . . . . . . . . . 50
9.5 Lender Credit Decision . . . . . . . . . . . . 50
9.6 Indemnification. . . . . . . . . . . . . . . . 50
9.7 Successor Agent. . . . . . . . . . . . . . . . 51
9.8 Setoff and Sharing of Payments . . . . . . . . 51
9.9 Advances; Payments; Non-Funding Lenders;
Information; Actions in Concert . . . . . . . . . . 52
10. SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . 54
10.1 Successors and Assigns . . . . . . . . . . . . 54
11. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . 54
11.1 Complete Agreement; Modification of Agreement. 55
11.2 Amendments and Waivers . . . . . . . . . . . . 55
11.3 Fees and Expenses. . . . . . . . . . . . . . . 57
11.4 No Waiver. . . . . . . . . . . . . . . . . . . 58
11.5 Remedies . . . . . . . . . . . . . . . . . . . 58
11.6 Severability . . . . . . . . . . . . . . . . . 59
11.7 Conflict of Terms. . . . . . . . . . . . . . . 59
11.8 Confidentiality. . . . . . . . . . . . . . . . 59
11.9 GOVERNING LAW. . . . . . . . . . . . . . . . . 59
11.10 Notices . . . . . . . . . . . . . . . . . 60
11.11 Section Titles. . . . . . . . . . . . . . 61
11.12 Counterparts. . . . . . . . . . . . . . . 61
11.13 WAIVER OF JURY TRIAL. . . . . . . . . . . 61
11.14 Press Releases. . . . . . . . . . . . . . 61
11.15 Reinstatement . . . . . . . . . . . . . . 62
11.16 Advice of Counsel . . . . . . . . . . . . 62
11.17 No Strict Construction. . . . . . . . . . 62
CREDIT AGREEMENT, dated as of November 30, 1999 among
GIBSON GREETINGS, INC., a Delaware corporation ("Borrower"); the
other Credit Parties signatory hereto; GENERAL ELECTRIC CAPITAL
CORPORATION, a New York corporation (in its individual capacity,
"GE Capital"), for itself, as Lender, and as Agent for Lenders,
and the other Lenders signatory hereto from time to time.
RECITALS
WHEREAS, Borrower desires that Lenders extend revolving
credit facilities to Borrower of up to Fifty Million Dollars
($50,000,000) in the aggregate for the purpose of refinancing
certain indebtedness of Borrower and to provide (a) working
capital financing for Borrower, and (b) funds for other general
corporate purposes of Borrower; and for these purposes, Lenders
are willing to make certain loans and other extensions of credit
to Borrower of up to such amount upon the terms and conditions
set forth herein; and
WHEREAS, Borrower desires to secure all of its
obligations under the Loan Documents by granting to Agent, for
the benefit of Agent and Lenders, a security interest in and lien
upon substantially all of its existing and after-acquired
personal and real property; and
WHEREAS, capitalized terms used in this Agreement shall
have the meanings ascribed to them in Annex A. All Annexes,
Disclosure Schedules, Exhibits and other attachments
(collectively, "Appendices") hereto, or expressly identified to
this Agreement, are incorporated herein by reference, and taken
together, shall constitute but a single agreement. These
Recitals shall be construed as part of the Agreement.
NOW, THEREFORE, in consideration of the premises and
the mutual covenants hereinafter contained, and for other good
and valuable consideration, the parties hereto agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1 Credit Facilities.
(a) Revolving Credit Facility.
(i) Subject to the terms and conditions hereof,
each Revolving Lender agrees to make available from time to time
until the Commitment Termination Date its Pro Rata Share of
advances (each, a "Revolving Credit Advance"). The Pro Rata
Share of the Revolving Loan of any Revolving Lender shall not at
<PAGE>
any time exceed its separate Revolving Loan Commitment. The
obligations of each Revolving Lender hereunder shall be several
and not joint. The aggregate amount of Revolving Credit Advances
outstanding shall not exceed at any time the lesser of (A) the
Maximum Amount and (B) the Borrowing Base, in each case less the
sum of the Letter of Credit Obligations outstanding at such time
("Borrowing Availability"), provided, however, that Borrowing
Availability based on Eligible Inventory (as defined in Section
1.7) shall at no time exceed sixty-five percent (65%) of total
Borrowing Availability. Borrowing Availability may be further
reduced by Reserves imposed by Agent in its reasonable credit
judgment. Until the Commitment Termination Date, Borrower may
from time to time borrow, repay and reborrow under this Section
1.1(a). Each Revolving Credit Advance shall be made on notice by
Borrower to one of the representatives of Agent identified on
Schedule 1.1 at the address specified thereon. Those notices
must be given no later than 12:00 p.m. (New York time) on the
Business Day of the proposed Revolving Credit Advance. Each such
notice (a "Notice of Revolving Credit Advance") must be given in
writing (by telecopy or overnight courier) substantially in the
form of Exhibit 1.1(a)(i), and shall include the information
required in such Exhibit and such other information as may be
required by Agent. Subject to Agent's receipt of wire transfers
from the Revolving Lenders in accordance with Section 9.9 hereof,
and provided timely notices are given by Borrower in accordance
with this Section 1.1(a)(i), Agent shall make Revolving Credit
Advances on the same Business Day of the requested funding.
(ii) Borrower shall execute and deliver to each
Revolving Lender a note to evidence the Revolving Loan Commitment
of that Revolving Lender. Each note shall be in the principal
amount of the Revolving Loan Commitment of the applicable
Revolving Lender, dated the Closing Date and substantially in the
form of Exhibit 1.1(a)(ii) (each a "Revolving Note" and,
collectively, the "Revolving Notes"). Each Revolving Note shall
represent the obligation of Borrower to pay the amount of each
Revolving Lender's Revolving Loan Commitment or, if less, the
applicable Revolving Lender's Pro Rata Share of the aggregate
unpaid principal amount of all Revolving Credit Advances to
Borrower together with interest thereon as prescribed in Section
1.5. The entire unpaid balance of the Revolving Loan and all
other non-contingent Obligations shall be immediately due and
payable in full in immediately available funds on the Commitment
Termination Date.
(b) Reliance on Notices. Agent shall be entitled to
rely upon, and shall be fully protected in relying upon, any
Notice of Revolving Credit Advance or similar notice believed by
Agent to be genuine. Agent may assume that each Person executing
and delivering any notice in accordance herewith was duly
authorized, unless the responsible individual acting thereon for
Agent has actual knowledge to the contrary.
1.2 Letters of Credit. Subject to and in accordance
with the terms and conditions contained herein and in Annex B,
Borrower shall have the right to request, and Revolving Lenders
agree to incur, or purchase participations in, Letter of Credit
Obligations in respect of Borrower.
1.3 Reductions/Prepayments.
(a) Reductions/Voluntary Prepayments. Borrower may at
any time on at least five (5) days' prior written notice to Agent
voluntarily permanently reduce (but not terminate) the Revolving
Loan Commitment; provided that (A) any such reduction shall be in
a minimum amount of $5,000,000 and integral multiples of $250,000
in excess of such amount and (B) the Revolving Loan Commitment
shall not be reduced to an amount less than Thirty Million
Dollars ($30,000,000). Borrower may at any time on at least ten
10 days' prior written notice to Agent terminate the Revolving
Loan Commitment, provided that upon such termination all Loans
and other Obligations shall be immediately due and payable in
full and all Letter of Credit Obligations shall be cash
collateralized or otherwise satisfied in accordance with Annex B
hereto. Any voluntary reduction or termination of the Revolving
Loan Commitment must be accompanied by the payment of the Fee
required by Section 1.9(c). Upon any such reduction or
termination of the Revolving Loan Commitment, Borrower's right
to request Revolving Credit Advances or request that Letter of
Credit Obligations be incurred on its behalf shall simultaneously
be permanently reduced or terminated, as the case may be;
provided that a permanent reduction of the Revolving Loan
Commitment shall not require a corresponding pro rata reduction
in the L/C Sublimit.
(b) Mandatory Prepayments.
(i) If at any time the outstanding balance of the
Revolving Loan exceeds the lesser of (A) the Maximum Amount and
(B) the Borrowing Base, Borrower shall, on the date that is the
earlier of Borrower obtaining knowledge thereof or upon
Borrower's receipt of notice thereof from Agent, repay the
aggregate outstanding Revolving Credit Advances to the extent
required to eliminate such excess. If any such excess remains
after repayment in full of the aggregate outstanding Revolving
Credit Advances, Borrower shall provide cash collateral for the
Letter of Credit Obligations in the manner set forth in Annex B
to the extent required to eliminate such excess. Additionally,
if at any time the outstanding balance of the Revolving Loan
based on Eligible Inventory exceeds sixty-five percent (65%) of
total Borrowing Availability, Borrower shall immediately repay
the aggregate outstanding Revolving Credit Advances to the extent
required to eliminate such excess.
(ii) Immediately upon receipt by any Credit Party
of proceeds of any asset disposition (including condemnation
proceeds, but excluding proceeds of asset dispositions permitted
by Section 6.8(a) or the Additional Liquidation Proceeds), any
sale of Stock of any Subsidiary of any Credit Party or any
termination fee or other amounts paid by American Greetings
Corporation to Borrower pursuant to the AG Merger Agreement as a
result of the transaction contemplated thereof not being
consummated, Borrower shall prepay the Loans in an amount equal
to all such proceeds, net of (A) commissions and other reasonable
and customary transaction costs, fees and expenses properly
attributable to such transaction and payable by Borrower in
connection therewith (in each case, paid to non-Affiliates), (B)
transfer taxes, (C) amounts payable to holders of senior Liens
(to the extent such Liens constitute Permitted Encumbrances
hereunder), if any, and (D) an appropriate reserve for income
taxes in accordance with GAAP in connection therewith. Any such
prepayment shall be applied in accordance with clause (c) below.
(iii) If Borrower issues Stock (other than
with respect to Stock issued in connection with the Stock Option
Plan) no later than the Business Day following the date of
receipt of the proceeds thereof, Borrower shall prepay the Loans
in an amount equal to all such proceeds, net of underwriting
discounts and commissions and other reasonable costs paid to non-
Affiliates in connection therewith. Any such prepayment shall be
applied in accordance with clause (c) below.
(c) Application of Certain Mandatory Prepayments. Any
prepayments made by Borrower pursuant to clauses (b)(ii) or
(b)(iii) above shall be applied as follows: first, to Fees and
reimbursable expenses of Agent then due and payable pursuant to
any of the Loan Documents; second, to interest then due and
payable on the Revolving Credit Advances; third, to the
outstanding principal balance of Revolving Credit Advances until
the same shall have been paid in full; and fourth, to any Letter
of Credit Obligations, to provide cash collateral therefor in the
manner set forth in Annex B, until all such Letter of Credit
Obligations have been fully cash collateralized in the manner set
forth in Annex B. The Revolving Loan Commitment shall not be
permanently reduced by the amount of any such prepayments.
(d) Application of Prepayments from Insurance
Proceeds. Prepayments from condemnation or insurance proceeds in
accordance with Section 5.4(c) shall be applied as follows:
insurance proceeds from casualties or losses shall be applied
first, to interest then due and payable on the Revolving Credit
Advances; second, to the outstanding principal balance of
Revolving Credit Advances until the same shall have been paid in
full; and third, to any Letter of Credit Obligations to provide
cash collateral therefor in the manner set forth in Annex B until
all such Letter of Credit Obligations have been fully cash
collateralized in the manner set forth in Annex B. The Revolving
Loan Commitment shall not be permanently reduced by the amount of
any such prepayments.
(e) Nothing in this Section 1.3 shall be construed to
constitute Agent's or any Lender's consent to any transaction
that is not permitted by other provisions of this Agreement or
the other Loan Documents.
1.4 Use of Proceeds. Borrower shall utilize the
proceeds of the Revolving Loan solely for the Refinancing (and to
pay any related transaction expenses), and for the financing of
Borrower's ordinary working capital and general corporate needs,
including Permitted Investments. Disclosure Schedule (1.4)
contains a description of Borrower's sources and uses of funds as
of the Closing Date, including Loans and Letter of Credit
Obligations to be made or incurred on that date, and a funds flow
memorandum detailing how funds from each source are to be
transferred to particular uses.
1.5 Interest and Applicable Margins.
(a) Borrower shall pay interest to Agent, for the
ratable benefit of Lenders in accordance with the Revolving Loans
being made by each Lender, in arrears on each applicable Interest
Payment Date, with respect to the Revolving Credit Advances, at
the Index Rate plus the Applicable Revolver Index Margin per
annum based on the aggregate Revolving Credit Advances
outstanding from time to time.
The Applicable Revolver Index Margin, Applicable
Standby L/C Fee and Applicable Unused Line Fee will be 2.25%,
2.00% and .375% per annum, respectively, as of the Closing Date.
The Applicable Margins will be adjusted (up or down)
prospectively on a quarterly basis as determined by Borrower's
financial performance, commencing with the first day of the first
calendar month that occurs more than five (5) days after delivery
of Borrower's quarterly Financial Statements to Lenders for the
applicable Fiscal Quarter(s) set forth below. Adjustments in
Applicable Margins will be determined by reference to the
following grids:
APPLICABLE MARGIN FOR FISCAL QUARTER ENDING DECEMBER 31, 1999:
If Adjusted EBITDA is: Level of
Applicable Margins:
>$15,000,000 Level I
>$13,000,000, but < $15,000,000 Level II
>$ 9,000,000, but < $13,000,000 Level III
>$ 8,000,000, but < $ 9,000,000 Level IV
< $ 8,000,000 Level V
APPLICABLE MARGINS FOR 2 FISCAL QUARTERS ENDING MARCH 31, 2000:
If Adjusted EBITDA is: Level of
Applicable Margins:
>$23,000,000 Level I
>$19,500,000, but < $23,000,000 Level II
>$13,500,000, but < $19,500,000 Level III
>$12,000,000, but < $13,500,000 Level IV
<$12,000,000 Level V
APPLICABLE MARGINS FOR 3 FISCAL QUARTERS ENDING JUNE 30, 2000:
If Adjusted EBITDA is: Level of
Applicable Margins:
>$30,500,000 Level I
>$26,000,000, but < $30,500,000 Level II
>$18,500,000, but < $26,000,000 Level III
>$16,500,000, but < $18,500,000 Level IV
<$16,500,000 Level V
APPLICABLE MARGINS FOR 4 FISCAL QUARTERS ENDING
SEPTEMBER 30, 2000:
If Adjusted EBITDA is: Level of
Applicable Margins:
>$35,000,000 Level I
>$32,500,000, but < $35,000,000 Level II
>$24,000,000, but < $32,500,000 Level III
>$21,000,000, but < $24,000,000 Level IV
<$21,000,000 Level V
APPLICABLE MARGINS FOR 4 FISCAL QUARTERS ENDING
DECEMBER 31, 2000 AND THEREAFTER:
If Adjusted EBITDA is: Level of
Applicable Margins:
>$38,000,000 Level I
>$35,000,000, but < $38,000,000 Level II
>$26,000,000, but < $35,000,000 Level III
>$23,000,000, but < $26,000,000 Level IV
<$23,000,000 Level V
Applicable Margins
Level I Level II Level III Level IV Level V
Applicable
Revolver Index 1.75% 2.0% 2.25% 2.50% 2.75%
Margin
Applicable Standby
L/C Fee 1.75% 2.0% 2.0% 2.0% 2.25%
Applicable Unused
Line Fee .25% .375% .375% .375% .50%
All adjustments in the Applicable Margins after
December 31, 1999 shall be implemented quarterly on a prospective
basis, for each calendar month commencing at least five (5) days
after the date of delivery to Lenders of the quarterly unaudited
or annual audited (as applicable) Financial Statements evidencing
the need for an adjustment. Concurrently with the delivery of
those Financial Statements, Borrower shall deliver to Agent and
Lenders a certificate, signed by its chief financial officer,
setting forth in reasonable detail the basis for the continuance
of, or any change in, the Applicable Margins. Failure to timely
deliver such Financial Statements shall, in addition to any other
remedy provided for in this Agreement, result in an increase in
the Applicable Margins to the highest level set forth in the
foregoing grid, until the first day of the first calendar month
following the delivery of those Financial Statements
demonstrating that such an increase is not required. If a
Default or an Event of Default has occurred and is continuing at
the time any reduction in the Applicable Margins is to be
implemented, that reduction shall be deferred until the first day
of the first calendar month following the date on which such
Default or Event of Default is waived or cured. Notwithstanding
anything to the contrary set forth herein, the Applicable Margins
shall not be adjusted down unless Excess Cash Flow exists for the
four most recent Fiscal Quarters then ended (or with respect to
any Fiscal Quarter ending on or before September 30, 2000, the
period commencing on October 1, 1999 and ending on the last day
of such Fiscal Quarter).
(b) If any payment on any Loan becomes due and payable
on a day other than a Business Day, the maturity thereof will be
extended to the next succeeding Business Day and, with respect to
payments of principal, interest thereon shall be payable at the
then applicable rate during such extension.
(c) All computations of Fees calculated on a per annum
basis and interest shall be made by Agent on the basis of a three
hundred and sixty (360) day year, in each case for the actual
number of days occurring in the period for which such interest
and Fees are payable. Each determination by Agent of an
interest rate and Fees hereunder shall be conclusive, absent
manifest error.
(d) So long (i) as an Event of Default has occurred
and is continuing under Section 8.1(h) or (i), or (ii) so long as
any other Event of Default shall have occurred and be continuing
and at the election of Agent (or upon the written request of
Requisite Lenders) confirmed by written notice from Agent to
Borrower, then the interest rates applicable to the Loans and the
Letter of Credit Fees shall be increased by two percent (2%) per
annum above the rates of interest or the rate of such Fees
otherwise applicable hereunder ("Default Rate"), and all
outstanding Obligations shall bear interest at the Default Rate
applicable to such Obligations. Interest and Letter of Credit
Fees at the Default Rate shall accrue from the initial date of
such Default or Event of Default until that Default or Event of
Default is cured or waived and shall be payable upon demand.
(e) Notwithstanding anything to the contrary set forth
in this Section 1.5, if a court of competent jurisdiction
determines in a final order that the rate of interest payable
hereunder exceeds the highest rate of interest permissible under
law (the "Maximum Lawful Rate"), then so long as the Maximum
Lawful Rate would be so exceeded, the rate of interest payable
hereunder shall be equal to the Maximum Lawful Rate; provided,
however, that if at any time thereafter the rate of interest
payable hereunder is less than the Maximum Lawful Rate, Borrower
shall continue to pay interest hereunder at the Maximum Lawful
Rate until such time as the total interest received by Agent, on
behalf of Lenders, is equal to the total interest which would
have been received had the interest rate payable hereunder been
(but for the operation of this paragraph) the interest rate
payable since the Closing Date as otherwise provided in this
Agreement. Thereafter, interest hereunder shall be paid at the
rate(s) of interest and in the manner provided in Sections 1.5(a)
through (d) above, unless and until the rate of interest again
exceeds the Maximum Lawful Rate, and at that time this paragraph
shall again apply. In no event shall the total interest received
by any Lender pursuant to the terms hereof exceed the amount
which such Lender could lawfully have received had the interest
due hereunder been calculated for the full term hereof at the
Maximum Lawful Rate. If the Maximum Lawful Rate is calculated
pursuant to this paragraph, such interest shall be calculated at
a daily rate equal to the Maximum Lawful Rate divided by the
number of days in the year in which such calculation is made.
If, notwithstanding the provisions of this Section 1.5(e), a
court of competent jurisdiction shall finally determine that a
Lender has received interest hereunder in excess of the Maximum
Lawful Rate, Agent shall, to the extent permitted by applicable
law, promptly apply such excess in the order specified in Section
1.11 and thereafter shall refund any excess to Borrower or as a
court of competent jurisdiction may otherwise order.
1.6 Eligible Accounts. Based on the most recent
Borrowing Base Certificate delivered by Borrower to Agent and on
other information available to Agent, Agent shall in its
reasonable credit judgment determine which Accounts of Borrower
shall be "Eligible Accounts" for purposes of this Agreement. In
determining whether a particular Account constitutes an Eligible
Account, Agent shall not include any such Account to which any of
the exclusionary criteria set forth below applies. Agent shall
have the right, at any time and from time to time after the
Closing Date, to adjust any such criteria, to establish new
criteria and to adjust advance rates with respect to Eligible
Accounts, in its reasonable credit judgment, subject to the
approval of Supermajority Lenders in the case of adjustments or
new criteria or changes in advance rates which have the effect of
making more credit available. Agent also shall have the right to
establish, modify, or eliminate Reserves against Eligible
Accounts from time to time, including without limitation, a
dilution reserve which shall be 40% on the Closing Date, subject
to adjustment (up or down) as determined by Agent in its
reasonable credit judgment. Eligible Accounts shall not include
any Account of Borrower:
(a) that does not arise from the sale of goods or the
performance of services by Borrower in the ordinary course of its
business;
(b) (i) upon which Borrower's right to receive payment
is not absolute or is contingent upon the fulfillment of any
condition whatsoever or (ii) as to which Borrower is not able to
bring suit or otherwise enforce its remedies against the Account
Debtor through judicial process, or (iii) if the Account
represents a progress billing consisting of an invoice for goods
sold or used or services rendered pursuant to a contract under
which the Account Debtor's obligation to pay that invoice is
subject to Borrower's completion of further performance under
such contract or is subject to the equitable lien of a surety
bond issuer;
(c) that contains payment terms greater than (i) in
the case of goods which are not Seasonal Goods (excluding goods
sold to Cub Foods, Super Valu, Marsh Supermarket and Kash-n-
Karry), sixty-one (61) days, and in the case of Cub Foods, Super
Valu, Marsh Supermarket and Kash-n-Karry, one hundred and one
(101) days, (ii) in the case of Seasonal Goods (other than those
relating to Christmas or Chanukah), one hundred and twenty (120)
days, or (iii) in the case of Seasonal Goods relating to
Christmas or Chanukah, one hundred and fifty (150) days.
(d) that is the obligation of Party City and Jitney
Jungle unless Agent otherwise consents;
(e) in the event that any defense, counterclaim,
setoff or dispute is asserted as to such Account, but only to the
extent of the amount of such defense, counterclaim, setoff or
dispute;
(f) that is not a true and correct statement of a bona
fide obligation incurred in the amount of the Account for
merchandise sold to or services rendered and accepted by the
applicable Account Debtor;
(g) with respect to which an invoice, acceptable to
Agent in form and substance, has not been sent to the applicable
Account Debtor;
(h) that (i) is not owned by Borrower or (ii) is
subject to any right, claim, security interest or other interest
of any other Person, other than Liens in favor of Agent, on
behalf of itself and Lenders;
(i) that arises from a sale to any director, officer,
other employee or Affiliate of any Credit Party, or to any entity
that has any common officer or director with any Credit Party;
(j) that is the obligation of an Account Debtor that
is the United States government or a political subdivision
thereof, or any state or municipality or department, agency or
instrumentality thereof unless Agent, in its sole discretion, has
agreed to the contrary in writing and Borrower, if necessary or
desirable, has complied with the Federal Assignment of Claims Act
of 1940 or any applicable state statute or municipal ordinance of
similar purpose and effect with respect to such obligation;
(k) that is the obligation of an Account Debtor
located in a foreign country other than Canada (excluding the
provinces of Quebec, Newfoundland and the Northwest Territories)
unless payment thereof is assured by a letter of credit assigned
and delivered to Agent, satisfactory to Agent as to form, amount
and issuer;
(l) to the extent Borrower or any Subsidiary thereof
is liable for goods sold or services rendered by the applicable
Account Debtor to Borrower or any Subsidiary thereof but only to
the extent of the potential offset;
(m) that arises with respect to goods that are
delivered on a bill-and-hold, cash-on-delivery basis or placed on
consignment, guaranteed sale (other than goods which are Seasonal
Goods) or other terms by reason of which the payment by the
Account Debtor is or may be conditional;
(n) that is an Account which has been written off
Borrower's general ledger and is included in Borrower's "Suspense
Accounts."
(o) that is in default; provided, that, without
limiting the generality of the foregoing, an Account shall be
deemed in default upon the occurrence of any of the following:
(i) the Account is not paid within the
earlier of: sixty (60) days following its due date,
provided, however, in the case of Seasonal Goods, the
Account is not paid within thirty (30) days following its
due date;
(ii) the Account Debtor obligated upon such
Account suspends business, makes a general assignment for
the benefit of creditors or fails to pay its debts generally
as they come due; or
(iii) a petition is filed by or against
any Account Debtor obligated upon such Account under any
bankruptcy law or any other federal, state or foreign
(including any provincial) receivership, insolvency relief
or other law or laws for the relief of debtors;
(p) that is the obligation of an Account Debtor if
fifty percent (50%) or more of the dollar amount of all Accounts
owing by that Account Debtor are ineligible under the other
criteria set forth in this Section 1.6;
(q) as to which Agent's Lien thereon, on behalf of
itself and Lenders, is not a first priority perfected Lien;
(r) as to which any of the representations or
warranties in the Loan Documents is untrue;
(s) to the extent such Account is evidenced by a
judgment, Instrument or Chattel Paper;
(t) to the extent such Account exceeds any credit
limit established by Agent, in its reasonable credit judgment,
following prior notice of such limit by Agent to Borrower;
(u) to the extent that such Account (excluding any
Account owing by Winn-Dixie Stores, Inc. or Phar-Mor, Inc.),
together with all other Eligible Accounts owing by such Account
Debtor and its Affiliates as of any date of determination exceed
ten percent (10%) of all Eligible Accounts, and in the case of
Winn-Dixie Stores, Inc. and Phar-Mor, Inc. exceed twenty-five
(25%) and twelve percent (12%), respectively, of all Eligible
Accounts;
(v) that is payable in any currency other than
Dollars; or
(w) that is otherwise unacceptable to Agent in its
reasonable credit judgment.
1.7 Eligible Inventory. Based on the most recent
Borrowing Base Certificate delivered by Borrower to Agent and on
other information available to Agent, Agent shall in its
reasonable credit judgment determine which Inventory of Borrower
shall be "Eligible Inventory" for purposes of this Agreement. In
determining whether any particular Inventory constitutes Eligible
Inventory, Agent shall not include any such Inventory to which
any of the exclusionary criteria set forth below applies. Agent
shall have the right to establish, modify or eliminate Reserves
against Eligible Inventory from time to time in its reasonable
credit judgment. In addition, Agent shall have the right, at any
time and from time to time after the Closing Date, to adjust any
such criteria, to establish new criteria and to adjust advance
rates with respect to Eligible Inventory in its reasonable credit
judgment, subject to the approval of Supermajority Lenders in the
case of adjustments or new criteria or changes in advance rates
which have the effect of making more credit available. Eligible
Inventory shall not include any Inventory of Borrower that:
(a) consists of "Silly Slammers";
(b) is not owned by Borrower free and clear of all
Liens and rights of any other Person (including the rights of a
purchaser that has made progress payments and the rights of a
surety that has issued a bond to assure Borrower's performance
with respect to that Inventory), except the Liens in favor of
Agent, on behalf of itself and Lenders, and except for Liens in
favor of landlords or warehousemen only in the event a
satisfactory landlord waiver has been delivered to Agent pursuant
to Section 5.9;
(c) (i) is not located on premises owned, leased or
rented by such Borrower and set forth in Disclosure Schedule 3.2
and such other premises as may be added from time to time in
accordance with Section 6.15, (ii) is stored with a bailee,
warehouseman or similar Person, unless Agent has given its prior
consent thereto and unless (x) a satisfactory bailee letter or
landlord waiver has been delivered to Agent, or (y) Reserves
satisfactory to Agent have been established with respect thereto,
or (iii) is located at any site if the aggregate book value of
Inventory at any such location is less than $100,000;
(d) is placed on consignment or is in transit;
(e) is covered by a negotiable document of title,
unless such document has been delivered to Agent with all
necessary endorsements, free and clear of all Liens except those
in favor of Agent and Lenders;
(f) is excess, obsolete, unsalable, shopworn, seconds,
damaged or unfit for sale;
(g) consists of display items or packing or shipping
materials, manufacturing supplies, work-in-process Inventory or
replacement parts;
(h) consists of goods which have been returned by the
buyer until such goods have been reprocessed into finished goods
for sale and otherwise comply with this Section 1.7;
(i) is not of a type held for sale in the ordinary
course of Borrower's business;
(j) is not subject to a first priority lien in favor
of Agent on behalf of itself and Lenders;
(k) breaches any of the representations or warranties
pertaining to Inventory set forth in the Loan Documents;
(l) consists of any costs associated with "freight-in"
charges;
(m) consists of Hazardous Materials or goods that can
be transported or sold only with licenses that are not readily
available;
(n) is not covered by casualty insurance acceptable to
Agent; or
(o) is otherwise unacceptable to Agent in its
reasonable credit judgment.
1.8 Cash Management Systems. On or prior to the
Closing Date, Borrower will establish and will maintain until the
Termination Date, the cash management systems described on Annex
C (the "Cash Management Systems").
1.9 Fees. (a) Borrower shall pay to GE Capital,
individually, the Fees specified in that certain fee letter of
even date herewith between Borrower and GE Capital (the "GE
Capital Fee Letter"), at the times specified for payment therein.
(b) As additional compensation for the Revolving
Lenders, Borrower agrees to pay to Agent, for the ratable benefit
of such Lenders, in arrears, on the first Business Day of each
month prior to the Commitment Termination Date and on the
Commitment Termination Date, a fee for Borrower's non-use of
available funds in an amount equal to the Applicable Unused Line
Fee per annum (calculated on the basis of a 360 day year for
actual days elapsed) multiplied by the difference between (x) the
Maximum Amount (as it may be reduced from time to time) and (y)
the average for the period of the daily closing balances of the
Revolving Loan outstanding during the period for which the such
fee is due, provided however, that during the period commencing
on March 1 through July 31 of each Fiscal Year, for purposes only
of calculating such non-use fee, the Revolving Loan Commitment
shall be deemed to be Thirty Million Dollars ($30,000,000),
provided further, that if during any calendar month of such five
month period the average daily closing balance of the Revolving
Loan exceeds Twenty Million Dollars ($20,000,000), then the
foregoing provision shall not apply during such month and the
Revolving Loan Commitment shall be deemed to be Fifty Million
Dollars ($50,000,000) for purposes of calculating the non-use fee
for such month.
(c) If Borrower reduces or terminates the Revolving
Loan Commitment, whether voluntarily or involuntarily and whether
before or after acceleration of the Obligations, Borrower shall
pay to Agent, for the benefit of Lenders as liquidated damages
and compensation for the costs of being prepared to make funds
available hereunder an amount equal to the Applicable Percentage
(as defined below) multiplied by the amount of the reduction of
the Revolving Loan Commitment. As used herein, the term
"Applicable Percentage" shall mean (x) one and one-half percent
(1.5%), in the case of a reduction on or prior to the first
anniversary of the Closing Date, (y) one percent (1%), in the
case of a reduction after the first anniversary of the Closing
Date but on or prior to the second anniversary, and (z) one-half
percent (.50%), in the case of a reduction after the second
anniversary of the Closing Date but on or prior to the third
anniversary. Notwithstanding the foregoing, no prepayment fee
shall be payable by Borrower upon a mandatory prepayment made
pursuant to Sections 1.3(b); provided that in the case of
prepayments made pursuant to Section 1.3(b)(ii) or (b)(iii), the
transaction giving rise to the applicable prepayment is expressly
permitted under Section 6.
1.10 Receipt of Payments. Borrower shall make each
payment under this Agreement not later than 2:00 p.m. (New York
time) on the day when due in immediately available funds in
Dollars to the Collection Account, or to the extent amounts have
been credited in immediately available funds to the Collection
Account, Agent shall apply such amounts in accordance with
Section 1.11 hereof. The Revolving Loan Commitment shall not be
reduced permanently by any amounts applied by Agent in accordance
with this Section 1.10. For purposes of computing interest and
Fees and determining Borrowing Availability or Net Borrowing
Availability as of any date, all payments shall be deemed
received on the Business Day of receipt of immediately available
funds therefor in the Collection Account prior to 2:00 p.m. New
York time. Payments received after 2:00 p.m. New York time on
any Business Day shall be deemed to have been received on the
following Business Day.
1.11 Application and Allocation of Payments.
(a) So long as no Default or Event of Default has
occurred and is continuing, (i) payments consisting of proceeds
of Accounts and Inventory received in the ordinary course of
business shall be applied to the Revolving Loan; (ii) payments
matching specific scheduled payments then due shall be applied to
those scheduled payments; (iii) voluntary prepayments shall be
applied as determined by Borrower, subject to the provisions of
Section 1.3(a); and (iv) mandatory prepayments shall be applied
as set forth in Sections 1.3(c) and 1.3(d). All payments and
prepayments applied to a particular Loan shall be applied ratably
to the portion thereof held by each Lender as determined by its
Pro Rata Share. As to each other payment, and as to all payments
made when a Default or Event of Default has occurred and is
continuing or following the Commitment Termination Date, Borrower
hereby irrevocably waives the right to direct the application of
any and all payments received from or on behalf of Borrower, and
Borrower hereby irrevocably agrees that Agent shall have the
continuing exclusive right to apply any and all such payments
against the Obligations as Agent may deem advisable
notwithstanding any previous entry by Agent in the Loan Account
or any other books and records. In the absence of a specific
determination by Agent with respect thereto, payments shall be
applied to amounts then due and payable in the following order:
(1) to Fees and Agent's expenses reimbursable hereunder; (2) to
interest on the Revolving Loan; (3) to principal payments on the
Revolving Loan; (4) to provide cash collateral for Letter of
Credit Obligations in the manner described in Annex B; and (5) to
all other Obligations including expenses of Lenders to the extent
reimbursable under Section 11.3.
(b) Agent is authorized to, and at its sole election
may, charge to the Revolving Loan balance on behalf of Borrower
and cause to be paid all Fees, expenses, Charges, costs
(including insurance premiums in accordance with Section 5.4(a))
and interest and principal, other than principal of the Revolving
Loan, owing by Borrower under this Agreement or any of the other
Loan Documents if and to the extent Borrower fails to promptly
pay any such amounts as and when due, even if such charges would
cause the aggregate balance of the Revolving Loan to exceed
Borrowing Availability. At Agent's option and to the extent
permitted by law, any charges so made shall constitute part of
the Revolving Loan hereunder.
