<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934.
For the quarter ended MAY 31, 1994 Commission file number 1-8738
------------------- ------
SEALY CORPORATION*
- - -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 36-3284147
- - ------------------------------- -------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
520 PIKE STREET
SEATTLE, WASHINGTON 98101
- - ----------------------------------------- -----------------------------------
(Address of principal executive offices)* (Zip Code)
Registrant's telephone number, including area code (206) 625-1233
------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities and Exchange Act
of 1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
------ ------
The number of shares of the registrant's common stock outstanding as of
JUNE 30, 1994 was 29,433,330.
- - ------------- ----------
* All corporate and administrative services are provided by Sealy, Inc., 10th
Floor Halle Building, 1228 Euclid Avenue, Cleveland, Ohio 44115.
================================================================================
<PAGE> 2
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
SEALY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<CAPTION>
SUCCESSOR
-----------------------
THREE MONTHS ENDED
MAY 31,
1994 1993
-----------------------
<S> <C> <C>
Net sales $176,751 $161,373
-------- --------
Costs and expenses:
Cost of goods sold 94,201 86,922
Selling, general and administrative 54,865 53,606
Amortization of intangibles 3,514 3,899
Interest expense, net 9,233 9,857
-------- --------
161,813 154,284
-------- --------
Income before income tax
and extraordinary item 14,938 7,089
Income tax 6,326 3,624
-------- --------
Income before extraordinary item 8,612 3,465
Extraordinary loss from early
extinguishment of debt (net of
income taxes of $1,504) - 2,919
-------- --------
Net income $ 8,612 $ 546
======== ========
Earnings per common share:
Income before extraordinary item $ .28 $ .12
Extraordinary loss - (.10)
-------- ---------
Net income $ .28 $ .02
======== ========
Weighted average number of common
shares and equivalents outstanding
during period 30,609 30,199
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
2
<PAGE> 3
<TABLE>
SEALY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<CAPTION>
SUCCESSOR PRE-SUCCESSOR
-------------------------------- -------------
SIX MONTHS FOUR MONTHS TWO MONTHS
ENDED ENDED ENDED
MAY 31, MAY 31, JANUARY 31,
1994 1993 1993
------------ -------------- ------------
<S> <C> <C> <C>
Net sales $332,358 $214,937 $103,492
-------- -------- --------
Costs and expenses:
Cost of goods sold 176,534 115,387 57,110
Selling, general and administrative 106,417 70,473 34,597
Amortization of intangibles 7,029 5,251 2,473
Interest expense, net 17,809 13,082 6,675
-------- -------- --------
307,789 204,193 100,855
-------- -------- --------
Income before income tax
and extraordinary item 24,569 10,744 2,637
Income tax 10,812 5,286 1,660
-------- -------- --------
Income before extraordinary item 13,757 5,458 977
Extraordinary loss from early
extinguishment of debt (net of
income taxes of $1,504) - 2,919 -
-------- -------- --------
Net income $ 13,757 $ 2,539 $ 977
======== ======== =======
Earnings per common share:
Income before extraordinary item $ .45 $ .18 $ .03
Extraordinary loss - (.10) -
-------- -------- --------
Net income $ .45 $ .08 $ .03
======== ======== ========
Weighted average number of common
shares and equivalents outstanding
during period 30,581 30,181 30,062
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
3
<PAGE> 4
<TABLE>
SEALY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<CAPTION>
SUCCESSOR
-------------------------------------
MAY 31, NOVEMBER 30,
1994 1993
------------- ---------------
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents $ 18,967 $ 20,919
Accounts receivable, less allowance for doubtful
accounts (1994 - $8,069; 1993 - $7,650) 81,041 72,128
Inventories 41,310 41,745
Prepaid expenses and taxes 19,599 23,261
-------- --------
160,917 158,053
Property, plant and equipment -- at cost 149,344 147,333
Less accumulated depreciation 11,910 7,228
-------- --------
137,434 140,105
Other assets:
Goodwill and other intangibles -
net of accumulated amortization
(1994 - $18,809; 1993 - $11,780) 500,421 507,450
Debt issuance costs and other assets 17,774 17,499
-------- --------
518,195 524,949
-------- --------
$816,546 $823,107
======== ========
</TABLE>
4
<PAGE> 5
<TABLE>
SEALY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<CAPTION>
SUCCESSOR
-------------------------------------
MAY 31, NOVEMBER 30,
1994 1993
------------- -----------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion -- long-term obligations $ 24,370 $ 21,728
Accounts payable 28,951 28,603
Accrued interest payable 1,894 3,474
Other accrued expenses 55,351 61,489
-------- --------
110,566 115,294
Long-term obligations 364,791 384,451
Other noncurrent liabilities 15,439 17,160
Deferred income taxes 25,964 21,857
Stockholders' equity:
Common stock 295 295
Additional paid-in capital 262,698 260,581
Retained earnings 38,482 24,725
Foreign currency translation adjustment (1,689) (1,256)
-------- --------
299,786 284,345
Commitments and contingencies
-------- --------
$816,546 $823,107
======== ========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
5
<PAGE> 6
<TABLE>
SEALY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<CAPTION>
SUCCESSOR PRE-SUCCESSOR
------------------------------- ------------
SIX MONTHS FOUR MONTHS TWO MONTHS
ENDED ENDED ENDED
MAY 31, MAY 31, JANUARY 31,
1994 1993 1993
------------ ------------ ------------
<S> <C> <C> <C>
Net cash provided by (used in)
operating activities $17,856 $22,399 $(1,277)
------- ------- -------
Net cash used in investing activities:
Property, plant and equipment, net (2,011) (7,633) (3,082)
------- ------- -------
Financing activities:
Proceeds from bank loans and sale
of 9 1/2% Senior Subordinated
Notes due 2003 $ - $450,000 $ -
Repayment of old bank loan and
12.4% Senior Subordinated
Notes due 2001 - (433,320) -
Debt issuance costs (779) (17,093) -
Other long term obligations, net (17,018) (12,666) 2,667
------- -------- -------
Net cash (used in) provided by
financing activities $(17,797) $(13,079) $ 2,667
-------- --------- -------
Change in cash and equivalents (1,952) 1,687 (1,692)
Cash and equivalents:
Beginning of period 20,919 11,057 12,749
------- ------- -------
End of period $18,967 $12,744 $11,057
======= ======= =======
Supplemental disclosures:
- - -------------------------
Taxes paid, net $ 2,813 $ 1,528 $ 895
Interest paid $18,382 $11,050 $ 1,037
======= ======= =======
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
6
<PAGE> 7
SEALY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED MAY 31, 1994, FOUR MONTHS ENDED MAY 31, 1993
AND TWO MONTHS ENDED JANUARY 31, 1993
================================================================================
NOTE A -- ACCOUNTING FOR THE TRANSACTION AND BASIS OF PRESENTATION
This report covers Sealy Corporation and its subsidiaries (collectively, the
"Company").
The accompanying unaudited condensed consolidated financial statements
should be read together with the Company's Annual Report on Form 10-K for the
year ended November 30, 1993.
On February 12, 1993, a group of investors led by Zell/Chilmark Fund L.P., a
Delaware limited partnership, acquired the Company for $250.0 million (the
"Acquisition"). The Company employed the purchase method of accounting for the
Acquisition, the effect of which changed the basis of certain assets and
liabilities, including deferred income taxes, goodwill, property, plant and
equipment and stockholders' equity. As a result of the purchase accounting
adjustments, the financials for the six months ended May 31, 1994 and the four
months ended May 31, 1993 (the "Successor Financials") are not comparable to
the financials for the two months ended January 31, 1993 (the "Pre-Successor
Financials") presented herein.
The accompanying unaudited condensed consolidated financial statements
contain all adjustments which, in the opinion of management, are necessary to
present fairly the financial position of the Company at May 31, 1994, and its
results of operations and cash flows for the periods presented herein. All
adjustments in the periods presented herein are normal and recurring in nature.
The November 30, 1993 condensed consolidated balance sheet included herein is
derived from the audited consolidated balance sheet as of November 30, 1993.
NOTE B -- INVENTORIES
<TABLE>
The major components of inventories were as follows:
<CAPTION>
SUCCESSOR
-------------------------------------
MAY 31, NOVEMBER 30,
1994 1993
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Raw materials $31,251 $31,573
Work in process 3,740 3,782
Finished goods 6,319 6,390
------- -------
$41,310 $41,745
======= =======
</TABLE>
7
<PAGE> 8
SEALY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED MAY 31, 1994, FOUR MONTHS ENDED MAY 31, 1993
AND TWO MONTHS ENDED JANUARY 31, 1993
================================================================================
NOTE C -- LONG-TERM OBLIGATIONS
<TABLE>
<CAPTION>
SUCCESSOR
-------------------------------------
MAY 31, NOVEMBER 30,
1994 1993
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Secured Credit Agreement:
Revolving Credit Facility $ - $ 3,000
Term Loan Facility - 196,774
Restated Credit Agreement:
Revolving Credit Facility 33,000 -
Term Loan Facility 150,000 -
9 1/2% Senior Subordinated Notes Due 2003 200,000 200,000
Other 6,161 6,405
-------- --------
389,161 406,179
Less current portion 24,370 21,728
-------- --------
$364,791 $384,451
======== ========
</TABLE>
On May 27, 1994, the Company entered into a restated secured credit
agreement (the "Restated Credit Agreement") with a majority of its current
group of senior lenders (the "Senior Lenders"), which modified the terms of its
existing secured credit agreement (the "Secured Credit Agreement") by reducing
the amounts available under its existing term loan facilities thereunder from
an aggregate of $250 million to a single facility of $150 million (the "Term
Loan Facility") and by increasing the amount available under its existing
revolving credit facility thereunder from $75 million to $125 million (the
"Revolving Credit Facility"). At the time the Company entered into the
Restated Credit Agreement, the Company converted $33 million outstanding under
its existing term loan facilities into outstanding loans of $33 million under
the Revolving Credit Facility.
The Restated Credit Agreement provides for loans up to $275 million and
consists of the $125 million Revolving Credit Facility and the $150 million
Term Loan Facility. The Revolving Credit Facility provides for a $30 million
discretionary letter of credit facility ("Letters of Credit") and a
discretionary swing loan facility of up to $5 million ("Swing Loans"). The
Revolving Credit Facility terminates and is due and payable on November 30,
1999.
The Term Loan Facility is a $150 million term loan with a final maturity
of November 30, 1999 and amortizes in uneven fiscal quarterly principal
payments aggregating $20 million in each of the fiscal years ending 1994 and
1995, $25 million in each of the fiscal years ending 1996 and 1997 and $30
million in each of the fiscal years ending 1998 and 1999.
Under the terms of the Restated Credit Agreement, the Company is initially
obligated to pay a commitment fee rate of 0.375% per annum on the unused
portion of the Revolving Credit Facility. The fee, which is payable quarterly
in arrears, is reduced or increased depending on certain financial ratios.