1.12 Loan Account and Accounting. Agent shall maintain
a loan account (the "Loan Account") on its books to record: all
Advances, all payments made by Borrower, and all other debits
and credits as provided in this Agreement with respect to the
Loans or any other Obligations. All entries in the Loan Account
shall be made in accordance with Agent's customary accounting
practices as in effect from time to time. The balance in the Loan
Account, as recorded on Agent's most recent printout or other
written statement, shall, absent manifest error, be presumptive
evidence of the amounts due and owing to Agent and Lenders by
Borrower; provided that any failure to so record or any error in
so recording shall not limit or otherwise affect Borrower's duty
to pay the Obligations. Agent shall render to Borrower a monthly
accounting of transactions with respect to the Loans setting
forth the balance of the Loan Account. Unless Borrower notifies
Agent in writing of any objection to any such accounting
(specifically describing the basis for such objection), within
thirty (30) days after the date thereof, each and every such
accounting shall, absent manifest error, be deemed final, binding
and conclusive upon Borrower in all respects as to all matters
reflected therein. Only those items (other than those which are
the subject of manifest error) expressly objected to in such
notice shall be deemed to be disputed by Borrower.
Notwithstanding any provision herein contained to the contrary,
any Lender may elect (which election may be revoked) to dispense
with the issuance of Notes to that Lender and may rely on the
Loan Account as evidence of the amount of Obligations from time
to time owing to it.
1.13 Indemnity.
(a) Each Credit Party that is a signatory hereto shall
jointly and severally indemnify and hold harmless each of Agent,
Lenders and their respective Affiliates, and each such Person's
respective officers, directors, employees, attorneys, agents and
representatives (each, an "Indemnified Person"), from and against
any and all suits, actions, proceedings, claims, damages, losses,
liabilities and expenses (including reasonable attorneys' fees
and disbursements and other costs of investigation or defense,
including those incurred upon any appeal) which may be instituted
or asserted against or incurred by any such Indemnified Person as
the result of credit having been extended, suspended or
terminated under this Agreement and the other Loan Documents and
the administration of such credit, and in connection with or
arising out of the transactions contemplated hereunder and
thereunder and any actions or failures to act in connection
therewith, including any and all Environmental Liabilities and
legal costs and expenses arising out of or incurred in connection
with disputes between or among any parties to any of the Loan
Documents (collectively, "Indemnified Liabilities"); provided,
that no such Credit Party shall be liable for any indemnification
to an Indemnified Person to the extent that any such suit,
action, proceeding, claim, damage, loss, liability or expense
results from that Indemnified Person's gross negligence or
willful misconduct. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE
OR LIABLE TO ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR,
ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER
PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR
INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY
BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED
OR TERMINATED UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY OTHER
TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.
1.14 Access. Each Credit Party which is a party hereto
shall, during normal business hours, from time to time upon one
(1) Business Day's prior notice as frequently as Agent determines
to be appropriate: (a) provide Agent and any of its officers,
employees and agents reasonable access to the properties,
facilities, advisors and employees (including officers) of each
Credit Party and to the Collateral, (b) permit Agent, and any of
its officers, employees and agents, to inspect, audit and make
extracts from any Credit Party's books and records, and (c)
permit Agent, and its officers, employees and agents, to inspect,
review, evaluate and make test verifications and counts of the
Accounts, Inventory and other Collateral of any Credit Party. If
a Default or Event of Default has occurred and is continuing or
if access is necessary to preserve or protect the Collateral as
determined by the Agent, each such Credit Party shall provide
such access to Agent and to each Lender at all times and without
advance notice. Furthermore, so long as any Event of Default has
occurred and is continuing, Borrower shall provide Agent and each
Lender with access to its suppliers and customers. Each Credit
Party shall make available to Agent and its counsel, as quickly
as is possible under the circumstances, originals or copies of
all books and records of Borrower which Agent may reasonably
request. Each Credit Party shall deliver any document or
instrument necessary for Agent, as it may from time to time
request, to obtain records from any service bureau or other
Person which maintains records for such Credit Party, and shall
maintain duplicate records or supporting documentation on media,
including computer tapes and discs owned by such Credit Party.
Agent will give Lenders at least ten (10) days' prior written
notice of regularly scheduled audits. Representatives of other
Lenders may accompany Agent's representatives on regularly
scheduled audits at no charge to Borrower.
1.15 Taxes.
(a) Any and all payments by Borrower hereunder or
under the Notes shall be made, in accordance with this Section
1.15, free and clear of and without deduction for any and all
present or future Taxes. If Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder
or under the Notes, (i) the sum payable shall be increased as
much as shall be necessary so that after making all required
deductions (including deductions applicable to additional sums
payable under this Section 1.15) Agent or Lenders, as applicable,
receive an amount equal to the sum they would have received had
no such deductions been made, (ii) Borrower shall make such
deductions, and (iii) Borrower shall pay the full amount deducted
to the relevant taxing or other authority in accordance with
applicable law. Within thirty (30) days after the date of any
payment of Taxes, Borrower shall furnish to Agent the original or
a certified copy of a receipt evidencing payment thereof.
(b) Each Credit Party that is a signatory hereto shall
indemnify and, within ten (10) days of demand therefor, pay Agent
and each Lender for the full amount of Taxes (including any Taxes
imposed by any jurisdiction on amounts payable under this Section
1.15) paid by Agent or such Lender, as appropriate, and any
liability (including penalties, interest and expenses) arising
therefrom or with respect thereto, whether or not such Taxes were
correctly or legally asserted.
(c) Each Lender organized under the laws of a
jurisdiction outside the United States (a "Foreign Lender") as to
which payments to be made under this Agreement or under the Notes
are exempt from United States withholding tax under an applicable
statute or tax treaty shall provide to Borrower and Agent a
properly completed and executed IRS Form 4224 or Form 1001 or
other applicable form, certificate or document prescribed by the
IRS or the United States certifying as to such Foreign Lender's
entitlement to such exemption (a "Certificate of Exemption").
Any foreign Person that seeks to become a Lender under this
Agreement shall provide a Certificate of Exemption to Borrower
and Agent prior to becoming a Lender hereunder. No foreign
Person may become a Lender hereunder if such Person is unable to
deliver a Certificate of Exemption.
1.16 Capital Adequacy; Increased Costs; Illegality.
(a) If any Lender shall have determined that any law,
treaty, governmental (or quasi-governmental) rule, regulation,
guideline or order regarding capital adequacy, reserve
requirements or similar requirements or compliance by any Lender
with any request or directive regarding capital adequacy, reserve
requirements or similar requirements (whether or not having the
force of law), in each case, adopted after the Closing Date, from
any central bank or other Governmental Authority increases or
would have the effect of increasing the amount of capital,
reserves or other funds required to be maintained by such Lender
and thereby reducing the rate of return on such Lender's capital
as a consequence of its obligations hereunder, then Borrower
shall from time to time upon demand by such Lender (with a copy
of such demand to Agent) pay to Agent, for the account of such
Lender, additional amounts sufficient to compensate such Lender
for such reduction. A certificate as to the amount of that
reduction and showing the basis of the computation thereof
submitted by such Lender to Borrower and to Agent shall, absent
manifest error, be final, conclusive and binding for all
purposes.
(b) If, due to either (i) the introduction of or any
change in any law or regulation (or any change in the
interpretation thereof) or (ii) the compliance with any guideline
or request from any central bank or other Governmental Authority
(whether or not having the force of law), in each case adopted
after the Closing Date, there shall be any increase in the cost
to any Lender of agreeing to make or making, funding or
maintaining any Loan, then Borrower shall from time to time,
upon demand by such Lender (with a copy of such demand to Agent),
pay to Agent for the account of such Lender additional amounts
sufficient to compensate such Lender for such increased cost. A
certificate as to the amount of such increased cost, submitted to
Borrower and to Agent by such Lender, shall be conclusive and
binding on Borrower for all purposes, absent manifest error.
Each Lender agrees that, as promptly as practicable after it
becomes aware of any circumstances referred to above which would
result in any such increased cost, the affected Lender shall, to
the extent not inconsistent with such Lender's internal policies
of general application, use reasonable commercial efforts to
minimize costs and expenses incurred by it and payable to it by
Borrower pursuant to this Section 1.16(b).
(c) Replacement of Lender in Respect of Increased
Costs. Within fifteen (15) days after receipt by Borrower of
written notice and demand from any Lender (an "Affected Lender")
for payment of additional amounts or increased costs as provided
in Section 1.15(a), 1.16(a) or 1.16(b), Borrower may, at its
option, notify Agent and such Affected Lender of its intention to
replace the Affected Lender. So long as no Event of Default has
occurred and is continuing, Borrower, with the consent of Agent,
may obtain, at Borrower's expense, a replacement Lender
("Replacement Lender") for the Affected Lender, which Replacement
Lender must be satisfactory to Agent, such consent not to be
unreasonably withheld or delayed. If Borrower obtains a
Replacement Lender within ninety (90) days following notice of
its intention to do so, the Affected Lender must sell and assign
its Loans and Commitments to such Replacement Lender for an
amount equal to the principal balance of all Loans held by the
Affected Lender and all accrued interest and Fees with respect
thereto through the date of such sale, provided that Borrower
shall have reimbursed such Affected Lender for the additional
amounts or increased costs that it is entitled to receive under
this Agreement through the date of such sale and assignment.
Notwithstanding the foregoing, Borrower shall not have the right
to obtain a Replacement Lender if the Affected Lender rescinds
its demand for increased costs or additional amounts within
fifteen (15) days following its receipt of Borrower's notice of
intention to replace such Affected Lender. Furthermore, if
Borrower gives a notice of intention to replace and does not so
replace such Affected Lender within ninety (90) days thereafter,
Borrower's rights under this Section 1.16(c) shall terminate and
Borrower shall promptly pay all increased costs or additional
amounts demanded by such Affected Lender pursuant to Sections
1.15(a), 1.16(a) and 1.16(b).
1.17 Single Loan. All Loans to Borrower and all of the
other Obligations of Borrower arising under this Agreement and
the other Loan Documents shall constitute one general obligation
of Borrower secured, until the Termination Date, by all of the
Collateral.
2. CONDITIONS PRECEDENT
2.1 Conditions to the Initial Loans. No Lender shall
be obligated to make any Loan or incur any Letter of Credit
Obligations on the Closing Date, or to take, fulfill, or perform
any other action hereunder, until the following conditions have
been satisfied or provided for in a manner satisfactory to Agent,
or waived in writing by Agent and Lenders:
(a) Credit Agreement; Loan Documents. This Agreement
or counterparts hereof shall have been duly executed by, and
delivered to, Borrower, each Credit Party, Agent and Lenders; and
Agent shall have received such documents, instruments, agreements
and legal opinions as Agent shall reasonably request in
connection with the transactions contemplated by this Agreement
and the other Loan Documents, including all those listed in the
Closing Checklist attached hereto as Annex D, each in form and
substance satisfactory to Agent.
(b) Repayment of Prior Lender Obligations;
Satisfaction of Outstanding L/Cs. (i) Agent shall have received
a fully executed original of a pay-off letter satisfactory to
Agent confirming that all of the Prior Lender Obligations will be
repaid in full from the proceeds of the initial Revolving Credit
Advance and all Liens upon any of the property of Borrower or any
of its Subsidiaries in favor of Prior Lender shall be terminated
by Prior Lender immediately upon such payment; and (ii) all
letters of credit issued or guaranteed by Prior Lender shall have
been cash collateralized, supported by a guaranty of Agent or
supported by a Letter of Credit issued pursuant to Annex B, as
mutually agreed upon by Agent, Borrower and Prior Lender.
(c) Approvals. Agent shall have received (i)
satisfactory evidence that the Credit Parties have obtained all
required consents and approvals of all Persons including all
requisite Governmental Authorities, to the execution, delivery
and performance of this Agreement and the other Loan Documents
and the consummation of the Related Transactions or (ii) an
officer's certificate in form and substance satisfactory to Agent
affirming that no such consents or approvals are required.
(d) Opening Availability. The Eligible Accounts and
Eligible Inventory supporting the initial Revolving Credit
Advance and the initial Letter of Credit Obligations incurred and
the amount of the Reserves to be established on the Closing Date
shall be sufficient in value, as determined by Agent, to provide
Borrower with Net Borrowing Availability, after giving effect to
the initial Revolving Credit Advance, the incurrence of any
initial Letter of Credit Obligations and the consummation of the
Related Transactions (on a pro forma basis, with trade payables
being paid currently, and expenses and liabilities being paid in
the ordinary course of business and without acceleration of
sales) of at least Nine Million Dollars ($9,000,000).
(e) Payment of Fees. Borrower shall have paid the Fees
required to be paid on the Closing Date in the respective amounts
specified in Section 1.9 (including the Fees specified in the GE
Capital Fee Letter), and shall have reimbursed Agent for all
fees, costs and expenses of closing presented as of the Closing
Date.
(f) Capital Structure: Other Indebtedness. The
capital structure of each Credit Party and the terms and
conditions of all Indebtedness of each Credit Party shall be
acceptable to Agent in its sole discretion.
(g) Consummation of Related Transactions. Agent shall
have received fully executed copies of each of the Related
Transactions Documents, each of which shall be in form and
substance satisfactory to Agent and its counsel. The Related
Transactions shall have been consummated in accordance with the
Related Transactions Documents.
2.2 Further Conditions to Each Loan. Except as
otherwise expressly provided herein, no Lender shall be obligated
to fund any Advance or incur any Letter of Credit Obligation, if,
as of the date thereof:
(a) Any representation or warranty by any Credit Party
contained herein or in any of the other Loan Documents shall be
untrue or incorrect as of such date, except to the extent that
such representation or warranty expressly relates to an earlier
date and except for changes therein expressly permitted or
expressly contemplated by this Agreement, and Agent or Requisite
Lenders shall have determined not to make such Advance or incur
such Letter of Credit Obligation due to the fact that such
representation or warranty is untrue or incorrect; or
(b) Any event or circumstance having a Material
Adverse Effect shall have occurred since the date hereof as
reasonably determined by the Requisite Lenders, and Agent or
Requisite Lenders shall have determined not to make such Advance
or incur such Letter of Credit Obligation as a result of the fact
that such event or circumstance has occurred; or
(c) Any Default or Event of Default shall have
occurred and be continuing or would result after giving effect to
any Advance (or the incurrence of any Letter of Credit
Obligations), and Agent or Requisite Lenders shall have
determined not to make any such Loan or incur any such Letter of
Credit Obligation on the basis of such Default or Event of
Default; or
(d) After giving effect to any Advance (or the
incurrence of any Letter of Credit Obligations), the outstanding
principal amount of the Revolving Loan would exceed the lesser of
the Borrowing Base and the Maximum Amount.
2.3 Reaffirmation. The request and acceptance by
Borrower of the proceeds of any Loan or the incurrence of any
Letter of Credit Obligations, as the case may be, shall be deemed
to constitute, as of the date of such request or acceptance, (i)
a representation and warranty by Borrower that the conditions in
Section 2.2 have been satisfied and (ii) a reaffirmation by
Borrower of the granting and continuance of Agent's Liens, on
behalf of itself and Lenders, pursuant to the Collateral
Documents.
3. REPRESENTATIONS AND WARRANTIES
To induce Lenders to make the Loans and to incur Letter
of Credit Obligations, the Credit Parties executing this
Agreement, jointly and severally, make the following
representations and warranties to Agent and each Lender with
respect to all Credit Parties, each and all of which shall
survive the execution and delivery of this Agreement.
3.1 Corporate Existence; Compliance with Law. Each
Credit Party (a) is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction
of incorporation; (b) is duly qualified to conduct business and
is in good standing in each other jurisdiction where its
ownership or lease of property or the conduct of its business
requires such qualification, except where the failure to be so
qualified would not result in exposure to losses, damages or
liabilities in excess of $100,000; (c) has the requisite
corporate power and authority and the legal right to own, pledge,
mortgage or otherwise encumber and operate its properties, to
lease the property it operates under lease and to conduct its
business as now, heretofore and proposed to be conducted; (d)
subject to specific representations regarding Environmental Laws,
has all material licenses, permits, consents or approvals from or
by, and has made all filings with, and has given all notices to,
all Governmental Authorities having jurisdiction, to the extent
required for such ownership, operation and conduct; (e) is in
compliance with its charter and by-laws; and (f) subject to
specific representations set forth herein regarding ERISA,
Environmental Laws, tax and other laws, is in compliance with all
applicable provisions of law, except where the failure to comply,
individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
3.2 Executive Offices; FEIN. As of the Closing Date,
the current location of each Credit Party's chief executive
office and principal place of business, as well as the location
of Borrower's assets, including all of its leased and owned
locations and corporate books and records, is set forth in
Disclosure Schedule (3.2), and none of such locations have
(except as set forth on Disclosure Schedule (3.2)) changed within
the twelve (12) months preceding the Closing Date. In addition,
Disclosure Schedule (3.2) lists the federal employer
identification number of each Credit Party.
3.3 Corporate Power, Authorization, Enforceable
Obligations. The execution, delivery and performance by each
Credit Party of the Loan Documents to which it is a party and the
creation of all Liens provided for therein: (a) are within such
Person's corporate power; (b) have been duly authorized by all
necessary or proper corporate and shareholder action; (c) do not
contravene any provision of such Person's charter or bylaws; (d)
do not violate any law or regulation, or any order or decree of
any court or Governmental Authority; (e) do not conflict with or
result in the breach or termination of, constitute a default
under or accelerate or permit the acceleration of any performance
required by, any indenture, mortgage, deed of trust, lease,
material agreement or other material instrument to which such
Person is a party or by which such Person or any of its property
is bound other than with respect to those agreements described in
Disclosure Schedule (3.3) and Capital Leases of Borrower existing
on the Closing Date which prohibit the creation of junior liens;
(f) do not result in the creation or imposition of any Lien upon
any of the property of such Person other than those in favor of
Agent, on behalf of itself and Lenders, pursuant to the Loan
Documents; and (g) do not require the consent or approval of any
Governmental Authority or any other Person, except those referred
to in Section 2.1(c) or Disclosure Schedule (3.3), all of which
will have been duly obtained, made or complied with prior to the
Closing Date. On or prior to the Closing Date, each of the Loan
Documents shall have been duly executed and delivered by each
Credit Party thereto and each such Loan Document shall then
constitute a legal, valid and binding obligation of such Credit
Party enforceable against it in accordance with its terms, except
as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar law affecting
creditors' rights generally, including fraudulent transfer or
conveyance laws and general principles of equity.
3.4 Financial Statements and Projections. Except for
the Projections, all Financial Statements concerning Borrower and
its Subsidiaries which are referenced below have been prepared in
accordance with GAAP consistently applied throughout the periods
covered (except as disclosed therein and except, with respect to
unaudited Financial Statements, for the absence of footnotes and
normal year-end audit adjustments) and present fairly in all
material respects the financial position of the Persons covered
thereby as at the dates thereof and the results of their
operations and cash flows for the periods then ended.
(a) The following Financial Statements attached hereto
as Disclosure Schedule (3.4(A)) have been delivered on the date
hereof:
(i) The audited consolidated balance sheets
at December 31, 1998 and the related statements of income
and cash flows of Borrower and its Subsidiaries for the
Fiscal Years then ended, certified by Deloitte and Touche
LLP.
(ii) The unaudited consolidated and
consolidating balance sheet(s) at September 30, 1999 and the
related statement(s) of income and cash flows of Borrower
and its Subsidiaries for the three (3) Fiscal Quarters then
ended.
(b) Projections. The Projections delivered on the
date hereof and attached hereto as Disclosure Schedule (3.4(B))
have been prepared by Borrower in light of the past operations of
its businesses, but include future payments of known contingent
liabilities, and reflect projections for (i) the three (3) month
period beginning on October 1, 1999 on a month by month through
December 31, 1999, and (ii) for the one year period beginning on
January 1, 2000, on a quarterly basis. The Projections are based
upon estimates and assumptions stated therein, all of which
Borrower believes to be reasonable and fair in light of current
conditions and current facts known to Borrower and, as of the
Closing Date, reflect Borrower's good faith and reasonable
estimates of the future financial performance of Borrower and of
the other information projected therein for the periods set forth
therein.
3.5 Material Adverse Effect. Between December 31,
1998 and the Closing Date, other than as disclosed in the
Borrower's 10-Q's and 10-K relating to such period or as
disclosed on Disclosure Schedule (3.5), (a) no Credit Party has
incurred any obligations, contingent or non-contingent
liabilities, liabilities for Charges, long-term leases or unusual
forward or long-term commitments which are not reflected in the
Financial Statements and which, alone or in the aggregate, could
reasonably be expected to have a Material Adverse Effect, (b) no
contract, lease or other agreement or instrument has been entered
into by any Credit Party or has become binding upon any Credit
Party's assets and no law or regulation applicable to any Credit
Party has been adopted, in either case, which has had or could
reasonably be expected to have a Material Adverse Effect, and (c)
no Credit Party is in default and to the best of Borrower's
knowledge no third party is in default under any material
contract, lease or other agreement or instrument, which alone or
in the aggregate has had a Material Adverse Effect. Between
December 31, 1998 and the Closing Date, other than as disclosed
on Disclosure Schedule (3.5) or in the Borrower's 10-Q's and 10-K
relating to such period, no event has occurred, which alone or
together with other events, could reasonably be expected to have
a Material Adverse Effect.
3.6 Ownership of Property; Liens. As of the Closing
Date, the real estate ("Real Estate") listed on Disclosure
Schedule (3.6) constitutes all of the real property owned,
leased, subleased, or used by Borrower. Borrower owns good and
marketable fee simple title to all of its owned Real Estate, and
valid and marketable leasehold interests in all of its leased
Real Estate, all as described on Disclosure Schedule (3.6), and
copies of all such leases or a summary of terms thereof
satisfactory to Agent have been delivered to Agent. Disclosure
Schedule (3.6) further describes any Real Estate with respect to
which Borrower is a lessor, sublessor or assignor as of the
Closing Date. Borrower also has good and marketable title to, or
valid leasehold interests in, all of its personal property and
assets. As of the Closing Date, none of the properties and
assets of Borrower are subject to any Liens other than Permitted
Encumbrances, and there are no facts, circumstances or conditions
known to Borrower that may result in any Liens (including Liens
arising under Environmental Laws) other than Permitted
Encumbrances. Borrower has received all deeds, assignments,
waivers, consents, non-disturbance and attornment or similar
agreements, bills of sale and other documents, and has duly
effected all recordings, filings and other actions necessary to
establish, protect and perfect Borrower's right, title and
interest in and to all such owned Real Estate. Disclosure
Schedule (3.6) also describes any purchase options, rights of
first refusal or other similar contractual rights pertaining to
any Real Estate. As of the Closing Date, no portion of
Borrower's Real Estate has suffered any material damage by fire
or other casualty loss which has not heretofore been repaired and
restored in all material respects to its original condition or
otherwise remedied. As of the Closing Date, all material permits
required to have been issued or appropriate to enable the Real
Estate to be lawfully occupied and used for all of the purposes
for which it is currently occupied and used have been lawfully
issued and are in full force and effect.
3.7 Labor Matters. As of the Closing Date (a) no
strikes or other material labor disputes against Borrower are
pending or, to Borrower's knowledge, threatened; (b) hours worked
by and payment made to employees of Borrower comply with the Fair
Labor Standards Act and each other federal, state, local or
foreign law applicable to such matter; (c) all material payments
due from Borrower for employee health and welfare insurance have
been paid or accrued as a liability on the books of Borrower; (d)
except as set forth in Disclosure Schedule (3.7), Borrower is not
a party to or bound by any collective bargaining agreement,
management agreement, consulting agreement, employment agreement,
bonus, stock option or stock appreciation plan or agreement
except for agreements terminable by Borrower on not more than
thirty (30) days' notice and without payment of penalty (and true
and complete copies of any agreements described on Disclosure
Schedule (3.7) have been delivered to Agent); (e) there is no
organizing activity involving Borrower pending or, to Borrower's
knowledge, threatened by any labor union or group of employees;
(f) there are no representation proceedings pending or, to
Borrower's knowledge, threatened with the National Labor
Relations Board, and no labor organization or group of employees
of Borrower has made a pending demand for recognition; and (g)
except as set forth in Disclosure Schedule (3.7), there are no
complaints or charges against Borrower pending or, to the
knowledge of Borrower, threatened to be filed with any
Governmental Authority or arbitrator based on, arising out of, in
connection with, or otherwise relating to the employment or
termination of employment by Borrower of any individual.
3.8 Ventures, Subsidiaries and Affiliates; Outstanding
Stock and Indebtedness. Except as set forth in Disclosure
Schedule (3.8) and with respect to the Borrower as of the Closing
Date, no Credit Party has any Subsidiaries, is engaged in any
joint venture or partnership with any other Person, or is an
Affiliate of any other Person. All of the issued and outstanding
Stock of each Credit Party (other than Borrower) is owned by each
of the stockholders and in the amounts set forth on Disclosure
Schedule (3.8). Except as set forth in Disclosure Schedule
(3.8), there are no outstanding rights to purchase, options,
warrants or similar rights or agreements pursuant to which any
Credit Party may be required to issue, sell, repurchase or redeem
any of its Stock or other equity securities or any Stock or other
equity securities of its Subsidiaries. All outstanding
Indebtedness of each Credit Party as of the Closing Date is
described in Section 6.3 (including Disclosure Schedule (6.3)).
3.9 Government Regulation. No Credit Party is an
"investment company" or an "affiliated person" of, or "promoter"
or "principal underwriter" for, an "investment company," as such
terms are defined in the Investment Company Act of 1940 as
amended. No Credit Party is subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal Power
Act, or any other federal or state statute that restricts or
limits its ability to incur Indebtedness or to perform its
obligations hereunder. The making of the Loans by Lenders to
Borrower, the incurrence of the Letter of Credit Obligations on
behalf of Borrower, the application of the proceeds thereof and
repayment thereof and the consummation of the Related
Transactions will not violate any provision of any such statute
or any rule, regulation or order issued by the Securities and
Exchange Commission.
3.10 Margin Regulations. No Credit Party is engaged,
nor will it engage, principally or as one of its important
activities, in the business of extending credit for the purpose
of "purchasing" or "carrying" any "margin security" as such terms
are defined in Regulation U or G of the Federal Reserve Board as
now and from time to time hereafter in effect (such securities
being referred to herein as "Margin Stock"). No Credit Party
owns any Margin Stock (other than Borrower in its capacity as a
shareholder of E-greetings Network, Inc.), and none of the
proceeds of the Loans or other extensions of credit under this
Agreement will be used, directly or indirectly, for the purpose
of purchasing or carrying any Margin Stock, for the purpose of
reducing or retiring any Indebtedness which was originally
incurred to purchase or carry any Margin Stock or for any other
purpose which might cause any of the Loans or other extensions of
credit under this Agreement to be considered a "purpose credit"
within the meaning of Regulation T, U or X of the Federal Reserve
Board. No Credit Party will take or permit to be taken any
action which might cause any Loan Document to violate any
regulation of the Federal Reserve Board.
3.11 Taxes. All tax returns, reports and statements,
including information returns, required by any Governmental
Authority to be filed by any Credit Party have been filed with
the appropriate Governmental Authority or an extension has been
granted, except where the failure to so file would not result in
damages, costs or liabilities in excess of $125,000, individually
or in the aggregate, and all Charges have been paid prior to the
date on which any fine, penalty, interest or late charge may be
added thereto for nonpayment thereof (or any such fine, penalty,
interest, late charge or loss has been paid), excluding Charges
or other amounts being contested in accordance with Section
5.2(b). Proper and accurate amounts have been withheld, other
than immaterial and inadvertent errors in an amount not to exceed
$50,000 by each Credit Party from its respective employees for
all periods generally in compliance with all applicable federal,
state, local and foreign law and such withholdings have been or
will be timely paid to the respective Governmental Authorities.
Disclosure Schedule (3.11) sets forth as of the Closing Date
those taxable years for which any Credit Party's tax returns are
currently being audited by the IRS or any other applicable
Governmental Authority and any assessments or threatened
assessments in connection with such audit, or otherwise currently
outstanding. Except as described on Disclosure Schedule (3.11),
no Credit Party has executed or filed with the IRS or any other
Governmental Authority any agreement or other document extending,
or having the effect of extending, the period for assessment or
collection of any Charges. None of the Credit Parties and their
respective predecessors are liable for any Charges: (a) under any
agreement (including any tax sharing agreements) or (b) to each
Credit Party's knowledge, as a transferee. As of the Closing
Date, no Credit Party has agreed or been requested to make any
adjustment under IRC Section 481(a), by reason of a change in
accounting method or otherwise, which would have a Material
Adverse Effect.
3.12 ERISA.
(a) Disclosure Schedule (3.12) lists and separately
identifies all Plans, including Title IV Plans, Multiemployer
Plans, ESOPs and Welfare Plans, including all Retiree Welfare
Plans. Copies of all such listed Plans, together with a copy of
the latest form 5500 for each such Plan for which the filing of
such form is required, have been delivered to Agent. Except with
respect to Multiemployee Plans, each Qualified Plan has been
determined by the IRS to qualify under Section 401 of the IRC,
and the trusts created thereunder have been determined to be
exempt from tax under the provisions of Section 501 of the IRC,
and nothing has occurred which would cause the loss of such
qualification or tax-exempt status. Each Plan is in compliance
with the applicable provisions of ERISA and the IRC, including
the timely filing of IRS/DOL 5500-series form reports required
under the IRC or ERISA. No Credit Party or ERISA Affiliate has
failed to make any contribution or pay any amount due as required
by either Section 412 of the IRC or Section 302 of ERISA or the
terms of any such Plan. No Credit Party or ERISA Affiliate has
engaged in a "prohibited transaction," as defined in Section 4975
of the IRC, in connection with any Plan, which would subject any
Credit Party to a material tax on prohibited transactions imposed
by Section 4975 of the IRC.
(b) Except as set forth in Disclosure Schedule (3.12):
(i) no Title IV Plan has any Unfunded Pension Liability; (ii) no
ERISA Event or event described in Section 4062(e) of ERISA with
respect to any Title IV Plan has occurred or is reasonably
expected to occur; (iii) there are no pending, or to the
knowledge of any Credit Party, threatened claims (other than
claims for benefits in the normal course), sanctions, actions or
lawsuits, asserted or instituted against any Plan or any Person
as fiduciary or sponsor of any Plan; (iv) no Credit Party or
ERISA Affiliate has incurred or reasonably expects to incur any
liability as a result of a complete or partial withdrawal from a
Multiemployer Plan; (v) within the last five years no Title IV
Plan of any Credit Party or ERISA Affiliate has been terminated
nor has any such Plan with Unfunded Pension Liabilities been
transferred outside of the "controlled group" (within the meaning
of Section 4001(a)(14) of ERISA) of any Credit Party or ERISA
Affiliate; (vi) except in the case of any ESOP, Stock of all
Credit Parties and their ERISA Affiliates makes up, in the
aggregate, no more than 10% of fair market value of the assets
of any Plan; and (vii) no liability under any Title IV Plan has
been satisfied with the purchase of a contract from an insurance
company that is not rated AAA by the Standard & Poor's
Corporation or the equivalent by another nationally recognized
rating agency.
3.13 No Litigation. No action, claim, lawsuit, demand,
investigation or proceeding is now pending or, to the knowledge
of any Credit Party, threatened against any Credit Party, before
any Governmental Authority or before any arbitrator or panel of
arbitrators (collectively, "Litigation"), (a) which challenges
any Credit Party's right or power to enter into or perform any of
its obligations under the Loan Documents to which it is a party,
or the validity or enforceability of any Loan Document or any
action taken thereunder, or (b) except as set forth on Disclosure
Schedule (3.13(a)), which has a reasonable risk of being
determined adversely to any Credit Party and which, if so
determined, could have a Material Adverse Effect. Except as set
forth on Disclosure Schedule (3.13(b)), as of the Closing Date
there is no Litigation pending or threatened which seeks damages
in excess of $250,000 or injunctive relief against or alleges
criminal misconduct of any Credit Party.
3.14 Brokers. No broker or finder acting on behalf of
any Credit Party or Affiliate thereof brought about the
obtaining, making or closing of the Loans or the Related
Transactions, and no Credit Party or Affiliate thereof has any
obligation to any Person in respect of any finder's or brokerage
fees in connection therewith.
3.15 Intellectual Property. As of the Closing Date,
each Credit Party owns or has rights to use all material
Intellectual Property necessary to continue to conduct its
business as now or heretofore conducted by it or proposed to be
conducted by it (except for Trademarks with respect to which each
Credit Party shall use its best efforts to obtain at the time of
the usage of such Trademarks as are necessary to conduct the
business proposed to be conducted by it), and each Patent,
registered Trademark, application for registration of Trademark,
registered Copyright, application for registration of Copyright,
and License is listed, together with application or registration
numbers, as applicable, in Disclosure Schedule (3.15) hereto. To
the best knowledge of any Credit Party, except as set forth on
Disclosure Schedule (3.15), each Credit Party conducts its
business and affairs without material infringement of or material
interference with any Intellectual Property of any other Person.
Except as set forth in Disclosure Schedule (3.15), no Credit
Party is aware of any material infringement claim by any other
Person with respect to Intellectual Property.
3.16 Full Disclosure. No information contained in this
Agreement, any of the other Loan Documents, any Projections,
Financial Statements or Collateral Reports or other reports from
time to time delivered hereunder or any written statement
furnished by or on behalf of any Credit Party to Agent or any
Lender pursuant to the terms of this Agreement contains or will
contain any untrue statement of a material fact or omits or will
omit to state a material fact necessary to make the statements
contained herein or therein not misleading in light of the
circumstances under which they were made. The Liens granted to
Agent, on behalf of itself and Lenders, pursuant to the
Collateral Documents will at all times be fully perfected first
priority Liens in and to the Collateral (other than with respect
to unregistered Copyrights or foreign Intellectual Property)
described therein, subject, as to priority, only to Permitted
Encumbrances with respect to the Collateral other than Accounts.
3.17 Environmental Matters.
(a) Except as set forth in Disclosure Schedule (3.17),
as of the Closing Date: (i) the Real Estate is free of
contamination from any Hazardous Material except for such
contamination that would not result in Environmental Liabilities
which could reasonably be expected to exceed $500,000; (ii) no
Credit Party has caused or suffered to occur any unlawful Release
of Hazardous Materials on, at, in, under, above, to, from or
about any of its Real Estate; (iii) the Credit Parties are and
have been in compliance with all Environmental Laws, except for
such noncompliance which would not result in Environmental
Liabilities which could reasonably be expected to exceed
$250,000; (iv) the Credit Parties have obtained, and are in
compliance with, all Environmental Permits required by
Environmental Laws for the operations of their respective
businesses as presently conducted or as proposed to be conducted,
except where the failure to so obtain or comply with such
Environmental Permits would not result in Environmental
Liabilities which could reasonably be expected to exceed
$250,000, and all such Environmental Permits are valid,
uncontested and in good standing; (v) no Credit Party is involved
in operations or knows of any facts, circumstances or conditions,
including any Releases of Hazardous Materials, that are likely to
result in any Environmental Liabilities of such Credit Party
which could reasonably be expected to exceed $250,000, and no
Credit Party has permitted any current or former tenant or
occupant of the Real Estate to engage in any such operations;
(vi) there is no Litigation arising under or related to any
Environmental Laws, Environmental Permits or Hazardous Material
which seeks damages, penalties, fines, costs or expenses in
excess of $250,000 or injunctive relief, or which alleges
criminal misconduct by any Credit Party; (vii) no notice has been
received by any Credit Party identifying it as a "potentially
responsible party" or requesting information under CERCLA or
analogous state statutes, and to the knowledge of the Credit
Parties, there are no facts, circumstances or conditions that may
result in any Credit Party being identified as a "potentially
responsible party" under CERCLA or analogous state statutes; and
(viii) the Credit Parties have provided to Agent copies of all
existing environmental reports, reviews and audits and all
written information pertaining to actual or potential
Environmental Liabilities, in each case relating to any Credit
Party.