8
<PAGE> 9
SEALY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED MAY 31, 1994, FOUR MONTHS ENDED MAY 31, 1993
AND TWO MONTHS ENDED JANUARY 31, 1993
================================================================================
The effects of the May 27, 1994 refinancing lowered the Company's interest
rates and debt service obligations. Two separate interest rate options exist
under the Restated Credit Agreement and are available to the Company at its
option as follows:
(a) A Floating Rate which is the greater of
(i) A Corporate Base Rate plus an applicable margin or
(ii) A Federal Funds Rate plus 0.25% and an applicable margin; or
(b) A Eurodollar Rate plus an applicable margin.
The applicable margin is initially zero for the Floating Rate option and
1.25% for the Eurodollar Rate option. The applicable margin is reduced or
increased depending on certain financial ratios.
In addition, certain other provisions of the Restated Credit Agreement
were amended to provide more flexibility to the Company relating to, among
other things, investments, capital expenditures and incurrence of debt. Other
terms of the Restated Credit Agreement were virtually unchanged from the terms
of the Secured Credit Agreement.
During the six months ended May 31, 1994, the maximum amount outstanding
under the revolving credit facility pursuant to either the Restated Credit
Agreement or the Secured Credit Agreement, excluding outstanding Letters of
Credit, was $33.0 million. At May 31, 1994, the Company had approximately $70
million available under the Revolving Credit Facility, with $33 million
outstanding and Letters of Credit totalling approximately $22 million.
All obligations of the Company to the Senior Lenders are jointly and
severally guaranteed by each direct and indirect domestic subsidiary of the
Company and secured by first priority liens on and security interests in
substantially all of the assets of the Company and its domestic subsidiaries
and by first priority pledges of substantially all of the capital stock of most
of the subsidiaries of the Company.
NOTE D -- CONTINGENCIES
Sealy Corporation and one of its subsidiaries are parties to an
Administrative Consent Order (the "ACO") issued by the New Jersey Department of
Environmental Protection and Energy (the "Department"), dating back to 1989,
which requires that soil and groundwater sampling be conducted to determine the
extent of environmental contamination found at a closed plant owned by the
subsidiary in South Brunswick, New Jersey. The Company does not believe that
any of its manufacturing processes was a source of any of the contaminants
found to exist above regulatorily acceptable levels in the groundwater, and the
Company is exploring other possible sources of the contamination, including
former owners of the facility. As the current owners of the facility, however,
the Company and its subsidiary are primarily responsible for site investigation
and any necessary clean-up plan approved by the Department under the terms of
the ACO. The Company has established an accrual for further site
investigation and remediation. Based on the facts currently known by the
Company, management believes that the accrual is adequate to cover the
Company's probable liability and does not believe that resolution of this
matter will have a material adverse effect on the Company's financial position
or future operations. However, because of the nature of certain of the
contaminants found, their geological location in fractured bedrock, the lack of
any accepted technology for successfully remediating the contamination, as well
as additional factors, including the uncertainties surrounding the nature and
application of environmental regulations, the practical and technical
difficulties in obtaining complete delineation of the contamination, the level
of clean-up that may be required, if any, or the technology that could be
involved, and the possible involvement of other potentially responsible
parties, the Company cannot presently predict the ultimate cost to remediate
this facility and there can be no assurance that the Company will not incur
material liability with respect to this matter.
9
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
The Company employed the purchase method of accounting for the Acquisition
in February 1993. In accordance with generally accepted accounting principles,
the post-Acquisition financials for the six months ended May 31, 1994 and the
four months ended May 31, 1993, presented in Part I, Item 1 herein, are not
comparable to the pre-Acquisition financials for the two months ended January
31, 1993. The application of purchase accounting for the Acquisition resulted
in changes in the valuation of certain assets and liabilities, the effect of
which had a slight change in the amount of depreciation and amortization in the
post-Acquisition financials when compared with amounts in the pre-Acquisition
Financials.
RESULTS OF OPERATIONS
For ease of reference in the following Six Month table, the results of
operations of the Company for the four months ended May 31, 1993 have been
arithmetically combined with the two months ended January 31, 1993.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
May 31, May 31,
--------------------------- --------------------------
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Sales $176.7 $161.4 $332.3 $318.4
------ ------ ------ ------
Cost and expenses:
Cost of goods sold 94.2 86.9 176.5 172.5
Selling, general and
administrative 54.9 53.6 106.4 105.0
Amortization of intangibles 3.5 3.9 7.0 7.7
Interest expense, net 9.2 9.9 17.8 19.8
------ ------ ------ ------
161.8 154.3 307.7 305.0
------ ------ ------ ------
Income before income tax
and extraordinary item 14.9 7.1 24.6 13.4
Income tax 6.3 3.6 10.8 7.0
----- ----- ----- -----
Income before extraordinary item 8.6 3.5 13.8 6.4
Extraordinary item - 2.9 - 2.9
----- ----- ----- -----
Net income $ 8.6 $ 0.6 $13.8 $ 3.5
===== ===== ===== =====
</TABLE>
THREE AND SIX MONTHS ENDED MAY 31, 1994 AND 1993
NET SALES. Net Sales for the three and six months ended May 31, 1994
increased $15.4 million (9.5%) and $13.9 million (4.4%), respectively, due to a
shift in mix to the higher priced Posturepedic product line and increased sales
of wood furniture products.
Sometime during the third quarter of 1994, the Company will no longer
manufacture private label bedding for Sears, Roebuck and Co. ("Sears").
Although there can be no assurances, management believes that continued
consumer acceptance of the Company's Posturepedic line, as well as improved
operating efficiencies, will result in Sears' decisions not having a material
adverse impact on the Company's profitability for fiscal 1994.
10
<PAGE> 11
COST OF GOODS SOLD. As a percentage of net sales, cost of goods sold for
the three and six months ended May 31, 1994 decreased 0.6 and 1.1 percentage
points, respectively, due to an improved product mix, better raw material
management and manufacturing overhead cost control.
SELLING, GENERAL AND ADMINISTRATIVE. As a percentage of sales, selling,
general and administrative expenses for the three and six months ended May 31,
1994 declined 2.2 and 1.0 percentage points to 31.0% and 32.0%, respectively,
due to lower delivery, selling and administrative expenses.
AMORTIZATION OF INTANGIBLES. Amortization of intangibles decreased as a
result of the Acquisition.
INTEREST EXPENSE, NET. Interest expense, net for the three and six months
ended May 31, 1994 decreased 0.9% ($0.7 million) and 0.8% ($2.0 million),
respectively, due primarily to a net reduction of approximately $68 million in
total indebtedness and a reduction in interest rates on senior subordinated
notes from 12.4% to 9 1/2% as a result of a refinancing in May 1993.
INCOME TAX. The Company's effective income tax rates differ from the
Federal statutory rate because of the application of purchase accounting,
certain foreign tax rate differentials and state and local taxes.
NET INCOME. For the reasons set forth above, net income improved
approximately $8.0 and $10.3 million for the three and six months ended May 31,
1994, respectively.
LIQUIDITY AND CAPITAL RESOURCES
During the six months ended May 31, 1994, the Company's principal source
of funds consisted of cash flow from operating activities. Its principal uses
of funds consisted of payments of principal, interest and capital expenditures.
Capital expenditures totalled $3.9 million for the six months. Management
believes that annual capital expenditure limitations in its Restated Credit
Agreement will not significantly inhibit the Company from meeting its ongoing
operating needs. At May 31, 1994, the Company had approximately $70 million
available under the Revolving Credit Facility, with $33 million outstanding,
and Letters of Credit issued totalling approximately $22 million. The
Company's net weighted average borrowing cost was 8.8% for the six months ended
May 31, 1994.
On May 27, 1994, the Company entered into a Restated Credit Agreement with
its current group of Senior Lenders, which modified the terms of its Secured
Credit Agreement by reducing the amounts available under its existing term loan
facilities thereunder from an aggregate of $250 million to a single facility of
$150 million (the "Term Loan Facility") and by increasing the amount available
under its existing revolving credit facility thereunder from $75 million to
$125 million (the "Revolving Credit Facility"). At the time the Company
entered into the Restated Credit Agreement, the Company converted $33 million
outstanding under its existing term loan facilities into outstanding loans of
$33 million under the Revolving Credit Facility. The Restated Credit Agreement
provides for loans up to $275 million and consists of the $125 million
Revolving Credit Facility and the $150 million Term Loan Facility. The
Revolving Credit Facility terminates and is due and payable on November 30,
1999.
The Company believes this refinancing will result in reduced interest
expense of up to $1.1 million in 1994 and up to $9.5 million over the term of
the loan and provides the Company with greater financial flexibility in the
management of cash and with certain less restrictive covenants.
Management believes that the Company will have the necessary liquidity for
the next several years to fund its expected capital expenditures, obligations
under its Restated Credit Agreement and subordinated note indenture,
environmental liabilities, if any, and for other needs required to manage its
business, through cash flow from operations and availability under the
Revolving Credit Facility.
11
<PAGE> 12
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
- - --------------------------
See Note D to the Condensed Consolidated Financial Statements, Part I,
Item 1 included herein.
Item 5. Other Information
- - --------------------------
None
Item 6. Exhibits and Reports on Form 8-K
- - -----------------------------------------
(a) Exhibits
Exhibit 4.1 Restated Secured Credit Agreement, dated May 27, 1994, by
and among Sealy Corporation, Certain Banks and Other
Financial Institutions and Banque Paribas, Citicorp USA,
Inc., Continental Bank N.A. and General Electric Capital
Corporation, as Managing Agents.
(b) Reports on Form 8-K
None
12
<PAGE> 13
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, Sealy Corporation has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
SEALY CORPORATION
By: /s/ Jesse E. Hogan
---------------------
Jesse E. Hogan
Senior Vice President and
Chief Financial Officer
(Duly Authorized and
Principal Financial Officer)
Date: July 13, 1994
13
<PAGE> 1
_______________________________________________________________________________
_______________________________________________________________________________
$275,000,000
__________________________
RESTATED SECURED CREDIT AGREEMENT
__________________________
dated as of
May 27, 1994
among
Sealy Corporation,
as Borrower,
Certain Banks and Other Financial Institutions,
as Banks,
Banque Paribas,
Citicorp USA, Inc.,
Continental Bank N.A.
and
General Electric Capital Corporation,
as Managing Agents,
and
Continental Bank N.A.,
as Administrative Agent
_______________________________________________________________________________
_______________________________________________________________________________
18163011.1 070894 1656C 93065134
<PAGE> 2
TABLE OF CONTENTS
PAGE
----
ARTICLE I
DEFINITIONS AND INTERPRETATION; ASSIGNMENTS
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . 2
1.02. Interpretation . . . . . . . . . . . . . . . . . . . . . . 29
1.03. Reallocation of Loans and Commitments . . . . . . . . . . 31
ARTICLE II
THE CREDITS
SECTION 2.01. Term Loans; Commitments to Make
Revolving Loans . . . . . . . . . . . . . . . . . . . . 32
2.02. Amounts of Term Loans and Commitments;
Reduction of Total Revolving Credit
Commitment Amount . . . . . . . . . . . . . . . . . . . 33
2.03. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.04. Method of Borrowing of Revolving Loans;
Ratable Loans . . . . . . . . . . . . . . . . . . . . . 34
2.05. Method of Selecting Rate Options and
Eurodollar Interest Periods;
Telephonic Notices . . . . . . . . . . . . . . . . . . . 34
2.06. Minimum Amount of Each Advance . . . . . . . . . . . . . . 35
2.07. Swing Loans . . . . . . . . . . . . . . . . . . . . . . . 35
2.08. Notes . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.09. Scheduled Principal Payments . . . . . . . . . . . . . . . 38
2.10. Optional Principal Prepayments . . . . . . . . . . . . . . . . . . 39
2.11. Mandatory Principal Prepayments . . . . . . . . . . . . . . . . . 39
2.11.01. Net Disposition Proceeds . . . . . . . . . . . . . . . . 39
2.11.02. Net Debt Proceeds . . . . . . . . . . . . . . . . . . . 40
2.11.03. Commitment Reductions . . . . . . . . . . . . . . . . . 40
2.11.04. General . . . . . . . . . . . . . . . . . . . . . . . . 40
2.12. Rate Options; Interest Payment Dates;
Interest Basis; Payments Due on Days Not
Business Days . . . . . . . . . . . . . . . . . . . . . . . . . . 40
2.13. Rate after Default . . . . . . . . . . . . . . . . . . . . . . . . 41
2.14. Method of Payment; Application of Payment . . . . . . . . . . . . 41
2.15. Notification of Advances, Interest Rates,
Prepayments and Revolving Credit Commitment
Reductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
2.16. Lending Installations . . . . . . . . . . . . . . . . . . . . . . 42
2.17. Non-Receipt of Funds by the
Administrative Agent . . . . . . . . . . . . . . . . . . . . . . . 42
2.18. Continuation and Conversion Elections . . . . . . . . . . . . . . 43
2.19. Net Payments; Tax Exemptions . . . . . . . . . . . . . . . . . . . 45
i
18163011.1 070894 1656C 93065134
<PAGE> 3
PAGE
----
2.20. Letters of Credit . . . . . . . . . . . . . . . . . . . 46
2.20.01. Issuance of Letters of Credit . . . . . . . . 46
2.20.02. Issuance Requests . . . . . . . . . . . . . . 46
2.20.03. Amendments . . . . . . . . . . . . . . . . . . 47
2.20.04. Letter of Credit Fees . . . . . . . . . . . . 48
2.20.05. Other Banks' Participations;
Reimbursements . . . . . . . . . . . . . . . 48
2.20.06. Disbursements . . . . . . . . . . . . . . . . 49
2.20.07. Reimbursement . . . . . . . . . . . . . . . . 50
2.20.08. Deemed Disbursements . . . . . . . . . . . . . 50
2.20.09. Nature of Reimbursement
Obligations . . . . . . . . . . . . . . . . . 51
ARTICLE III
CHANGE IN CIRCUMSTANCES
SECTION 3.01. Yield Protection . . . . . . . . . . . . . . . 53
3.02. Availability of Rate Options; Illegality . . . 54
3.03. Funding Indemnification . . . . . . . . . . . 55
3.04. Change of Lending Office, Replacement of
Bank, etc . . . . . . . . . . . . . . . . . . 55
ARTICLE IV
CONDITIONS PRECEDENT
SECTION 4.01. All Credit Extensions . . . . . . . . . . . . 57
4.01.01. Required Notice . . . . . . . . . . 57
4.01.02. No Default . . . . . . . . . . . . . 57
4.01.03. Representations and Warranties
Correct . . . . . . . . . . . . . . 57
4.01.04. No Litigation, etc . . . . . . . . . 57
4.01.05. Further Requests . . . . . . . . . . 58
4.01.06. Satisfactory Legal Form . . . . . . 58
4.02. Amendment Effective Time . . . . . . . . . . . 58
4.02.01. Resolutions, etc . . . . . . . . . . 59
4.02.02. No Materially Adverse Effect . . . . 59
4.02.03. Closing Fees and Expenses . . . . . 59
4.02.04. Notes . . . . . . . . . . . . . . . 59
4.02.05. Opinions of Counsel . . . . . . . . 59
4.02.06. Confirmation . . . . . . . . . . . . 60
4.02.07. Real Estate . . . . . . . . . . . . 60
4.02.08. Other Conditions . . . . . . . . . . 60
4.02.09. All Proceedings and Instruments
Satisfactory . . . . . . . . . . . 60
ii
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.01. Corporate Existence and Power . . . . . . . . 61
5.02. Corporate and Governmental Authorization;
Contravention . . . . . . . . . . . . . . . . 61
5.03. Binding Effect; Ranking . . . . . . . . . . . 61
5.04. Financial Statements . . . . . . . . . . . . . 62
5.05. Materially Adverse Effect . . . . . . . . . . 62
5.06. Insurance . . . . . . . . . . . . . . . . . . 63
5.07. Subsidiaries; Capitalization . . . . . . . . . 63
5.08. Litigation . . . . . . . . . . . . . . . . . . 63
5.09. Investment Company . . . . . . . . . . . . . . 64
5.10. Public Utility Company . . . . . . . . . . . . 64
5.11. Absence of Default . . . . . . . . . . . . . . 64
5.12. Disclosure . . . . . . . . . . . . . . . . . . 64
5.13. Regulations G, T, U and X . . . . . . . . . . 65
5.14. Securities Regulations . . . . . . . . . . . . 65
5.15. Burdensome Agreements . . . . . . . . . . . . 65
5.16. Taxes . . . . . . . . . . . . . . . . . . . . 65
5.17. Pension and Welfare Plans . . . . . . . . . . 66
5.18. Labor Controversies . . . . . . . . . . . . . 66
5.19. Ownership of Properties; Liens . . . . . . . . 66
5.20. Patents, Trademarks, etc . . . . . . . . . . . 67
5.21. Subordinated Debt, etc . . . . . . . . . . . . 67
5.22. The Collateral Documents . . . . . . . . . . . 67
5.23. Hazardous Materials . . . . . . . . . . . . . 68
ARTICLE VI
COVENANTS
SECTION 6.01. Certain Affirmative Covenants . . . . . . . 70
6.01.01. Financial Information, etc . . . . . 70
6.01.02. Maintenance of Corporate
Existence, etc . . . . . . . . . . . 72
6.01.03. Foreign Qualification . . . . . . . 73
6.01.04. Payment of Taxes, etc . . . . . . . 73
6.01.05. Maintenance of Property . . . . . . 73
6.01.06. Notice of Default, Litigation,
etc . . . . . . . . . . . . . . . . 74
6.01.07. Performance of Instruments . . . . . 75
6.01.08. Collateral Audits; Books and
Records . . . . . . . . . . . . . . 75
6.01.09. Rate Protection . . . . . . . . . . 76
6.01.10. Compliance with Laws, etc . . . . . 76
iii
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PAGE
----
6.01.11. Security . . . . . . . . . . . . . . . 76
6.01.12. Cash Management System . . . . . . . . 77
6.01.13. Annual Cleandown of Revolving
Loans . . . . . . . . . . . . . . . . 77
6.01.14. Letter to Independent Public
Accountant . . . . . . . . . . . . . 77
6.01.15. Insurance . . . . . . . . . . . . . 77
6.01.16 Insurance Survey . . . . . . . . . . . 79
6.01.17. Environmental Matters . . . . . . . . 79
6.01.18 Real Estate Matters . . . . . . . . . 79
6.02. Certain Negative Covenants . . . . . . . . . . . 80
6.02.01. Business Activities . . . . . . . . . 80
6.02.02. Debt . . . . . . . . . . . . . . . . . 80
6.02.03. Liens . . . . . . . . . . . . . . . . 81
6.02.04. Financial Condition . . . . . . . . . 83
6.02.05. Investments . . . . . . . . . . . . . 85
6.02.06. Restricted Payments, etc . . . . . . . 87
6.02.07. Consolidated Capital
Expenditures, etc . . . . . . . . . . 89
6.02.08. Guarantees . . . . . . . . . . . . . . 90
6.02.09. Lease Obligations . . . . . . . . . . 90
6.02.10. Take or Pay Contracts . . . . . . . . 91
6.02.11. Consolidation, Merger, Sale of
Assets, etc . . . . . . . . . . . . . 91
6.02.12. Modification, etc. of Certain
Agreements . . . . . . . . . . . . . 93
6.02.13. Transactions with Affiliates . . . . . 94
6.02.14. Negative Pledges; Subsidiary
Payments . . . . . . . . . . . . . . 94
6.02.15. Subordinated Debt Instruments . . . . 95
6.02.16. Inconsistent Agreements . . . . . . . 95
6.02.17. Fiscal Year . . . . . . . . . . . . . 95
6.02.18. Use of Proceeds . . . . . . . . . . . 95
6.02.19. Tax Sharing Agreements . . . . . . . . 95
6.02.20. FX Swap Agreements . . . . . . . . . . 95
ARTICLE VII
DEFAULTS
SECTION 7.01. Events of Default . . . . . . . . . . . . . . 95
7.02. Notice of Default . . . . . . . . . . . . . . . 98
ARTICLE VIII
AMENDMENTS AND REMEDIES
SECTION 8.01. Amendments . . . . . . . . . . . . . . . . . . 98
iv
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PAGE
----
8.02. Preservation of Rights . . . . . . . . . . 99
8.03. Collateral Matters . . . . . . . . . . . 99
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Survival of Representations . . . . . . 100
9.02. Governmental Regulation . . . . . . . . . 100
9.03. Taxes . . . . . . . . . . . . . . . . . . 100
9.04. Headings . . . . . . . . . . . . . . . . . 101
9.05. Entire Agreement . . . . . . . . . . . . . 101
9.06. Several Obligations . . . . . . . . . . . 101
9.07. Expenses; Indemnification . . . . . . . . 101
9.08. Numbers of Documents . . . . . . . . . . . 102
9.09. Severability of Provisions . . . . . . . . 102
9.10. Nonliability of Banks . . . . . . . . . . 103
9.11. CHOICE OF LAW . . . . . . . . . . . . . . 103
9.12. CONSENT TO JURISDICTION . . . . . . . . . 103
9.13. WAIVER OF JURY TRIAL . . . . . . . . . . . 103
9.14. Limitation on Managing Agent and Bank
Liability . . . . . . . . . . . . . . . . 104
9.15. Confidentiality . . . . . . . . . . . . . 104
ARTICLE X
THE MANAGING AGENTS
SECTION 10.01. Appointment . . . . . . . . . . . . . . 105
10.02. Powers . . . . . . . . . . . . . . . . . 105
10.03. General Immunity . . . . . . . . . . . . 105
10.04. No Responsibility for Loans,
Recitals, etc . . . . . . . . . . . . . . 105
10.05. Action on Instructions of Banks . . . . 106
10.06. Employment of Agents and Counsel . . . . 106
10.07. Reliance on Documents; Counsel . . . . . 106
10.08. Managing Agents' Reimbursement and
Indemnification . . . . . . . . . . . . . 106
10.09. Rights as a Lender . . . . . . . . . . . 107
10.10. Bank Credit Decision . . . . . . . . . . 107
10.11. Successor Managing Agent . . . . . . . . 107
ARTICLE XI
SETOFF; RATABLE PAYMENTS
SECTION 11.01. Setoff . . . . . . . . . . . . . . . . . 108
11.02. Ratable Payments . . . . . . . . . . . . 108
v
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PAGE
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ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
SECTION 12.01. Successors and Assigns . . . . . . . . . . 109
12.02. Assignments and Participations . . . . . . 109
12.03. Tax Treatment . . . . . . . . . . . . . . 114
ARTICLE XIII
NOTICES
SECTION 13.01. Giving Notice . . . . . . . . . . . . . . 114
13.02. Change of Address . . . . . . . . . . . . 114
ARTICLE XIV
COUNTERPARTS; REFERENCES
SECTION 14.01. Counterparts . . . . . . . . . . . . . . . 115
14.02. References . . . . . . . . . . . . . . . . 115
14.03. Confirmation . . . . . . . . . . . . . . . 115
Testimonium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
Execution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
SCHEDULES
- - ---------
Schedule I - Disclosure Schedule
Schedule 1.03 - Existing Revolving Credit Commitments,
Existing Revolving Loans and Existing
Term Loans under Existing Agreement
Schedule 2.01 - Banks' Applicable Percentages
Schedule 2.09(a) - Amortization of Term Advances
Schedule 2.20.01 - Issuers of Letters of Credit
Schedule 2.20.01(b) - Letters of Credit Outstanding
Schedule 6.01.01 - Reporting Package
EXHIBITS
- - --------
Exhibit A - Form of Global Term Note
Exhibit B - Form of Global Revolving Note
Exhibit C - Form of Swing Note
Exhibit D - Form of Borrowing Notice
Exhibit E-1 - Form of Issuance Request
vi
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<PAGE> 8
Exhibit E-2 - Form of Request for Letter of Credit
Amendment
Exhibit F - Form of Repayment Notice
Exhibit G - Form of Continuation/Conversion Notice
and Certificate
Exhibit H-1 - Form of Amendment to Subsidiary Guarantees
Exhibit H-2 - Form of Amendment to Contribution Agreement
Exhibit H-3 - Form of Amendment to Pledge Agreements
Exhibit H-4 - Form of Amendment to Security Agreements
Exhibit H-5 - Form of Assignment of and Amendment to
Trademark Security Agreement
Exhibit H-6 - Form of Assignment of and Amendment to
Patent Security Agreement
Exhibit H-7 - Form of Intercompany Note
Exhibit I - Form of Compliance Certificate
Exhibit J-1 - Form of Mortgage Amendment
Exhibit J-2 - Form of Mortgage
Exhibit K-1 - Form of Opinion of Calfee, Halter & Griswold
Exhibit K-2 - Form of Opinion of Kramer, Levin, Naftalis,
Nessen, Kamin & Frankel
Exhibit K-3 - Form of Opinion of Rosenberg &
Liebentritt, P.C.