(b) Each Credit Party hereby acknowledges and agrees
that Agent (i) is not now, and has not ever been, in control of
any of the Real Estate or any Credit Party's affairs, and (ii)
does not have the capacity through the provisions of the Loan
Documents or otherwise to influence any Credit Party's conduct
with respect to the ownership, operation or management of any of
its Real Estate or compliance with Environmental Laws or
Environmental Permits.
3.18 Insurance. Disclosure Schedule (3.18) lists all
insurance policies of any nature maintained, as of the Closing
Date, for current occurrences by each Credit Party and copies of
such policies have been provided to Agent.
3.19 Deposit and Disbursement Accounts. Disclosure
Schedule (3.19) lists all banks and other financial institutions
at which Borrower maintains deposits or other accounts as of the
Closing Date, including any Disbursement Accounts, and such
Schedule correctly identifies the name, address and telephone
number of each depository, the name in which the account is held,
a description of the purpose of the account, and the complete
account number therefor.
3.20 Government Contracts. Except as set forth in
Disclosure Schedule (3.20), as of the Closing Date, no Credit
Party is a party to any contract or agreement requiring annual
payments in excess of $25,000 with any Governmental Authority and
no Credit Party's Accounts are subject to the Federal Assignment
of Claims Act (31 U.S.C. Section 3727) or any similar state or
local law.
3.21 Customer and Trade Relations. As of the Closing
Date, there exists no actual or, to the knowledge of any Credit
Party, threatened termination or cancellation of, or any
material adverse modification or change in: the business
relationship of any Credit Party with any customer or group of
customers (other than Cub Foods) whose purchases during the
preceding twelve (12) months caused them to be ranked among the
ten largest customers of such Credit Party; or the business
relationship of any Credit Party with any supplier material to
its operations. Agent acknowledges that Borrower's existing
contracts with BJ's Wholesale Club and Giant Eagle shall expire
during the Fiscal Year ending December 31, 2000, and may or may
not be renewed by such customers.
3.22 Agreements and Other Documents. As of the Closing
Date, each Credit Party has provided to Agent or its counsel, on
behalf of Lenders, accurate and complete copies (or summaries) of
all of the following agreements or documents to which any it is
subject and each of which are listed on Disclosure Schedule
(3.22): supply agreements and purchase agreements not terminable
by such Credit Party within sixty (60) days following written
notice issued by such Credit Party and involving transactions in
excess of $1,000,000 per annum; the letter of understanding with
Winn-Dixie Stores, Inc.; all material sales agreements; leases of
Equipment having a remaining term of one year or longer and
requiring aggregate rental and other payments in excess of
$500,000 per annum; licenses and permits held by the Credit
Parties, the absence of which could be reasonably likely to have
a Material Adverse Effect; instruments and documents evidencing
Indebtedness of such Credit Party and any Lien granted by such
Credit Party with respect thereto; and instruments and
agreements evidencing the issuance of any equity securities,
warrants, rights or options to purchase equity securities of such
Credit Party.
3.23 Solvency. Both before and after giving effect to
(a) the Loans and Letter of Credit Obligations to be made or
incurred on the Closing Date or such other date as Loans and
Letter of Credit Obligations requested hereunder are made or
incurred, (b) the disbursement of the proceeds of such Loans
pursuant to the instructions of Borrower, (c) the Refinancing and
the consummation of the other Related Transactions and (d) the
payment and accrual of all transaction costs in connection with
the foregoing, each Credit Party is and will be Solvent.
3.24 Year 2000 Representations. As of the Closing
Date, Borrower has prepared a Year 2000 Assessment and adopted a
Year 2000 Corrective Plan. All of the information set forth in
the survey completed and delivered by Borrower to Agent with
respect to any Year 2000 Problems is true and correct in all
material respects as of the date thereof.
4. FINANCIAL STATEMENTS AND INFORMATION
4.1 Reports and Notices.
(a) Each Credit Party executing this Agreement hereby
agrees that from and after the Closing Date and until the
Termination Date, it shall deliver to Agent or to Agent and
Lenders, as required, the Financial Statements, notices,
Projections and other information at the times, to the Persons
and in the manner set forth in Annex E.
(b) Each Credit Party executing this Agreement hereby
agrees that from and after the Closing Date and until the
Termination Date, it shall deliver to Agent or to Agent and
Lenders, as required, the various Collateral Reports (including
Borrowing Base Certificates in the form of Exhibit 4.1(b)) at the
times, to the Persons and in the manner set forth in Annex F.
4.2 Communication with Accountants. Each Credit Party
executing this Agreement authorizes Agent and, so long as a
Default or Event of Default has occurred and is continuing, each
Lender, to communicate directly with its independent certified
public accountants including Deloitte & Touche LLP, and
authorizes and at Agent's request shall instruct those
accountants and advisors to disclose and make available to Agent
and each Lender any and all Financial Statements and other
supporting financial documents, schedules and information
relating to any Credit Party (including copies of any issued
management letters) with respect to the business, financial
condition and other affairs of any Credit Party.
5. AFFIRMATIVE COVENANTS
Each Credit Party executing this Agreement jointly and
severally agrees as to all Credit Parties that from and after the
date hereof and until the Termination Date:
5.1 Maintenance of Existence and Conduct of Business.
Each Credit Party shall: do or cause to be done all things
necessary to preserve and keep in full force and effect its
corporate existence and its rights and franchises; continue to
conduct its business substantially as now conducted or as
otherwise permitted hereunder; at all times maintain, preserve
and protect all of its assets and properties necessary to the
conduct of its business, and keep the same in good repair,
working order and condition in all material respects (taking into
consideration ordinary wear and tear) and from time to time make,
or cause to be made, all necessary or appropriate repairs,
replacements and improvements thereto consistent with industry
practices; and transact business only in such corporate and
trade names as are set forth in Disclosure Schedule (5.1).
5.2 Payment of Obligations.
(a) Subject to Section 5.2(b), each Credit Party shall
pay and discharge or cause to be paid and discharged when due all
Charges payable by it, including (i) Charges imposed upon it, its
income and profits, or any of its property (real, personal or
mixed) and all Charges with respect to tax, social security and
unemployment withholding with respect to its employees, (ii)
lawful claims for labor, materials, supplies and services or
otherwise, and (iii) all storage or rental charges payable to
warehouseman and bailees, in each case, before any charges
thereof shall become past due.
(b) Each Credit Party may in good faith contest, by
appropriate proceedings, the validity or amount of any Charges or
claims described in Section 5.2(a); provided, that (i) adequate
reserves with respect to such contest are maintained on the books
of such Credit Party, in accordance with GAAP, (ii) no Lien shall
be imposed to secure payment of such Charges that is superior to
any of the Liens securing payment of the Obligations and such
contest is maintained and prosecuted continuously and with
diligence and operates to suspend collection or enforcement of
such Charges (other than payments to bailees), (iii) none of the
Collateral becomes subject to forfeiture or loss as a result of
such contest, (iv) such Credit Party shall promptly pay or
discharge such contested Charges or claims and all additional
charges, interest, penalties and expenses, if any, and shall
deliver to Agent evidence acceptable to Agent of such compliance,
payment or discharge, if such contest is terminated or
discontinued adversely to such Credit Party or the conditions set
forth in this Section 5.2(b) are no longer met, and (v) Agent has
not advised Borrower in writing that Agent reasonably believes
that nonpayment or nondischarge thereof could have or result in a
Material Adverse Effect. Additionally, Borrower shall deliver to
Agent a copy of any notice of levy received by it with respect to
any of Borrower's Accounts (as such term is defined in Annex C)
immediately upon receipt thereof.
5.3 Books and Records. Each Credit Party shall keep
adequate books and records with respect to its business
activities in which proper entries, reflecting all financial
transactions, are made in accordance with GAAP and on a basis
consistent with the Financial Statements attached as Disclosure
Schedule (3.4(A)).
5.4 Insurance; Damage to or Destruction of Collateral.
(a) The Credit Parties shall, at their sole cost and
expense, maintain the policies of insurance described on
Disclosure Schedule (3.18), or replacements with comparable
insurers and policy forms and amounts reasonably acceptable to
Agent, as in effect on the date hereof or otherwise in form and
amounts and with insurers acceptable to Agent. If any Credit
Party at any time or times hereafter shall fail to obtain or
maintain any of the policies of insurance required above or to
pay all premiums relating thereto, Agent may at any time or times
thereafter obtain and maintain such policies of insurance and pay
such premiums and take any other action with respect thereto
which Agent deems advisable. Agent shall have no obligation to
obtain insurance for any Credit Party or pay any premiums
therefor. By doing so, Agent shall not be deemed to have waived
any Default or Event of Default arising from any Credit Party's
failure to maintain such insurance or pay any premiums therefor.
All sums so disbursed, including attorneys' fees, court costs and
other charges related thereto, shall be payable on demand by
Borrower to Agent and shall be additional Obligations hereunder
secured by the Collateral.
(b) Agent reserves the right at any time upon any
change in any Credit Party's risk profile (including any change
in the product mix maintained by any Credit Party or any laws
affecting the potential liability of such Credit Party) to
require additional forms and limits of insurance to, in Agent's
reasonable opinion, adequately protect both Agent's and Lender's
interests in all or any portion of the Collateral and to ensure
that each Credit Party is protected by insurance in amounts and
with coverage customary for its industry. If requested by Agent,
each Credit Party shall deliver to Agent from time to time a
report of a reputable insurance broker, satisfactory to Agent,
with respect to its insurance policies.
(c) Borrower shall deliver to Agent, in form and
substance satisfactory to Agent, endorsements to (i) all "All
Risk" and business interruption insurance naming Agent, on behalf
of itself and Lenders, as loss payee, and (ii) all general
liability and other liability policies naming Agent, on behalf of
itself and Lenders, as additional insured. Borrower irrevocably
makes, constitutes and appoints Agent (and all officers,
employees or agents designated by Agent), so long as any Default
or Event of Default has occurred and is continuing or the
anticipated insurance proceeds exceed $1,000,000, as Borrower's
true and lawful agent and attorney-in-fact for the purpose of
making, settling and adjusting claims under such "All Risk"
policies of insurance, endorsing the name of Borrower on any
check or other item of payment for the proceeds of such "All
Risk" policies of insurance and for making all determinations and
decisions with respect to such "All Risk" policies of insurance.
Agent shall have no duty to exercise any rights or powers granted
to it pursuant to the foregoing power-of-attorney. Borrower
shall promptly notify Agent of any loss, damage, or destruction
to the Collateral in the amount of $500,000 or more, whether or
not covered by insurance. After deducting from such proceeds the
expenses, if any, incurred by Agent in the collection or handling
thereof, Agent may, at its option, apply such proceeds to the
reduction of the Obligations in accordance with Section 1.3(d),
or permit or require Borrower to use such money, or any part
thereof, to replace, repair, restore or rebuild the Collateral in
a diligent and expeditious manner with materials and workmanship
of substantially the same quality as existed before the loss,
damage or destruction. Notwithstanding the foregoing, if the
casualty giving rise to such insurance proceeds could not
reasonably be expected to have a Material Adverse Effect and such
insurance proceeds do not exceed $500,000 in the aggregate, Agent
shall permit Borrower to replace, restore, repair or rebuild the
property; provided that if Borrower has not completed or entered
into binding agreements to complete such replacement,
restoration, repair or rebuilding within 90 days of such
casualty, Agent may apply such insurance proceeds to the
Obligations in accordance with Section 1.3(d). All insurance
proceeds which are to be made available to Borrower to replace,
repair, restore or rebuild the Collateral shall be applied by
Agent to reduce the outstanding principal balance of the
Revolving Loan (which application shall not result in a permanent
reduction of the Revolving Loan Commitment) and upon such
application, Agent shall establish a Reserve against the
Borrowing Base in an amount equal to the amount of such proceeds
so applied. All insurance proceeds made available to any Credit
Party that is not a Borrower to replace, repair, restore or
rebuild Collateral shall be deposited in a cash collateral
account. Thereafter, such funds shall be made available to
Borrower to provide funds to replace, repair, restore or rebuild
the Collateral as follows: (i) Borrower shall request a Revolving
Credit Advance in the amount requested to be released; (ii) so
long as the conditions set forth in Section 2.2 have been met,
Revolving Lenders shall make such Revolving Credit Advance or
Agent shall release funds from the cash collateral account; and
(iii) in the case of insurance proceeds applied against the
Revolving Loan, the Reserve established with respect to such
insurance proceeds shall be reduced by the amount of such
Revolving Credit Advance. To the extent not used to replace,
repair, restore or rebuild the Collateral, such insurance
proceeds shall be applied in accordance with Section 1.3(d).
5.5 Compliance with Laws. Each Credit Party shall
comply with all federal, state, local and foreign laws and
regulations applicable to it, including those relating to ERISA
and labor matters and Environmental Laws and Environmental
Permits, except to the extent that the failure to comply,
individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
5.6 Supplemental Disclosure. From time to time as may
be requested by Agent (which request will not be made more
frequently than once each year absent the occurrence and
continuance of a Default or an Event of Default), the Credit
Parties shall supplement each Disclosure Schedule hereto, or any
representation herein or in any other Loan Document, with respect
to any matter hereafter arising which, if existing or occurring
at the date of this Agreement, would have been required to be set
forth or described in such Disclosure Schedule or as an exception
to such representation or which is necessary to correct any
information in such Disclosure Schedule or representation which
has been rendered inaccurate thereby (and, in the case of any
supplements to any Disclosure Schedule, such Disclosure Schedule
shall be appropriately marked to show the changes made therein);
provided that (a) no such supplement to any such Disclosure
Schedule or representation shall be or be deemed a waiver of any
Default or Event of Default resulting from the matters disclosed
therein, except as consented to by Agent and Requisite Lenders in
writing; and (b) no supplement shall be required or permitted as
to representations and warranties that relate solely to the
Closing Date.
5.7 Intellectual Property. Each Credit Party will
conduct its business and affairs without any knowing and
intentional infringement of or interference with any Intellectual
Property of any other Person in any material respect.
5.8 Environmental Matters. Each Credit Party shall
and shall cause each Person within its control to: (a) conduct
its operations and keep and maintain its Real Estate in
compliance with all Environmental Laws and Environmental Permits
other than noncompliance which could not reasonably be expected
to have a Material Adverse Effect; (b) implement any and all
investigation, remediation, removal and response actions which
are appropriate or necessary to maintain the value and
marketability of the Real Estate or to otherwise comply with
Environmental Laws and Environmental Permits pertaining to the
presence, generation, treatment, storage, use, disposal,
transportation or Release of any Hazardous Material on, at, in,
under, above, to, from or about any of its Real Estate; (c)
notify Agent promptly after such Credit Party becomes aware of
any violation of Environmental Laws or Environmental Permits or
any Release on, at, in, under, above, to, from or about any Real
Estate which is reasonably likely to result in Environmental
Liabilities in excess of $250,000; and (d) promptly forward to
Agent a copy of any order, notice, request for information or any
communication or report received by such Credit Party in
connection with any such violation or Release or any other matter
relating to any Environmental Laws or Environmental Permits that
could reasonably be expected to result in Environmental
Liabilities in excess of $250,000, in each case whether or not
the Environmental Protection Agency or any Governmental Authority
has taken or threatened any action in connection with any such
violation, Release or other matter. If Agent at any time has a
reasonable basis to believe that there may be a violation of any
Environmental Laws or Environmental Permits by any Credit Party
or any Environmental Liability arising thereunder, or a Release
of Hazardous Materials on, at, in, under, above, to, from or
about any of its Real Estate, which, in each case, could
reasonably be expected to have a Material Adverse Effect, then
each Credit Party shall, upon Agent's written request (i) cause
the performance of such environmental audits including subsurface
sampling of soil and groundwater, and preparation of such
environmental reports, at Borrower's expense, as Agent may from
time to time reasonably request, which shall be conducted by
reputable environmental consulting firms reasonably acceptable to
Agent and shall be in form and substance acceptable to Agent, and
(ii) permit Agent or its representatives to have access to all
Real Estate for the purpose of conducting such environmental
audits and testing as Agent deems appropriate, including
subsurface sampling of soil and groundwater. Borrower shall
reimburse Agent for the costs of such audits and tests and the
same will constitute a part of the Obligations secured
hereunder.
5.9 Landlords' Agreements, Mortgagee Agreements and
Bailee Letters. Except as set forth on Disclosure Schedule
(5.9), Borrower shall obtain a landlord's agreement, mortgagee
agreement or bailee letter, as applicable, from the lessor of
each leased property or mortgagee of owned property or bailee
with respect to any warehouse, or other location (other than a
processor or converter facility) where Collateral is stored or
located, which agreement or letter shall contain a waiver or
subordination of all Liens or claims that the landlord, mortgagee
or bailee may assert against the Inventory or Collateral at that
location, and shall otherwise be satisfactory in form and
substance to Agent. With respect to such locations or warehouse
space leased or owned as of the Closing Date and thereafter, if
Agent has not received a landlord or mortgagee agreement or
bailee letter as of the Closing Date (or, if later, as of the
date such location is acquired or leased), Borrower's Eligible
Inventory at that location shall, in Agent's discretion, be
excluded from the Borrowing Base or be subject to such Reserves
as may be established by Agent in its reasonable credit judgment,
it being understood and agreed that the failure alone to obtain
any such landlord or mortgagee agreement or bailee letter shall
not be deemed a Default or Event of Default. After the Closing
Date, no real property or warehouse space shall be leased by
Borrower under arrangements established after the Closing Date
without the prior written consent of Agent (which consent, in
Agent's reasonable discretion, may be conditioned upon the
exclusion from the Borrowing Base of Eligible Inventory at that
location or the establishment of Reserves acceptable to Agent)
unless and until a satisfactory landlord agreement or bailee
letter, as appropriate, shall first have been obtained with
respect to such location. Borrower shall timely and fully pay
and perform its obligations under all leases and other agreements
with respect to each leased location or public warehouse where
any Collateral is or may be located. If Borrower proposes to
acquire a fee ownership interest in Real Estate after the Closing
Date, it shall first provide to Agent a mortgage or deed of
trust, environmental audits, mortgage title insurance commitment,
survey, and if required by Agent, supplemental casualty insurance
and flood insurance, all in form and substance satisfactory to
Agent.
5.10 Further Assurances. Each Credit Party executing
this Agreement agrees that it shall and shall cause each other
Credit Party to, at such Credit Party's expense and upon request
of Agent, duly execute and deliver, or cause to be duly executed
and delivered, to Agent such further instruments and do and cause
to be done such further acts as may be necessary or proper in the
reasonable opinion of Agent to carry out more effectively the
provisions and purposes of this Agreement or any other Loan
Document.
5.11 Year 2000 Problems. On or before December 1,
1999, Borrower shall have completed substantially all Year 2000
Corrective Actions (other than with respect to its payroll and
manifesting systems) and shall have completed substantially all
Year 2000 Implementation Testing (other than with respect to its
payroll and manifesting systems), except where the failure to
substantially complete the same could not reasonably be expected
to have a Material Adverse Effect, individually or in the
aggregate. On or before December 15, 1999, Borrower shall have
completed substantially all Year 2000 Corrective Actions and
Implementation Testing with respect to its payroll and
manifesting systems, except where the failure to complete the
same could not reasonably be expected to have a Material Adverse
Effect. On or before December 1, 1999 (and in the case of Year
2000 Problems with respect to its payroll and manifesting
systems, December 15, 1999), Borrower shall have satisfactorily
addressed all Year 2000 Problems, except where the failure to
correct the same could not reasonably be expected to have a
Material Adverse Effect, individually or in the aggregate.
6. NEGATIVE COVENANTS
Each Credit Party executing this Agreement jointly and
severally agrees as to all Credit Parties that, without the
prior written consent of Agent and the Requisite Lenders, from
and after the date hereof until the Termination Date:
6.1 Mergers, Subsidiaries, etc. Except as set forth
in the AG Merger Agreement and on the terms and conditions
thereof, which AG Merger Agreement shall not be modified, amended
or any provision thereof waived without Agent's consent, which
consent shall not be unreasonably withheld, no Credit Party shall
directly or indirectly, by operation of law or otherwise, (a)
form or acquire any Subsidiary, or (b) merge with, consolidate
with, acquire all or substantially all of the assets or Stock of,
or otherwise combine with or acquire, any Person (other than
Borrower's purchase of the Stock of the Ink Group Entities as
permitted by Section 6.2).
6.2 Investments; Loans and Advances. Except as
otherwise expressly permitted by this Section 6, no Credit Party
shall make or permit to exist any investment in, or make, accrue
or permit to exist loans or advances of money to, any Person,
through the direct or indirect lending of money, holding of
securities or otherwise, except that (a) Borrower may hold
investments comprised of notes payable, or Stock or other
securities issued by Account Debtors to Borrower pursuant to
negotiated agreements with respect to settlement of such Account
Debtor's Accounts in the ordinary course of business consistent
with past practices; (b) each Credit Party may maintain its
existing investments in its Subsidiaries, E-greetings Network and
Honkworm International as of the Closing Date; (c) investments
may be held in the Rabbi Trust for the purpose of making or
reimbursing Borrower for amounts paid by Borrower under the Key
Employee Retention Incentive Plan, provided that, (i) investments
held by and cash deposited in the Rabbi Trust are funded solely
by American Greetings Corporation or with funds that American
Greetings Corporation has delivered to Borrower solely for such
purpose; and (ii) such investments and cash are funded in
accordance with Section 6.14; (d) so long as no Event of Default
has occurred and is continuing, additional investments in an
amount not to exceed $750,000 per calendar year, together with
existing assets of the Retiree Rabbi Trust, may be made and held
in the Retiree Rabbi Trust provided that such investments are
consistent with the provisions and purposes of such Retiree Rabbi
Trust (e) so long as no Event of Default shall have occurred and
be continuing, and there is no outstanding Revolving Loan
balance, Borrower may make investments in (i) marketable direct
obligations issued or unconditionally guaranteed by the United
States of America or any agency thereof maturing within one year
from the date of acquisition thereof, (ii) commercial paper
maturing no more than one year from the date of creation thereof
and currently having the highest rating obtainable from either
Standards & Poor's Ratings Group or Moody's Investors Service,
Inc., (iii) certificates of deposit, maturing no more than one
year from the date of creation thereof, issued by commercial
banks incorporated under the laws of the United States of
America, each having combined capital, surplus and undivided
profits of not less than $300,000,000 and having a senior
unsecured rating of "A" or better by a nationally recognized
rating agency (an "A Rated Bank"), (iv) time deposits, maturing
no more than 30 days from the date of creation thereof with A
Rated Banks (v) mutual funds that invest solely in one or more of
the investments described in clauses (i) through (iv) above and
(vi) that certain Dreyfus Management Fund (Account No. 719-
0616437216) (the "Dreyfus Fund"); and (f) Borrower may make
investments (in each case, a "Permitted Investment") from
Borrower's Excess Cash Flow or from Additional Liquidation
Proceeds during the period prior to and including the first
anniversary of the Closing Date in an amount not to exceed
$15,000,000, and during the period after the first anniversary of
the Closing Date but on or prior to the third anniversary
thereof, in an aggregate amount not to exceed $15,000,000,
provided that, such permitted amounts shall be reduced at any
time and from time to time by the amount of any funds received
from the Subordinated Lender, and further subject to satisfaction
of each of the following conditions:
(i) Agent shall receive at least ten (10)
Business Days' prior written notice of such proposed
Permitted Investment, which notice shall include a
reasonably detailed description of such proposed Permitted
Investment;
(ii) with respect to Permitted Investments
from Additional Liquidation Proceeds, Borrower may only make
Permitted Investments from Additional Liquidation Proceeds
if (A) Agent has been notified by Borrower of receipt of
such proceeds within three (3) Business Days of Borrower's
receipt thereof and (B) Agent has established a book-keeping
reserve in an amount equal to the amount of such proceeds so
received. Thereafter, such funds shall be made available to
Borrower for Permitted Investments, the creation of
additional Borrowing Availability or for application to
interest due or to the outstanding principal balance of the
Revolving Loan, as Borrower may elect, provided however,
Agent may apply amounts set aside by such reserve to the
Obligations if an Event of Default has occurred and is
continuing. For amounts to be made available for Permitted
Investments, Borrower shall request a Revolving Credit
Advance in the amount requested to be released, and so long
as the conditions set forth in Section 2.2 and this Section
6.3 have been met, Agent shall make such Revolving Credit
Advance;
(iii) such Permitted Investment shall
only be of the type made by Borrower as of the Closing Date
and shall be consistent with the businesses currently
engaged by Borrower;
(iv) at the time of such Permitted Investment
and after giving effect thereto, no Default or Event of
Default has occurred and is continuing; and
(v) Concurrently with delivery of the notice
referred to in clause (i) above, Borrower shall have
delivered to Agent, in form and substance satisfactory to
Agent:
(A) a pro forma consolidated balance
sheet, income statement and cash flow statement of Borrower
and its Subsidiaries (the "Investment Pro Forma"), based on
recent financial statements, which shall be complete and
shall fairly present in all material respects the assets,
liabilities, financial condition and results of operations
of Borrower and its Subsidiaries in accordance with GAAP
consistently applied, but taking into account such Permitted
Investment, and such Investment Pro Forma shall reflect that
(y) Net Borrowing Availability for each day of the 30-day
period preceding the making of such Permitted Investment
would have exceeded (i) $9,000,000, if such investment is
made between September 30 and December 31 of any Fiscal
Year, and (ii) $13,000,000 if such investment is made
between January 1 and September 29 of any Fiscal Year, on a
pro forma basis (giving effect to such Permitted Investment
as if made on the first day of such period), and (z) on a
pro forma basis, no Default or Event of Default has occurred
and is continuing or would result after giving effect to
such Permitted Investment and Borrower shall be in
compliance with the Financial Covenants for the period
reflected in the Compliance Certificate most recently
delivered to Agent pursuant to Annex E prior to the
consummation of such Permitted Investment (giving effect to
such Permitted Investment as if made on the first day of
such period);
(B) a certificate of the chief
financial officer of Borrower to the effect that: (x) Excess
Cash Flow for the most recent four Fiscal Quarters then
ended is available for the making of the Permitted
Investment; (y) the Investment Pro Forma fairly presents the
financial condition of Borrower as of the date thereof after
giving effect to the Permitted Investment; and (z) Borrower
will be Solvent upon the consummation of the Permitted
Investment.
Notwithstanding the foregoing and for purposes of clarification,
Borrower may invest in E-greetings Network with funds received
from the Subordinated Lender and Borrower may purchase shares of
The Ink Group Publishers Pty Limited and The Ink Group NZ Limited
if a Management Shareholder (as defined in the Shareholder
Agreement relating thereto) exercised his or her right to "put"
such shares to Borrower, provided however, that such purchase of
shares in The Ink Group Publishers Pty Limited and The Ink Group
NZ Limited shall be deemed a Permitted Investment and Borrower
shall comply with Section 6.2 in purchasing such shares provided
further that Borrower shall not be required to comply with the
requirement of such Section 6.2 to make such purchases from
Excess Cash Flow.
6.3 Indebtedness.
(a) No Credit Party shall create, incur, assume or
permit to exist any Indebtedness, except (without duplication)
(i) Indebtedness secured by purchase money security interests and
Capital Leases permitted in clause (c) of Section 6.7, (ii) the
Loans and the other Obligations, (iii) unfunded pension fund and
other employee benefit plan obligations and liabilities to the
extent they are permitted to remain unfunded under applicable
law, (iv) existing Indebtedness described in Disclosure Schedule
(6.3(a)) and refinancings thereof or amendments or modifications
thereof which do not have the effect of increasing the principal
amount thereof or changing the amortization thereof (other than
to extend the same) and which are otherwise on terms and
conditions no less favorable to any Credit Party, Agent or any
Lender, as determined by Agent, than the terms of the
Indebtedness being refinanced, amended or modified, (v)
Indebtedness incurred by the Domestic Subsidiary and secured
solely by such Subsidiary's real property located in Telford,
England, provided the lender(s) extending such financing shall
not have any recourse to the Domestic Subsidiary, (vi)
Indebtedness up to the amount of $9,000,000 provided that (A)
such Indebtedness is on terms reasonably acceptable to Agent and
is subordinated to the Obligations in a manner and form
satisfactory to Agent in its sole discretion, (B) such
Indebtedness is incurred prior to June 30, 2000, and (C) no
Default or Event of Default has occurred and is continuing after
giving effect to any such proposed Indebtedness, (vi)
Indebtedness consisting of intercompany loans and advances made
by Borrower to Gibson Greetings International Ltd. and Gibson
Greetings Benelux B.V. and to the Ink Group Entities (each of the
foregoing, an "Intercompany Borrower"), provided that (A) each
such Intercompany Borrower shall have executed and delivered to
Borrower, on the Closing Date, a demand note (collectively, the
"Intercompany Notes") to evidence any such intercompany
Indebtedness owing at any time by such Intercompany Borrower to
Borrower, which Intercompany Notes shall be in form and substance
attached to the Pledge Agreement or otherwise reasonably
satisfactory to Agent and shall be pledged and delivered to Agent
pursuant to the applicable Pledge Agreement or Security Agreement
as additional collateral security for the Obligations; (B)
Borrower shall record all intercompany transactions on its books
and records in a manner reasonably satisfactory to Agent; (C) at
the time any such intercompany loan or advance is made by
Borrower and after giving effect thereto, Borrower shall be
Solvent; (D) no Event of Default would occur and be continuing
after giving effect to any such proposed intercompany loan; (E)
in the case of any such intercompany loans made by Borrower,
Borrower shall have Net Borrowing Availability (after giving
effect to such intercompany loan) of not less than $9,000,000, if
such intercompany loan is made between September 30 and December
31 of any Fiscal Year, and $13,000,000 if such intercompany loan
is made between January 1 and September 29 of any Fiscal Year;
and (F) the aggregate balance of all such intercompany loans
(including any loans outstanding as of the Closing Date but
excluding all increases therein which do not represent the
transfer of cash or property by Borrower to such Subsidiaries for
royalties, interest and management fees owing to Borrower) owing
to Borrower shall not exceed in the case of Gibson Greetings
International Limited and Gibson Greetings Benelux B.V., the
amount of $25,000,000, and in the case of the Ink Group Entities,
the amount of $13,000,000. The aggregate balance of intercompany
loans of as October 31, 1999 by Borrower to its Subsidiaries are
described in Disclosure Schedule (6.3(b)).
(b) No Credit Party shall, directly or indirectly,
voluntarily purchase, redeem, defease or prepay any principal of,
premium, if any, interest or other amount payable in respect of
any Indebtedness, other than (i) the Obligations, and (ii)
Indebtedness secured by a Permitted Encumbrance if the asset
securing such Indebtedness has been sold or otherwise disposed of
in accordance with Sections 6.8(b) or (c).
6.4 Employee Loans and Affiliate Transactions.
(a) Except as otherwise expressly permitted in this
Section 6 with respect to Affiliates (excluding any subsidiaries
of Affiliates which otherwise individually are not Affiliates
hereunder or are not known by any Credit Party to be an Affiliate
hereunder), no Credit Party shall enter into or be a party to any
transaction with any other Credit Party or any Affiliate thereof
except in the ordinary course of and pursuant to the reasonable
requirements of such Credit Party's business and upon fair and
reasonable terms that are no less favorable to such Credit Party
than would be obtained in a comparable arm's length transaction
with a Person not an Affiliate of such Credit Party. In addition,
if any such transaction or series of related transactions
involves payments in excess of $250,000 in the aggregate between
any Credit Parties, the terms of these transactions must be
disclosed in advance to Agent and Lenders to the extent such
transactions have not previously been disclosed in the monthly
financial information delivered by Borrower in accordance with
Annex E. All such transactions for the month ended October 31,
1999 are described on Disclosure Schedule (6.4(a)).
(b) No Credit Party shall enter into any lending or
borrowing transaction with any employees of any Credit Party,
except loans to their respective employees on an arm's-length
basis in the ordinary course of business consistent with past
practices for travel expenses, relocation costs and similar
purposes and stock option financing up to a maximum of $200,000
to any employee and up to a maximum of $1,000,000 in the
aggregate at any one time outstanding.
6.5 Capital Structure and Business. Except as set
forth in the AG Merger Agreement and on the terms and conditions
thereof, which AG Merger Agreement shall not be modified, amended
or any provision thereof waived without Agent's consent, which
consent shall not be unreasonably withheld, no Credit Party shall
(a) make any changes in any of its business objectives, purposes
or operations which could in any way adversely affect the
repayment of the Loans or any of the other Obligations or could
reasonably be expected to have or result in a Material Adverse
Effect, (b) except in connection with the exercise of stock
options pursuant to the Stock Option Plan, make any change in its
capital structure as described on Disclosure Schedule (3.8),
including the issuance of any shares of Stock, warrants or other
securities convertible into Stock or any revision of the terms of
its outstanding Stock, except that Borrower may make additional
stock offerings, whether by private placement or otherwise, if
(i) the proceeds thereof are applied in prepayment of the
Obligations as required by Section 1.3(b)(iii), and (ii) no
Change of Control occurs after giving effect thereto, (c) amend
its charter or bylaws in a manner which would adversely affect
Agent or Lenders or such Credit Party's duty or ability to repay
the Obligations, or (d) amend the Rights Agreement so long as (i)
no Change of Control occurs after giving effect thereto, and (ii)
such amendment does not adversely affect Agent or Lenders or
Borrower's duty or ability to repay the Obligations. No Credit
Party shall engage in any business other than the businesses
currently engaged in by it or businesses reasonably related
thereto.
6.6 Guaranteed Indebtedness. Except as described in
Disclosure Schedule (6.6), no Credit Party shall create, incur,
assume or permit to exist any Guaranteed Indebtedness except (a)
by endorsement of instruments or items of payment for deposit to
the general account of any Credit Party, (b) for Guaranteed
Indebtedness incurred for the benefit of any other Credit Party
if the primary obligation is expressly permitted by this
Agreement, and (c) for Guaranteed Indebtedness which may be
deemed to arise by reason of letters from Borrower to Westpac
Banking Corporation, Australian Pacific Surety Corporation
Limited, and Deloitte & Touche dated November 30, 1998, May 26,
1999, and May 26, 1999 respectively, copies of which have been
delivered to Agent, or any extension, renewal or replacement
thereof provided that any such extension, renewal or replacement
thereof is consistent with, and does not violate, any provision
of this Agreement. Notwithstanding the provisions of this
Section 6.6, nothing herein shall be deemed to confer any rights
or benefits on any Persons other than the parties to this
Agreement and their respective successors and assigns, including
without limitation the recipients of the aforementioned letters.