Exhibit K-4 - Form of Opinion of Mayer, Brown & Platt
Exhibit L - Form of Assignment and Acceptance
Exhibit M - Form of Cash Management Letter
Exhibit N - Form of Intercompany Subordination Agreement
Exhibit O-1 - Subsidiary Guarantee
Exhibit O-2 - Contribution Agreement
Exhibit O-3 - Pledge Agreement
Exhibit O-4 - Security Agreement
Exhibit O-5 - Trademark Security Agreement
Exhibit O-6 - Patent Security Agreement
Exhibit P - Form of Insurance Endorsement
Exhibit Q - Form of Letter to Independent Public
Accountants
Exhibit R - Form of Confirmation
18163011.1 070894 1656C 93065134 vii
<PAGE> 9
RESTATED SECURED CREDIT AGREEMENT
THIS RESTATED SECURED CREDIT AGREEMENT, dated as of May 27, 1994, is
among SEALY CORPORATION (the "BORROWER"), a Delaware corporation, the banks and
other financial institutions whose signatures appear on the signature pages
hereof or which hereafter become parties hereto (collectively the "BANKS" and
individually a "BANK"), BANQUE PARIBAS, a French banking corporation
("PARIBAS"), CITICORP USA, INC., a Delaware corporation ("CITICORP"),
CONTINENTAL BANK N.A., a national banking association ("CONTINENTAL"), and
GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation ("GE CAPITAL"), as
managing agents for the Banks (collectively in such capacity, the "MANAGING
AGENTS"), and Continental, as administrative agent for the Banks (in such
capacity, the "ADMINISTRATIVE AGENT").
W I T N E S S E T H:
WHEREAS, pursuant to the Secured Credit Agreement dated as of May 7,
1993 (the "EXISTING AGREEMENT"), the Borrower borrowed and obtained $250,000,000
in term loans and commitments for up to $75,000,000 in revolving loans and
letters of credit;
WHEREAS, the Borrower, the Banks and the Managing Agents have agreed
to restate the Existing Agreement so as to, among other things, (a)
consolidate, and reduce the principal amount of, the term loans thereunder (the
"EXISTING TERM LOANS") so that the remaining outstanding Existing Term Loans
will be reevidenced in full by the Term Loans (as defined below) hereunder in
an aggregate amount of $150,000,000, (b) increase the amount of the revolving
credit facility to $125,000,000, (c) amend the pricing, certain covenants and
various other provisions of the Existing Agreement and (d) revise in certain
respects the composition of the lender group; and
WHEREAS, the Borrower, the Banks and the Managing Agents intend that
this Agreement and the Credit Documents executed in connection herewith not
effect a novation of the obligations of the Borrower under the Existing
Agreement and the "Credit Documents" (as defined in the Existing Agreement),
but merely a restatement and, where applicable, an amendment of the terms
governing such obligations;
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, and subject to the terms and conditions hereof, the Existing Agreement
is hereby restated in its entirety, and the parties hereto, intending to be
legally bound hereby, further agree as follows:
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ARTICLE I
DEFINITIONS AND INTERPRETATION; ASSIGNMENTS
SECTION 1.01. DEFINITIONS. The following terms, as used herein and
in the other Credit Documents (unless a clear contrary intention appears), have
the following meanings:
"Adjusted Net Worth" at any time, means all amounts which, in
accordance with GAAP, would be included under stockholders' equity on the
consolidated balance sheet of the Borrower and its Subsidiaries at such time;
PROVIDED that Adjusted Net Worth shall be calculated net of amounts carried on
the books of the Borrower and its Subsidiaries for
(i) any write-up in the book value of any assets of
the Borrower and its Subsidiaries resulting from a revaluation
thereof subsequent to May 7, 1993,
(ii) treasury stock, and
(iii) foreign currency translation adjustments.
"Administrative Agent" is defined in the PREAMBLE.
"Advance" means a group of Loans hereunder consisting of (i) the
aggregate amount of the Revolving Loans or Term Loans made (or converted or
continued) on the same Borrowing Date (or date of conversion or continuation),
at the same Rate Option and, in the case of Eurodollar Rate Loans, for the same
Eurodollar Interest Period or (ii) the aggregate amount of Swing Loans made by
Continental and Paribas to the Borrower on the same Borrowing Date.
"Affected Bank" is defined in SECTION 3.04(a).
"Affected Loan" is defined in SECTION 3.02(b).
"Affiliate" means (a) any Person that, directly or indirectly through
one or more intermediaries, controls the Borrower (a "CONTROLLING PERSON") or
(b) any Person (other than the Borrower) which is controlled by or is under
common control with a Controlling Person. As used herein, the term "control"
(and with correlative meaning "controlled" and "under common control") means
possession, direct or indirect, of the power to direct or cause the direction
of the management or policies of a Person, whether through the ownership of
voting securities, by contract or otherwise.
"Agents' Fee Letter" means the letter agreement, dated April 29, 1994,
between the Borrower and the Managing Agents.
18163011.1 070894 1656C 93065134 2
<PAGE> 11
"Agreement" means this Restated Secured Credit Agreement including
SCHEDULES and EXHIBITS.
"Amendment Effective Time" means the time when the conditions
precedent for the effectiveness of this Agreement specified in SECTION 4.02
shall have been met.
"Applicable Law" with respect to any Person or matter means any law,
rule, regulation, order, decree or other requirement having the force of law
relating to such Person or matter and, where applicable, any interpretation
thereof by any Person having jurisdiction with respect thereto or charged with
the administration or interpretation thereof.
"Applicable Percentage" means, with respect to a Term Loan Bank, its
Term Loan Percentage, and, with respect to a Revolving Credit Bank, its
Revolving Credit Percentage.
"Approval" means each and every approval, consent, filing and
registration by or with any Federal, state or other regulatory authority
necessary to authorize or permit the execution, delivery or performance by any
Person of this Agreement, any other Credit Document, or any other agreement or
instrument executed in connection with any of the foregoing or for the validity
or enforceability of any thereof against any Person.
"Assignment and Acceptance" is defined in SECTION 12.02(b)(v).
"Authorized Officer" means any of the president, any vice president or
the treasurer, acting singly, of the Borrower or, as applicable, any
Subsidiary.
"Bank" is defined in the PREAMBLE.
"Beneficial Owner" is used as defined in Rule 13d-3 promulgated by the
Commission under the Securities Exchange Act of 1934.
"Borrower" is defined in the PREAMBLE.
"Borrowing Date" means the date on which the Amendment Effective Time
occurs and any other date on which Revolving Loans or Swing Loans are made
hereunder.
"Borrowing Notice" is defined in SECTION 2.05(a).
"Budget" is defined in SECTION 6.01.01(f).
18163011.1 070894 1656C 93065134 3
<PAGE> 12
"Business Day" means (a) any day except a Saturday, Sunday or other
day on which commercial banks in Chicago or New York are authorized by law to
close and (b) relative to the date of (i) making or continuing any Loans as, or
converting any Loans from or into, Eurodollar Rate Loans, or (ii) making any
payment of principal or interest on any portion of the Loans being maintained
as Eurodollar Rate Loans, or (iii) giving any notice in connection with CLAUSE
(i) or (ii) above, any such banking business day on which dealings in U.S.
Dollars are carried on in the interbank eurodollar market.
"Canadian Subsidiary" means a Subsidiary of the Borrower incorporated
or organized under the federal laws of Canada or the laws of a province of
Canada or substantially all the business of which is carried on in Canada.
"Capitalized Lease" means any lease or similar arrangement of the
Borrower or any Subsidiary which is or should be classified on the Borrower's
consolidated balance sheet as a capitalized lease.
"Capitalized Lease Liabilities" means all monetary obligations of the
Borrower or any Subsidiary under any Capitalized Lease.
"Cash Management Letter" means a letter agreement, substantially in
the form of EXHIBIT M or otherwise reasonably satisfactory to the Administrative
Agent, among the Borrower, each applicable U.S. Subsidiary, the Administrative
Agent, and any financial institution which is providing cash collection
services or collection accounts to, or maintaining a lockbox for, the Borrower
or such Subsidiary.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980.
"Change in Control" means the occurrence of any of the following:
(a) the failure by Zell/Chilmark to be the Beneficial Owner
of issued and outstanding capital stock of the Borrower representing
at least 51%, on a fully diluted basis, of the voting power in
elections for directors of the Borrower, without regard to the
occurrence of any contingency; or
(b) a majority of the Board of Directors of the Borrower
ceases to be comprised of Continuing Directors; or
(c) any "Change of Control" as defined in the Senior
Subordinated Note Indenture, any other Subordinated Debt
18163011.1 070894 1656C 93065134 4
<PAGE> 13
Document or any Senior Debt Document, as in effect from time to time,
or any like event, the occurrence of which would obligate the Borrower
to purchase, redeem or repay any Subordinated Debt or Senior Debt
prior to its stated maturity.
"Citicorp" is defined in the PREAMBLE.
"Code" means the Internal Revenue Code of 1986.
"Collateral" means, relative to the Borrower or any of its
Subsidiaries, collateral under each Collateral Document to which the Borrower
or such Subsidiary is a party and in, under or to which the Borrower or such
Subsidiary has any right, title or interest.
"Collateral Documents" means, collectively, each Pledge Agreement,
each Security Agreement, each Patent Security Agreement, each Trademark
Security Agreement, each Mortgage, each Subsidiary Guarantee, the Contribution
Agreement, each Mortgage Amendment, and each other instrument or document
executed and delivered pursuant to or in connection with any thereof in
accordance with the terms of this Agreement or the Existing Agreement.
"Commercial Letter of Credit" means any Letter of Credit which is
drawable upon presentation of a sight draft and other documents evidencing the
sale or shipment of goods purchased by the Borrower or Subsidiary in the
ordinary course of business.
"Commission" means the United States Securities and Exchange
Commission.
"Commitment" of any Bank means its Term Loan Commitment and/or its
Revolving Credit Commitment, as the context may require or allow.
"Commitment Fee Rate" means a rate per annum equal to (i) initially,
0.375%, and (ii) commencing on the date on which the Borrower delivers (or, if
earlier, is required to deliver) its financial statements pursuant to SECTION
6.01.01 for the Fiscal Quarter ending May 31, 1994, the rate set forth below
opposite the applicable Consolidated Adjusted Leverage Ratio determined as of
the most recently ended Fiscal Quarter for which the Borrower has delivered
financial statements pursuant to CLAUSE (a) or (b) of SECTION 6.01.01, as the
case may be, as shown in a certificate delivered by the Borrower to the
Administrative Agent, IT BEING UNDERSTOOD that (i) such rate shall be effective
from and after the fifth Business Day after any such financial statements are
delivered pursuant to such SECTION 6.01.01 and (ii) if the Borrower fails to
deliver any such financial statements by the
18163011.1 070894 1656C 93065134 5
<PAGE> 14
date required by such SECTION 6.01.01, the Commitment Fee Rate shall be 0.5%
until such statements are delivered:
Consolidated Adjusted
Leverage Ratio Commitment Fee Rate
--------------------- -------------------
Greater than 4.00 0.500%
Greater than 3.00 0.375%
and less than or equal
to 4.00
3.00 or less 0.250%.
"Commitment Termination Event" means:
(a) automatically and without notice or further action, the
occurrence of any Default described in CLAUSE (h) or (i) of SECTION
7.0; or
(b) the occurrence and continuation of any other Event of
Default and the declaration of any Loans to be due and payable or the
termination of the Commitments of the Banks, in each case pursuant to
SECTION 7.01.
"Compliance Certificate" means a certificate duly executed by an
Authorized Officer of the Borrower, substantially in the form of EXHIBIT I
(with such changes thereto as may be agreed upon from time to time by the
Managing Agents and the Borrower for purposes of monitoring the compliance of
the Borrower and its Subsidiaries herewith).
"Confirmation" means the Confirmation of the Borrower and each
Subsidiary party to any Credit Document, substantially in the form of EXHIBIT
R.
"Consolidated Adjusted Leverage Ratio" means, as of the close of any
Fiscal Quarter, the ratio of
(a) Consolidated Funded Debt at the computation date
TO
(b) the aggregate amount of Consolidated Cash Flow for the
period comprising the four consecutive Fiscal Quarters ended on the
computation date MINUS Consolidated Capital Expenditures for such
period of four consecutive Fiscal Quarters.
"Consolidated Capital Expenditures" means, for any period, without
duplication, the sum of
18163011.1 070894 1656C 93065134 6
<PAGE> 15
(a) the gross amount of additions (excluding repair and
maintenance and environmental costs and additions pursuant to
Capitalized Leases) during such period to property, plant and
equipment of the Borrower and its Subsidiaries; PLUS
(b) the aggregate amount of Capitalized Lease Liabilities
incurred in such period (to the extent not included as a Consolidated
Capital Expenditure in any prior period) by the Borrower and its
Subsidiaries (excluding the portion thereof, if any, allocable to
Consolidated Interest Expense);
PROVIDED that no such amounts shall include additions resulting from
Investments accounted for under SECTION 6.02.05(e) or (h).
With respect to the purchase of any asset that is subsequently sold
within the 12-month period following such purchase in accordance with CLAUSE
(C) of the first proviso to the definition of "Net Disposition Proceeds",
Consolidated Capital Expenditures shall not include such purchase, but shall
include any Capitalized Lease Liability resulting from the subsequent sale and
leaseback transaction; PROVIDED that, if the sale price of such asset in such
sale and leaseback transaction is less than the purchase price therefor,
Consolidated Capital Expenditures shall include the excess of such purchase
price over such sale price.
"Consolidated Cash Flow" means, for a period ending at the close of
any Fiscal Quarter, the total (without duplication) of
(a) Consolidated Net Income for such period,
PLUS
(b) to the extent deducted in determining Consolidated Net
Income for such period, the sum of all expenses of the Borrower and
its Subsidiaries, on a consolidated basis, for such period in respect
of
(i) depreciation,
(ii) amortization of Intangible Assets,
(iii) all Taxes with respect to the income of the
Borrower and its Subsidiaries,
(iv) Consolidated Interest Expense, and
18163011.1 070894 1656C 93065134 7
<PAGE> 16
(v) any other non-cash charges (including any
charges taken with respect to the Performance Share Plan),
MINUS
(c) any non-cash income with respect to the Performance Share
Plan to the extent included in determining Consolidated Net Income for
such period,
MINUS
(d) to the extent included in Consolidated Net Income for
such period, the income of any Subsidiary to the extent that the
declaration or payment of dividends or similar distributions by such
Subsidiary from such income is not at the time permitted by the terms
of its charter or any judgment, decree, order, statute, rule or
regulation which is binding in such Subsidiary.
"Consolidated Current Assets" means, as of the close of any Fiscal
Quarter, all amounts (excluding cash and Temporary Cash Investments) which
would be included as current assets on a consolidated balance sheet of the
Borrower and its Subsidiaries at such time.
"Consolidated Current Liabilities" means, as of the close of any
Fiscal Quarter, all amounts which would be included as current liabilities on a
consolidated balance sheet of the Borrower and its Subsidiaries at such time
(excluding current maturities of long-term Debt).
"Consolidated Current Ratio" means, as of the close of any Fiscal
Quarter, the ratio at such time of (a) Consolidated Current Assets to (b)
Consolidated Current Liabilities.
"Consolidated Fixed Charge Coverage Ratio" means, as of the close of
any Fiscal Quarter, the ratio computed for the period comprised of the four
consecutive Fiscal Quarters ending on the computation date, of
(a) the amount equal to
(i) Consolidated Cash Flow for such period, MINUS
(ii) Taxes with respect to the income of the
Borrower and its Subsidiaries accrued in
such period, MINUS
(iii) Consolidated Capital Expenditures for such
period,
18163011.1 070894 1656C 93065134 8
<PAGE> 17
TO
(b) the amount equal to
(i) Consolidated Interest Expense for such
period, MINUS
(ii) any portion of Consolidated Interest Expense
with respect to such period not required to
be paid in cash in such period, PLUS
(iii) the amount of the aggregate scheduled
principal installments of (A) the Term Loans
pursuant to SECTIONS 2.09(a) and (B) all
other Debt of the Borrower or any Subsidiary,
in each case due by the Borrower or such
Subsidiary during such period.
"Consolidated Funded Debt" means, as of the close of any Fiscal
Quarter, all amounts of Debt of the Borrower and its Subsidiaries included
under (without duplication) CLAUSES (a), (b), (c) (in respect only of bankers'
acceptances), (d), (e) and (i) of the definition of Debt.
"Consolidated Interest Coverage Ratio" means, as of the close of any
Fiscal Quarter, the ratio computed for the period comprising the four
consecutive Fiscal Quarters ended on the computation date of
(a) Consolidated Cash Flow for such period to (b) Consolidated Interest Expense
for such period.
"Consolidated Interest Expense" means, for any Fiscal Quarter, the
aggregate net interest expense of the Borrower and its Subsidiaries for such
Fiscal Quarter, including all commissions, discounts and other fees and charges
incurred in connection with commitment fees owed with respect to the Unused
Total Revolving Credit Commitment Amount, net costs or net benefits under Rate
Swap Agreements and the portion of any interest expense payable with respect to
Capitalized Lease Liabilities.
"Consolidated Leverage Ratio" means, as of the close of any Fiscal
Quarter, the ratio of
(a) Consolidated Funded Debt at the computation date
TO
(b) the aggregate amount of Consolidated Cash Flow for
the period of four consecutive Fiscal Quarters ended on the
computation date.
18163011.1 070894 1656C 93065134 9
<PAGE> 18
"Consolidated Net Income" means, for any Fiscal Quarter, all amounts
which would be included as net earnings on the consolidated statements of
earnings of the Borrower and its Subsidiaries at such time; PROVIDED that in
any event:
(a) no such amounts shall include any gain or loss arising
from the sale or disposition of any assets (other than (i) inventory
sold in the ordinary course of business or (ii) any gain or loss
arising from the sale or disposition of obsolete assets in the
ordinary course of business not to exceed in the aggregate $2,000,000
in any Fiscal Year) or from the write-up of assets or any other
extraordinary gains; and
(b) no such amounts determined with respect to any Person
shall be included for any such period during which it was not at all
times a Subsidiary, except that amounts actually received from any
such Person may be included.
"Consolidated Working Capital" means, on any date, the excess of
(a) Consolidated Current Assets OVER (b) Consolidated Current Liabilities.
"Continental" is defined in the PREAMBLE.