6.7 Liens. No Credit Party shall create, incur,
assume or permit to exist any Lien on or with respect to its
Accounts or any of its other properties or assets (whether now
owned or hereafter acquired) except for (a) Permitted
Encumbrances; (b) Liens in existence on the date hereof and
summarized on Disclosure Schedule (6.7); and (c) Liens created
after the date hereof by conditional sale or other title
retention agreements (including Capital Leases) or in connection
with purchase money Indebtedness with respect to Equipment and
Fixtures acquired by any Credit Party in the ordinary course of
business, involving the incurrence of an aggregate amount of
purchase money Indebtedness and Capital Lease Obligations of not
more than $2,000,000 (which amount shall be increased in the
aggregate up to $5,000,000 by the amount of Capital Lease
Obligations for the SOAR project and any furniture and/or
fixtures for the Borrower's property located at 100 East River-
Center Boulevard, Covington, Kentucky 41011), outstanding at any
one time for all such Liens (provided that such Liens attach only
to the assets subject to such purchase money debt and such
Indebtedness is incurred within twenty (20) days following such
purchase and does not exceed 100% of the purchase price of the
subject assets); (d) Liens in favor of the Subordinated Lender as
permitted under the Borrower Pledge Agreement; (e) Liens in favor
of any lender(s) providing a non-recourse loan to the Domestic
Subsidiary covering such Subsidiary's real property located in
Telford, England; and (f) other Liens securing Indebtedness not
exceeding $500,000 in the aggregate at any time outstanding, so
long as such Liens do not attach to any Accounts or Inventory.
In addition, no Credit Party shall become a party to any
agreement, note, indenture or instrument, or take any other
action, which would prohibit the creation of a Lien on any of its
properties or other assets in favor of Agent, on behalf of itself
and Lenders, as additional collateral for the Obligations, except
operating leases, Capital Leases or Licenses which prohibit Liens
upon the assets that are subject thereto.
6.8 Sale of Stock and Assets. No Credit Party shall
sell, transfer, convey, assign or otherwise dispose of any of its
properties or other assets, including the capital Stock of any of
its Subsidiaries (whether in a public or a private offering or
otherwise) or any of their Accounts, other than (a) the sale of
Inventory in the ordinary course of business, and (b) the sale,
transfer, conveyance or other disposition by a Credit Party of
Equipment, Fixtures or Real Estate that are obsolete or no longer
used or useful in such Credit Party's business and having a value
not exceeding $250,000 in any single transaction or $1,000,000 in
the aggregate in any Fiscal Year, (c) other Equipment and
Fixtures having a value not exceeding $250,000 in any single
transaction or $1,000,000 in the aggregate in any Fiscal Year,
(d) the disposition of Silly Slammers in connection with the
Borrower's discontinuation of such product line, (e) the
disposition of the stock of E-greetings Network, Inc. owned by
Borrower provided that at least fifty percent (50%) of the
proceeds of such sale is in cash, (f) the sale by Borrower of its
Fishwick Road real property, (g) the sale by Borrower of the
Obsolete Capital Equipment and (h) the sale by Borrower of its
stock in the Ink Group Entities pursuant to the Shareholders
Agreements, provided that prior to such sale, all intercompany
loans owed by the Ink Group to Borrower shall have been paid in
full. With respect to any disposition of assets or other
properties permitted pursuant to clause (b) and clause (c) above,
Agent agrees on reasonable prior written notice to release its
Lien on such assets or other properties in order to permit the
applicable Credit Party to effect such disposition and shall
execute and deliver to Borrower, at Borrower's expense,
appropriate UCC-3 termination statements and other releases as
reasonably requested by Borrower. Notwithstanding any other
provision of this Agreement, if the minority shareholders of the
Ink Group Entities initiate the process contemplated by the
buy/sell provisions of the Shareholders Agreements and, as a
result thereof, Borrower is required thereby to elect either to
purchase or sell stock of the Ink Group Entities, but such
purchase or sale would otherwise be prohibited by this Article 6,
Borrower may do so if (x) Borrower submits a proposal therefor in
reasonable detail to Agent at least 15 Business Days prior to the
anticipated closing of such purchase or sale and (y) Agent
consents thereto, such consent not to be withheld unreasonably.
6.9 ERISA. No Credit Party shall, or shall cause or
permit any ERISA Affiliate to, cause or permit to occur an event
which could result in the imposition of a Lien under Section 412
of the IRC or Section 302 or 4068 of ERISA or cause or permit to
occur an ERISA Event to the extent such ERISA Event could
reasonably be expected to have a Material Adverse Effect.
6.10 Financial Covenants. Borrower shall not breach or
fail to comply with any of the Financial Covenants.
6.11 Hazardous Materials. No Credit Party shall cause
or permit a Release of any Hazardous Material on, at, in, under,
above, to, from or about any of the Real Estate where such
Release would (a) violate in any respect, or form the basis for
any Environmental Liabilities under, any Environmental Laws or
Environmental Permits or (b) otherwise adversely impact the value
or marketability of any of the Real Estate or any of the
Collateral, other than such violations or Environmental
Liabilities which would not reasonably be expected to have a
Material Adverse Effect.
6.12 Sale-Leasebacks. No Credit Party shall engage in
any sale-leaseback, synthetic lease or similar transaction
involving any of its assets.
6.13 Cancellation of Indebtedness. No Credit Party
shall cancel any claim or debt owing to it, except for reasonable
consideration or otherwise in connection with the administration
of accounts receivable, in each case, negotiated on an
arm's-length basis and in the ordinary course of its business
consistent with past practices.
6.14 Restricted Payments. No Credit Party shall make
any Restricted Payment, except (a) intercompany loans and
advances to the extent permitted by Section 6.3 above, (b)
dividends and distributions by Subsidiaries of Borrower paid to
Borrower, (c) employee loans permitted under Section 6.4(b)
above, (d) payments of principal and interest of Intercompany
Notes issues in accordance with Section 6.3, (e) the redemption
of rights pursuant to the Rights Agreement, (f) incentive, stay
and employee benefits to be paid in connection with the AG Merger
Agreement in an amount not to exceed $10,000,000, plus any
interest thereon, paid solely from the Rabbi Trust, and (g)
scheduled payments of interest with respect to the Subordinated
Debt, provided that (i) no Default or Event of Default shall have
occurred and be continuing or would result after giving effect to
any payment pursuant to clause (g) above, (ii) Borrower shall
have Net Borrowing Availability of at least $5,000,000 if such
payment is to be made between September 30 and December 31 of any
Fiscal Year, and $9,000,000 if such payment is to be made between
January 1 and September 29 of any Fiscal Year, after giving
effect to any payment pursuant to clause (g) above; and (iii) the
timing of the payments referred to in clause (g) above shall be
set at dates which permit the delivery of Financial Statements
necessary to determine current compliance with the Financial
Covenants prior to each such payment.
6.15 Change of Corporate Name or Location; Change of
Fiscal Year. Borrower shall not (a) change its corporate name,
or (b) change its chief executive office, principal place of
business, corporate offices or warehouses or locations at which
Collateral is held or stored, except for processor or converter
facilities at which work in progress and/or raw materials up to a
maximum amount of $20,000,000 in the aggregate is held or stored,
or the location of its records concerning the Collateral, in any
case without at least thirty (30) days prior written notice to
Agent and after Agent's written acknowledgment that any
reasonable action requested by Agent in connection therewith,
including to continue the perfection of any Liens in favor of
Agent, on behalf of Lenders, in any Collateral, has been
completed or taken, and provided that any such new location shall
be in the continental United States. Without limiting the
foregoing, Borrower shall not change its name, identity or
corporate structure in any manner which might make any financing
or continuation statement filed in connection herewith seriously
misleading within the meaning of Section 9-402(7) of the Code or
any other then applicable provision of the Code except upon prior
written notice to Agent and Lenders and after Agent's written
acknowledgment that any reasonable action requested by Agent in
connection therewith, including to continue the perfection of any
Liens in favor of Agent, on behalf of Lenders, in any Collateral,
has been completed or taken. Borrower shall not change its
Fiscal Year.
6.16 No Impairment of Intercompany Transfers. No
Credit Party shall directly or indirectly enter into or become
bound by any agreement, instrument, indenture or other obligation
(other than this Agreement and the other Loan Documents) which
could directly or indirectly restrict, prohibit or require the
consent of any Person with respect to the payment of dividends or
distributions or the making or repayment of intercompany loans by
a Subsidiary of Borrower to Borrower other than as may be
permitted under Section 6.6(c).
6.17 No Speculative Transactions. No Credit Party
shall engage in any transaction involving commodity options,
futures contracts or similar transactions, except solely to hedge
against fluctuations in the prices of commodities owned or
purchased by it and the values of foreign currencies receivable
or payable by it and interest swaps, caps or collars.
6.18 Real Estate Purchases. Borrower shall not
purchase fee simple ownership interest in Real Estate with an
aggregate purchase price in excess of $1,000,000.
6.19 Changes Relating to Subordinated Debt. Borrower
shall not change or amend the terms of any Subordinated Debt (or
any indenture or agreement in connection therewith) if the effect
of such amendment is to: (a) increase the interest rate on such
Subordinated Debt; (b) change the dates upon which payments of
principal or interest are due on such Subordinated Debt other
than to extend such dates; (c) change any default or event of
default other than to delete or make less restrictive any default
provision therein, or add any covenant with respect to such
Subordinated Debt; (d) change the redemption or prepayment
provisions of such Subordinated Debt other than to extend the
dates therefor or to reduce the premiums payable in connection
therewith; (e) grant any security or collateral to secure payment
of such Subordinated Debt; or (f) change or amend any other term
if such change or amendment would materially increase the
obligations of Borrower thereunder or confer additional material
rights on the holder of such Subordinated Debt in a manner
adverse to Borrower, Agent or any Lender.
6.20 IP Subsidiary. IP Subsidiary shall not engage in
any trade or business or own any assets (other than the
Intellectual Property which is the subject of the IP Subsidiary
License Agreement) or incur any Indebtedness or Guaranteed
Indebtedness (other than the Obligations).
7. TERM
7.1 Termination. The financing arrangements
contemplated hereby shall be in effect until the Commitment
Termination Date, and the Loans and all other Obligations shall
be automatically due and payable in full on such date.
7.2 Survival of Obligations Upon Termination of
Financing Arrangements. Except as otherwise expressly provided
for in the Loan Documents, no termination or cancellation
(regardless of cause or procedure) of any financing arrangement
under this Agreement shall in any way affect or impair the
obligations, duties and liabilities of the Credit Parties or the
rights of Agent and Lenders relating to any unpaid portion of the
Loans or any other Obligations, due or not due, liquidated,
contingent or unliquidated or any transaction or event occurring
prior to such termination, or any transaction or event, the
performance of which is required after the Commitment Termination
Date. Except as otherwise expressly provided herein or in any
other Loan Document, all undertakings, agreements, covenants,
warranties and representations of or binding upon the Credit
Parties, and all rights of Agent and each Lender, all as
contained in the Loan Documents, shall not terminate or expire,
but rather shall survive any such termination or cancellation and
shall continue in full force and effect until the Termination
Date; provided that the provisions of Section 11, the payment
obligations under Sections 1.15 and 1.16, and the indemnities
contained in the Loan Documents shall survive the Termination
Date.
8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES
8.1 Events of Default. The occurrence of any one or
more of the following events (regardless of the reason therefor)
shall constitute an "Event of Default" hereunder:
(a) Borrower (i) fails to make any payment of
principal of, or interest on, or Fees owing in respect of, the
Loans or any of the other Obligations when due and payable, or
(ii) fails to pay or reimburse Agent or Lenders for any expense
reimbursable hereunder or under any other Loan Document within
ten (10) days following Agent's demand for such reimbursement or
payment of expenses.
(b) Any Credit Party shall fail or neglect to perform,
keep or observe any of the provisions of Sections 1.4, 1.8, 5.4
or 6, or any of the provisions set forth in Annexes C or G,
respectively.
(c) Borrower shall fail or neglect to perform, keep or
observe any of the provisions of Section 4 or any provisions set
forth in Annexes E or F, respectively, and the same shall remain
unremedied for three (3) days or more.
(d) Any Credit Party shall fail or neglect to perform,
keep or observe any other provision of this Agreement or of any
of the other Loan Documents (other than any provision embodied in
or covered by any other clause of this Section 8.1) and the same
shall remain unremedied for thirty (30) days or more.
(e) A default or breach shall occur under any other
agreement, document or
instrument to which any Credit Party is a party which is not
cured within any applicable grace
period, and such default or breach (i) involves the failure to
make any payment when due in
respect of any Indebtedness (other than the Obligations) of any
Credit Party in excess of $500,000
in the aggregate, or (ii) causes, or permits any holder of such
Indebtedness or a trustee to cause,
Indebtedness or a portion thereof in excess of $1,000,000 in the
aggregate to become due prior to
its stated maturity or prior to its regularly scheduled dates of
payment, regardless of whether such
default is waived (unless any such waiver is obtained within
thirty (30) days after the occurrence
of such default), or such right is exercised, by such holder or
trustee.
(f) (i) Any information contained in any Borrowing
Base Certificate is untrue or incorrect in any respect as of the
date of any such Borrowing Base Certificate, other than
inadvertent or immaterial errors not exceeding $100,000, or (ii)
any representation or warranty herein or in any Loan Document or
in any written statement, report, financial statement or
certificate (other than a Borrowing Base Certificate) made or
delivered to Agent or any Lender by any Credit Party is untrue or
incorrect in any material respect as of the date when made or
deemed made.
(g) Assets of Borrower with a fair market value of
$250,000 or more shall be attached, seized, levied upon or
subjected to a writ or distress warrant, or come within the
possession of any receiver, trustee, custodian or assignee for
the benefit of creditors of any Credit Party and such condition
continues for thirty (30) days or more.
(h) A case or proceeding shall have been commenced
against any Credit Party seeking a decree or order in respect of
any Credit Party (i) under the Bankruptcy Code, as now
constituted or hereafter amended or any other applicable federal,
state or foreign bankruptcy or other similar law, (ii) appointing
a custodian, receiver, liquidator, assignee, trustee or
sequestrator (or similar official) for such Credit Party or for
any substantial part of any such Credit Party's assets, or (iii)
ordering the winding-up or liquidation of the affairs of such
Credit Party, and such case or proceeding shall remain
undismissed or unstayed for sixty (60) days or more or such court
shall enter a decree or order granting the relief sought in such
case or proceeding.
(i) Any Credit Party (i) shall file a petition seeking
relief under Title 11 of the United States Code, as now
constituted or hereafter amended, or any other applicable
federal, state or foreign bankruptcy or other similar law, (ii)
shall fail to contest in a timely and appropriate manner or shall
consent to the institution of proceedings thereunder or to the
filing of any such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee,
trustee or sequestrator (or similar official) for such Credit
Party or of any substantial part of any such Credit Party's
assets, (iii) shall make an assignment for the benefit of
creditors, or (iv) shall take any corporate action in furtherance
of any of the foregoing, or (v) shall admit in writing its
inability to, or shall be generally unable to, pay its debts as
such debts become due.
(j) A final judgment or judgments for the payment of
money in excess of $250,000 in the aggregate at any time
outstanding against one or more of the Credit Parties and the
same shall not, within thirty (30) days after the entry thereof,
have been discharged or execution thereof stayed or bonded
pending appeal, or such judgments are not discharged prior to the
expiration of any such stay.
(k) Any material provision of any Loan Document for
any reason ceases to be valid, binding and enforceable in
accordance with its terms (or any Credit Party shall challenge
the enforceability of any Loan Document or shall assert in
writing, or engage in any action or inaction based on any such
assertion, that any provision of any of the Loan Documents has
ceased to be or otherwise is not valid, binding and enforceable
in accordance with its terms), or any Lien created under any Loan
Document shall cease to be a valid and perfected first priority
Lien (except as otherwise permitted herein or therein) in any of
the Collateral purported to be covered thereby, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar law affecting creditors'
rights generally, including fraudulent transfer or conveyance
laws and general principles of equity.
(l) Any Change of Control shall occur.
(m) Any event shall occur, whether or not insured or
insurable, as a result of which revenue-producing activities
cease or are substantially curtailed at any facility of Borrower
generating more than 20% of Borrower's revenues for the Fiscal
Year preceding such event and such cessation or curtailment
continues for more than 60 days.
(n) Any "Event of Default" under and as defined in any
Mortgage shall occur.
8.2 Remedies. (a) If any Default or Event of
Default shall have occurred and be continuing, Agent may (and at
the written request of the Requisite Lenders shall), without
notice, suspend the Revolving Loan facility with respect to
further Advances and/or the incurrence of further Letter of
Credit Obligations whereupon any further Advances and Letter of
Credit Obligations shall be made or extended in Agent's sole
discretion (if such suspension occurred at their direction) so
long as such Default or Event of Default is continuing. If any
Event of Default has occurred and is continuing, Agent may (and
at the written request of Requisite Lenders shall), without
notice except as otherwise expressly provided herein, increase
the rate of interest applicable to the Loans and the Letter of
Credit Fees to the Default Rate.
(b) If any Event of Default has occurred and is
continuing, Agent may (and at the written request of the
Requisite Lenders shall), without notice, (i) terminate the
Revolving Loan facility with respect to further Advances or the
incurrence of further Letter of Credit Obligations; (ii) declare
all or any portion of the Obligations, including all or any
portion of any Loan to be forthwith due and payable, and require
that the Letter of Credit Obligations be cash collateralized as
provided in Annex B, all without presentment, demand, protest or
further notice of any kind, all of which are expressly waived by
Borrower and each other Credit Party; and (iii) exercise any
rights and remedies provided to Agent under the Loan Documents
and/or at law or equity, including all remedies provided under
the Code; provided, however, that upon the occurrence of an Event
of Default specified in Sections 8.1(g), (h) or (i), the
Revolving Loan facility shall be immediately terminated and all
of the Obligations, including the Revolving Loan, shall become
immediately due and payable without declaration, notice or demand
by any Person.
8.3 Waivers by Credit Parties. Except as otherwise
provided for in this Agreement or by applicable law, each Credit
Party waives: (a) presentment, demand and protest and notice of
presentment, dishonor, notice of intent to accelerate, notice of
acceleration, protest, default, nonpayment, maturity, release,
compromise, settlement, extension or renewal of any or all
commercial paper, accounts, contract rights, documents,
instruments, chattel paper and guaranties at any time held by
Agent on which any Credit Party may in any way be liable, and
hereby ratifies and confirms whatever Agent may do in this
regard, (b) all rights to notice and a hearing prior to Agent's
taking possession or control of, or to Agent's replevy,
attachment or levy upon, the Collateral or any bond or security
which might be required by any court prior to allowing Agent to
exercise any of its remedies, and (c) the benefit of all
valuation, appraisal, marshaling and exemption laws.
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT
9.1 Assignment and Participations.
(a) The Credit Parties signatory hereto consent to
any Lender's assignment of, and/or sale of participations in, at
any time or times, the Loan Documents, Loans, Letter of Credit
Obligations and any Commitment or of any portion thereof or
interest therein, including any Lender's rights, title,
interests, remedies, powers or duties thereunder, whether
evidenced by a writing or not. Any assignment by a Lender shall
(i) require the consent of Agent (which shall not be unreasonably
withheld or delayed) and the execution of an assignment agreement
(an "Assignment Agreement" substantially in the form attached
hereto as Exhibit 9.1(a) and otherwise in form and substance
satisfactory to, and acknowledged by, Agent; (ii) require the
consent of Borrower which consent shall not be unreasonably
withheld or delayed; provided that no such consent shall be
required so long as any Default or Event of Default has occurred
and is continuing; (iii) be conditioned on such assignee Lender
representing to the assigning Lender and Agent that it is
purchasing the applicable Loans to be assigned to it for its own
account, for investment purposes and not with a view to the
distribution thereof; (iv) if a partial assignment, be in an
amount at least equal to $5,000,000 and, after giving effect to
any such partial assignment, the assigning Lender shall have
retained Commitments in an amount at least equal to $5,000,000;
and (v) include a payment to Agent of an assignment fee of
$3,500. In the case of an assignment by a Lender under this
Section 9.1, the assignee shall have, to the extent of such
assignment, the same rights, benefits and obligations as all
other Lenders hereunder. The assigning Lender shall be relieved
of its obligations hereunder with respect to its Commitments or
assigned portion thereof from and after the date of such
assignment. Borrower hereby acknowledges and agrees that any
assignment will give rise to a direct obligation of Borrower to
the assignee and that the assignee shall be considered to be a
"Lender". In all instances, each Lender's liability to make
Loans hereunder shall be several and not joint and shall be
limited to such Lender's Pro Rata Share of the applicable
Commitment. In the event Agent or any Lender assigns or
otherwise transfers all or any part of the Obligations, Agent or
any such Lender shall so notify Borrower and Borrower shall, upon
the request of Agent or such Lender, execute new Notes in
exchange for the Notes, if any, being assigned. Notwithstanding
the foregoing provisions of this Section 9.1(a), any Lender may
at any time pledge the Obligations held by it and such Lender's
rights under this Agreement and the other Loan Documents to a
Federal Reserve Bank, and any lender that is an investment fund
may assign the Obligations held by it and such Lender's rights
under this Agreement and the other Loan Documents to another
investment fund managed by the same investment advisor; provided,
however, that no such pledge to a Federal Reserve Bank shall
release such Lender from such Lender's obligations hereunder or
under any other Loan Document.
(b) Any participation by a Lender of all or any part
of its Commitments shall be made with the understanding that all
amounts payable by Borrower hereunder shall be determined as if
that Lender had not sold such participation, and that the holder
of any such participation shall not be entitled to require such
Lender to take or omit to take any action hereunder except
actions directly affecting (i) any reduction in the principal
amount of, or interest rate or Fees payable with respect to, any
Loan in which such holder participates, (ii) any extension of the
scheduled amortization of the principal amount of any Loan in
which such holder participates or the final maturity date
thereof, and (iii) any release of all or substantially all of the
Collateral (other than in accordance with the terms of this
Agreement, the Collateral Documents or the other Loan Documents).
Solely for purposes of Sections 1.13, 1.15, 1.16 and 9.8,
Borrower acknowledges and agrees that a participation shall give
rise to a direct obligation of Borrower to the participant and
the participant shall be considered to be a "Lender". Except as
set forth in the preceding sentence neither Borrower nor any
other Credit Party shall have any obligation or duty to any
participant. Neither Agent nor any Lender (other than the Lender
selling a participation) shall have any duty to any participant
and may continue to deal solely with the Lender selling a
participation as if no such sale had occurred.
(c) Except as expressly provided in this Section 9.1,
no Lender shall, as between Borrower and that Lender, or Agent
and that Lender, be relieved of any of its obligations hereunder
as a result of any sale, assignment, transfer or negotiation of,
or granting of participation in, all or any part of the Loans,
the Notes or other Obligations owed to such Lender.
(d) Each Credit Party executing this Agreement shall
assist any Lender permitted to sell assignments or participations
under this Section 9.1 as reasonably required to enable the
assigning or selling Lender to effect any such assignment or
participation, including the execution and delivery of any and
all agreements, notes and other documents and instruments as
shall be requested and the preparation of informational materials
for, and the participation of management in meetings with,
potential assignees or participants. Each Credit Party executing
this Agreement shall certify the correctness, completeness and
accuracy of all descriptions of the Credit Parties and their
affairs contained in any selling materials provided by it and all
other information provided by it and included in such materials,
except that any Projections delivered by Borrower shall only be
certified by Borrower as having been prepared by Borrower in
compliance with the representations contained in Section 3.4(b).
(e) A Lender may furnish any information concerning
Credit Parties in the possession of such Lender from time to time
to assignees and participants (including prospective assignees
and participants). Each Lender shall obtain from assignees or
participants confidentiality covenants substantially equivalent
to those contained in Section 11.8.
(f) So long as no Event of Default has occurred and is
continuing, no Lender shall assign or sell participations in any
portion of its Loans or Commitments to a potential Lender or
participant, if, as of the date of the proposed assignment or
sale, the assignee Lender or participant would be subject to
capital adequacy or similar requirements under Section 1.16(a),
increased costs under Section 1.16(b), or withholding taxes in
accordance with Section 1.15(a).
9.2 Appointment of Agent. GE Capital is hereby
appointed to act on behalf of all Lenders as Agent under this
Agreement and the other Loan Documents. The provisions of this
Section 9.2 are solely for the benefit of Agent and Lenders and
no Credit Party nor any other Person shall have any rights as a
third party beneficiary of any of the provisions hereof. In
performing its functions and duties under this Agreement and the
other Loan Documents, Agent shall act solely as an agent of
Lenders and does not assume and shall not be deemed to have
assumed any obligation toward or relationship of agency or trust
with or for any Credit Party or any other Person. Agent shall
have no duties or responsibilities except for those expressly set
forth in this Agreement and the other Loan Documents. The duties
of Agent shall be mechanical and administrative in nature and
Agent shall not have, or be deemed to have, by reason of this
Agreement, any other Loan Document or otherwise a fiduciary
relationship in respect of any Lender. Neither Agent nor any of
its Affiliates nor any of their respective officers, directors,
employees, agents or representatives shall be liable to any
Lender for any action taken or omitted to be taken by it
hereunder or under any other Loan Document, or in connection
herewith or therewith, except for damages caused by its or their
own gross negligence or willful misconduct.
If Agent shall request instructions from Requisite
Lenders, Supermajority Lenders or all affected Lenders with
respect to any act or action (including failure to act) in
connection with this Agreement or any other Loan Document, then
Agent shall be entitled to refrain from such act or taking such
action unless and until Agent shall have received instructions
from Requisite Lenders, Supermajority Lenders, or all affected
Lenders, as the case may be, and Agent shall not incur liability
to any Person by reason of so refraining. Agent shall be fully
justified in failing or refusing to take any action hereunder or
under any other Loan Document (a) if such action would, in the
opinion of Agent, be contrary to law or the terms of this
Agreement or any other Loan Document, (b) if such action would,
in the opinion of Agent, expose Agent to Environmental
Liabilities or (c) if Agent shall not first be indemnified to its
satisfaction against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any
such action. Without limiting the foregoing, no Lender shall
have any right of action whatsoever against Agent as a result of
Agent acting or refraining from acting hereunder or under any
other Loan Document in accordance with the instructions of
Requisite Lenders, Supermajority Lenders or all affected Lenders,
as applicable.
9.3 Agent's Reliance, Etc. Neither Agent nor any of
its Affiliates nor any of their respective directors, officers,
agents or employees shall be liable for any action taken or
omitted to be taken by it or them under or in connection with
this Agreement or the other Loan Documents, except for damages
caused by its or their own gross negligence or willful
misconduct. Without limitation of the generality of the
foregoing, Agent: (a) may treat the payee of any Note as the
holder thereof until Agent receives written notice of the
assignment or transfer thereof signed by such payee and in form
satisfactory to Agent; (b) may consult with legal counsel,
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; (c) makes no warranty or
representation to any Lender and shall not be responsible to any
Lender for any statements, warranties or representations made in
or in connection with this Agreement or the other Loan Documents;
(d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or
conditions of this Agreement or the other Loan Documents on the
part of any Credit Party or to inspect the Collateral (including
the books and records) of any Credit Party; (e) shall not be
responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of
this Agreement or the other Loan Documents or any other
instrument or document furnished pursuant hereto or thereto; and
(f) shall incur no liability under or in respect of this
Agreement or the other Loan Documents by acting upon any notice,
consent, certificate or other instrument or writing (which may be
by telecopy, telegram, cable or telex) believed by it to be
genuine and signed or sent by the proper party or parties.
9.4 GE Capital and Affiliates. With respect to its
Commitments hereunder, GE Capital shall have the same rights and
powers under this Agreement and the other Loan Documents as any
other Lender and may exercise the same as though it were not
Agent; and the term "Lender" or "Lenders" shall, unless otherwise
expressly indicated, include GE Capital in its individual
capacity. GE Capital and its Affiliates may lend money to,
invest in, and generally engage in any kind of business with, any
Credit Party, any of their Affiliates and any Person who may do
business with or own securities of any Credit Party or any such
Affiliate, all as if GE Capital were not Agent and without any
duty to account therefor to Lenders. GE Capital and its
Affiliates may accept fees and other consideration from any
Credit Party for services in connection with this Agreement or
otherwise without having to account for the same to Lenders.
Each Lender acknowledges the potential conflict of interest
between GE Capital as a Lender holding disproportionate interests
in the Loans and GE Capital as Agent.
9.5 Lender Credit Decision. Each Lender acknowledges
that it has, independently and without reliance upon Agent or any
other Lender and based on the Financial Statements referred to in
Section 3.4(a) and such other documents and information as it has
deemed appropriate, made its own credit and financial analysis of
the Credit Parties and its own decision to enter into this
Agreement. Each Lender also acknowledges that it will,
independently and without reliance upon Agent or any other Lender
and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement.
Each Lender acknowledges the potential conflict of interest of
each other Lender as a result of Lenders holding disproportionate
interests in the Loans, and expressly consents to, and waives any
claim based upon, such conflict of interest.
9.6 Indemnification. Lenders agree to indemnify Agent
(to the extent not reimbursed by Credit Parties and without
limiting the obligations of Borrower hereunder), ratably
according to their respective Pro Rata Shares, from and against
any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of
any kind or nature whatsoever which may be imposed on, incurred
by, or asserted against Agent in any way relating to or arising
out of this Agreement or any other Loan Document or any action
taken or omitted by Agent in connection therewith; provided,
however, that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from
Agent's gross negligence or wilful misconduct. Without limiting
the foregoing, each Lender agrees to reimburse Agent promptly
upon demand for its ratable share of any out-of-pocket expenses
(including counsel fees) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification,
amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement and each other
Loan Document, to the extent that Agent is not reimbursed for
such expenses by Credit Parties.
9.7 Successor Agent. Agent may resign at any time by
giving not less than thirty (30) days' prior written notice
thereof to Lenders and Borrower. Upon any such resignation, the
Requisite Lenders shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed by the
Requisite Lenders and shall have accepted such appointment within
30 days after the resigning Agent's giving notice of resignation,
then the resigning Agent may, on behalf of Lenders, appoint a
successor Agent, which shall be a Lender, if a Lender is willing
to accept such appointment, or otherwise shall be a commercial
bank or financial institution or a subsidiary of a commercial
bank or financial institution if such commercial bank or
financial institution is organized under the laws of the United
States of America or of any State thereof and has a combined
capital and surplus of at least $300,000,000. If no successor
Agent has been appointed pursuant to the foregoing, by the 30th
day after the date such notice of resignation was given by the
resigning Agent, such resignation shall become effective and the
Requisite Lenders shall thereafter perform all the duties of
Agent hereunder until such time, if any, as the Requisite Lenders
appoint a successor Agent as provided above. Any successor Agent
appointed by Requisite Lenders hereunder shall be subject to the
approval of Borrower, such approval not to be unreasonably
withheld or delayed; provided that such approval shall not be
required if a Default or an Event of Default has occurred and is
continuing. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall
succeed to and become vested with all the rights, powers,
privileges and duties of the resigning Agent. Upon the earlier
of the acceptance of any appointment as Agent hereunder by a
successor Agent or the effective date of the resigning Agent's
resignation, the resigning Agent shall be discharged from its
duties and obligations under this Agreement and the other Loan
Documents, except that any indemnity rights or other rights in
favor of such resigning Agent shall continue. After any
resigning Agent's resignation hereunder, the provisions of this
Section 9 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was acting as Agent under this
Agreement and the other Loan Documents.
9.8 Setoff and Sharing of Payments. In addition to
any rights now or hereafter granted under applicable law and not
by way of limitation of any such rights, upon the occurrence and
during the continuance of any Event of Default, and subject to
Section 9.9(f) each Lender is hereby authorized at any time or
from time to time, without notice to any Credit Party or to any
other Person, any such notice being hereby expressly waived, to
set off and to appropriate and to apply any and all balances held
by it at any of its offices for the account of Borrower or any
Guarantor (regardless of whether such balances are then due to
Borrower or any Guarantor) and any other properties or assets any
time held or owing by that Lender or that holder to or for the
credit or for the account of Borrower or any Guarantor against
and on account of any of the Obligations which are not paid when
due. Any Lender or holder of any Note exercising a right to set
off or otherwise receiving any payment on account of the
Obligations in excess of its Pro Rata Share thereof shall
purchase for cash (and the other Lenders or holders shall sell)
such participations in each such other Lender's or holder's Pro
Rata Share of the Obligations as would be necessary to cause such
Lender to share the amount so set off or otherwise received with
each other Lender or holder in accordance with their respective
Pro Rata Shares (other than setoff rights exercised by any Lender
with respect to Section 1.13, 1.15 or 1.16). Borrower and each
Guarantor agrees, to the fullest extent permitted by law, that
(a) any Lender or holder may exercise its right to set off with
respect to amounts in excess of its Pro Rata Share of the
Obligations and may sell participations in such amount so set off
to other Lenders and holders and (b) any Lender or holders so
purchasing a participation in the Loans made or other Obligations
held by other Lenders or holders may exercise all rights of
set-off, bankers' lien, counterclaim or similar rights with
respect to such participation as fully as if such Lender or
holder were a direct holder of the Loans and the other
Obligations in the amount of such participation. Notwithstanding
the foregoing, if all or any portion of the set-off amount or
payment otherwise received is thereafter recovered from the
Lender that has exercised the right of set-off, the purchase of
participations by that Lender shall be rescinded and the purchase
price restored without interest.
9.9 Advances; Payments; Non-Funding Lenders;
Information; Actions in Concert.
(a) Advances; Payments.
(i) Each Revolving Lender shall make the
amount of such Lender's Pro Rata Share of such Revolving
Credit Advance available to Agent in same day funds by wire
transfer to Agent's account as set forth in Annex H not
later than 3:00 p.m. (New York time) on the requested
funding date. After receipt of such wire transfers (or, in
the Agent's sole discretion, before receipt of such wire
transfers), subject to the terms hereof, Agent shall make
the requested Revolving Credit Advance to Borrower. All
payments by each Revolving Lender shall be made without
setoff, counterclaim or deduction of any kind.
(ii) On the second (2nd) Business Day of each
calendar week or more frequently as aggregate cumulative
payments in excess of $2,000,000 are received with respect
to the Loans (each, a "Settlement Date"), Agent will advise
each Lender by telephone, or telecopy of the amount of such
Lender's Pro Rata Share of principal, interest and Fees paid
for the benefit of Lenders with respect to each applicable
Loan. Provided that such Lender has funded all payments and
Advances required to be made by it under this Agreement and
the other Loan Documents as of such Settlement Date, Agent
will pay to each Lender such Lender's Pro Rata Share of
principal, interest and Fees paid by Borrower since the
previous Settlement Date for the benefit of that Lender on
the Loans held by it. To the extent that any Lender (a
"Non-Funding Lender") has failed to fund all such payments
and Advances, Agent shall be entitled to set off the funding
short-fall against that Non-Funding Lender's Pro Rata Share
of all payments received from Borrower. Such payments shall
be made by wire transfer to such Lender's account (as
specified by such Lender in Annex H or the applicable
Assignment Agreement) not later than 2:00 p.m. (New York
time) on the next Business Day following each Settlement
Date.
(b) Availability of Lender's Pro Rata Share. Agent
may assume that each Revolving Lender will make its Pro Rata
Share of each Revolving Credit Advance available to Agent on each
funding date. If such Pro Rata Share is not, in fact, paid to
Agent by such Revolving Lender when due, Agent will be entitled
to recover such amount on demand from such Revolving Lender
without set-off, counterclaim or deduction of any kind. If any
Revolving Lender fails to pay the amount of its Pro Rata Share
forthwith upon Agent's demand, Agent shall promptly notify
Borrower and Borrower shall immediately repay such amount to
Agent. Nothing in this Section 9.9(b) or elsewhere in this
Agreement or the other Loan Documents shall be deemed to require
Agent to advance funds on behalf of any Revolving Lender or to
relieve any Revolving Lender from its obligation to fulfill its
Commitments hereunder or to prejudice any rights that Borrower
may have against any Revolving Lender as a result of any default
by such Revolving Lender hereunder. To the extent that Agent
advances funds to Borrower on behalf of any Revolving Lender and
is not reimbursed therefor on the same Business Day as such
Advance is made, Agent shall be entitled to retain for its
account all interest accrued on such Advance until reimbursed by
the applicable Revolving Lender.
(c) Return of Payments.
(i) If Agent pays an amount to a Lender
under this Agreement in the belief or expectation that a
related payment has been or will be received by Agent from
Borrower and such related payment is not received by Agent,
then Agent will be entitled to recover such amount from such
Lender on demand without set-off, counterclaim or deduction
of any kind.
(ii) If Agent determines at any time that any
amount received by Agent under this Agreement must be
returned to Borrower or paid to any other Person pursuant to
any insolvency law or otherwise, then, notwithstanding any
other term or condition of this Agreement or any other Loan
Document, Agent will not be required to distribute any
portion thereof to any Lender. In addition, each Lender
will repay to Agent on demand any portion of such amount
that Agent has distributed to such Lender, together with
interest at such rate, if any, as Agent is required to pay
to Borrower or such other Person, without set-off,
counterclaim or deduction of any kind.
(d) Non-Funding Lenders. The failure of any
Non-Funding Lender to make any Revolving Credit Advance or any
payment required by it hereunder shall not relieve any other
Revolving Lender (each such other Revolving Lender, an "Other
Lender") of its obligations to make such Advance, but neither any
Other Lender nor Agent shall be responsible for the failure of
any Non-Funding Lender to make an Advance required hereunder.
Notwithstanding anything set forth herein to the contrary, a Non-
Funding Lender shall not have any voting or consent rights under
or with respect to any Loan Document or constitute a "Lender" or
a "Revolving Lender" (or be included in the calculation of
"Requisite Lenders", or "Supermajority Lenders" hereunder) for
any voting or consent rights under or with respect to any Loan
Document.
(e) Dissemination of Information. Agent will use
reasonable efforts to provide Lenders with any notice of Default
or Event of Default received by Agent from, or delivered by Agent
to, any Credit Party, with notice of any Event of Default of
which Agent has actually become aware and with notice of any
action taken by Agent following any Event of Default; provided,
however, that Agent shall not be liable to any Lender for any
failure to do so, except to the extent that such failure is
attributable to Agent's gross negligence or willful misconduct.
Lenders acknowledge that Borrower is required to provide
Financial Statements and Collateral Reports to Lenders in
accordance with Annexes E and F hereto and agree that Agent shall
have no duty to provide the same to Lenders.
(f) Actions in Concert. Anything in this Agreement to
the contrary notwithstanding, each Lender hereby agrees with each
other Lender that no Lender shall take any action to protect or
enforce its rights arising out of this Agreement or the Notes
(including exercising any rights of set-off) without first
obtaining the prior written consent of Agent and Requisite
Lenders, it being the intent of Lenders that any such action to
protect or enforce rights under this Agreement and the Notes
shall be taken in concert and at the direction or with the
consent of Agent.
10. SUCCESSORS AND ASSIGNS
10.1 Successors and Assigns. This Agreement and the
other Loan Documents shall be binding on and shall inure to the
benefit of each Credit Party, Agent, Lenders and their respective
permitted successors and assigns (including, in the case of any
Credit Party, a debtor-in-possession on behalf of such Credit
Party), except as otherwise provided herein or therein. No
Credit Party may assign, transfer, hypothecate or otherwise
convey its rights, benefits, obligations or duties hereunder or
under any of the other Loan Documents without the prior express
written consent of Agent and Lenders. Any such purported
assignment, transfer, hypothecation or other conveyance by any
Credit Party without the prior express written consent of Agent
and Lenders shall be void. The terms and provisions of this
Agreement are for the purpose of defining the relative rights and
obligations of each Credit Party, Agent and Lenders with respect
to the transactions contemplated hereby and no Person shall be a
third party beneficiary of any of the terms and provisions of
this Agreement or any of the other Loan Documents.
11. MISCELLANEOUS
11.1 Complete Agreement; Modification of Agreement.
The Loan Documents constitute the complete agreement between the
parties with respect to the subject matter thereof and may not be
modified, altered or amended except as set forth in Section 11.2
below. Any letter of interest, commitment letter, and/or fee
letter (other than the GE Capital Fee Letter) and/or
confidentiality agreement between any Credit Party and Agent or
any Lender or any of their respective affiliates, predating this
Agreement and relating to a financing of substantially similar
form, purpose or effect shall be superseded by this Agreement.
11.2 Amendments and Waivers. (a) Except for actions
expressly permitted to be taken by Agent, no amendment,
modification, termination or waiver of any provision of this
Agreement or any other Loan Document, or any consent to any
departure by any Credit Party therefrom, shall in any event be
effective unless the same shall be in writing and signed by Agent
and Borrower, and by Requisite Lenders, Supermajority Lenders or
all affected Lenders, as applicable. Except as set forth in
clauses (b) and (c) below, all such amendments, modifications,
terminations or waivers requiring the consent of any Lenders
shall require the written consent of Requisite Lenders.
(b) No amendment, modification, termination or waiver
of or consent with respect to any provision of this Agreement
which increases the percentage advance rates set forth in the
definition of the Borrowing Base, or which makes less restrictive
the nondiscretionary criteria for exclusion from Eligible
Accounts and Eligible Inventory set forth in Sections 1.6 and
1.7, shall be effective unless the same shall be in writing and
signed by Agent, Supermajority Lenders and Borrower. No
amendment, modification, termination or waiver of or consent with
respect to any provision of this Agreement which waives
compliance with the conditions precedent set forth in Section 2.2
to the making of any Loan or the incurrence of any Letter of
Credit Obligations shall be effective unless the same shall be in
writing and signed by Agent, and Borrower. Notwithstanding
anything contained in this Agreement to the contrary, no waiver
or consent with respect to any Default or any Event of Default
shall be effective for purposes of the conditions precedent to
the making of Loans or the incurrence of Letter of Credit
Obligations set forth in Section 2.2 unless the same shall be in
writing and signed by Agent and Borrower.
(c) No amendment, modification, termination or waiver
shall, unless in writing and signed by Agent and each Lender
directly affected thereby: (i) increase the principal amount of
any Lender's Commitment; (ii) reduce the principal of, rate of
interest on or Fees payable with respect to any Loan or Letter of
Credit Obligations of any affected Lender; (iii) extend any
scheduled payment date or final maturity date of the principal
amount of any Loan of any affected Lender (excluding mandatory
prepayments required under Section 1.3); (iv) waive, forgive,
defer, extend or postpone any payment of interest or Fees as to
any affected Lender; (v) release any Guaranty or, except as
otherwise permitted herein or in the other Loan Documents,
release, or permit any Credit Party to sell or otherwise dispose
of, any Collateral with a value exceeding $5,000,000 in the
aggregate (which action shall be deemed to directly affect all
Lenders); (vi) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which shall be
required for Lenders or any of them to take any action hereunder;
and (vii) amend or waive this Section 11.2 or the definitions of
the terms "Requisite Lenders" or "Supermajority Lenders" insofar
as such definitions affect the substance of this Section 11.2.
Furthermore, no amendment, modification, termination or waiver
affecting the rights or duties of Agent under this Agreement or
any other Loan Document shall be effective unless in writing and
signed by Agent, in addition to Lenders required hereinabove to
take such action. Each amendment, modification, termination or
waiver shall be effective only in the specific instance and for
the specific purpose for which it was given. No amendment,
modification, termination or waiver shall be required for Agent
to take additional Collateral pursuant to any Loan Document. No
amendment, modification, termination or waiver of any provision
of any Note shall be effective without the written concurrence of
the holder of that Note. No notice to or demand on any Credit
Party in any case shall entitle such Credit Party or any other
Credit Party to any other or further notice or demand in similar
or other circumstances. Any amendment, modification,
termination, waiver or consent effected in accordance with this
Section 11.2 shall be binding upon each holder of the Notes at
the time outstanding and each future holder of the Notes.
(d) If, in connection with any proposed amendment,
modification, waiver or termination (a "Proposed Change"):
(i) requiring the consent of all affected
Lenders, the consent of Requisite Lenders is obtained, but
the consent of other Lenders whose consent is required is
not obtained (any such Lender whose consent is not obtained
as described in this clause (i) and in clauses (ii), (iii)
and (iv) below being referred to as a "Non-Consenting
Lender"), or
(ii) requiring the consent of Supermajority
Lenders, the consent of Requisite Lenders is obtained, but
the consent of Supermajority Lenders is not obtained, or
(iii) requiring the consent of Requisite
Lenders, the consent of Revolving Lenders holding 51% or
more of the aggregate Revolving Loan Commitments is
obtained, but the consent of Requisite Lenders is not
obtained, or
(iv) requiring the consent of Requisite
Lenders, the consent of Lenders holding 51% or more of the
aggregate Commitments is obtained, but the consent of
Requisite Lenders is not obtained,
then, so long as Agent is not a Non-Consenting Lender, at
Borrower's request Agent, or a Person acceptable to Agent, shall
have the right with Agent's consent and in Agent's sole
discretion (but shall have no obligation) to purchase from such
Non-Consenting Lenders, and such Non-Consenting Lenders agree
that they shall, upon Agent's request, sell and assign to Agent
or such Person, all of the Commitments of such Non-Consenting
Lender's for an amount equal to the principal balance of all
Loans held by the Non-Consenting Lender's and all accrued
interest and Fees with respect thereto through the date of sale,
such purchase and sale to be consummated pursuant to an executed
Assignment Agreement.
(e) Upon indefeasible payment in full in cash and
performance of all of the Obligations (other than indemnification
Obligations under Section 1.13), termination of the Commitments
and a release of all claims against Agent and Lenders, and so
long as no suits, actions proceedings, or claims are pending or
threatened against any Indemnified Person asserting any damages,
losses or liabilities that are Indemnified Liabilities, Agent
shall deliver to Borrower termination statements, mortgage
releases and other documents necessary or appropriate to evidence
the termination of the Liens securing payment of the Obligations.
11.3 Fees and Expenses. Borrower shall reimburse (i)
Agent for fees, costs and expenses incurred (including the
reasonable fees and expenses of all of its special loan counsel,
advisors, consultants and auditors), and (ii) Agent (and, with
respect to clauses (c) and (d) below, all Lenders) for all fees,
costs and expenses, including the reasonable fees, costs and
expenses of counsel or other advisors (including environmental
and management consultants and appraisers) incurred in connection
with the negotiation and preparation of the Loan Documents and
for advice, assistance, or other representation in connection
with:
(a) the forwarding to Borrower or any other Person on
behalf of Borrower by Agent of the proceeds of the Loans;
(b) any amendment, modification or waiver of, consent
with respect to, or termination of, any of the Loan Documents or
Related Transactions Documents or advice in connection with the
administration of the Loans made pursuant hereto or its rights
hereunder or thereunder;
(c) any litigation, contest, dispute, suit, proceeding
or action (whether instituted by Agent, any Lender, Borrower or
any other Person and whether as a party, witness or otherwise) in
any way relating to the Collateral, any of the Loan Documents or
any other agreement to be executed or delivered in connection
therewith or herewith, including any litigation, contest,
dispute, suit, case, proceeding or action, and any appeal or
review thereof, in connection with a case commenced by or against
Borrower or any other Person that may be obligated to Agent by
virtue of the Loan Documents; including any such litigation,
contest, dispute, suit, proceeding or action arising in
connection with any work-out or restructuring of the Loans during
the pendency of one or more Events of Default; provided that in
the case of reimbursement of counsel for Lenders other than
Agent, such reimbursement shall be limited to one counsel for all
such Lenders;
(d) any attempt to enforce any remedies of Agent or
any Lender against any or all of the Credit Parties or any other
Person that may be obligated to Agent or any Lender by virtue of
any of the Loan Documents; including any such attempt to enforce
any such remedies in the course of any work-out or restructuring
of the Loans during the pendency of one or more Events of
Default; provided that in the case of reimbursement of counsel
for Lenders other than Agent, such reimbursement shall be limited
to one counsel for all such Lenders;
(e) any work-out or restructuring of the Loans during
the pendency of one or more Events of Default;
(f) efforts to (i) monitor the Loans or any of the
other Obligations, (ii) evaluate, observe or assess any of the
Credit Parties or their respective affairs, and (iii) verify,
protect, evaluate, assess, appraise, collect, sell, liquidate or
otherwise dispose of any of the Collateral;
including, as to each of clauses (a) through (f) above, all
attorneys' and other professional and service providers' fees
arising from such services, including those in connection with
any appellate proceedings; and all expenses, costs, charges and
other fees incurred by such counsel and others in connection with
or relating to any of the events or actions described in this
Section 11.3 shall be payable, on demand, by Borrower to Agent.
Without limiting the generality of the foregoing, such expenses,
costs, charges and fees may include: fees, costs and expenses of
accountants, environmental advisors, appraisers, investment
bankers, management and other consultants and paralegals; court
costs and expenses; photocopying and duplication expenses; court
reporter fees, costs and expenses; long distance telephone
charges; air express charges; telegram or telecopy charges;
secretarial overtime charges; and expenses for travel, lodging
and food paid or incurred in connection with the performance of
such legal or other advisory services.
11.4 No Waiver. Agent's or any Lender's failure, at
any time or times, to require strict performance by the Credit
Parties of any provision of this Agreement and or any other Loan
Document shall not waive, affect or diminish any right of Agent
or such Lender thereafter to demand strict compliance and
performance herewith or therewith. Any suspension or waiver of
an Event of Default shall not suspend, waive or affect any other
Event of Default whether the same is prior or subsequent thereto
and whether the same or of a different type. Subject to the
provisions of Section 11.2, none of the undertakings, agreements,
warranties, covenants and representations of any Credit Party
contained in this Agreement or any of the other Loan Documents
and no Default or Event of Default by any Credit Party shall be
deemed to have been suspended or waived by Agent or any Lender,
unless such waiver or suspension is by an instrument in writing
signed by an officer of or other authorized employee of Agent and
the applicable required Lenders and directed to Borrower
specifying such suspension or waiver.
11.5 Remedies. Agent's and Lenders' rights and
remedies under this Agreement shall be cumulative and
nonexclusive of any other rights and remedies which Agent or any
Lender may have under any other agreement, including the other
Loan Documents, by operation of law or otherwise. Recourse to
the Collateral shall not be required.
11.6 Severability. Wherever possible, each provision
of this Agreement and the other Loan Documents shall be
interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement or any
other Loan Document shall be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating
the remainder of such provision or the remaining provisions of
this Agreement.
11.7 Conflict of Terms. Except as otherwise provided
in this Agreement or any of the other Loan Documents by specific
reference to the applicable provisions of this Agreement, if any
provision contained in this Agreement conflicts with any
provision in any of the other Loan Documents, the provision
contained in this Agreement shall govern and control.
11.8 Confidentiality. Agent and each Lender agree to
use commercially reasonable efforts (equivalent to the efforts
Agent or such Lender applies to maintain the confidentiality of
its own confidential information) to maintain as confidential all
confidential information provided to them by the Credit Parties
and designated as confidential for a period of two (2) years
following receipt thereof, except that Agent and each Lender may
disclose such information (a) to Persons employed or engaged by
Agent or such Lender in evaluating, approving, structuring or
administering the Loans and the Commitments; provided that such
Persons have been informed of, and directed to comply with, this
Section 11.8, (b) to any bona fide assignee or participant or
potential assignee or participant that has agreed to comply with
the covenant contained in this Section 11.8 (and any such bona
fide assignee or participant or potential assignee or participant
may disclose such information to Persons employed or engaged by
them as described in clause (a) above who have agreed to comply
with this Section 11.8); (c) as required or requested by any
Governmental Authority or reasonably believed by Agent or such
Lender to be compelled by any court decree, subpoena or legal or
administrative order or process; (d) as, on the advise of Agent's
or such Lender's counsel, is required by law; (e) in connection
with the exercise of any right or remedy under the Loan Documents
or in connection with any Litigation to which Agent or such
Lender is a party; or (f) which ceases to be confidential through
no fault of Agent or any Lender.
11.9 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY
PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING
ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THE LOAN
DOCUMENTS AND THE OBLIGATIONS SHALL BE GOVERNED BY, AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE
OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT
STATE AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
EACH CREDIT PARTY HEREBY CONSENTS AND AGREES THAT THE STATE OR
FEDERAL COURTS LOCATED IN NEW YORK COUNTY, CITY OF NEW YORK, NEW
YORK SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY
CLAIMS OR DISPUTES BETWEEN THE CREDIT PARTIES, AGENT AND LENDERS
PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS
OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS, PROVIDED, THAT AGENT, LENDERS
AND THE CREDIT PARTIES ACKNOWLEDGE THAT ANY APPEALS FROM THOSE
COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW
YORK COUNTY, CITY OF NEW YORK, NEW YORK AND, PROVIDED, FURTHER
NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE
AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY
OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER
SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER
COURT ORDER IN FAVOR OF AGENT. EACH CREDIT PARTY EXPRESSLY
SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY
ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH CREDIT PARTY
HEREBY WAIVES ANY OBJECTION WHICH SUCH CREDIT PARTY MAY HAVE
BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM
NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL
OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH
CREDIT PARTY HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS,
COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS
MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH
CREDIT PARTY AT THE ADDRESS SET FORTH IN ANNEX I OF THIS
AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON
THE EARLIER OF SUCH CREDIT PARTY'S ACTUAL RECEIPT THEREOF OR
THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE
PREPAID.
11.10 Notices. Except as otherwise provided
herein, whenever it is provided herein that any notice, demand,
request, consent, approval, declaration or other communication
shall or may be given to or served upon any of the parties by any
other parties, or whenever any of the parties desires to give or
serve upon any other parties any communication with respect to
this Agreement, each such notice, demand, request, consent,
approval, declaration or other communication shall be in writing
and shall be deemed to have been validly served, given or
delivered (a) upon the earlier of actual receipt and three (3)
Business Days after deposit in the United States Mail, registered
or certified mail, return receipt requested, with proper postage
prepaid, (b) upon transmission, when sent by telecopy or other
similar facsimile transmission (with such telecopy or facsimile
promptly confirmed by delivery of a copy by personal delivery or
United States Mail as otherwise provided in this Section 11.10),
(c) one (1) Business Day after deposit with a reputable overnight
courier with all charges prepaid or (d) when delivered, if
hand-delivered by messenger, all of which shall be addressed to
the party to be notified and sent to the address or facsimile
number indicated on Annex I or to such other address (or
facsimile number) as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be
waived in writing by the party entitled to receive such notice.
Failure or delay in delivering copies of any notice, demand,
request, consent, approval, declaration or other communication to
any Person (other than Borrower or Agent) designated on Annex I
to receive copies shall in no way adversely affect the
effectiveness of such notice, demand, request, consent, approval,
declaration or other communication.
11.11 Section Titles. The Section titles and Table
of Contents contained in this Agreement are and shall be without
substantive meaning or content of any kind whatsoever and are not
a part of the agreement between the parties hereto.
11.12 Counterparts. This Agreement may be executed
in any number of separate counterparts, each of which shall
collectively and separately constitute one agreement.
11.13 WAIVER OF JURY TRIAL. BECAUSE DISPUTES
ARISING IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE
MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND
EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL
LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE
THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH
APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF
THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE
PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG AGENT, LENDERS AND
ANY CREDIT PARTY ARISING OUT OF, CONNECTED WITH, RELATED TO, OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN
CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
11.14 Press Releases. Each Credit Party executing
this Agreement agrees that neither it nor its Affiliates will in
the future issue any press releases or other public disclosure
using the name of GE Capital or its affiliates or referring to
this Agreement, the other Loan Documents or the Related
Transactions Documents without at least two (2) Business Days'
prior notice to GE Capital and without the prior written consent
of GE Capital unless (and only to the extent that) such Credit
Party or Affiliate is required to do so under law and then, in
any event, such Credit Party or Affiliate will consult with GE
Capital before issuing such press release or other public
disclosure. Each Credit Party consents to the publication by
Agent or any Lender of a tombstone or similar advertising
material relating to the financing transactions contemplated by
this Agreement. Agent or such Lender shall provide a draft of
any such tombstone or similar advertising material to each Credit
Party for review and comment prior to the publication thereof.
Agent reserves the right to provide to industry trade
organizations information necessary and customary for inclusion
in league table measurements with Borrower's consent which shall
not be unreasonably withheld or delayed.
11.15 Reinstatement. This Agreement shall remain
in full force and effect and continue to be effective should any
petition be filed by or against Borrower for liquidation or
reorganization, should Borrower become insolvent or make an
assignment for the benefit of any creditor or creditors or should
a receiver or trustee be appointed for all or any significant
part of Borrower's assets, and shall continue to be effective or
to be reinstated, as the case may be, if at any time payment and
performance of the Obligations, or any part thereof, is, pursuant
to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by any obligee of the
Obligations, whether as a "voidable preference," "fraudulent
conveyance," or otherwise, all as though such payment or
performance had not been made. In the event that any payment, or
any part thereof, is rescinded, reduced, restored or returned,
the Obligations shall be reinstated and deemed reduced only by
such amount paid and not so rescinded, reduced, restored or
returned.
11.16 Advice of Counsel. Each of the parties
represents to each other party hereto that it has discussed this
Agreement and, specifically, the provisions of Sections 11.9 and
11.13, with its counsel.
11.17 No Strict Construction. The parties hereto
have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if
drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly
executed as of the date first written above.
GIBSON GREETINGS, INC.
By:______________________________
Title:___________________________
GENERAL ELECTRIC CAPITAL
CORPORATION, as Agent and Lender
By:______________________________
Title:___________________________
<PAGE>
The following Persons are signatories to this Agreement
in their capacity as Credit Parties and not as Borrowers.
GIBSON GREETINGS INTERNATIONAL
LIMITED
By:_________________________
Title:______________________
GGIP, INC.
By:_________________________
Title:______________________
<PAGE>
ANNEX A (Recitals)
to
CREDIT AGREEMENT
DEFINITIONS
Capitalized terms used in the Loan Documents shall have
(unless otherwise provided elsewhere in the Loan Documents) the
following respective meanings and all references to Sections,
Exhibits, Schedules or Annexes in the following definitions shall
refer to Sections, Exhibits, Schedules or Annexes of or to the
Agreement:
"Account Debtor" shall mean any Person who may become
obligated to any Credit Party under, with respect to, or on
account of, an Account.
"Accounting Changes" has the meaning ascribed thereto
in Annex G.
"Accounts" shall mean all "accounts," as such term is
defined in the Code, now owned or hereafter acquired by any
Credit Party and, in any event, including (a) all accounts
receivable, other receivables, book debts and other forms of
obligations on an invoice by invoice basis (other than forms of
obligations evidenced by Chattel Paper, Documents or
Instruments), whether arising out of goods sold or services
rendered by it or from any other transaction (including any such
obligations which may be characterized as an account or contract
right under the Code), (b) all of each Credit Party's rights in,
to and under all purchase orders or receipts for goods or
services on an invoice by invoice basis , (c) all of each Credit
Party's rights to any goods represented by any of the foregoing
(including unpaid sellers' rights of rescission, replevin,
reclamation and stoppage in transit and rights to returned,
reclaimed or repossessed goods), (d) all monies due or to become
due to any Credit Party, under all purchase orders and contracts
for the sale of goods or the performance of services or both by
such Credit Party or in connection with any other transaction on
an invoice by invoice basis (whether or not yet earned by
performance on the part of such Credit Party), including the
right to receive the proceeds of said purchase orders and
contracts, and (e) all collateral security and guarantees of any
kind, now or hereafter in existence, given by any Person with
respect to any of the foregoing.
"Acquisition Charges" shall mean charges associated
with the consummation of the transactions contemplated by the AG
Merger Agreement.
"Additional Liquidation Proceeds" shall mean proceeds
received by Borrower from (i) the liquidation of Silly Slammers,
(ii) the sale of the Fishwick property, and (iii) the sale of the
Obsolete Capital Equipment.
"Advance" shall mean any Revolving Credit Advance.
"Adjusted EBITDA" shall mean EBITDA minus cash payments
on Sales Agreements that have not been expensed in the period
being measured.
"Affiliate" shall mean, with respect to any Person, (a)
each Person that, directly or indirectly, owns or controls,
whether beneficially, or as a trustee, guardian or other
fiduciary, ten percent (10%) or more of the Stock having ordinary
voting power in the election of directors of such Persons, (b)
each Person that controls, is controlled by or is under common
control with such Person, (c) each of such Person's officers,
directors, joint venturers and partners and (d) in the case of
Borrower, the immediate family members, spouses and lineal
descendants of individuals who are Affiliates of Borrower. For
the purposes of this definition, "control" of a Person shall mean
the possession, directly or indirectly, of the power to direct or
cause the direction of its management or policies, whether
through the ownership of voting securities, by contract or
otherwise; provided, however, that the term "Affiliate" shall
specifically exclude Agent and each Lender.
"Agent" shall mean GE Capital in its capacity as Agent
for Lenders or its successor appointed pursuant to Section 9.7.
"AG Escrow Agreement" shall mean the Escrow Agreement
dated as of November 2, 1999 among Borrower, American Greetings
Corporation and The Bank of New York.
"AG Merger Agreement" means the Agreement and Plan of
Merger dated as of November 2, 1999 among Borrower, American
Greetings Corporation and Granite Acquisition Corp.
"Agreement" shall mean the Credit Agreement by and
among Borrower, the other Credit Parties named therein, GE
Capital, as Agent and Lender and the other Lenders signatory from
time to time to the Agreement.
"Appendices" shall have the meaning assigned to it in
the recitals to the Agreement.
"Applicable Margins" means collectively the Applicable
Standby L/C Fee, the Applicable Unused Line Fee and the
Applicable Revolver Index Margin.
"Applicable Revolver Index Margin" shall mean the per
annum interest rate margin from time to time in effect and
payable in addition to the Index Rate applicable to the Revolving
Loan, as determined by reference to Section 1.5(a) of the
Agreement.
"Applicable Standby L/C Fee" shall mean the per annum
fee, from time to time in effect, payable with respect to
outstanding Letter of Credit Obligations as determined by
reference to Section 1.5(a).
"Applicable Unused Line Fee" shall mean the per annum
fee, from time to time in effect, payable in respect to
Borrower's non-use of committed funds pursuant to Section 1.9(b),
which fee is determined by reference to Section 1.5(a).
"Assignment Agreement" shall have the meaning assigned
to it in Section 9.1(a).
"Borrower" shall have the meaning assigned thereto in
the recitals to the Agreement.
"Borrower Accounts" shall have the meaning assigned to
it in Annex C.
"Borrowing Availability" shall have the meaning
assigned to it in Section 1.1(a)(i).
"Borrowing Base" shall mean, as of any date of
determination by Agent, from time to time, an amount equal to the
sum at such time of:
(a) eighty percent (80%) of the book value of
Borrower's Eligible Accounts, less any Reserves established by
Agent at such time; and
(a) fifty-five percent (55%) of the book value of
Borrower's Eligible Inventory valued on a first-in, first-out
basis (at the lower of cost or market), less any Reserves
established by Agent at such time.
"Borrowing Base Certificate" shall mean a certificate
to be executed and delivered from time to time by Borrower in the
form attached to the Agreement as Exhibit 4.1(b).
"Business Day" shall mean any day that is not a
Saturday, a Sunday or a day on which banks are required or
permitted to be closed in the State of New York.
"Capital Expenditures" shall mean, with respect to any
Person, all expenditures (by the expenditure of cash or the
incurrence of Indebtedness) by such Person during any measuring
period for any fixed assets or improvements or for replacements,
substitutions or additions thereto, that have a useful life of
more than one year and that are required to be capitalized under
GAAP.
"Capital Lease" shall mean, with respect to any Person,
any lease of any property (whether real, personal or mixed) by
such Person as lessee that, in accordance with GAAP, would be
required to be classified and accounted for as a capital lease on
a balance sheet of such Person.
"Capital Lease Obligation" shall mean, with respect to
any Capital Lease of any Person, the amount of the obligation of
the lessee thereunder that, in accordance with GAAP, would appear
on a balance sheet of such lessee in respect of such Capital
Lease.
"Cash Collateral Account" shall have the meaning
ascribed to it in Annex B.
"Cash Equivalents" shall have the meaning assigned to
it in Section 1.8.
"Cash Management Systems" shall have the meaning
assigned to it in Section 1.8.
"Change of Control" means any of the following: (a)
any person or group of persons (within the meaning of the
Securities Exchange Act of 1934) shall have acquired beneficial
ownership (within the meaning of Rule 13d-3 promulgated by the
Securities and Exchange Commission under the Securities Exchange
Act of 1934) of 35% or more of the issued and outstanding shares
of capital Stock of Borrower having the right to vote for the
election of directors of Borrower under ordinary circumstances;
(b) during any period of twelve consecutive calendar months,
individuals who at the beginning of such period constituted the
board of directors of Borrower (together with any new directors
whose election by the board of directors of Borrower or whose
nomination for election by the stockholders of Borrower was
approved by a vote of at least two-thirds of the directors then
still in office who either were directors at the beginning of
such period or whose elections or nomination for election was
previously so approved) cease for any reason other than death or
disability to constitute a majority of the directors then in
office, or (c) Borrower shall cease to own and control all of the
economic and voting rights associated with all of the outstanding
capital Stock of any of its Subsidiaries at a time when any such
Subsidiary has intercompany loans outstanding to Borrower.
Notwithstanding the foregoing, the consummation of the
transactions contemplated by the AG Merger Agreement shall not be
deemed a Change of Control provided that after such consummation
the management, ownership and structure resulting therefrom is
reasonably acceptable to Agent.
"Charges" shall mean all federal, state, county, city,
municipal, local, foreign or other governmental taxes (including
taxes owed to the PBGC at the time due and payable), levies,
assessments, charges, liens, claims or encumbrances upon or
relating to (a) the Collateral, (b) the Obligations, (c) the
employees, payroll, income or gross receipts of any Credit Party,
(d) any Credit Party's ownership or use of any properties or
other assets, or (e) any other aspect of any Credit Party's
business.
"Chattel Paper" shall mean any "chattel paper," as such
term is defined in the Code, now owned or hereafter acquired by
any Credit Party, wherever located.
"Cleo Escrow Agreement" shall mean the Escrow Agreement
among Borrower, CSS Industries, Inc., and The Bank of New York.
"Closing Date" shall mean November 30, 1999.
"Closing Checklist" shall mean the schedule, including
all appendices, exhibits or schedules thereto, listing certain
documents and information to be delivered in connection with the
Agreement, the other Loan Documents and the transactions
contemplated thereunder, substantially in the form attached
hereto as Annex D.
"Code" shall mean the Uniform Commercial Code as the
same may, from time to time, be enacted and in effect in the
State of New York; provided, however, in the event that, by
reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of, or remedies with respect
to, Agent's or any Lender's Lien on any Collateral is governed by
the Uniform Commercial Code as enacted and in effect in a
jurisdiction other than the State of New York, the term "Code"
shall mean the Uniform Commercial Code as enacted and in effect
in such other jurisdiction solely for purposes of the provisions
thereof relating to such attachment, perfection, priority or
remedies and for purposes of definitions related to such
provisions.
"Collateral" shall mean the property covered by the
Security Agreement, the Mortgages and the other Collateral
Documents and any other property, real or personal, tangible or
intangible, now existing or hereafter acquired, that may at any
time be or become subject to a security interest or Lien in favor
of Agent, on behalf of itself and Lenders, to secure the
Obligations.
"Collateral Documents" shall mean the Security
Agreement, the Pledge Agreements, the Subsidiary Guaranty, the
Mortgages, the Intellectual Property Security Agreement and the
Consent and Agreement and all similar agreements entered into
guaranteeing payment of, or granting a Lien upon property as
security for payment of, the Obligations.
"Collateral Reports" shall mean the reports with
respect to the Collateral referred to in Annex F.
"Collection Account" shall mean that certain account of
Agent, account number 502-328-54 in the name of Agent at Bankers
Trust Company in New York, New York or such other account as
Agent shall specify in writing as the "Collection Account".
"Commitment Termination Date" shall mean the earliest
of (a) November 30, 2002, (b) the date of termination of Lenders'
obligations to make Advances and/or incur Letter of Credit
Obligations or permit existing Loans to remain outstanding
pursuant to Section 8.2(b), and (c) the date of indefeasible
prepayment in full by Borrower of the Loans and the cancellation
and return (or stand-by guarantee) of all Letters of Credit or
the cash collateralization of all Letter of Credit Obligations
pursuant to Annex B, and the permanent reduction of the Revolving
Loan Commitment to zero dollars ($0).
"Commitments" shall mean (a) as to any Lender, the
aggregate of such Lender's Revolving Loan Commitment as set
forth on Annex J to the Agreement or in the most recent
Assignment Agreement executed by such Lender and (b) as to all
Lenders, the aggregate of all Lenders' Revolving Loan
Commitments, which aggregate commitment shall be Fifty Million
Dollars ($50,000,000) on the Closing Date, as to each of clauses
(a) and (b), as such Commitments may be reduced, amortized or
adjusted from time to time in accordance with the Agreement.
"Compliance Certificate" shall have the meaning
assigned to it in Annex E.
"Concentration Account" shall have the meaning assigned
to it in Annex C.