"Continuation/Conversion Notice" means a notice of continuation or
conversion and certificate duly executed by an Authorized Officer of the
Borrower, substantially in the form of EXHIBIT G (with such changes thereto as
may be agreed upon from time to time by the Borrower and the Administrative
Agent).
"Continuing Director" means a director who either (a) was a member of
the Board of Directors of the Borrower prior to the Amendment Effective Time
and continuously thereafter or (b) after the Amendment Effective Time became a
director of the Borrower and whose election or nomination for election
subsequent to such date was approved by (i) a vote of the majority of the
Continuing Directors then on the Board of Directors of the Borrower or (ii)
Zell/Chilmark.
"Contractual Obligation" means, relative to any Person, any provision
of any security issued by such Person or of any instrument or undertaking to
which such Person is a party or by which it or any of its property is bound.
"Contribution Agreement" means the Contribution Agreement among the
Subsidiaries executing Subsidiary Guarantees, a copy of which is attached as
EXHIBIT O-2, as amended concurrently with the effectiveness of the Existing
Agreement by an amendment substantially in the form of EXHIBIT H-2.
18163011.1 070894 1656C 93065134 10
<PAGE> 19
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower, are treated as a single
employer under section 414 of the Code or section 4001 of ERISA.
"Corporate Base Rate" means a rate per annum equal to the reference
rate of interest announced by Continental from time to time, changing when and
as said reference rate changes.
"Credit Documents" means this Agreement, the Notes, the Letters of
Credit, the Collateral Documents, the Intercompany Notes, the Intercompany
Subordination Agreement, each Borrowing Notice, each Issuance Request, each
Letter of Credit Amendment Request, each Rate Swap Agreement or FX Swap
Agreement with any Bank or Lending Installation thereof, the Contribution
Agreement, each Cash Management Letter, the Confirmation and each other
instrument, agreement, certificate, financing statement, stock power and notice
executed and/or delivered by the Borrower or any Subsidiary pursuant hereto or
thereto or otherwise furnished by or on behalf of the Borrower or any
Subsidiary to any Managing Agent or any Bank in connection herewith or
therewith.
"Credit Extension" means any Term Loan, Revolving Loan, Swing Loan,
Letter of Credit or Reimbursement Obligation.
"Debt" of any Person at any date means, without duplication, (a) the
principal of and premium (if any) in respect of (i) all obligations of such
Person for borrowed money and (ii) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (b) all obligations of
such Person for the payment of money issued as payment in consideration of the
purchase by such Person of the stock or substantially all of the assets of
other Persons or in a merger or consolidation to which such Person was a party,
(c) all obligations, contingent or otherwise, relative to the face amount of
all letters of credit, whether or not drawn, and banker's acceptances issued
for the account of such Person and similar credit transactions, (d) all
obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable and other like current liabilities
arising in the ordinary course of business, (e) all obligations of such Person
as lessee under Capitalized Leases, (f) net obligations under interest rate or
foreign exchange swap, exchange, cap or similar arrangements, (g) any dividends
declared but not yet paid on any capital stock of such Person, (h) all
obligations of the kind described in CLAUSES (a) through (g) above secured by a
Lien on any asset owned or being purchased by such Person, whether or not such
Debt is assumed by such Person, and (i) all obligations of the kind described
in CLAUSES (a) through (g) above Guaranteed by such Person.
18163011.1 070894 1656C 93065134 11
<PAGE> 20
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived as permitted or provided hereby, become an Event or
Default.
"Default Rate" is defined in SECTION 2.13(a).
"Departing Bank" means an Existing Bank which does not have a
Revolving Credit Commitment or a Term Loan Commitment under this Agreement.
"Disbursement" is defined in SECTION 2.20.06.
"Disbursement Date" is defined in SECTION 2.20.06.
"Disclosure Schedule" means the schedule attached hereto as SCHEDULE I.
"Dollar" and the sign "$" mean lawful money of the United States of
America.
"Eligible Assignees" is defined in SECTION 12.02(a).
"Employment Incentive Agreement" means any employment agreement
between the Borrower or any Subsidiary and a senior executive officer of the
Borrower or such Subsidiary providing for, among other compensation, the grant
to such officer of shares of capital stock of the Borrower.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"Eurodollar Base Rate" means, relative to a Eurodollar Rate Advance
for the relevant Eurodollar Interest Period, the rate determined by the
Administrative Agent to be the arithmetic average of the respective rates
reported to the Administrative Agent by each Reference Bank as the rate at
which deposits in U.S. Dollars in immediately available funds are offered to
such Reference Bank by major banks in the interbank eurodollar market at
approximately 11 a.m., New York time, 2 Business Days prior to the first day of
such Eurodollar Interest Period, in the approximate amount of such Reference
Bank's relevant Eurodollar Rate Loan and having a maturity approximately equal
to such Eurodollar Rate Interest Period. If any Reference Bank fails to
provide such quotation to the Administrative Agent, then the Administrative
Agent shall determine the Eurodollar Base Rate on the basis of the quotations
of the remaining Reference Bank(s).
"Eurodollar Interest Period" means, relative to a Eurodollar Rate
Advance, a period of one, two, three or, if available, six months commencing on
a Business Day, each selected by the
18163011.1 070894 1656C 93065134 12
<PAGE> 21
Borrower pursuant to this Agreement. Such Eurodollar Interest Period shall end
on the day that is one, two, three or six months after, and which corresponds
numerically to, the beginning day of such Eurodollar Interest Period; PROVIDED
that if there is no such numerically corresponding day in such ending month,
such Eurodollar Interest Period shall end on the last Business Day of such
ending month. If a Eurodollar Interest Period would otherwise end on a day
which is not a Business Day, such Eurodollar Interest Period shall end on the
immediately succeeding Business Day; PROVIDED that if said immediately
succeeding Business Day falls in a new month, such Eurodollar Interest Period
shall end on the immediately preceding Business Day. A Eurodollar Interest
Period shall not be scheduled to end after the applicable Final Maturity Date.
"Eurodollar Rate" means, relative to a Eurodollar Rate Advance for the
relevant Eurodollar Interest Period, the sum of
(a) the quotient (rounded upwards, if necessary, to the next
1/16 of 1%) of (i) the Eurodollar Base Rate applicable to that
Eurodollar Interest Period, DIVIDED by (ii) one minus the Reserve
Requirement (expressed as a decimal) applicable to that Eurodollar
Interest Period, PLUS
(b) the then-applicable Margin.
"Eurodollar Rate Advance" means an Advance which bears interest at a
Eurodollar Rate.
"Eurodollar Rate Loan" means a Loan which bears interest at a
Eurodollar Rate.
"Event of Default" is defined in SECTION 7.01.
"Excluded Taxes" is defined in the definition of "Taxes".
"Exemption Agreement" is defined in SECTION 2.19(b).
"Exemption Representation" is defined in SECTION 2.19(c).
"Existing Agreement" is defined in the RECITALS.
"Existing Bank" means a "Bank" under and as defined in the Existing
Agreement immediately prior to the Amendment Effective Time.
"Existing Revolving Credit Commitment" means a "Revolving Credit
Commitment" under and as defined in the Existing Agreement immediately prior to
the Amendment Effective Time.
18163011.1 070894 1656C 93065134 13
<PAGE> 22
"Existing Revolving Loan" means a "Revolving Loan" under and as
defined in the Existing Agreement immediately prior to the Amendment Effective
Time.
"Existing Revolving Credit Percentage" means, as to any Existing Bank,
its "Revolving Credit Percentage" under and as defined in the Existing
Agreement immediately prior to the Amendment Effective Time.
"Existing Term Loans" is defined in the RECITALS.
"Federal Funds Rate" means, for any date, the weighted average of the
rates on overnight Federal Funds transactions, with members of the Federal
Reserve System only, arranged by Federal Funds brokers applicable to Federal
Funds transactions on that date. The Federal Funds Rate shall be determined by
the Administrative Agent on the basis of reports by Federal Funds brokers to,
and published daily by, the Federal Reserve Bank of New York in the Composite
Closing Quotations for U.S. Government Securities. If such publication is
unavailable or the Federal Funds Rate is not set forth therein, the Federal
Funds Rate shall be determined on the basis of any other source reasonably
selected by the Administrative Agent. In the case of Saturday, Sunday or legal
holiday, the Federal Funds Rate shall be the rate applicable to Federal Funds
transactions on the immediately preceding day for which the Federal Funds Rate
is reported.
"Final Maturity Date" means
(a) with respect to the Term Loans, November 30, 1999; or
(b) with respect to the Revolving Credit Commitment and the
Revolving Credits, November 30, 1999; or
in each case, such earlier date when such Loan or Revolving Credit (or any
portion thereof) shall become due and payable in accordance with the terms of
this Agreement, including by acceleration pursuant to SECTION 7.01.
"Financial Standby Letter of Credit" means any Standby Letter of
Credit which any Bank is required under Applicable Law (including under 12 CFR
Part 3, Appendix A, Section 3, clause (b)) to classify as a financial letter of
credit with respect to its participation therein pursuant to this Agreement.
"Fiscal Quarter" means each of the four consecutive quarterly periods
collectively forming a Fiscal Year.
"Fiscal Year" means any period of four consecutive Fiscal Quarters
ending on November 30.
18163011.1 070894 1656C 93065134 14
<PAGE> 23
"Floating Rate" means a per annum interest rate which is equal to the
sum of (a) the greater at any time of (i) the Corporate Base Rate and (ii) the
sum of the Federal Funds Rate plus 0.25% PLUS (b) the then-applicable Margin,
such sum changing when and as the Corporate Base Rate, the Federal Funds Rate
and/or the Margin changes.
"Floating Rate Advance" means an Advance which bears interest at the
Floating Rate.
"Floating Rate Loan" means a Loan which bears interest at the Floating
Rate.
"FX Swap Agreement" means any foreign currency swap, exchange or
similar arrangement intended to protect the Borrower or any Subsidiary against
fluctuation in foreign currency exchange rates entered into from time to time
by the Borrower or a Subsidiary and a Swap Party.
"GAAP" means generally accepted accounting principles as set forth in
the opinions and pronouncements of the Commission and the Accounting Principles
Board of the American Institute of Certified Public Accountants and the
statements and pronouncements of the Financial Accounting Standards Board and
in such other statements and pronouncements by such other Person as may be
approved by a significant segment of the accounting profession and concurred in
by the independent certified public accountants certifying such audited
financial statement.
"GE Capital" is defined in the PREAMBLE.
"Global Revolving Note" is defined in SECTION 2.08(b).
"Global Term Note" is defined in SECTION 2.08(a).
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person, including any obligation, direct or indirect,
contingent or otherwise, of such Person (a) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Debt or other obligation
(whether arising by virtue of partnership arrangements, by agreement to
keep-well, to purchase assets, goods, securities or services, to take-or-pay,
or to maintain financial statement conditions or otherwise) or (b) entered into
for the purpose of assuring in any other manner the obligee of such Debt or
other obligation of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part); PROVIDED that the term Guarantee
shall not include endorsements for collection or deposit in the ordinary course
of business. The term "Guarantee" used as a verb has a corresponding meaning.
18163011.1 070894 1656C 93065134 15
<PAGE> 24
"Hazardous Materials" is defined in SECTION 5.23(a).
"Impermissible Qualification" means, relative to the opinion or
certification of any Independent Public Accountant as to any financial
statement of the Borrower or any of its Affiliates, any qualification or
exception to such opinion or certification:
(a) which is of a "going concern" or similar nature;
(b) which relates to the limited scope of examination of
matters relevant to such financial statement; or
(c) which relates to the treatment or classification of any
item in such financial statement and which, as a condition to its
removal, would require an adjustment to such item the effect of which
would be to cause the Borrower to be in default of any of its
obligations under SECTION 6.02.04.
"Indemnified Party" is defined in SECTION 9.07.
"Independent Public Accountant" means any of the six largest public
accounting firms in the United States, or any other public accounting firm of
recognized national standing selected by the Borrower and consented to by the
Required Banks.
"Initial Financial Projections" means projections of the Borrower's
financial performance on an annual basis for Fiscal Years 1994 through 1999,
prepared by Borrower's management, as previously delivered to the Managing
Agents.
"Insurance Report" means the Sealy Corporation and Subsidiaries -
Policy Register/Stewardship Report dated January 1994 prepared by Rollins Hudig
Hall of New York, Inc. describing the insurance coverage of the Borrower and
its Subsidiaries.
"Intangible Assets" of any Person means:
(a) all licenses, franchises, patents, patent applications,
trademarks, customer lists and other intellectual property;
(b) goodwill;
(c) capitalized financing and transaction costs; and
(d) other like intangibles,
each as shown on a balance sheet of such Person.
18163011.1 070894 1656C 93065134 16
<PAGE> 25
"Intercompany Note" means a promissory note, substantially in the form
of EXHIBIT H-7.
"Intercompany Subordination Agreement" means an agreement among the
Borrower and its Subsidiaries substantially in the form of EXHIBIT N.
"Investment" means, relative to any investment of the Borrower or any
Subsidiary,
(a) any loan, advance or other extension of credit made by it
to any other Person (excluding (i) reasonable commission, travel,
salary, relocation, and similar advances or loans to officers and
employees made in the ordinary course of business and (ii) reasonable
royalties or management fees arising in the ordinary course of
business owing to the Borrower or a Subsidiary);
(b) any Guarantee made by the Borrower or such Subsidiary; and
(c) any capital contribution by the Borrower or such
Subsidiary to, or purchase of stock or other securities or partnership
interests by the Borrower or such Subsidiary in, any other Person, or
any other investment evidencing an ownership or similar interest of
the Borrower or such Subsidiary in any other Person;
and the amount of any Investment shall be the original principal or capital
amount thereof LESS
(i) all cash returns of principal thereof or equity
thereon, and
(ii) in the case of any Guarantee, any reduction in
the aggregate amount of liability under such Guarantee to the
extent that such reduction is made strictly in accordance with
the terms of such Guarantee (and, in each case, without
adjustment by reason of the financial condition of such other
Person);
and the amount of such Investment shall, if made by the transfer or exchange of
property other than cash, be deemed to have been made in an original principal
or capital amount equal to the fair market value of such property.
"Investment/Overseas CapEx Limit" means $50,000,000; PROVIDED that not
more than $30,000,000 of such amount may be used by the Borrower or any
Subsidiary to make Investments in a Person, or by the Borrower or any
Subsidiary to make acquisitions of all or substantially all of the assets of a
Person or of a
18163011.1 070894 1656C 93065134 17
<PAGE> 26
business unit of a Person, or by any Overseas Subsidiary to make Consolidated
Capital Expenditures, in each such case (a) which Person, acquiring Subsidiary
or Overseas Subsidiary (as the case may be) is not consolidated with the
Borrower for financial reporting purposes or (b) less than 80% of the capital
stock or other equity interests of which are owned and controlled, directly or
indirectly, by the Borrower (or will be so owned and controlled after giving
effect to such Investment or acquisition).
"Issuance Request" is defined in SECTION 2.20.02.
"Issuer" means any Bank listed from time to time on SCHEDULE 2.20.01
(as such SCHEDULE may be amended or supplemented from time to time with the
consent of the Managing Agents); and "Issuer" means, with respect to any Letter
of Credit, the issuer of such Letter of Credit.
"Joint Venture" means a partnership or other entity in which the
Borrower or a Subsidiary owns shares of capital stock or otherwise has an
ownership interest but which is not consolidated with the Borrower and its
Subsidiaries for financial reporting purposes; PROVIDED that such entity
engages in the same historic business as the Borrower and such activities as
may be incidental or related thereto or closely-related extensions thereof.
"L/C Fee Rate" means (i) initially, 1.25% in the case of each
Financial Standby Letter of Credit, 1% in the case of each Non-Financial
Standby Letter of Credit and 1% in the case of each Commercial Letter of
Credit, and (ii) commencing on the date on which the Borrower delivers (or, if
earlier, is required to deliver) its financial statements pursuant to SECTION
6.01.01 for the Fiscal Quarter ending May 31, 1994, the rate set forth below
for the applicable type of Letter of Credit opposite the applicable
Consolidated Adjusted Leverage Ratio determined as of the most recently ended
Fiscal Quarter for which the Borrower has delivered financial statements
pursuant to CLAUSE (a) or (b) of SECTION 6.01.01, as the case may be, as shown
in a certificate delivered by the Borrower to the Administrative Agent, IT
BEING UNDERSTOOD that (i) the applicable rate shall be effective on the fifth
Business Day after any such financial statements are delivered pursuant to such
SECTION 6.01.01 and (ii) if the Borrower fails to deliver any such financial
statements by the date required by such SECTION 6.01.01, the applicable rate
shall be the highest rate shown below for the applicable type of Letter of
Credit until such statements are delivered:
18163011.1 070894 1656C 93065134 18
<PAGE> 27
<TABLE>
<CAPTION>
Financial Non-Financial
Standby Standby Commercial
Consolidated Adjusted Letter Letter Letter
Leverage Ratio of Credit of Credit of Credit
--------------------- --------- ------------- ----------
<S> <C> <C> <C>
Greater than 4.00 1.50% 1.25% 1.00%
Greater than 3.50 1.25% 1.00% 1.00%
and less than or
equal to 4.00
Greater than 3.00 1.00% 1.00% 1.00%
and less than or
equal to 3.50
3.00 or less 0.75% 0.75% 0.75%.
</TABLE>
"Lending Installation" means any office, branch, Subsidiary or other
affiliate of any Bank or the Administrative Agent.
"Letter of Credit" means any Financial Standby Letter of Credit,
Non-Financial Standby Letter of Credit and/or Commercial Letter of Credit, as
the context may require or allow.
"Letter of Credit Amendment Request" is defined in SECTION 2.20.03.
"Lien" means, relative to any asset, any mortgage, lien (statutory or
otherwise), pledge, charge, security interest, assignment, deposit arrangement,
priority, encumbrance or preferential arrangement of any kind in respect of
such asset. For the purposes of this Agreement, the Borrower or any Subsidiary
shall be deemed to own subject to a Lien any asset which it has acquired or
holds subject to the interest of a vendor or lessor under any conditional sale
agreement, Capitalized Lease or other title retention agreement relating to
such asset.
"Loan" means a Term Loan, Revolving Loan and/or Swing Loan, as the
context may require or allow.
"Managing Agents" is defined in the preamble and, in the case of
Continental, includes Continental in its capacity as Administrative Agent.
"Margin" means, for purposes of determining the Eurodollar Rate for
any Eurodollar Interest Period or the Floating Rate, as applicable, (i)
initially, 1.25% for purposes of the Eurodollar Rate and zero for purposes of
the Floating Rate, and (ii) commencing on the date on which the Borrower
delivers (or, if earlier, is required to deliver) its financial statements
pursuant to SECTION 6.01.01 for the Fiscal Quarter ending May 31, 1994, the
18163011.1 070894 1656C 93065134 19
<PAGE> 28
applicable rate set forth below opposite the applicable Consolidated Adjusted
Leverage Ratio determined on the first day of such Eurodollar Interest Period
(or from time to time in the case of the Floating Rate) as of the most recently
ended Fiscal Quarter for which the Borrower has delivered financial statements
pursuant to CLAUSE (a) or (b) of SECTION 6.01.01, as the case may be, as shown
in a certificate delivered by the Borrower to the Administrative Agent, IT
BEING UNDERSTOOD that (i) the applicable rate shall be effective as of the
first day of any Eurodollar Interest Period commencing on or after (or, in the
case of the Floating Rate, on) the fifth Business Day after any such financial
statements are delivered pursuant to such SECTION 6.01.01 and (ii) if the
Borrower fails to deliver any such financial statements by the date required by
such SECTION 6.01.01, the applicable rate shall be 1.50% in the case of the
Eurodollar Rate, or 0.25% in the case of the Floating Rate, as the case may be,
until such statements are delivered (or such higher rate as may be required
from time to time by SECTION 2.13):
<TABLE>
<CAPTION>
Consolidated Adjusted Margin for Margin for
Leverage Ratio Eurodollar Rate Floating Rate
--------------------- --------------- -------------
<S> <C> <C>
Greater than 4.00 1.50% 0.25%
Greater than 3.50 1.25% 0%
and less than or
equal to 4.00
Greater than 3.00 1.00% 0%
and less than or
equal to 3.50
3.00 or less 0.75% 0%.
</TABLE>
"Materially Adverse Effect" means, relative to any occurrence of
whatever nature (including any adverse determination in any litigation,
arbitration, or governmental investigation or proceeding), a materially adverse
effect on:
(a) the consolidated business, assets, revenues, financial
condition, operations or prospects of the Borrower and its
Subsidiaries, taken as a whole; or
(b) the ability of the Borrower or, as applicable, any
Affiliate to perform any of its payment or other material obligations
under this Agreement, the Notes or any other Credit Document to which
it is a party.
"Mortgage" means each real estate mortgage or deed of trust executed
by the Borrower or a Subsidiary, in substantially the form
18163011.1 070894 1656C 93065134 20
<PAGE> 29
of EXHIBIT R-1 or R-2 to the Original Amended Credit Agreement or EXHIBIT J-2
hereto.
"Mortgage Amendment" means each amendment to each Mortgage previously
executed by the Borrower or a Subsidiary, in substantially the form of EXHIBIT
J-1.
"N.A.S.D." means the National Association of Securities Dealers.
"Net Debt Proceeds" means, relative to the sale or incurrence by the
Borrower or any Subsidiary of any Permitted Senior Debt, the excess of
(a) the gross cash proceeds received by the Borrower or any
Subsidiary from such sale or incurrence
OVER
(b) all necessary or incidental reasonable fees and expenses
with respect to underwriting commissions, private placement fees,
legal, investment banking, and accounting fees and disbursements,
printing expenses, and any governmental or N.A.S.D. fees incurred (or
reasonably expected to be incurred) in connection with such sale or
incurrence which are not payable to Affiliates of the Borrower unless
such fees and disbursements are permitted by SECTION 6.02.13.
"Net Disposition Proceeds" means the gross cash proceeds received by
the Borrower or any Subsidiary from the sale or other disposition of any of
their respective assets (excluding inventory sold in the ordinary course of
business but including condemnation awards, casualty loss insurance recoveries
and other similar payments received in respect of assets that are no longer
fully useful to the extent such assets are not replaced or repaired in
accordance with the applicable Collateral Documents) LESS (i) necessary or
incidental reasonable selling expenses incurred in connection therewith, (ii)
good faith estimated taxes (if any) payable as a result thereof, and (iii)
amounts necessary to retire Debt secured by any Liens permitted under SECTION
6.02.03 which encumber the subject assets; PROVIDED that Net Disposition
Proceeds shall not include (A) any promissory note received upon the sale of
Woodstuff Manufacturing, Inc. until proceeds thereof are actually received by
the Borrower or any Subsidiary, (B) the proceeds of any Restructure
Investments, or (C) the proceeds of any sale and leaseback of real property or
equipment expressly permitted pursuant to and in accordance with SECTION
6.02.11(g) SO LONG AS such proceeds of a sale and leaseback transaction
represent a return or reimbursement to the Borrower or any Subsidiary, within
the same 12-month period as the purchase of such real property or equipment, of
any original purchase price for such real property or
18163011.1 070894 1656C 93065134 21
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equipment; IT BEING UNDERSTOOD that if the Borrower or such Subsidiary receives
proceeds from such sale in excess of the purchase price thereof, such excess
shall constitute Net Disposition Proceeds.
"Non-Financial Standby Letter of Credit" means any Standby Letter of
Credit that is not a Financial Standby Letter of Credit.
"Non-Pro Rata Assignment" is defined in SECTION 12.02(b)(i).
"Note" means the Global Term Note, the Global Revolving Note and/or
the Swing Note, as the context may require or allow, and includes any note
issued pursuant to SECTION 12.02(h) to evidence the Loans of any Bank.
"Obligations" means all unpaid principal of and accrued and unpaid
interest on the Notes, all accrued and unpaid fees and expenses, the stated
amount of any outstanding Letter of Credit, all Reimbursement Obligations, and
all other obligations of the Borrower or, as applicable, any Affiliate to the
Banks or to any Bank, any Managing Agent or any Issuer arising under or in
connection with the Credit Documents.
"Organic Document" means, relative to any Person, its certificate of
incorporation, its by-laws, and all shareholder agreements, voting trusts, and
similar arrangements applicable to any of its authorized shares of capital
stock or, as applicable, its partnership agreement and certificate of
partnership.
"Original Amended Credit Agreement" has the meaning assigned thereto
in the Existing Agreement.
"Overseas Capital Expenditures" means, for any period, the portion of
Consolidated Capital Expenditures in such period made by all Overseas
Subsidiaries.
"Overseas Subsidiary" means a Subsidiary of the Borrower which is not
a U.S. Subsidiary or a Canadian Subsidiary.
"Paribas" is defined in the PREAMBLE.
"Patent Security Agreement" means each security agreement, in
substantially the form of EXHIBIT O-6, executed and delivered by certain
Subsidiaries, as amended (if applicable) concurrently with the effectiveness of
the Existing Agreement by an amendment substantially in the form of EXHIBIT
H-6.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
18163011.1 070894 1656C 93065134 22
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"Pension Plan" means a "pension plan", as such term is defined in
section 3(2) of ERISA, which is subject to title IV of ERISA and to which the
Borrower, either directly or as a member of a Controlled Group, may have any
liability, including any liability by reason of having been a substantial
employer within the meaning of section 4063 of ERISA at any time during the
preceding five years, or by reason of being deemed to be a contributing sponsor
under section 4069 of ERISA.
"Performance Share Plan" means the Sealy Corporation Performance Share
Plan dated January 11, 1993, effective April 1, 1992, executed by the Borrower,
whereby the Borrower provides for certain unfunded long-term incentive
compensation for key employees of the Borrower and its Subsidiaries in the form
of performance shares convertible into capital stock of the Borrower.
"Permitted Senior Debt" is defined in SECTION 6.02.02(j).
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Pledge Agreement" means each pledge agreement, substantially in the
form of EXHIBIT O-3, executed and delivered by the Borrower or certain
Subsidiaries, as amended (if applicable) concurrently with the effectiveness of
the Existing Agreement by an amendment substantially in the form of EXHIBIT
H-3.
"Quarterly Payment Date" means the last Business Day of each Fiscal
Quarter of each year, subject to the terms of SECTION 2.12.
"Rate Option" means the Eurodollar Rate or the Floating Rate as the
context may require or allow.
"Rate Swap Agreement" means any interest rate swap, exchange, cap or
similar interest rate protection arrangement (including a firm option to
purchase such protection) entered into from time to time by the Borrower and a
Swap Party in connection with Debt incurred by the Borrower under this
Agreement.
"Recipient Taxes" is defined in SECTION 2.19(a).
"Reference Banks" means Paribas, Continental and Citibank, N.A., a
national banking association.
"Register" is defined in SECTION 12.02(d).
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System and shall include any successor or other regulation or
official interpretation of said Board of Governors
18163011.1 070894 1656C 93065134 23
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relating to reserve requirements applicable to member banks of the Federal
Reserve System.
"Regulation G, T, U or X" means Regulation G, T, U or X, respectively,
of the Board of Governors of the Federal Reserve System.
"Reimbursement Obligation" is defined in SECTION 2.20.07.
"Release" is defined in SECTION 5.23(a).
"Repayment Notice" means a notice of repayment or prepayment duly
executed by an Authorized Officer of the Borrower, substantially in the form of
EXHIBIT F (with such changes thereto as may be agreed upon from time to time by
the Borrower and the Administrative Agent).
"Required Banks" means at any time Banks holding at least 51% of the
sum of the aggregate unpaid principal amount of the Term Loans PLUS the Total
Revolving Credit Commitment Amount.
"Required Revolving Credit Banks" means at any time Revolving Credit
Banks having at least 51% of the Total Revolving Credit Commitment Amount.
"Reserve Requirement" means, relative to a Eurodollar Interest Period,
the reserve percentage (expressed as a decimal) equal to the maximum aggregate
reserve requirement, if any, (including all basic, emergency, supplemental,
marginal and other reserves and taking into account any transitional
adjustments or other scheduled changes in reserve requirements) specified under
regulations issued from time to time by the Board of Governors of the Federal
Reserve System and then applicable to assets or liabilities consisting of and
including "Eurocurrency liabilities", as presently defined in Regulation D (or
on similar liabilities under any successor regulation), having a term
approximately equal to such Eurodollar Interest Period.
"Restructure Investments" is defined in SECTION 6.02.05(c).
"Revolving Advance" means any Advance consisting solely of Revolving
Loans.
"Revolving Credits" means Revolving Loans, Letters of Credit,
Reimbursement Obligations and/or Swing Loans, as the context may require or
allow.
"Revolving Credit Bank" means a Bank with a Revolving Credit
Commitment.
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"Revolving Credit Commitment" means, relative to each Revolving Credit
Bank, its obligation pursuant to SECTION 2.01(b) and (c) to make Revolving Loans
and its obligation pursuant to SECTIONS 2.07(c) and 2.20.05 to participate in
Swing Loans and Letters of Credit, respectively.
"Revolving Credit Commitment Termination Date" means the earlier to
occur of:
(a) November 30, 1999; and
(b) any Commitment Termination Event.
"Revolving Credit Percentage" of a Revolving Credit Bank at any time
means the percentage set forth opposite such Revolving Credit Bank's name in
the column labeled "Revolving Credit Percentage" on SCHEDULE 2.01 (or if such
Revolving Credit Bank has, subsequent to the signing of this Agreement,
executed an Assignment and Acceptance relating to its Revolving Credit
Commitment, as recorded in the Register).
"Revolving Loan" is defined in SECTION 2.01(c).
"Second Amended Credit Agreement" has the meaning assigned thereto in
the Existing Agreement.
"Security Agreement" means each security agreement, in substantially
the form of EXHIBIT O-4, executed and delivered by the Borrower or certain
Subsidiaries, as amended (if applicable) concurrently with the effectiveness of
the Existing Agreement by an amendment substantially in the form of EXHIBIT
H-4.
"Senior Debt" means, collectively, without duplication (the amount of
all such Debt to be calculated by reference to the face amount outstanding or
in the case of such Debt issued at a discount, by reference to the face amount
outstanding less the initial discount at issuance plus any accreted value to
any date of calculation), all Debt (including Permitted Senior Debt) of the
Borrower or any Subsidiary for money borrowed which is not subordinated to the
Obligations.
"Senior Debt Document" means any instrument evidencing or issued in
connection with Senior Debt, or pursuant to which any Senior Debt may be
incurred.
"Senior Subordinated Notes" means any of the 9-1/2% senior
subordinated notes due 2003 issued pursuant to the Senior Subordinated Note
Indenture.
"Senior Subordinated Note Indenture" means the senior subordinated
note indenture, dated as of May 7, 1993, between the
18163011.1 070894 1656C 93065134 25
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Borrower and Society National Bank, as trustee, pursuant to which $200,000,000
in original principal amount of the Senior Subordinated Notes have been issued
by the Borrower.
"Standby Letter of Credit" means any Letter of Credit other than a
Commercial Letter of Credit.
"Stated Expiry Date" is defined in SECTION 2.20.02(b)(i).
"Stock Option Plan" means the Sealy Corporation 1992 Stock Option Plan
dated January 25, 1993, executed by the Borrower, whereby the Borrower provides
for options for the purchase of the Borrower's capital stock to be extended to
certain officers and executive, managerial and professional employees of, and
consultants to, the Borrower or any Subsidiary.
"Subordinated Debt" means, collectively, without duplication (the
amount of all such Debt to be calculated by reference to the face amount
outstanding or in the case of such Debt issued at a discount, by reference to
the face amount outstanding less the initial discount at issuance plus any
accreted value to any date of calculation):
(a) the Senior Subordinated Notes; and
(b) all other Debt of the Borrower or any Subsidiary for
money borrowed which is subordinated in form and substance to the
Obligations, the prospective holders of which have been disclosed to
the Banks prior to the issuance thereof, and which has subordination
provisions, terms of payment, interest rates, covenants, remedies,
defaults, and other material terms, in each case satisfactory in form
and substance to the Required Banks, as evidenced by their prior
written consent thereto.
"Subordinated Debt Document" means any Senior Subordinated Note, the
Senior Subordinated Note Indenture, and any other instrument evidencing or
issued in connection with Subordinated Debt, or pursuant to which any
Subordinated Debt may be incurred.
"Subsidiary" relative to any Person means any corporation or other
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by such Person.
Unless the context otherwise requires, all references herein to a Subsidiary
shall mean and be a reference to a Subsidiary of the Borrower.
"Subsidiary