"Consent and Agreement" shall mean that certain Consent
and Agreement of even date herewith, executed by IP Subsidiary,
Borrower and Agent, relating to the assignment of certain rights
from Borrower to IP Subsidiary.
"Contracts" shall mean all "contracts," as such term is
defined in the Code, now owned or hereafter acquired by any
Credit Party, in any event, including all contracts,
undertakings, or agreements (other than rights evidenced by
Chattel Paper, Documents or Instruments) in or under which any
Credit Party may now or hereafter have any right, title or
interest, including any agreement relating to the terms of
payment or the terms of performance of any Account.
"Copyright License" shall mean any and all rights now
owned or hereafter acquired by any Credit Party under any written
agreement granting any right to use any Copyright or Copyright
registration.
"Copyrights" shall mean all of the following now owned
or hereafter obtained or acquired by any Credit Party (including
all of the following in all media now known or hereafter
developed): (a) all copyrights and General Intangibles of like
nature (whether registered or unregistered), all registrations
and recordings thereof, and all applications in connection
therewith, including all registrations, recordings and
applications in the United States Copyright Office or in any
similar office or agency of the United States, any state or
territory thereof, or any other country or any political
subdivision thereof, and (b) all reissues, extensions or renewals
thereof.
"Credit Parties" shall mean Borrower, IP Subsidiary and
Domestic Subsidiary.
"Current Assets" shall mean, with respect to any
Person, all current assets of such Person as of any date of
determination calculated in accordance with GAAP, but excluding
cash, cash equivalents and debts due from Affiliates.
"Current Liabilities" shall mean, with respect to any
Person, all liabilities which should, in accordance with GAAP, be
classified as current liabilities, and in any event shall include
all Indebtedness payable on demand or within one year from any
date of determination without any option on the part of the
obligor to extend or renew beyond such year, all accruals for
federal or other taxes based on or measured by income and payable
within such year, and the current portion of long-term debt
required to be paid within one year, but excluding, in the case
of Borrower, the aggregate outstanding principal balances of the
Revolving Loan.
"Default" shall mean any event which, with the passage
of time or notice or both, would, unless cured or waived, become
an Event of Default.
"Default Rate" shall have the meaning assigned to it in
Section 1.5(d).
"Disbursement Accounts" shall have the meaning assigned
to it on Annex C.
"Disclosure Schedules" shall mean the Schedules
prepared by Borrower and denominated as Disclosure Schedules 1.4
through 6.7 in the Index to the Agreement.
"Documents" shall mean any "documents," as such term is
defined in the Code, now owned or hereafter acquired by any
Credit Party, wherever located.
"Dollars" or "$" shall mean lawful currency of the
United States of America.
"Domestic Subsidiary" shall mean Gibson Greetings
International Limited.
"Dreyfus Fund" shall have the meaning assigned to it in
Section 6.2.
"EBIT" shall mean EBITDA minus the amount of non-cash
charges (including depreciation and amortization) for such
period.
"EBITDA" shall mean, with respect to any Person for any
fiscal period, without duplication, an amount equal to (a) net
income of such Person for such period, minus (b) the sum of (i)
income tax credits, (ii) interest income, (iii) gain from
extraordinary items for such period, (iv) any aggregate net gain
(but not any aggregate net loss) during such period arising from
the sale, exchange or other disposition of capital assets by such
Person (including any fixed assets, whether tangible or
intangible, all inventory sold in conjunction with the
disposition of fixed assets and all securities), and (v) any
other non-cash gains which have been added in determining net
income, in each case to the extent included in the calculation of
net income of such Person for such period in accordance with
GAAP, but without duplication, plus (c) the sum of (i) any
provision for income taxes, (ii) Interest Expense, (iii) loss
from extraordinary items for such period, (iv) the amount of non-
cash charges (including depreciation and amortization) for such
period, (v) amortized debt discount for such period, and (vi) the
amount of any deduction to net income as the result of any grant
to any members of the management of such Person of any Stock, in
each case to the extent included in the calculation of net income
of such Person for such period in accordance with GAAP, but
without duplication. For purposes of this definition, the
following items shall be excluded in determining net income of a
Person: (1) the income (or deficit) of any other Person accrued
prior to the date it became a Subsidiary of, or was merged or
consolidated into, such Person or any of such Person's
Subsidiaries; (2) the income (or deficit) of any other Person
(other than a Subsidiary) in which such Person has an ownership
interest, except to the extent any such income has actually been
received by such Person in the form of cash dividends or
distributions; (3) the undistributed earnings of any Subsidiary
of such Person to the extent that the declaration or payment of
dividends or similar distributions by such Subsidiary is not at
the time permitted by the terms of any contractual obligation or
requirement of law applicable to such Subsidiary; (4) any
restoration to income of any contingency reserve, except to the
extent that provision for such reserve was made out of income
accrued during such period; (5) any write-up of any asset; (6)
any net gain from the collection of the proceeds of life
insurance policies; (7) any net gain arising from the acquisition
of any securities, or the extinguishment, under GAAP, of any
Indebtedness, of such Person, (8) in the case of a successor to
such Person by consolidation or merger or as a transferee of its
assets, any earnings of such successor prior to such
consolidation, merger or transfer of assets, and (9) any deferred
credit representing the excess of equity in any Subsidiary of
such Person at the date of acquisition of such Subsidiary over
the cost to such Person of the investment in such Subsidiary.
For purpose of calculating compliance with the covenants set
forth in Annex G and Adjusted EBITDA, EBITDA for: (A) the Fiscal
Quarter ending December 31, 1999, restructuring charges and
Acquisition Charges in amounts not to exceed $1,831,000 and
$600,000, respectively, shall be excluded, (B) for the Fiscal
Quarter ending March 31, 2000, restructuring charges and
Acquisition Charges in amounts not to exceed $1,831,000 and
$800,000, respectively, shall be excluded, and (C) for the
Fiscal Quarter ending June 30, 2000, restructuring charges and
Acquisition Charges in amounts not to exceed $1,831,000 and
$1,600,000, respectively, shall be excluded.
"Eligible Accounts" shall have the meaning assigned to
it in Section 1.6 of the Agreement.
"Eligible Inventory" shall have the meaning assigned to
it in Section 1.7 of the Agreement.
"Environmental Laws" shall mean all applicable federal,
state, local and foreign laws, statutes, ordinances, codes,
rules, standards and regulations, now or hereafter in effect, and
any applicable judicial or administrative interpretation thereof,
including any applicable judicial or administrative order,
consent decree, order or judgment, imposing liability or
standards of conduct for or relating to the regulation and
protection of human health, safety, the environment and natural
resources (including ambient air, surface water, groundwater,
wetlands, land surface or subsurface strata, wildlife, aquatic
species and vegetation). Environmental Laws include the
Comprehensive Environmental Response, Compensation, and Liability
Act of 1980 (42 U.S.C. Sections 9601 et seq.) ("CERCLA"); the
Hazardous Materials Transportation Authorization Act of 1994 (49
U.S.C. Sections 5101 et seq.); the Federal Insecticide,
Fungicide, and Rodenticide Act (7 U.S.C. Sections 136 et seq.);
the Solid Waste Disposal Act (42 U.S.C. Sections 6901 et seq.);
the Toxic Substance Control Act (15 U.S.C. Sections 2601 et
seq.); the Clean Air Act (42 U.S.C. Sections 7401 et seq.); the
Federal Water Pollution Control Act (33 U.S.C. Sections 1251 et
seq.); the Occupational Safety and Health Act (29 U.S.C. Sections
651 et seq.); and the Safe Drinking Water Act (42 U.S.C. Sections
300(f) et seq.), and any and all regulations promulgated
thereunder, and all analogous state, local and foreign
counterparts or equivalents and any transfer of ownership
notification or approval statutes.
"Environmental Liabilities" shall mean, with respect to
any Person, all liabilities, obligations, responsibilities,
response, remedial and removal costs, investigation and
feasibility study costs, capital costs, operation and maintenance
costs, losses, damages, punitive damages, property damages,
natural resource damages, consequential damages, treble damages,
costs and expenses (including all fees, disbursements and
expenses of counsel, experts and consultants), fines, penalties,
sanctions and interest incurred as a result of or related to any
claim, suit, action, investigation, proceeding or demand by any
Person, whether based in contract, tort, implied or express
warranty, strict liability, criminal or civil statute or common
law, including any arising under or related to any Environmental
Laws, Environmental Permits, or in connection with any Release or
threatened Release or presence of a Hazardous Material whether
on, at, in, under, from or about or in the vicinity of any real
or personal property.
"Environmental Permits" shall mean all permits,
licenses, authorizations, certificates, approvals or
registrations required by any Governmental Authority under any
Environmental Laws.
"Equipment" shall mean all "equipment," as such term is
defined in the Code, now owned or hereafter acquired by any
Credit Party, wherever located and, in any event, including all
such Credit Party's machinery and equipment, including processing
equipment, conveyors, machine tools, data processing and computer
equipment with software and peripheral equipment, and all
engineering, processing and manufacturing equipment, office
machinery, furniture, materials handling equipment, tools,
attachments, accessories, automotive equipment, trailers, trucks,
forklifts, molds, dies, stamps, motor vehicles, rolling stock and
other equipment of every kind and nature, trade fixtures and
fixtures not forming a part of real property, together with all
additions and accessions thereto, replacements therefor, all
parts therefor, all substitutes for any of the foregoing, fuel
therefor, and all manuals, drawings, instructions, warranties and
rights with respect thereto, and all products and proceeds
thereof and condemnation awards and insurance proceeds with
respect thereto.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time, and any
regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to any
Credit Party, any trade or business (whether or not incorporated)
which, together with such Credit Party, are treated as a single
employer within the meaning of Sections 414(b), (c), (m) or (o)
of the IRC.
"ERISA Event" shall mean, with respect to any Credit
Party or any ERISA Affiliate, (a) any event described in Section
4043(c) of ERISA with respect to a Title IV Plan; (b) the
withdrawal of any Credit Party or ERISA Affiliate from a Title IV
Plan subject to Section 4063 of ERISA during a plan year in which
it was a substantial employer, as defined in Section 4001(a)(2)
of ERISA; (c) the complete or partial withdrawal of any Credit
Party or any ERISA Affiliate from any Multiemployer Plan; (d) the
filing of a notice of intent to terminate a Title IV Plan or the
treatment of a plan amendment as a termination under Section 4041
of ERISA; (e) the institution of proceedings to terminate a Title
IV Plan or Multiemployer Plan by the PBGC; (f) the failure by any
Credit Party or ERISA Affiliate to make when due required
contributions to a Multiemployer Plan or Title IV Plan unless
such failure is cured within 30 days; (g) any other event or
condition which might reasonably be expected to constitute
grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any Title IV Plan or
Multiemployer Plan or for the imposition of liability under
Section 4069 or 4212(c) of ERISA; (h) the termination of a
Multiemployer Plan under Section 4041A of ERISA or the
reorganization or insolvency of a Multiemployer Plan under
Section 4241 of ERISA; (i) the loss of a Qualified Plan's
qualification or tax exempt status; or (j) the termination of a
Plan described in Section 4064 of ERISA.
"ESOP" shall mean a Plan which is intended to satisfy
the requirements of Section 4975(e)(7) of the IRC.
"Event of Default" shall have the meaning assigned to
it in Section 8.1.
"Excess Cash Flow" shall mean, without duplication,
with respect to any measurement period, net income plus (a)
depreciation, amortization and Interest Expense to the extent
deducted in determining net income, minus (b) Capital
Expenditures during such Fiscal Year (excluding the financed
portion thereof), minus (c) any cash payments on Sales Agreements
that are otherwise not expensed, minus, (d) Interest Expense paid
or accrued (excluding any original issue discount, interest paid
in kind or amortized debt discount, to the extent included in
determining Interest Expense) and scheduled principal payments
paid or payable in respect of Funded Debt, plus or minus (as the
case may be), (e) extraordinary gains or losses which are cash
items not included in the calculation of net income, minus (f)
mandatory prepayments paid in cash pursuant to Section 1.3 other
than mandatory prepayments made pursuant to Sections 1.3(b)(i) or
1.3(d), plus (g) taxes deducted in determining net income to the
extent not paid in cash.
"Fair Labor Standards Act" means the Fair Labor
Standards Act, 29 U.S.C. Section 201 et seq.
"Federal Funds Rate" shall mean, for any day, a
floating rate equal to the weighted average of the rates on
overnight federal funds transactions among members of the Federal
Reserve System, as determined by Agent.
"Federal Reserve Board" means the Board of Governors of
the Federal Reserve System.
"Fees" shall mean any and all fees payable to Agent or
any Lender pursuant to the Agreement or any of the other Loan
Documents.
"Financial Covenants" shall mean the financial
covenants set forth in Annex G.
"Financial Statements" shall mean the consolidated and
consolidating income statements, statements of cash flows and
balance sheets of Borrower delivered in accordance with Section
3.4 and Annex E.
"Fiscal Month" shall mean any of the monthly accounting
periods of Borrower.
"Fiscal Quarter" shall mean any of the quarterly
accounting periods of Borrower, ending on March 31, June 30,
September 30 or December 31 of each year.
"Fiscal Year" shall mean any of the annual accounting
periods of Borrower ending on December 31 of each year.
"Fixed Charges" shall mean, with respect to any Person
for any fiscal period, (a) the aggregate of all Interest Expense
paid or accrued during such period, plus (b) scheduled payments
of principal with respect to Indebtedness during such period
(excluding any repayment of the Revolving Loans).
"Fixed Charge Coverage Ratio" shall mean, with respect
to any Person for any fiscal period, the ratio of EBITDA minus
(a) Capital Expenditures during such period (excluding
extraordinary Capital Expenditures related to Borrower's ERP
computer system in an amount not to exceed, (i) for the Fiscal
Quarter ending December 31, 1999, $5,600,000, (ii) for the Fiscal
Quarter ending March 31, 1999, $4,500,000, (iii) for the Fiscal
Quarter ending June 30, 2000, $4,500,000 and (iv) for the Fiscal
Quarter ending September 30, 2000, $1,000,000 provided that, such
excluded Capital Expenditures shall only apply to the extent that
actual cumulative Capital Expenditures related to Borrower's ERP
computer system is at least equal to the projected amounts of
$5,600,000 for the Fiscal Quarter ending December 31, 1999,
$10,100,000 for the Fiscal Quarter ending June 30, 1999,
$14,600,000 for the Fiscal Quarter ending June 30, 2000, and
$15,600,000 for the Fiscal Quarter ending September 30, 2000 and
to the extent that such extraordinary Capital Expenditures are
less than such projected amounts, the excluded amount of Capital
Expenditures shall be reduced by the difference between the
projected amount and the actual amount thereof), minus (b) cash
payments made on Sales Agreements that are not otherwise
expensed, minus (c) taxes to the extent paid in cash, to Fixed
Charges. In computing Fixed Charges for any fiscal period,
interest and principal payments that are due within one week
after the end of that fiscal period, without duplication, shall
be deemed to have been paid on the last day of that fiscal
period.
"Fixtures" shall mean any "fixtures" as such term is
defined in the Code, now owned or hereafter acquired by any
Credit Party.
"Funded Debt" shall mean, with respect to any Person,
without duplication, all Indebtedness for borrowed money
evidenced by notes, bonds, debentures, or similar evidences of
Indebtedness and which by its terms matures more than one year
from, or is directly or indirectly renewable or extendible at
such Person's option under a revolving credit or similar
agreement obligating the lender or lenders to extend credit over
a period of more than one year from the date of creation thereof,
and specifically including Capital Lease Obligations, current
maturities of long-term debt, revolving credit and short-term
debt extendible beyond one year at the option of the debtor, and
also including, in the case of Borrower, the Obligations and,
without duplication, Guaranteed Indebtedness consisting of
guaranties of Funded Debt of other Persons.
"GAAP" shall mean generally accepted accounting
principles in the United States of America, consistently applied,
as such term is further defined in Annex G to the Agreement.
"GE Capital Fee Letter" shall mean that certain letter,
dated of even date hereof, between GE Capital and Borrower with
respect to certain Fees to be paid from time to time by Borrower
to GE Capital.
"General Intangibles" shall mean any "general
intangibles," as such term is defined in the Code, now owned or
hereafter acquired by any Credit Party, and, in any event,
including all right, title and interest which such Credit Party
may now or hereafter have in or under any Contract, all customer
lists, Licenses, Copyrights, Trademarks, Patents, and all
applications therefor and reissues, extensions or renewals
thereof, rights in Intellectual Property, interests in
partnerships, joint ventures and other business associations,
licenses, permits, copyrights, trade secrets, proprietary or
confidential information, inventions (whether or not patented or
patentable), technical information, procedures, designs,
knowledge, know-how, software, data bases, data, skill,
expertise, experience, processes, models, drawings, materials and
records, goodwill (including the goodwill associated with any
Trademark or Trademark License), all rights and claims in or
under insurance policies (including insurance for fire, damage,
loss and casualty, whether covering personal property, real
property, tangible rights or intangible rights, all liability,
life, key man and business interruption insurance, and all
unearned premiums), uncertificated securities, choses in action,
deposit, checking and other bank accounts, rights to receive tax
refunds and other payments, rights of indemnification, all books
and records, correspondence, credit files, invoices and other
papers, including without limitation all tapes, cards, computer
runs and other papers and documents in the possession or under
the control of such Credit Party or any computer bureau or
service company from time to time acting for such Credit Party.
"Goods" means any "goods" as defined in the Code, now
owned or hereafter acquired by any Person.
"Governmental Authority" shall mean any nation or
government, any state or other political subdivision thereof, and
any agency, department or other entity exercising executive,
legislative, judicial, regulatory or administrative functions of
or pertaining to government.
"Guaranteed Indebtedness" shall mean, as to any Person,
any obligation of such Person guaranteeing any indebtedness,
lease, dividend, or other obligation ("primary obligations") of
any other Person (the "primary obligor") in any manner, including
any obligation or arrangement of such Person (a) to purchase or
repurchase any such primary obligation, (b) to advance or supply
funds (i) for the purchase or payment of any such primary
obligation or (ii) to maintain working capital or equity capital
of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet condition of the primary obligor,
(c) to purchase property, securities or services primarily for
the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such
primary obligation, or (d) to indemnify the owner of such primary
obligation against loss in respect thereof. The amount of any
Guaranteed Indebtedness at any time shall be deemed to be an
amount equal to the lesser at such time of (x) the stated or
determinable amount of the primary obligation in respect of which
such Guaranteed Indebtedness is incurred and (y) the maximum
amount for which such Person may be liable pursuant to the terms
of the instrument embodying such Guaranteed Indebtedness; or, if
not stated or determinable, the maximum reasonably anticipated
liability (assuming full performance) in respect thereof.
"Guarantors" shall mean Domestic Subsidiary, IP
Subsidiary and each other Person, if any, which executes a
guarantee or other similar agreement in favor of Agent in
connection with the transactions contemplated by the Agreement
and the other Loan Documents.
"Hazardous Material" shall mean any substance, material
or waste which is regulated by or forms the basis of liability
now or hereafter under, any Environmental Laws, including any
material or substance which is (a) defined as a "solid waste,"
"hazardous waste," "hazardous material," "hazardous substance,"
"extremely hazardous waste," "restricted hazardous waste,"
"pollutant," "contaminant," "hazardous constituent," "special
waste," "toxic substance" or other similar term or phrase under
any Environmental Laws, (b) petroleum or any fraction or
by-product thereof, asbestos, polychlorinated biphenyls (PCB's),
or any radioactive substance.
"Indebtedness" shall mean, with respect to any Person,
without duplication (a) all indebtedness of such Person for
borrowed money or for the deferred purchase price of property
payment for which is deferred six (6) months or more, but
excluding obligations to trade creditors incurred in the ordinary
course of business that are not overdue by more than six (6)
months unless being contested in good faith, (b) all
reimbursement and other obligations with respect to letters of
credit, bankers' acceptances and surety bonds, whether or not
matured, (c) all obligations evidenced by notes, bonds,
debentures or similar instruments, (d) all indebtedness created
or arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or
sale of such property), (e) all Capital Lease Obligations and the
present value (discounted at the Index Rate as in effect on the
Closing Date) of future rental payments under all synthetic
leases, (f) all obligations of such Person under commodity
purchase or option agreements or other commodity price hedging
arrangements, in each case whether contingent or matured, (g) all
obligations of such Person under any foreign exchange contract,
currency swap agreement, interest rate swap, cap or collar
agreement or other similar agreement or arrangement designed to
alter the risks of that Person arising from fluctuations in
currency values or interest rates, in each case whether
contingent or matured, (h) all Indebtedness referred to above
secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any
Lien upon or in property or other assets (including accounts and
contract rights) owned by such Person, even though such Person
has not assumed or become liable for the payment of such
Indebtedness, and (i) the Obligations.
"Indemnified Liabilities" shall have the meaning
assigned to it in Section 1.13.
"Indemnified Person" shall have the meaning assigned to
it in Section 1.13.
"Index Rate" shall mean the latest rate for 30-day
dealer placed commercial paper (which for purposes hereof shall
mean high grade unsecured notes sold through dealers by major
corporations in multiples of $1,000) which normally is published
in the "Money Rates" section of The Wall Street Journal (or if
such rate ceases to be so published, as quoted from such other
generally available and recognizable source as Agent may select).
The Index Rate shall be determined (i) on the first Business Day
immediately prior to the Closing Date and (ii) thereafter, on the
last Business Day of each calendar month for calculation of
interest for the following month.
"Index Rate Loan" shall mean a Loan or portion thereof
bearing interest by reference to the Index Rate.
"Ink Group Entities" shall mean collectively, The Ink
Group Publishers Ltd., The Ink Group Publishers Pty Ltd., The Ink
Group Pty Ltd., Faime Pty Ltd. and The Ink Group NZ Ltd.
"Instruments" shall mean any "instrument," as such term
is defined in the Code, now owned or hereafter acquired by any
Credit Party, wherever located, and, in any event, including all
certificated securities, all certificates of deposit, and all
notes and other, without limitation, evidences of indebtedness,
other than instruments that constitute, or are a part of a group
of writings that constitute, Chattel Paper.
"Intellectual Property" shall mean any and all
Licenses, Patents, Copyrights, Trademarks, trade secrets and
customer lists.
"Intercompany Borrower" shall have the meaning assigned
to it in Section 6.3.
"Intercompany Notes" shall have the meaning assigned to
it in Section 6.3.
"Interest Coverage Ratio" shall mean, with respect to
any Person for any period, the ratio of EBIT to Interest Expense.
"Interest Expense" shall mean, with respect to any
Person for any fiscal period, interest expense (whether cash or
non-cash) of such Person determined in accordance with GAAP for
the relevant period ended on such date, including, in any event,
interest expense with respect to any Funded Debt of such Person
and interest expense for the relevant period that has been
capitalized on the balance sheet of such Person.
"Interest Payment Date" means as to any Index Rate
Loan, the first Business Day of each month to occur while such
Loan is outstanding, and provided that, in addition to the
foregoing, each of (x) the date upon which all of the Commitments
have been terminated and the Loans have been paid in full and (y)
the Commitment Termination Date shall be deemed to be an
"Interest Payment Date" with respect to any interest which is
then accrued under the Agreement.
"Inventory" shall mean any "inventory," as such term is
defined in the Code, now or hereafter owned or acquired by any
Credit Party, wherever located, and in any event including
inventory, merchandise, goods and other personal property which
are held by or on behalf of any Credit Party for sale or lease or
are furnished or are to be furnished under a contract of service,
or which constitute raw materials, work in process or materials
used or consumed or to be used or consumed in such Credit Party's
business or in the processing, production, packaging, promotion,
delivery or shipping of the same, including other supplies.
"Investment Pro Forma" shall have the meaning assigned
to it in Section 6.2.
"IP Subsidiary" shall mean GGIP, Inc., a Delaware
corporation.
"IP Subsidiary License Agreement" shall mean that
certain License Agreement of even date hereof between Borrower
and IP Subsidiary providing for a license of the assets of IP
Subsidiary to Borrower.
"IRC" shall mean the Internal Revenue Code of 1986, as
amended, and all regulations promulgated thereunder.
"IRS" shall mean the Internal Revenue Service.
"Key Employee Retention Incentive Plan" shall mean the
Gibson Greetings, Inc. Key Employee Retention Incentive Plan
adopted by the Board of Directors of Borrower.
"L/C Issuer" shall have the meaning assigned to such
term in Annex B.
"Lenders" shall mean GE Capital, the other Lenders
named on the signature page of the Agreement, and, if any such
Lender shall decide to assign all or any portion of the
Obligations, such term shall include any permitted assignee of
such Lender.
"Letter of Credit Fee" has the meaning ascribed thereto
in Annex B.
"Letter of Credit Obligations" shall mean all
outstanding obligations incurred by Agent and Lenders at the
request of Borrower, whether direct or indirect, contingent or
otherwise, due or not due, in connection with the issuance of a
reimbursement agreement or guaranty by Agent or purchase of a
participation as set forth in Annex B with respect to any Letter
of Credit. The amount of such Letter of Credit Obligations shall
equal the maximum amount which may be payable by Agent or Lenders
thereupon or pursuant thereto.
"Letters of Credit" shall mean commercial or standby
letters of credit issued for the account of Borrower by any L/C
Issuer, and bankers' acceptances issued by Borrower, for which
Agent and Lenders have incurred Letter of Credit Obligations.
"License" shall mean any Copyright License, Patent
License, Trademark License or other license of rights or
interests now held or hereafter acquired by any Credit Party.
"Lien" shall mean any mortgage or deed of trust,
pledge, hypothecation, assignment, deposit arrangement, lien,
charge, claim, security interest, easement or encumbrance, or
preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any lease
or title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing,
and the filing of, or agreement to give, any financing statement
perfecting a security interest under the Code or comparable law
of any jurisdiction).
"Litigation" shall have the meaning assigned to it in
Section 3.13.
"Loan Account" shall have the meaning assigned to it in
Section 1.12.
"Loan Documents" shall mean the Agreement, the Notes,
the Collateral Documents and all other agreements, instruments,
documents and certificates identified in the Closing Checklist
executed and delivered to, or in favor of, Agent or any Lenders
and including all other pledges, powers of attorney, consents,
assignments, contracts, notices, and all other written matter
whether heretofore, now or hereafter executed by or on behalf of
any Credit Party, or any employee of any Credit Party, and
delivered to Agent or any Lender in connection with the Agreement
or the transactions contemplated thereby. Any reference in the
Agreement or any other Loan Document to a Loan Document shall
include all appendices, exhibits or schedules thereto, and all
amendments, restatements, supplements or other modifications
thereto, and shall refer to the Agreement or such Loan Document
as the same may be in effect at any and all times such reference
becomes operative.
"Loans" shall mean the Revolving Loan.
"Lock Boxes" shall have the meaning assigned to it in
Annex C.
"Margin Stock" shall have the meaning assigned to it in
Section 3.10.
"Material Adverse Effect" shall mean a material adverse
effect on (a) the business, assets, operations, prospects or
financial or other condition of the Credit Parties considered as
a whole, (b) Borrower's ability to pay any of the Loans or any of
the other Obligations in accordance with the terms of the
Agreement, (c) the Collateral or Agent's Liens, on behalf of
itself and Lenders, on the Collateral or the priority of such
Liens, or (d) Agent's or any Lender's rights and remedies under
the Agreement and the other Loan Documents. A Material Adverse
Effect shall not include the non-renewal by Winn-Dixie Stores,
Inc. of its existing agreement with Borrower only if Borrower has
Net Borrowing Availability immediately thereafter (after giving
effect to any reduced value of Inventory resulting from such
non-renewal) of not less than $9,000,000. Without limiting the
foregoing, any event or occurrence adverse to one or more Credit
Parties which results or could reasonably be expected to result
in costs and/or liabilities or loss of revenues, individually, or
in the aggregate, to any Credit Party in any 30-day period in
excess of $7,500,000 shall constitute a Material Adverse Effect.
"Maximum Amount" shall mean, as of any date of
determination, an amount equal to the Revolving Loan Commitment
of all Lenders as of that date.
"Mortgaged Properties" shall have the meaning assigned
to it in Annex D.
"Mortgages" shall mean each of the mortgages, deeds of
trust, leasehold mortgages, leasehold deeds of trust, collateral
assignments of leases or other real estate security documents
delivered by any Credit Party to Agent on behalf if itself and
Lenders with respect to the Mortgaged Properties, all in form and
substance satisfactory to Agent.
"Multiemployer Plan" shall mean a "multiemployer plan"
as defined in Section 4001(a)(3) of ERISA, and to which any
Credit Party or ERISA Affiliate is making, is obligated to make
or has made or been obligated to make, contributions on behalf of
participants who are or were employed by any of them.
"Net Borrowing Availability" shall mean as of any date
of determination, the lesser of (i) the Maximum Amount and (ii)
the Borrowing Base, in each case less the Revolving Loan then
outstanding.
"Net Worth" shall mean, with respect to any Person as
of any date of determination, the book value of the assets of
such Person, minus the sum of (a) reserves applicable thereto,
and (b) all of such Person's liabilities on a consolidated basis
(including accrued and deferred income taxes), all as determined
in accordance with GAAP.
"Non-Funding Lender" shall have the meaning assigned to
it in Section 9.9(a)(ii).
"Notes" shall mean, collectively, the Revolving Notes.
"Notice of Revolving Credit Advance" shall have the
meaning assigned to it in Section 1.1(a).
"Obligations" shall mean all loans, advances, debts,
liabilities and obligations, for the performance of covenants,
tasks or duties or for payment of monetary amounts (whether or
not such performance is then required or contingent, or such
amounts are liquidated or determinable) owing by any Credit Party
to Agent or any Lender, and all covenants and duties regarding
such amounts, of any kind or nature, present or future, whether
or not evidenced by any note, agreement or other instrument,
arising under the Agreement or any of the other Loan Documents.
This term includes all principal, interest (including all
interest which accrues after the commencement of any case or
proceeding by or against any Credit Party in bankruptcy, whether
or not allowed in such case or proceeding), Fees, Charges,
expenses, attorneys' fees and any other sum chargeable to any
Credit Party under the Agreement or any of the other Loan
Documents.
"Obsolete Capital Equipment" shall mean the following
two pieces of equipment:
Bobst SP126 D.C. / Strip, Emboss #42
Bobst SP126 D.C., Emboss, Foil Stamper #47
"Patent License" shall mean rights under any written
agreement now owned or hereafter acquired by any Credit Party
granting any right with respect to any invention on which a
Patent is in existence.
"Patents" shall mean all of the following in which any
Credit Party now holds or hereafter acquires any interest
(including all of the following in all media now known or
hereafter developed): (a) all letters patent of the United States
or any other country, all registrations and recordings thereof,
and all applications for letters patent of the United States or
any other country, including 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
or Territory thereof, or any other country, and (b) all reissues,
continuations, continuations-in-part or extensions thereof.
"PBGC" shall mean the Pension Benefit Guaranty
Corporation or any successor thereto.
"Pension Plan" shall mean a Plan described in Section
3(2) of ERISA.
"Permitted Encumbrances" shall mean the following
encumbrances: (a) Liens for taxes or assessments or other
governmental Charges not yet due and payable or which are being
contested in accordance with Section 5.2(b); (b) pledges or
deposits of money securing statutory obligations under workmen's
compensation, unemployment insurance, social security or public
liability laws or similar legislation (excluding Liens under
ERISA); (c) pledges or deposits of money securing bids, tenders,
contracts (other than contracts for the payment of money) or
leases to which any Credit Party is a party as lessee made in the
ordinary course of business; (d) inchoate and unperfected
workers', mechanics' or similar liens arising in the ordinary
course of business, so long as such Liens attach only to
Equipment, Fixtures and/or Real Estate; (e) mechanics',
carriers', warehousemen's, suppliers' or other similar possessory
liens arising in the ordinary course of business and securing
liabilities in an outstanding aggregate amount not in excess of
$100,000 at any time, so long as such Liens attach only to
Inventory; (f) deposits securing, or in lieu of, surety, appeal
or customs bonds in proceedings to which any Credit Party is a
party; (g) any attachment or judgment lien not constituting an
Event of Default under Section 8.1(j); (h) zoning restrictions,
easements, licenses, or other restrictions on the use of any Real
Estate or other minor irregularities in title (including
leasehold title) thereto, so long as the same do not materially
impair the use, value, or marketability of such Real Estate; (i)
presently existing or hereafter created Liens in favor of Agent,
on behalf of Lenders; and (j) Liens expressly permitted under
clauses (b), (c), (d) and (e) of Section 6.7 of the Agreement.
"Permitted Investment" has the meaning assigned to it
in Section 6.2.
"Person" shall mean any individual, sole
proprietorship, partnership, joint venture, trust, unincorporated
organization, association, corporation, limited liability
company, institution, public benefit corporation, other entity or
government (whether federal, state, county, city, municipal,
local, foreign, or otherwise, including any instrumentality,
division, agency, body or department thereof).
"Plan" shall mean, at any time, an "employee benefit
plan", as defined in Section 3(3) of ERISA, which any Credit
Party or ERISA Affiliate maintains, contributes to or has an
obligation to contribute to on behalf of participants who are or
were employed by any Credit Party.
"Pledge Agreement" shall mean collectively (i) the
Pledge Agreement of even date herewith executed by Borrower in
favor of Agent, on behalf of itself and Lenders, pledging all
Stock held by Borrower in IP Subsidiary, and (ii) the Pledge
Agreement of even date hereof executed by Borrower in favor of
Agent, on behalf of itself and Lenders, pledging all Stock held
by Borrower in E-greetings Network, Inc. and Honkworm
International, Inc. and all Intercompany Notes owing to or held
by Borrower.
"Pledge Agreements" shall mean the Pledge Agreement and
any other pledge agreement entered into after the Closing Date by
any Credit Party (as required by the Agreement or any other Loan
Document).
"Prior Lender" shall mean collectively Bank One,
Indiana, National Association, formerly known as First Chicago,
NBD Bank, N.A. and the other financial institutions party to that
certain Amended and Restated Credit Agreement, dated as of May
11, 1999, evidencing the Prior Lender's Obligations.
"Prior Lender Obligations" shall mean all obligations
and liabilities of any Credit Party to the Prior Lender pursuant
to that certain Amended and Restated Credit Agreement, dated as
of May 11, 1999 between Borrower and Prior Lender and all
instruments and documents executed pursuant thereto or in
connection therewith.
"Proceeds" shall mean "proceeds," as such term is
defined in the Code and, in any event, shall include (a) any and
all proceeds of any insurance, indemnity, warranty or guaranty
payable to any Credit Party 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 any Credit Party 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
under color of governmental authority), (c) any claim of any
Credit Party against third parties (i) for past, present or
future infringement of any Patent or Patent License, or (ii) for
past, present or future infringement or dilution of any
Copyright, Copyright License, Trademark or Trademark License, or
for injury to the goodwill associated with any Trademark or
Trademark License, (d) any recoveries by any Credit Party against
third parties with respect to any litigation or dispute
concerning any of the Collateral, and (e) any and all other
amounts from time to time paid or payable under or in connection
with any of the Collateral, upon disposition or otherwise.
"Projections" means Borrower's forecasted: (a) balance
sheets; (b) profit and loss statements; and (c) cash flow
statements, all of the foregoing consistent with the historical
Financial Statements of Borrower, together with appropriate
supporting details and a statement of underlying assumptions.
"Pro Rata Share" shall mean with respect to all matters
relating to any Lender (a) with respect to the Revolving Loan,
the percentage obtained by dividing (i) the Revolving Loan
Commitment of that Lender, by (ii) the aggregate Revolving Loan
Commitments of all Lenders, (b) with respect to all Loans, the
percentage obtained by dividing (i) the aggregate Commitments of
that Lender by (ii) the aggregate Commitments of all Lenders, and
(c) with respect to all Loans on and after the Commitment
Termination Date, the percentage obtained by dividing (i) the
aggregate outstanding principal balance of the Loans held by that
Lender, by (ii) the outstanding principal balance of the Loans
held by all Lenders.
"Qualified Plan" shall mean a Plan which is intended to
be tax-qualified under Section 401(a) of the IRC.
"Rabbi Trust" shall mean the Rabbi Trust created and
maintained pursuant to the Rabbi Trust Agreement dated as of
November 5, 1999 between Borrower and U.S. Trust Company.
"Real Estate" shall have the meaning assigned to it in
Section 3.6.
"Refinancing" shall mean the repayment in full by
Borrower of the Prior Lender Obligations on the Closing Date.
"Related Transactions" means the initial borrowing
under the Revolving Loan, the Refinancing, the payment of all
fees, costs and expenses associated with all of the foregoing and
the execution and delivery of all of the Related Transactions
Documents.
"Related Transactions Documents" shall mean the Loan
Documents and all documents and instruments executed in
connection with the Refinancing.
"Release" shall mean any release, threatened release,
spill, emission, leaking, pumping, pouring, emitting, emptying,
escape, injection, deposit, disposal, discharge, dispersal,
dumping, leaching or migration of Hazardous Material in the
indoor or outdoor environment, including the movement of
Hazardous Material through or in the air, soil, surface water,
ground water or property.
"Requisite Lenders" shall mean (a) Lenders having more
than sixty-six and two-thirds percent (66 2/3%) of the
Commitments of all Lenders, or (b) if the Commitments have been
terminated, more than sixty-six and two-thirds percent (66 2/3%)
of the aggregate outstanding amount of the Loans.
"Reserves" shall mean (a) reserves established by Agent
from time to time against Eligible Inventory pursuant to
Section 5.9, (b) reserves established pursuant to Section 5.4(c),
and (c) such other reserves against Eligible Accounts, Eligible
Inventory or Borrowing Availability of Borrower which Agent may,
in its reasonable credit judgment, establish from time to time.
Without limiting the generality of the foregoing, Reserves
established to ensure the payment of accrued Interest Expenses or
Indebtedness shall be deemed to be a reasonable exercise of
Agent's credit judgment.
"Restricted Payment" shall mean, with respect to any
Credit Party (a) the declaration or payment of any dividend or
the incurrence of any liability to make any other payment or
distribution of cash or other property or assets in respect of
Stock, (b) any payment on account of the purchase, redemption,
defeasance, sinking fund or other retirement of such Credit
Party's Stock or any other payment or distribution made in
respect thereof, either directly or indirectly, (c) any payment
or prepayment of principal of, premium, if any, or interest, fees
or other charges on or with respect to, and any redemption,
purchase, retirement, defeasance, sinking fund or similar payment
and any claim for rescission with respect to, any Subordinated
Debt; (d) any payment made to redeem, purchase, repurchase or
retire, or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire Stock of such Credit Party now
or hereafter outstanding; (e) any payment of a claim for the
rescission of the purchase or sale of, or for material damages
arising from the purchase or sale of, any shares of such Credit
Party's Stock or of a claim for reimbursement, indemnification or
contribution arising out of or related to any such claim for
damages or rescission; (f) any payment, loan, contribution, or
other transfer of funds or other property to any Stockholder of
such Credit Party other than payment of compensation in the
ordinary course to stockholders who are employees or directors of
such Credit Party; and (g) any payment of management fees (or
other fees of a similar nature) by such Credit Party to any
Stockholder of such Credit Party or its Affiliates.
"Retiree Rabbi Trust" shall mean the Rabbi Trust
created and maintained between Borrower and Key Bank, N.A. with
respect to Borrower's Retirement Plan for Outside Directors,
ERISA Make-Up Plan and SERP.
"Retiree Welfare Plan" shall mean, at any time, a
Welfare Plan that provides for continuing coverage or benefits
for any participant or any beneficiary of a participant after
such participant's termination of employment, other than
continuation coverage provided pursuant to Section 4980B of the
IRC and at the sole expense of the participant or the beneficiary
of the participant.
"Revolving Credit Advance" shall have the meaning
assigned to it in Section 1.1(a)(i).
"Revolving Lenders" shall mean, as of any date of
determination, Lenders having a Revolving Loan Commitment.
"Revolving Loan" shall mean, at any time, the sum of
(i) the aggregate amount of Revolving Credit Advances outstanding
to Borrower plus (ii) the aggregate Letter of Credit Obligations
incurred on behalf of Borrower. Unless the context otherwise
requires, references to the outstanding principal balance of the
Revolving Loan shall include the outstanding balance of Letter of
Credit Obligations.
"Revolving Loan Commitment" shall mean (a) as to any
Revolving Lender, the aggregate commitment of such Revolving
Lender to make Revolving Credit Advances and/or incur Letter of
Credit Obligations as set forth on Annex J to the Agreement or in
the most recent Assignment Agreement executed by such Revolving
Lender and (b) as to all Revolving Lenders, the aggregate
commitment of all Revolving Lenders to make Revolving Credit
Advances and/or incur Letter of Credit Obligations, which
aggregate commitment shall be Fifty Million Dollars ($50,000,000)
on the Closing Date, as such amount may be adjusted, if at all,
from time to time in accordance with the Agreement.
"Revolving Note" shall have the meaning assigned to it
in Section 1.1(a)(ii).
"Rights Agreement" shall mean the Rights Agreement
dated as of September 8, 1999 between Borrower and The Bank of
New York, as amended by Amendment No. 1 to Rights Agreement dated
as of November 2, 1999.
"Seasonal Goods" shall mean all finished goods
inventory that is saleable only on a seasonal basis and is not
typically shelved on a day to day basis by merchants engaged in
the sale of greeting cards.
"Security Agreement" shall mean the Security Agreement
of even date herewith entered into among Agent, on behalf of
itself and Lenders, and each Credit Party that is a signatory
thereto.
"Shareholders Agreement" shall mean (i) The Ink Group
NZ Limited Shareholders Agreement among Borrower, Linda Susan
Langton, Jonathon David Lee and The Ink Group NZ Limited, and
(ii) the Ink Group Publishers PTY Limited Shareholders Agreement
among Borrower, Linda Susan Langton, Jonathon David Lee and The
Ink Group Publishers PTY Limited.
"Solvent" shall mean, with respect to any Person on a
particular date, that on such date (a) the fair value of the
property of such Person is greater than the total amount of
liabilities, including contingent liabilities, of such Person;
(b) the present fair salable value of the assets of such Person
is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become
absolute and matured; (c) such Person does not intend to, and
does not believe that it will, incur debts or liabilities beyond
such Person's ability to pay as such debts and liabilities
mature; and (d) such Person is not engaged in a business or
transaction, and is not about to engage in a business or
transaction, for which such Person's property would constitute an
unreasonably small capital. The amount of contingent liabilities
(such as litigation, guarantees and pension plan liabilities) at
any time shall be computed as the amount which, in light of all
the facts and circumstances existing at the time, represents the
amount which can be reasonably be expected to become an actual or
matured liability.
"Stock" shall mean all shares, options, warrants,
general or limited partnership interests, membership interests or
other equivalents (regardless of how designated) of or in a
corporation, partnership, limited liability company or equivalent
entity whether voting or nonvoting, including common stock,
preferred stock or any other "equity security" (as such term is
defined in Rule 3a11-1 of the General Rules and Regulations
promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended).
"Stock Option Plan" shall mean, collectively, the
Gibson Greetings, Inc. 1999 Stock Incentive Plan, the Gibson
Greetings, Inc. 1991 Stock Incentive Plan, the Gibson Greetings,
Inc. 1989 Stock Incentive Plan, the Gibson Greetings, Inc. 1996
Stock Option Plan for Nonemployee Directors, the Gibson
Greetings, Inc. 1987 Stock Option Plan and the Gibson Greetings,
Inc. 1985 Stock Option Plan.
"Subordinated Debt" shall mean the Indebtedness of
Borrower to the Subordinated Lender.
"Subordinated Lender" shall mean any lender(s)
extending financing to the Borrower as permitted under Section
6.3(a)(v).
"Subsidiary" shall mean, with respect to any Person,
(a) any corporation of which an aggregate of more than fifty
percent (50%) of the outstanding Stock having ordinary voting
power to elect a majority of the board of directors of such
corporation (irrespective of whether, at the time, Stock of any
other class or classes of such corporation shall have or might
have voting power by reason of the happening of any contingency)
is at the time, directly or indirectly, owned legally or
beneficially by such Person and/or one or more Subsidiaries of
such Person, or with respect to which any such Person has the
right to vote or designate the vote of fifty percent (50%) or
more of such Stock whether by proxy, agreement, operation of law
or otherwise, and (b) any partnership or limited liability
company in which such Person and/or one or more Subsidiaries of
such Person shall have an interest (whether in the form of voting
or participation in profits or capital contribution) of more than
fifty percent (50%) or of which any such Person is a general
partner or may exercise the powers of a general partner.
"Subsidiary Guaranty" shall mean the guaranty of even
date herewith executed by Domestic Subsidiary and IP Subsidiary
in favor of Agent and Lenders.
"Supermajority Lenders" shall mean (a) Lenders having
eighty percent (80%) or more of the Revolving Loan Commitments of
all Lenders, or (b) if the Revolving Loan Commitments have been
terminated, eighty percent (80%) or more of the aggregate
outstanding amount of the Revolving Loan and Letter of Credit
Obligations.
"Tangible Net Worth" shall mean, with respect to any
Person at any date, the Net Worth of such Person at such date,
excluding, however, from the determination of the total assets at
such date, (a) all goodwill, capitalized organizational expenses,
capitalized research and development expenses, trademarks, trade
names, copyrights, patents, patent applications, licenses and
rights in any thereof, and other intangible items, (b) all
unamortized debt discount and expense, (c) treasury Stock, and
(d) any write-up in the book value of any asset resulting from a
revaluation thereof.
"Taxes" shall mean taxes, levies, imposts, deductions,
Charges or withholdings, and all liabilities with respect
thereto, excluding taxes imposed on or measured by the net income
of Agent or a Lender by the jurisdictions under the laws of which
Agent and Lenders are organized or any political subdivision
thereof.
"Termination Date" shall mean the date on which the
Loans have been indefeasibly repaid in full and all other
Obligations under the Agreement and the other Loan Documents have
been completely discharged and Letter of Credit Obligations have
been cash collateralized, cancelled or backed by stand-by letters
of credit in accordance with Annex B, and Borrower shall not have
any further right to borrow any monies under the Agreement.
"Third Party Interactives " shall mean all Persons with
whom any Credit Party exchanges data electronically in the
ordinary course of business, including, without limitation,
customers, suppliers, third-party vendors, subcontractors,
processors-converters, shippers and warehousemen.
"Title IV Plan" shall mean a Pension Plan (other than a
Multiemployer Plan), which is covered by Title IV of ERISA, and
which any Credit Party or ERISA Affiliate maintains, contributes
to or has an obligation to contribute to on behalf of
participants who are or were employed by any of them.
"Trademark License" shall mean rights under any written
agreement now owned or hereafter acquired by any Credit Party
granting any right to use any Trademark.
"Trademarks" shall mean all of the following now owned
or hereafter adopted and used or acquired by any Credit Party
(including all of the following in all media now known or
hereafter developed): (a) all trademarks, trade names, corporate
names, business names, trade styles, service marks, logos, other
source or business identifiers, designs and general intangibles
of like nature (whether registered or unregistered), all
registrations and recordings thereof, and all applications in
connection therewith (including intent to use applications),
including 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 or territory
thereof, or any other country or any political subdivision
thereof; (b) all reissues, extensions or renewals thereof; and
(c) all goodwill associated with or symbolized by any of the
foregoing.
"Unfunded Pension Liability" shall mean, at any time,
the aggregate amount, if any, of the sum of (a) the amount by
which the present value of all accrued benefits under each Title
IV Plan exceeds the fair market value of all assets of such Title
IV Plan allocable to such benefits in accordance with Title IV of
ERISA, all determined as of the most recent valuation date for
each such Title IV Plan using the actuarial assumptions for
funding purposes in effect under such Title IV Plan, and (b) for
a period of five (5) years following a transaction which might
reasonably be expected to be covered by Section 4069 of ERISA,
the liabilities (whether or not accrued) that could be avoided by
any Credit Party or any ERISA Affiliate as a result of such
transaction.
"Welfare Plan" shall mean a Plan described in Section
3(1) of ERISA.
"Year 2000 Assessment" shall mean a comprehensive
written assessment of the nature and extent of each Credit
Party's Year 2000 Problems and Year 2000 Date-Sensitive
Systems/Components, including, without limitation, Year 2000
Problems regarding data exchanges with Third Party Interactives.
"Year 2000 Corrective Actions" shall mean, as to each
Credit Party, all actions necessary to satisfactorily address
such Person's Year 2000 Problems, including, without limitation,
computer code enhancements and revisions, upgrades and
replacements of Year 2000 Date-Sensitive Systems/Components, and
coordination of such enhancements, revisions, upgrades and
replacements with Third Party Interactives.
"Year 2000 Corrective Plan" shall mean, with respect to
each Credit Party, a comprehensive plan to satisfactorily address
all of its Year 2000 Problems on or before November 30, 1999,
including without limitation (i) computer code enhancements or
revisions, (ii) upgrades or replacements of Year 2000 Date-
Sensitive Systems/Components, (iii) test and validation
procedures, (iv) an implementation time line and budget and (v)
designation of specific employees who will be responsible for
planning, coordinating and implementing each phase or subpart of
the Year 2000 Corrective Plan.
"Year 2000 Date-Sensitive System/Component" shall mean,
as to any Person, any system software, network software,
applications software, data base, computer file, embedded
microchip, firmware or hardware that accepts, creates,
manipulates, sorts, sequences, calculates, compares or outputs
calendar-related data accurately; such systems and components
shall include, without limitation, mainframe computers, file
server/client systems, computer workstations, routers, hubs,
other network-related hardware, and other computer-related
software, firmware or hardware and information processing and
delivery systems of any kind and telecommunications systems and
other communications processors, security systems, alarms,
elevators and HVAC systems.
"Year 2000 Implementation Testing" shall mean, as to
each Credit Party, (i) the performance of test and validation
procedures regarding Year 2000 Corrective Actions on a unit basis
and on a systemwide basis; (ii) the performance of test and
validation procedures regarding data exchanges among the Credit
Parties' Year 2000 Date-Sensitive Systems/Components and data
exchanges with Third Party Interactives, and (iii) the design and
implementation of additional Corrective Actions, the need for
which has been demonstrated by test and validation procedures.
"Year 2000 Problems" shall mean, with respect to each
Credit Party, limitations on the capacity or readiness of any
such Credit Party's Year 2000 Date-Sensitive Systems/Components
to accurately accept, create, manipulate, sort, sequence,
calculate, compare or output calendar date information with
respect to calendar year 1999 or any subsequent calendar year
beginning on or after January 1, 2000 (including leap year
computations), including, without limitation, exchanges of
information among Year 2000 Date-Sensitive Systems/Components of
the Credit Parties and exchanges of information among the Credit
Parties and Year 2000 Date-Sensitive Systems/Components of Third
Party Interactives and functionality of peripheral interfaces,
firmware and embedded microchips.
Rules of construction with respect to accounting terms
used in the Agreement or the other Loan Documents shall be as set
forth in Annex G. All other undefined terms contained in any of
the Loan Documents shall, unless the context indicates otherwise,
have the meanings provided for by the Code as in effect in the
State of New York to the extent the same are used or defined
therein. Unless otherwise specified, references in the Agreement
or any of the Appendices to a Section, subsection or clause refer
to such Section, subsection or clause as contained in the
Agreement. The words "herein," "hereof" and "hereunder" and
other words of similar import refer to the Agreement as a whole,
including all Annexes, Exhibits and Schedules, as the same may
from time to time be amended, restated, modified or supplemented,
and not to any particular section, subsection or clause contained
in the Agreement or any such Annex, Exhibit or Schedule.
Wherever from the context it appears appropriate, each
term stated in either the singular or plural shall include the
singular and the plural, and pronouns stated in the masculine,
feminine or neuter gender shall include the masculine, feminine
and neuter genders. The words "including", "includes" and
"include" shall be deemed to be followed by the words "without
limitation"; the word "or" is not exclusive; references to
Persons include their respective successors and assigns (to the
extent and only to the extent permitted by the Loan Documents)
or, in the case of governmental Persons, Persons succeeding to
the relevant functions of such Persons; and all references to
statutes and related regulations shall include any amendments of
the same and any successor statutes and regulations. Whenever
any provision in any Loan Document refers to the knowledge (or an
analogous phrase) of any Credit Party, such words are intended to
signify that such Credit Party has actual knowledge or awareness
of a particular fact or circumstance or that such Credit Party,
if it had exercised reasonable diligence, would have known or
been aware of such fact or circumstance.
ANNEX B (Section 1.2)
to
CREDIT AGREEMENT
LETTERS OF CREDIT
(a) Issuance. Subject to the terms and conditions of
the Agreement, Agent and Revolving Lenders agree to incur, from
time to time prior to the Commitment Termination Date, upon the
request of Borrower and for Borrower's account, Letter of Credit
Obligations by causing Letters of Credit to be issued (by a bank
or other legally authorized Person selected by or acceptable to
Agent in its sole discretion, except with respect to documentary
Letters of Credit which shall be issued by GE Capital Finance,
Ltd. (each, an "L/C Issuer")) for Borrower's account and
guaranteed by Agent; provided, however, that if the L/C Issuer is
a Revolving Lender, then such Letters of Credit shall not be
guaranteed by Agent but rather each Revolving Lender shall,
subject to the terms and conditions hereinafter set forth,
purchase (or be deemed to have purchased) risk participations in
all such Letters of Credit issued with the written consent of
Agent, as more fully described in paragraph (b)(ii) below. The
aggregate amount of all such Letter of Credit Obligations shall
not at any time exceed the least of (i) Seven Million Five
Hundred Thousand Dollars ($7,500,000) (the "L/C Sublimit"), (ii)
the Maximum Amount less the aggregate outstanding principal
balance of the Revolving Credit Advances, and (iii) the Borrowing
Base less the aggregate outstanding principal balance of the
Revolving Credit Advances. No such Letter of Credit shall have
an expiry date which is more than one year following the date of
issuance thereof, and neither Agent nor Revolving Lenders shall
be under any obligation to incur Letter of Credit Obligations in
respect of, or purchase risk participations in, any Letter of
Credit having an expiry date which is later than the Commitment
Termination Date.
(b)(i) Advances Automatic; Participations. In the
event that Agent or any Revolving Lender shall make any payment
on or pursuant to any Letter of Credit Obligation, such payment
shall then be deemed automatically to constitute a Revolving
Credit Advance under Section 1.1(a) of the Agreement regardless
of whether a Default or Event of Default has occurred and is
continuing and notwithstanding Borrower's failure to satisfy the
conditions precedent set forth in Section 2, and each Revolving
Lender shall be obligated to pay its Pro Rata Share thereof in
accordance with the Agreement. The failure of any Revolving
Lender to make available to Agent for Agent's own account its Pro
Rata Share of any such Revolving Credit Advance or payment by
Agent under or in respect of a Letter of Credit shall not relieve
any other Revolving Lender of its obligation hereunder to make
available to Agent its Pro Rata Share thereof, but no Revolving
Lender shall be responsible for the failure of any other
Revolving Lender to make available such other Revolving Lender's
Pro Rata Share of any such payment.
(ii) If it shall be illegal or unlawful for
Borrower to incur Revolving Credit Advances as contemplated by
paragraph (b)(i) above because of an Event of Default described
in Section 8.1(h) or (i) or otherwise or if it shall be illegal
or unlawful for any Revolving Lender to be deemed to have assumed
a ratable share of the reimbursement obligations owed to an L/C
Issuer, or if the L/C Issuer is a Revolving Lender, then (i)
immediately and without further action whatsoever, each Revolving
Lender shall be deemed to have irrevocably and unconditionally
purchased from Agent (or such L/C Issuer, as the case may be) an
undivided interest and participation equal to such Revolving
Lender's Pro Rata Share (based on the Revolving Loan Commitments)
of the Letter of Credit Obligations in respect of all Letters of
Credit then outstanding and (ii) thereafter, immediately upon
issuance of any Letter of Credit, each Revolving Lender shall be
deemed to have irrevocably and unconditionally purchased from
Agent (or such L/C Issuer, as the case may be) an undivided
interest and participation in such Revolving Lender's Pro Rata
Share (based on the Revolving Loan Commitments) of the Letter of
Credit Obligations with respect to such Letter of Credit on the
date of such issuance. Each Revolving Lender shall fund its
participation in all payments or disbursements made under the
Letters of Credit in the same manner as provided in the Agreement
with respect to Revolving Credit Advances.
(c) Cash Collateral. If Borrower is required to
provide cash collateral for any Letter of Credit Obligations
pursuant to the Agreement prior to the Commitment Termination
Date, Borrower will pay to Agent for the ratable benefit of
itself and Revolving Lenders cash or cash equivalents acceptable
to Agent ("Cash Equivalents") in an amount equal to the sum of
(i) 100% of the maximum amount then available to be drawn under
each applicable Letter of Credit outstanding and (ii) $50,000.
Such funds or Cash Equivalents shall be held by Agent in a cash
collateral account (the "Cash Collateral Account") maintained at
a bank or financial institution acceptable to Agent. The Cash
Collateral Account shall be in the name of Borrower and shall be
pledged to, and subject to the control of, Agent, for the benefit
of Agent and Lenders, in a manner satisfactory to Agent.
Borrower hereby pledges and grants to Agent, on behalf of itself
and Lenders, a security interest in all such funds and Cash
Equivalents held in the Cash Collateral Account from time to time
and all proceeds thereof, as security for the payment of all
amounts due in respect of the Letter of Credit Obligations and
other Obligations, whether or not then due. The Agreement,
including this Annex B, shall constitute a security agreement
under applicable law.
If any Letter of Credit Obligations, whether or not
then due and payable, shall for any reason be outstanding on the
Commitment Termination Date, Borrower shall either (i) provide
cash collateral therefor in the manner described above, or (ii)
cause all such Letters of Credit and guaranties thereof to be
canceled and returned, or (iii) deliver a stand-by letter (or
letters) of credit in guarantee of such Letter of Credit
Obligations, which stand-by letter (or letters) of credit shall
be of like tenor and duration (plus thirty (30) additional days)
as, and in an amount equal to the sum of (i) 100% of the
aggregate maximum amount then available to be drawn under and
(ii) $50,000, the Letters of Credit to which such outstanding
Letter of Credit Obligations relate and shall be issued by a
Person, and shall be subject to such terms and conditions, as are
be satisfactory to Agent in its sole discretion.
From time to time after funds are deposited in the Cash
Collateral Account by Borrower, whether before or after the
Commitment Termination Date, Agent may apply such funds or Cash
Equivalents then held in the Cash Collateral Account to the
payment of any amounts, in such order as Agent may elect, as
shall be or shall become due and payable by Borrower to Agent and
Lenders with respect to such Letter of Credit Obligations of
Borrower and, upon the satisfaction in full of all Letter of
Credit Obligations of Borrower, to any other Obligations then due
and payable.
Neither Borrower nor any Person claiming on behalf of
or through Borrower shall have any right to withdraw any of the
funds or Cash Equivalents held in the Cash Collateral Account,
except that upon the termination of all Letter of Credit
Obligations and the payment of all amounts payable by Borrower to
Agent and Lenders in respect thereof, any funds remaining in the
Cash Collateral Account shall be applied to other Obligations
then due and owing and upon payment in full of such Obligations,
any remaining amount shall be paid to Borrower or as otherwise
required by law.
(d) Fees and Expenses. Borrower agrees to pay to
Agent for the benefit of Revolving Lenders, as compensation to
such Lenders for Letter of Credit Obligations incurred hereunder,
(x) all costs and expenses incurred by Agent or any Lender on
account of such Letter of Credit Obligations, and (y) for each
month during which any standby Letter of Credit Obligation shall
remain outstanding, a fee (the "Letter of Credit Fee") in an
amount equal to the Applicable Standby L/C Fee from time to time
in effect multiplied by the maximum amount available from time to
time to be drawn under the applicable standby Letter of Credit.
Such fee shall be paid to Agent for the benefit of the Revolving
Lenders in arrears, on the first day of each month and on the
Commitment Termination Date. In addition, Borrower shall pay to
any L/C Issuer, on demand, such fees (including all per annum
fees), charges and expenses of such L/C Issuer in respect of the
issuance, negotiation, acceptance, amendment, transfer and
payment of any documentary Letter of Credit or otherwise payable
pursuant to the application and related documentation under which
any documentary Letter of Credit is issued at the rates set forth
below:
Issuance: 20 basis points or $50 minimum
Payment/Negotiation: 10 basis points or $50 minimum
Amendment: 10 basis points or $40 minimum
Cancellation: $40
Telex: $25
Courier: $20
(e) Request for Incurrence of Letter of Credit
Obligations. Borrower shall give Agent at least two (2) Business
Days' prior written notice requesting the incurrence of any
Letter of Credit Obligation, specifying the date such Letter of
Credit Obligation is to be incurred, identifying the beneficiary
to which such Letter of Credit Obligation relates and describing
the nature of the transactions proposed to be supported thereby.
The notice shall be accompanied by the form of the Letter of
Credit (which shall be acceptable to the L/C Issuer) to be
guarantied and, to the extent not previously delivered to Agent,
copies of all agreements between Borrower and the L/C Issuer
pertaining to the issuance of Letters of Credit. Notwithstanding
anything contained herein to the contrary, Letter of Credit
applications by Borrower and approvals by Agent and the L/C
Issuer may be made and transmitted pursuant to electronic codes
and security measures mutually agreed upon and established by and
among Borrower, Agent and the L/C Issuer.
(f) Obligation Absolute. The obligation of Borrower
to reimburse Agent and Revolving Lenders for payments made with
respect to any Letter of Credit Obligation shall be absolute,
unconditional and irrevocable, without necessity of presentment,
demand, protest or other formalities, and the obligations of each
Revolving Lender to make payments to Agent with respect to
Letters of Credit shall be unconditional and irrevocable. Such
obligations of Borrower and Revolving Lenders shall be paid
strictly in accordance with the terms hereof under all
circumstances including the following:
(i) any lack of validity or enforceability of any
Letter of Credit or the Agreement or the other Loan
Documents or any other agreement;
(ii) the existence of any claim, set-off, defense
or other right which Borrower or any of its Affiliates
or any Lender may at any time have against a
beneficiary or any transferee of any Letter of Credit
(or any Persons or entities for whom any such
transferee may be acting), Agent, any Lender, or any
other Person, whether in connection with the Agreement,
the Letter of Credit, the transactions contemplated
herein or therein or any unrelated transaction
(including any underlying transaction between Borrower
or any of its Affiliates and the beneficiary for which
the Letter of Credit was procured);
(iii) any draft, demand, certificate or any
other document presented under any Letter of Credit
proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein
being untrue or inaccurate in any respect;
(iv) payment by Agent (except as otherwise
expressly provided in paragraph (g)(ii)(C) below) or
any L/C Issuer under any Letter of Credit or guaranty
thereof against presentation of a demand, draft or
certificate or other document which does not comply
with the terms of such Letter of Credit or such
guaranty;
(v) any other circumstance or event whatsoever,
which is similar to any of the foregoing; or
(vi) the fact that a Default or an Event of
Default has occurred and is continuing.
(g) Indemnification; Nature of Lenders' Duties.
(i) In addition to amounts payable as elsewhere provided in the
Agreement, Borrower hereby agrees to pay and to protect,
indemnify, and save harmless Agent and each Lender from and
against any and all claims, demands, liabilities, damages,
losses, costs, charges and expenses (including attorneys' fees
and allocated costs of internal counsel) which Agent or any
Lender may incur or be subject to as a consequence, direct or
indirect, of (A) the issuance of any Letter of Credit or guaranty
thereof, or (B) the failure of Agent or any Lender seeking
indemnification or of any L/C Issuer to honor a demand for
payment under any Letter of Credit or guaranty thereof as a
result of any act or omission, whether rightful or wrongful, of
any present or future de jure or de facto government or
Governmental Authority, in each case other than to the extent
solely as a result of the gross negligence or willful misconduct
of Agent or such Lender (as finally determined by a court of
competent jurisdiction).
(ii) As between Agent and any Lender and Borrower,
Borrower assumes all risks of the acts and omissions of, or
misuse of any Letter of Credit by beneficiaries of any Letter of
Credit. In furtherance and not in limitation of the foregoing,
to the fullest extent permitted by law neither Agent nor any
Lender shall be responsible: (A) for the form, validity,
sufficiency, accuracy, genuineness or legal effect of any
document issued by any party in connection with the application
for and issuance of any Letter of Credit, even if it should in
fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged; (B) for the validity or
sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any Letter of Credit or the
rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any
reason; (C) for failure of the beneficiary of any Letter of
Credit to comply fully with conditions required in order to
demand payment under such Letter of Credit; provided that, in the
case of any payment by Agent under any Letter of Credit or
guaranty thereof, Agent shall be liable to the extent such
payment was made solely as a result of its gross negligence or
willful misconduct (as finally determined by a court of competent
jurisdiction) in determining that the demand for payment under
such Letter of Credit or guaranty thereof complies on its face
with any applicable requirements for a demand for payment under
such Letter of Credit or guaranty thereof; (D) for errors,
omissions, interruptions or delays in transmission or delivery of
any messages, by mail, cable, telegraph, telex or otherwise,
whether or not they be in cipher; (E) for errors in
interpretation of technical terms; (F) for any loss or delay in
the transmission or otherwise of any document required in order
to make a payment under any Letter of Credit or guaranty thereof
or of the proceeds thereof; (G) for the credit of the proceeds of
any drawing under any Letter of Credit or guaranty thereof; and
(H) for any consequences arising from causes beyond the control
of Agent or any Lender. None of the above shall affect, impair,
or prevent the vesting of any of Agent's or any Lender's rights
or powers hereunder or under the Agreement.
(iii) Nothing contained herein shall be deemed
to limit or to expand any waivers, covenants or indemnities made
by Borrower in favor of any L/C Issuer in any letter of credit
application, reimbursement agreement or similar document,
instrument or agreement between Borrower and such L/C Issuer.
ANNEX C (Section 1.8)
to
CREDIT AGREEMENT
CASH MANAGEMENT SYSTEMS
Borrower shall, and shall cause its Subsidiaries to,
establish and maintain the Cash Management Systems described
below:
(a) On or before the Closing Date and until the
Termination Date, Borrower shall (i) establish lock boxes ("Lock
Boxes") at one or more of the banks set forth on Disclosure
Schedule (3.19), and shall request in writing and otherwise take
such reasonable steps to ensure that all Account Debtors forward
payment directly to such Lock Boxes, and (ii) deposit or cause to
be deposited promptly, and in any event no later than the first
Business Day after the date of receipt thereof, all cash, checks,
drafts or other similar items of payment relating to or
constituting payments made in respect of any and all Collateral
(whether or not otherwise delivered to a Lock Box) into one or
more bank accounts in Borrower's name (each, a "Borrower Account"
and collectively, the "Borrower Accounts") at banks set forth on
Disclosure Schedule (3.19) (each, a "Relationship Bank"). On or
before the Closing Date, Borrower shall have established a
concentration account in its name (the "Concentration Account")
at the bank which shall be designated as the Concentration
Account bank for Borrower on Disclosure Schedule (3.19) (the
"Concentration Account Bank") which bank shall be satisfactory to
Agent.
(b) Borrower may maintain, in its name an account (the
"Disbursement Account") at a bank acceptable to Agent into which
Agent shall, from time to time, deposit proceeds of Advances made
to Borrower pursuant to Section 1.1 for use by Borrower solely in
accordance with the provisions of Section 1.4.
(c) On or before the Closing Date (or such later date
as Agent shall consent to in writing), the Concentration Account
Bank, each bank where a Disbursement Account is maintained and
all other Relationship Banks, shall have entered into tri-party
blocked account agreements with Agent, for the benefit of itself
and Lenders, and Borrower and Subsidiaries thereof, as
applicable, in form and substance acceptable to Agent, which
shall become operative on or prior to the Closing Date. Each
such blocked account agreement shall provide, among other things,
that (i) all items of payment deposited in such account and
proceeds thereof deposited in the Concentration Account are held
by such bank as agent or bailee-in-possession for Agent, on
behalf of itself and Lenders, (ii) the bank executing such
agreement has no rights of setoff or recoupment or any other
claim against such account, as the case may be, other than for
payment of its service fees and other charges directly related to
the administration of such account and for returned checks or
other items of payment, and (iii) from and after the Closing Date
(A) with respect to banks at which a Borrower Account is
maintained, such bank agrees to forward immediately all amounts
in each Borrower Account to the Concentration Account Bank and to
commence the process of daily sweeps from such Borrower Account
into the Concentration Account and (B) with respect to the
Concentration Account Bank, such bank agrees to immediately
forward all amounts received in the Concentration Account to the
Collection Account through daily sweeps from such Concentration
Account into the Collection Account. Borrower shall not
accumulate or maintain cash in Disbursement Accounts or payroll
accounts as of any date of determination in excess of checks
outstanding against such accounts as of that date and amounts
necessary to meet minimum balance requirements.
(d) So long as no Default or Event of Default has
occurred and is continuing, Borrower may amend Disclosure
Schedule (3.19) to add or replace a Relationship Bank, Lock Box
or Borrower Account or to replace any Concentration Account or
any Disbursement Account; provided, however, that (i) Agent shall
have consented in writing, which consent shall not be
unreasonably withheld, in advance to the opening of such account
or Lock Box with the relevant bank and (ii) prior to the time of
the opening of such account or Lock Box, Borrower or its
Subsidiaries, as applicable, and such bank shall have executed
and delivered to Agent a tri-party blocked account agreement, in
form and substance satisfactory to Agent. Borrower shall close
any of its accounts (and establish replacement accounts in
accordance with the foregoing sentence) promptly and in any event
within thirty (30) days following notice from Agent that the
creditworthiness of any bank holding an account is no longer
acceptable in Agent's reasonable judgment, or as promptly as
practicable and in any event within sixty (60) days following
notice from Agent that the operating performance, funds transfer
or availability procedures or performance with respect to
accounts or Lock Boxes of the bank holding such accounts or
Agent's liability under any tri-party blocked account agreement
with such bank is no longer acceptable in Agent's reasonable
judgment.
(e) The Lock Boxes, Borrower Accounts, Disbursement
Accounts and the Concentration Account shall be cash collateral
accounts, with all cash, checks and other similar items of
payment in such accounts securing payment of the Loans and all
other Obligations, and in which Borrower and each Subsidiary
thereof shall have granted a Lien to Agent, on behalf of itself
and Lenders, pursuant to the Security Agreement.
(f) All amounts deposited in the Collection Account
shall be deemed received by Agent in accordance with Section 1.10
and shall be applied (and allocated) by Agent in accordance with
Section 1.11. In no event shall any amount be so applied unless
and until such amount shall have been credited in immediately
available funds to the Collection Account.
(g) Borrower shall and shall cause its Affiliates,
officers, employees, agents, directors or other Persons acting
for or in concert with Borrower (each a "Related Person") to (i)
hold in trust for Agent, for the benefit of itself and Lenders,
all checks, cash and other items of payment received by Borrower
or any such Related Person, and (ii) within one (1) Business Day
after receipt by Borrower or any such Related Person of any
checks, cash or other items or payment, deposit the same into a
Borrower Account for Borrower. Borrower and each Related Person
thereof acknowledges and agrees that all cash, checks or other
items of payment constituting proceeds of Collateral are the
property of Agent and Lenders. All proceeds of the sale or other
disposition of any Collateral, shall be deposited directly into
Borrower Accounts.
(h) Notwithstanding anything to the contrary contained
herein, at no time shall there be an amount (i) in excess of
$25,000 in the account designated on Disclosure Schedule (3.19)
as the Art Award Account (or any account in replacement thereof
as Agent may permit), (ii) an amount in excess of $50,000 in the
account designated on Disclosure Schedule (3.19) as the Dividend
Account, (iii) an amount in excess of $10,000 in the account
designated on Disclosure Schedule (3.19) as the Berea Account,
and (iv) an amount in excess of $250,000, plus the amount of all
checks written but not presented yet for payment, in the account
designated on Disclosure Schedule (3.19) as the Concentration
Account.
(i) No later than December 17, 1999, Borrower shall
cause the account designated on Disclosure Schedule (3.19) as the
Wachovia Account to be closed and a second Lock Box Account at
Mellon Bank, N.A. to be opened in replacement thereof.
(j) Notwithstanding anything to the contrary herein,
the Rabbi Trust, the Cleo Escrow Agreement and the AG Escrow
Agreement shall not be subject to the provisions of this Annex C.
ANNEX D (Section 2.1(a))
to
CREDIT AGREEMENT
SCHEDULE OF ADDITIONAL CLOSING DOCUMENTS
In addition to, and not in limitation of, the conditions
described in Section 2.1 of the Agreement, pursuant to Section
2.1(a), the following items must be received by Agent in form and
substance satisfactory to Agent on or prior to the Closing Date
(each capitalized term used but not otherwise defined herein
shall have the meaning ascribed thereto in Annex A to the
Agreement):
A. Appendices. All Appendices to the Agreement, in
form and substance satisfactory to Agent.
B. Revolving Notes. Duly executed originals of the
Revolving Notes for each applicable Lender, dated the Closing
Date.
C. Security Agreement. Duly executed originals of
the Security Agreement, dated the Closing Date, and all
instruments, documents and agreements executed pursuant thereto.
D. Insurance. Satisfactory evidence that the
insurance policies required by Section 5.4 are in full force and
effect, together with appropriate evidence showing loss payable
and/or additional insured clauses or endorsements, as requested
by Agent, in favor of Agent, on behalf of Lenders.
E. Security Interests and Code Filings. (a) Evidence
satisfactory to Agent that Agent (for the benefit of itself and
Lenders) has a valid and perfected first priority security
interest in the Collateral, including (i) such documents duly
executed by each Credit Party (including financing statements
under the Code and other applicable documents under the laws of
any jurisdiction with respect to the perfection of Liens) as
Agent may request in order to perfect its security interests in
the Collateral and (ii) copies of Code search reports listing all
effective financing statements that name any Credit Party as
debtor, together with copies of such financing statements, none
of which shall cover the Collateral, except for those relating to
the Prior Lender Obligations (all of which shall be terminated on
the Closing Date).
(b) Evidence satisfactory to Agent, including copies,
of all UCC-1 and other financing statements filed in favor of any
Credit Party with respect to each location, if any, at which
Inventory may be consigned.
F. Payoff Letter; Termination Statements. Copies of
a duly executed payoff letter, in form and substance satisfactory
to Agent, by and between all parties to the Prior Lender loan
documents evidencing repayment in full of all Prior Lender
Obligations, together with (a) UCC-3 or other appropriate
termination statements, in form and substance satisfactory to
Agent, manually signed by the Prior Lender releasing all liens of
Prior Lender upon any of the personal property of each Credit
Party, and (b) termination of all blocked account agreements,
bank agency agreements or other similar agreements or
arrangements or arrangements in favor of Prior Lender or relating
to the Prior Lender Obligations.
G. Intellectual Property Security Agreement. Duly
executed originals of Intellectual Property Security Agreement
dated the Closing Date and signed by each Credit Party which owns
Trademarks, Copyrights and/or Patents, as applicable, all in form
and substance satisfactory to Agent, together with all
instruments, documents and agreements executed pursuant thereto.
H. Subsidiary Guaranty. Duly executed originals of
the Subsidiary Guaranty, dated the Closing Date, and all
documents, instruments and agreements executed pursuant thereto.
I. Consent and Agreement. Duly executed originals
of the Consent and Agreement, dated the Closing Date, and all
documents, instruments and agreements executed pursuant thereto.
J. IP Subsidiary License Agreement. Duly executed
originals of the IP Subsidiary License Agreement dated the
Closing Date, and all documents, instruments and agreements
executed pursuant thereto.
K. Initial Borrowing Base Certificate. Duly executed
originals of an initial Borrowing Base Certificate from Borrower,
dated the Closing Date, reflecting information concerning
Eligible Accounts and Eligible Inventory of Borrower as of a date
not more than seven (7) days prior to the Closing Date.
L. Initial Notice of Revolving Credit Advance. Duly
executed originals of a Notice of Revolving Credit Advance, dated
the Closing Date, with respect to the initial Revolving Credit
Advance to be requested by Borrower on the Closing Date.
M. Letter of Direction. Duly executed originals of a
letter of direction from Borrower addressed to Agent, on behalf
of itself and Lenders, with respect to the disbursement on the
Closing Date of the proceeds of the initial Revolving Credit
Advance.
N. Cash Management System; Blocked Account
Agreements. Evidence satisfactory to Agent that, as of the
Closing Date, Cash Management Systems complying with Annex C to
the Agreement have been established and are currently being
maintained in the manner set forth in such Annex C, together with
copies of duly executed tri-party blocked account and lock box
agreements, satisfactory to Agent, with the banks as required by
Annex C.
O. Charter and Good Standing. For each Credit Party,
such Person's (a) charter and all amendments thereto, (b) good
standing certificates (including verification of tax status) in
its state of incorporation and (c) good standing certificates
(including verification of tax status) and certificates of
qualification to conduct business in each jurisdiction where its
ownership or lease of property or the conduct of its business
requires such qualification, each dated a recent date prior to
the Closing Date and certified by the applicable Secretary of
State or other authorized Governmental Authority.
P. Bylaws and Resolutions. For each Credit Party,
(a) such Person's bylaws, together with all amendments thereto
and (b) resolutions of such Person's Board of Directors and
stockholders, approving and authorizing the execution, delivery
and performance of the Loan Documents to which such Person is a
party and the transactions to be consummated in connection
therewith, each certified as of the Closing Date by such Person's
corporate secretary or an assistant secretary as being in full
force and effect without any modification or amendment.
Q. Incumbency Certificates. For each Credit Party,
signature and incumbency certificates of the officers of each
such Person executing any of the Loan Documents, certified as of
the Closing Date by such Person's corporate secretary or an
assistant secretary as being true, accurate, correct and
complete.
R. Opinions of Counsel. Duly executed originals of
opinions of Taft, Stettinius & Hollister LLP, counsel for the
Credit Parties each in form and substance satisfactory to Agent
and its counsel, dated the Closing Date.
S. Pledge Agreements. Duly executed originals of the
Pledge Agreement accompanied by the original Intercompany Notes
and other instruments evidencing Indebtedness being pledged
pursuant to such Pledge Agreement, duly endorsed in blank.
T. Accountants' Letters. A letter from the Credit
Parties to their independent auditors authorizing the independent
certified public accountants of the Credit Parties to communicate
with Agent and Lenders in accordance with Section 4.2.
U. Appointment of Agent for Service. An appointment
of CT Corporation as each Credit Party's agent for service of
process.
V. Fee Letter. Duly executed originals of the GE
Capital Fee Letter.
W. Officer's Certificate. Agent shall have received
duly executed originals of a certificate of the Chief Financial
Officer of Borrower, dated the Closing Date, stating that, since
December 31, 1998 through the Closing Date, other than as
disclosed in Borrower's 10-Q's and 10-K relating to such period
or as disclosed in Disclosure Schedule (3.5): (a) no event or
condition has occurred or is existing which could reasonably be
expected to have a Material Adverse Effect; (b) there has been no
material adverse change in the industry in which Borrower
operates; (c) no Litigation has been commenced which, if
successful, would have a Material Adverse Effect or could
challenge any of the transactions contemplated by the Agreement
and the other Loan Documents; (d) there have been no Restricted
Payments made by any Credit Party; and (e) there has been no
material increase in liabilities, liquidated or contingent, and
no material decrease in assets of any Credit Party.
X. Waivers. Agent, on behalf of Lenders, shall have
received landlord waivers and consents, bailee letters and
mortgagee agreements in form and substance satisfactory to Agent,
in each case as required pursuant to Section 5.9.
Y. Mortgages. Mortgages covering Borrower's real
property located at 3951 Madison Pike, Covington, Kentucky (the
"Mortgaged Properties") owned by Borrower together with: (a)
title insurance policies, current as-built surveys, zoning
letters and certificates of occupancy, in each case satisfactory
in form and substance to Agent, in its sole discretion; (b)
evidence that counterparts of the Mortgages have been recorded in
all places to the extent necessary or desirable, in the judgment
of Agent, to create a valid and enforceable first priority lien
(subject to Permitted Encumbrances) on each Mortgaged Property in
favor of Agent for the benefit of itself and Lenders (or in favor
of such other trustee as may be required or desired under local
law); and (c) an opinion of counsel in each state in which any
Mortgaged Property is located in form and substance and from
counsel satisfactory to Agent.
Z. Environmental Reports. Agent shall have received
such environmental review and audit reports with respect to the
Real Estate of any Credit Party as Agent shall have requested,
and Agent shall be satisfied, in its sole discretion, with the
contents of all such environmental reports.
AA. Appraisals. Agent shall have received appraisals
as to all Equipment and as to each of the Mortgaged Properties,
each of which shall be in form and substance satisfactory to
Agent.
BB. Audited Financials; Financial Condition. Agent
shall have received Borrower's final Financial Statements for its
Fiscal Year ended December 31, 1998, audited by Deloitte & Touche
LLP. Borrower shall have provided Agent with its current
operating statements, a consolidated and unaudited consolidating
balance sheet and statement of cash flows, the Projections, and
a Borrowing Base Certificate with respect to Borrower certified
by its Chief Financial Officer, in each case in form and
substance satisfactory to Agent, and Agent shall be satisfied, in
its sole discretion, with all of the foregoing. Agent shall have
further received a certificate of the Chief Executive Officer
and/or the Chief Financial Officer of Borrower, based on such
Projections, to the effect that (a) Borrower will be Solvent upon
the consummation of the transactions contemplated herein; (b) the
Projections are based upon estimates and assumptions stated
therein, all of which Borrower believes to be reasonable and fair
in light of current conditions and current facts known to
Borrower and, as of the Closing Date, reflect Borrower's good
faith and reasonable estimates of its future financial
performance and of the other information projected therein for
the period set forth therein; and (c) containing such other
statements with respect to the solvency of Borrower and matters
related thereto as Agent shall request.
CC. Other Documents. Such other certificates,
documents and agreements respecting any Credit Party as Agent
may, in its sole discretion, request.
ANNEX E (Section 4.1(a))
to
CREDIT AGREEMENT
FINANCIAL STATEMENTS AND PROJECTIONS -- REPORTING
Borrower shall deliver or cause to be delivered to Agent or to
Agent and Lenders, as indicated, the following:
(a) Monthly Financials. To Agent and Lenders, within
thirty-five (35) days after the end of each Fiscal Month,
financial information regarding Borrower and its Subsidiaries,
certified by the Chief Financial Officer of Borrower, consisting
of consolidated and consolidating (i) unaudited balance sheets as
of the close of such Fiscal Month and the related statements of
income and cash flow for that portion of the Fiscal Year ending
as of the close of such Fiscal Month; (ii) unaudited statements
of income and cash flow for such Fiscal Month, setting forth in
comparative form the figures for the corresponding period in the
prior year and the figures contained in the budget for such
Fiscal Year, all prepared in accordance with GAAP and consistent
with past practices (subject to the absence of footnotes and to
normal year-end adjustments); and (iii) a summary of the
outstanding balance of all Intercompany Notes as of the last day
of that Fiscal Month, on a Subsidiary by Subsidiary basis,
including the beginning balance, the activity for such Fiscal
Month and the ending balance. Such financial information shall
be accompanied by the certification of the Chief Financial
Officer of Borrower that (i) such financial information presents
fairly in accordance with GAAP (subject to the absence of
footnotes and to normal year-end adjustments) the financial
position and results of operations of Borrower and its
Subsidiaries, on a consolidated and consolidating basis, in each
case as at the end of such Fiscal Month and for the period then
ended and (ii) any other information presented is true, correct
and complete in all material respects and that there was no
Default or Event of Default in existence as of such time or, if a
Default or Event of Default has occurred and is continuing,
describing the nature thereof and all efforts undertaken to cure
such Default or Event of Default;
(b) Quarterly Financials. To Agent and Lenders,
within forty-five (45) days after the end of each Fiscal Quarter,
consolidated and consolidating financial information regarding
Borrower and its Subsidiaries, certified by the Chief Financial
Officer of Borrower, including (i) unaudited balance sheets as of
the close of such Fiscal Quarter and the related statements of
income and cash flow for that portion of the Fiscal Year ending
as of the close of such Fiscal Quarter and (ii) unaudited
statements of income and cash flows for such Fiscal Quarter, in
each case setting forth in comparative form the figures for the
corresponding period in the prior year and the figures contained
in the budget for such Fiscal Year, all prepared in accordance
with GAAP (subject to the absence of footnotes and to normal
year-end adjustments). Such financial information shall be
accompanied by (A) a statement in reasonable detail (each, a
"Compliance Certificate") showing the calculations used in
determining compliance with a Compliance Certificate in respect
of each of the Financial Covenants which is tested on a quarterly
basis and (B) the certification of the Chief Financial Officer of
Borrower that (i) such financial information presents fairly in
accordance with GAAP and consistent with past practices (subject
to the absence of footnotes and to normal year-end adjustments)
the financial position, results of operations and statements of
cash flows of Borrower and its Subsidiaries, on both a
consolidated and consolidating basis, as at the end of such
Fiscal Quarter and for that portion of the Fiscal Year then
ended, (ii) any other information presented is true, correct and
complete in all material respects and that there was no Default
or Event of Default in existence as of such time or, if a Default
or Event of Default has occurred and is continuing, describing
the nature thereof and all efforts undertaken to cure such
Default or Event of Default. In addition, Borrower shall deliver
to Agent and Lenders, within forty-five (45) days after the end
of each Fiscal Quarter, a management discussion and analysis as
contained in Borrower's 10-Q's, 10-K or other report filed with
the Securities and Exchange Commission for such period.
(c) Operating Plan. To Agent and Lenders, as soon as
available, but not later than thirty (30) days after the end of
each Fiscal Year, an annual operating plan for Borrower, approved
by the Board of Directors of Borrower, for the following Fiscal
Year, which will include a statement of all of the material
assumptions on which such plan is based, will include monthly
balance sheets and a monthly budget for the following year and
will integrate sales, gross profits, operating expenses,
operating profit and cash flow projections all prepared on the
same basis and in similar detail as that on which operating
results are reported (and in the case of cash flow projections,
representing management's good faith estimates of future
financial performance based on historical performance), and
including plans for personnel, Capital Expenditures and
facilities;
(d) Annual Audited Financials. To Agent and Lenders,
within ninety (90) days after the end of each Fiscal Year,
audited Financial Statements for Borrower and its Subsidiaries on
a consolidated and (unaudited) consolidating basis, consisting of
balance sheets and statements of income and retained earnings and
cash flows, setting forth in comparative form in each case the
figures for the previous Fiscal Year, which Financial Statements
shall be prepared in accordance with GAAP and consistent with
past practices (subject to the absence of footnotes and to normal
year-end adjustments) except for new accounting principles that
will be adopted by Borrower as required by GAAP, certified
without any disclaimers or adverse opinions, by an independent
certified public accounting firm of national standing or
otherwise acceptable to Agent. Such Financial Statements shall
be accompanied by (i) a statement prepared in reasonable detail
showing the calculations used in determining compliance with each
of the Financial Covenants, (ii) a report from such accounting
firm to the effect that, in connection with their audit
examination, nothing has come to their attention to cause them to
believe that a Default or Event of Default has occurred (or
specifying those Defaults and Events of Default that they became
aware of), it being understood that such audit examination
extended only to accounting matters and that no special
investigation was made with respect to the existence of Defaults
or Events of Default, (iii) a letter addressed to Agent, on
behalf of itself and Lenders, in form and substance reasonably
satisfactory to Agent and subject to standard qualifications
required by nationally recognized accounting firms, signed by
such accounting firm acknowledging that Agent and Lenders are
entitled to rely upon such accounting firm's certification of
such audited Financial Statements, (iv) the annual letters to
such accountants in connection with their audit examination
detailing contingent liabilities and material litigation matters,
and (v) the certification of the Chief Executive Officer or Chief
Financial Officer of Borrower that all such Financial Statements
present fairly in accordance with GAAP the financial position,
results of operations and statements of cash flows of Borrower
and its Subsidiaries on a consolidated and consolidating basis,
as at the end of such year and for the period then ended, and
that there was no Default or Event of Default in existence as of
such time or, if a Default or Event of Default has occurred and
is continuing, describing the nature thereof and all efforts
undertaken to cure such Default or Event of Default;
(e) Management Letters. To Agent and Lenders, within
five (5) Business Days after receipt thereof by any Credit Party,
copies of all management letters, exception reports or similar
letters or reports received by such Credit Party from its
independent certified public accountants;
(f) Default Notices. To Agent and Lenders, as soon as
practicable, and in any event within five (5) Business Days after
an executive officer of Borrower has actual knowledge of the
existence of any Default, Event of Default or other event which
has had a Material Adverse Effect, telephonic or telecopied
notice specifying the nature of such Default or Event of Default
or other event, including the anticipated effect thereof, which
notice, if given telephonically, shall be promptly confirmed in
writing on the next Business Day;
(g) SEC Filings and Press Releases. To Agent and
Lenders, promptly upon their becoming available, copies of: (i)
all Financial Statements, reports, notices and proxy statements
made publicly available by any Credit Party to its security
holders; (ii) all regular and periodic reports and all
registration statements and prospectuses, if any, filed by any
Credit Party with any securities exchange or with the Securities
and Exchange Commission or any governmental or private regulatory
authority; and (iii) all press releases and other statements made
available by any Credit Party to the public concerning material
changes or developments in the business of any such Person;
(h) Subordinated Debt and Equity Notices. To Agent,
as soon as practicable, copies of all material written notices
given or received by any Credit Party with respect to any
Subordinated Debt or Stock of such Person, and, within two (2)
Business Days after any Credit Party obtains knowledge of any
matured or unmatured event of default with respect to any
Subordinated Debt, notice of such event of default;
(i) Supplemental Schedules. To Agent, supplemental
disclosures, if any, required by Section 5.6;
(j) Litigation. To Agent in writing, promptly upon
learning thereof, notice of any Litigation commenced or
threatened against any Credit Party that (i) seeks damages in
excess of $250,000, (ii) seeks injunctive relief, (iii) is
asserted or instituted against any Plan, its fiduciaries or its
assets or against any Credit Party or ERISA Affiliate in
connection with any Plan, (iv) alleges criminal misconduct by any
Credit Party, (v) alleges the violation of any law regarding, or
seeks remedies in connection with, any Environmental Liabilities;
or (vi) involves any product recall;
(k) Insurance Notices. To Agent, disclosure of losses
or casualties required by Section 5.4;
(l) Lease Default Notices. To Agent, copies of (i)
any and all default notices received under or with respect to any
leased location or public warehouse where Collateral is located,
and (ii) such other notices or documents as Agent may request in
its reasonable discretion; and
(m) Lease Amendments. To Agent, copies of all
material amendments to real estate leases.
(n) Other Documents. To Agent and Lenders, such other
financial and other information respecting any Credit Party's
business or financial condition as Agent or any Lender shall,
from time to time, request.
<PAGE>
ANNEX F (Section 4.1(b))
to
CREDIT AGREEMENT
COLLATERAL REPORTS
Borrower shall deliver or cause to be delivered the
following:
(a) To Agent, upon its request, and in no event less
frequently than twelve (12) Business Days after the end of each
Fiscal Month (together with a copy of all or any part of such
delivery requested by any Lender in writing after the Closing
Date), each of the following:
(i) a Borrowing Base Certificate with respect to
Borrower, accompanied by such supporting detail and documentation
as shall be requested by Agent in its reasonable discretion;
(ii) with respect to Borrower, a summary of
Inventory by location and type with a supporting perpetual
Inventory report, in each case accompanied by such supporting
detail and documentation as shall be requested by Agent in its
reasonable discretion;
(iii) with respect to Borrower, a monthly
trial balance showing Accounts outstanding aged from invoice due
date as follows: future, current, 1 to 30 days, 31 to 60 days,
61 to 90 days and 91 days or more, accompanied by such supporting
detail and documentation as shall be requested by Agent in its
reasonable discretion; and
(iv) a schedule evidencing Borrower's compliance
and performance under all of its license agreements and
arrangements, including a description of all royalties, on a
license by license basis, due and paid by Borrower for such
Fiscal Month;
(b) To Agent, on Wednesday of each week or at such
more frequent intervals as Agent may request from time to time
(together with a copy of all or any part of such delivery
requested by any Lender in writing after the Closing Date),
collateral reports with respect to Borrower for the prior week
then ended, including all additions and reductions (cash and non-
cash) with respect to Accounts of Borrower, in each case
accompanied by a weekly Borrowing Base Certificate detailing
Eligible Accounts for the prior week then ended and such
supporting detail and documentation as shall be requested by
Agent in its reasonable discretion;
(c) To Agent, at the time of delivery of each of the
monthly Financial Statements delivered pursuant to Annex E, a
reconciliation of the Accounts trial balance and month-end
Inventory reports of Borrower to Borrower's general ledger and
monthly Financial Statements delivered pursuant to such Annex E,
in each case accompanied by such supporting detail and
documentation as shall be requested by Agent in its reasonable
discretion;
(d) To Agent, at the time of delivery of each of the
quarterly Financial Statements delivered pursuant to Annex E, (i)
a listing of government contracts of Borrower subject to the
Federal Assignment of Claims Act of 1940; and (ii) a list of any
applications for the registration of any Patent, Trademark or
Copyright by Borrower with the United States Patent and Trademark
Office, the United States Copyright Office or any similar office
or agency which any Credit Party thereof has filed in the prior
Fiscal Quarter;
(e) Borrower, at its own expense, shall deliver to
Agent the results of each physical verification, if any, which
Borrower or any of its Subsidiaries may in their discretion have
made, or caused any other Person to have made on their behalf, of
all or any portion of their Inventory (and, if a Default or an
Event of Default has occurred and is continuing, Borrower shall,
upon the request of Agent, conduct, and deliver the results of,
such physical verifications as Agent may require);
(f) Borrower, at its own expense, shall deliver to
Agent such appraisals of its assets as Agent may request at any
time after the occurrence and during the continuance of a Default
or an Event of Default, such appraisals to be conducted by an
appraiser, and in form and substance, satisfactory to Agent; and
(g) Such other reports, statements and reconciliations
with respect to the Borrowing Base or Collateral of any or all
Credit Parties as Agent shall from time to time request in its
reasonable discretion.
<PAGE>
ANNEX G (Section 6.10)
to
CREDIT AGREEMENT
FINANCIAL COVENANTS
Borrower shall not breach or fail to comply with any of
the following financial covenants, each of which shall be
calculated in accordance with GAAP consistently applied:
(a) Maximum Capital Expenditures. Borrower shall not make
Capital Expenditures that exceed the amounts set forth below as
of each Fiscal Quarter for the four most recent Fiscal Quarters
then ended (or with respect to any Fiscal Quarter ending on or
before June 30, 2000 the period commencing on October 1, 1999 and
ending on the last day of such Fiscal Quarter):
Fiscal Quarter Ending Maximum Capital Expenditures
December 31, 1999 $10,500,000
March 31, 2000 24,000,000
June 30, 2000 34,500,000
Fiscal Year Ending Maximum Capital Expenditures
December 31, 2000 $31,000,000
December 21, 2001 25,000,000
December 31, 2002 25,000,000
(b) Minimum Fixed Charge Coverage Ratio. Borrower shall
have at the end of each Fiscal Quarter set forth below, a Fixed
Charge Coverage Ratio for the 12-month period then ended of not
less than the following:
Fiscal Quarter Ending Fixed Charge Coverage Ratio
September 30, 2000 1.1:1
December 31, 2000 1.1:1
March 31, 2001 1.1:1
June 30, 2001 1.1:1
September 30, 2001 1.1:1
December 31, 2001 1.1:1
March 31, 2002 1.1:1
June 30, 2002 1.1:1
September 30, 2002 1.1:1
(c) Minimum EBITDA. Borrower shall have, at the end of
each Fiscal Quarter set forth below, EBITDA for the period
commencing on October 1, 1999 and ending on the last day of such
Fiscal Quarter of not less than the following:
Fiscal Quarter Ending EBITDA
December 31, 1999 $13,000,000
March 31, 2000 27,500,000
June 30, 2000 38,000,000
(d) Minimum Tangible Net Worth. Borrower shall have at the
end of each period set forth below, Tangible Net Worth of not
less than the following:
December 31, 1999 $200,000,000
March 31, 2000 200,000,000
June 30, 2000 200,000,000
September 30, 2000 and thereafter 205,000,000
(e) Minimum Interest Coverage Ratio. Borrower shall have
at the end of each Fiscal Quarter set forth below, an Interest
Coverage Ratio for the 12-month period then ended (or with
respect to any Fiscal Quarter ending on or before June 30, 2000,
the period commencing on October 1, 1999 and ending on the last
day of such Fiscal Quarter) of not less than the following:
Minimum Interest
Fiscal Quarter Ending Coverage Ratio
December 31, 1999 4:1
March 31, 2000 4:1
June 30, 2000 4:1
September 30, 2000 3:1
December 31, 2000 3:1
March 31, 2001 3:1
June 30, 2001 3:1
September 30, 2001 3:1
December 31, 2001 3:1
March 31, 2002 3:1
June 30, 2002 3:1
September 30, 2002 3:1
(f) Maximum Sales Agreement Payments. Borrower shall not
make payments under the Sales Agreements in an amount that
exceeds $32,000,000 in the aggregate during the period commencing
on October 1, 1999 through and including June 30, 2000, and,
provided further, that such payments shall not exceed $13,000,000
during any one Fiscal Quarter of such period.
Unless otherwise specifically provided herein, any
accounting term used in the Agreement shall have the meaning
customarily given such term in accordance with GAAP, and all
financial computations hereunder shall be computed in accordance
with GAAP consistently applied. That certain items or
computations are explicitly modified by the phrase "in accordance
with GAAP" shall in no way be construed to limit the foregoing.
If any "Accounting Changes" (as defined below) occur and such
changes result in a change in the calculation of the financial
covenants, standards or terms used in the Agreement or any other
Loan Document, then Borrower, Agent and Lenders agree to enter
into negotiations in order to amend such provisions of the
Agreement so as to equitably reflect such Accounting Changes with
the desired result that the criteria for evaluating Borrower's
and its Subsidiaries' financial condition shall be the same after
such Accounting Changes as if such Accounting Changes had not
been made; provided, however, that the agreement of Requisite
Lenders to any required amendments of such provisions shall be
sufficient to bind all Lenders. "Accounting Changes" means (a)
changes in accounting principles required by the promulgation of
any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified
Public Accountants (or successor thereto or any agency with
similar functions), (b) changes in accounting principles
concurred in by Borrower's certified public accountants; (c)
purchase accounting adjustments under A.P.B. 16 and/or 17 and
EITF 88-16, and the application of the accounting principles set
forth in FASB 109, including the establishment of reserves
pursuant thereto and any subsequent reversal (in whole or in
part) of such reserves; and (d) the reversal of any reserves
established as a result of purchase accounting adjustments. All
such adjustments resulting from expenditures made subsequent to
the Closing Date (including capitalization of costs and expenses
or payment of pre-Closing Date liabilities) shall be treated as
expenses in the period the expenditures are made and deducted as
part of the calculation of EBITDA in such period. If Agent,
Borrower and Requisite Lenders agree upon the required
amendments, then after appropriate amendments have been executed
and the underlying Accounting Change with respect thereto has
been implemented, any reference to GAAP contained in the
Agreement or in any other Loan Document shall, only to the extent
of such Accounting Change, refer to GAAP, consistently applied
after giving effect to the implementation of such Accounting
Change. If Agent, Borrower and Requisite Lenders cannot agree
upon the required amendments within thirty (30) days following
the date of implementation of any Accounting Change, then all
Financial Statements delivered and all calculations of financial
covenants and other standards and terms in accordance with the
Agreement and the other Loan Documents shall be prepared,
delivered and made without regard to the underlying Accounting
Change. For purposes of Section 8.01, a breach of a Financial
Covenant contained in this Annex G shall be deemed to have
occurred as of any date of determination by Agent as of the last
day of any specified measurement period, regardless of when the
Financial Statements reflecting such breach are delivered to
Agent.
<PAGE>
ANNEX H (Section 1.1(d))
to
CREDIT AGREEMENT
LENDERS' WIRE TRANSFER INFORMATION
Bankers Trust Company
New York, New York
Account No. 50-232-854
ABA Number: 021-001-033
Account Name: GE Capital
Reference: Gibson Greetings
<PAGE>
ANNEX I (Section 11.10)
to
CREDIT AGREEMENT
NOTICE ADDRESSES
(A) Paul, Hastings, Janofsky & Walker LLP
1055 Washington Boulevard
Stamford, Connecticut 06901
Attention: Leslie Plaskon, Esq.
Telecopier No.: (203) 359-3031
Telephone No.: (203) 961-7400
General Electric Capital Corporation
201 High Ridge Road
Stamford, Connecticut 06927-5100
Attention: Corporate Counsel - Commercial Finance
Telecopier No.: (203) 316-7889
Telephone No.: (203) 316-7500
Paul, Hastings, Janofsky & Walker LLP
600 Peachtree Street N.E.
Suite 2400
Atlanta, Georgia 30308
Attention: Jesse H. Austin, III, Esq.
Telecopier No.: (404) 815-2424
Telephone No.: (404) 815-2400
(B) If to Borrower, at
Gibson Greetings, Inc.
2100 Section Road
Cincinnati, Ohio 45237
Attention: James T. Wilson
Telecopier No.: (606) 815-6647
Telephone No.: (606) 815-6033
<PAGE>
With copies to:
Taft, Stettinius & Hollister LLP
1800 Firstar Tower
425 Walnut Street
Cincinnati, Ohio 45202
Attention: Gerald S. Greenberg
Telecopier No.: (513) 381-0205
Telephone No.: (513) 357-9670
<PAGE>
ANNEX J (from Annex A - Commitments definition)
to
CREDIT AGREEMENT
Lender(s):
General Electric Capital Corporation
Revolving Loan Commitment
$50,000,000
<PAGE>
INDEX OF APPENDICES
Exhibit 1.1(a)(i) - Form of Notice of Revolving Credit
Advance
Exhibit 1.1(a)(ii) - Form of Revolving Note
Exhibit 4.1(b) - Form of Borrowing Base Certificate
Exhibit 9.1(a) - Form of Assignment Agreement
Schedule 1.1 - Responsible Individual
Schedule 1.4 - Sources and Uses; Funds Flow
Memorandum
Schedule 3.2 - Executive Offices; FEIN
Schedule 3.3 - Conflicts
Schedule 3.4(A) - Financial Statements
Schedule 3.4(B) - Projections
Schedule 3.5 - Material Adverse Effect Events
Schedule 3.6 - Real Estate and Leases
Schedule 3.7 - Labor Matters
Schedule 3.8 - Ventures, Subsidiaries and
Affiliates; Outstanding Stock
Schedule 3.11 - Tax Matters
Schedule 3.12 - ERISA Plans
Schedule 3.13(a) - MAE Litigation
Schedule 3.13(b) - Other Material Litigation
Schedule 3.15 - Intellectual Property
Schedule 3.17 - Hazardous Materials
Schedule 3.18 - Insurance
Schedule 3.19 - Deposit and Disbursement Accounts
Schedule 3.20 - Government Contracts
Schedule 3.22 - Material Agreements
Schedule 5.1 - Trade Names
Schedule 5.9 - Non-Landlord Waiver Locations
Schedule 6.3(a) - Indebtedness
Schedule 6.3(b) - Intercompany Loan Balances
Schedule 6.4(a) - Transactions with Affiliates
Schedule 6.6 - Guaranteed Obligations
Schedule 6.7 - Existing Liens
Annex A (Recitals) - Definitions
Annex B (Section 1.2) - Letters of Credit
Annex C (Section 1.8) - Cash Management System
Annex D (Section 2.1(a)) - Schedule of Additional Closing
Documents
Annex E (Section 4.1(a)) - Financial Statements and
Projections -- Reporting
Annex F (Section 4.1(b)) - Collateral Reports
Annex G (Section 6.10) - Financial Covenants
Annex H (Section 9.9(a)) - Lenders' Wire Transfer Information
Annex I (Section 11.10) - Notice Addresses
Annex J (from Annex A-
Commitments
definition) - Commitments as of Closing Date
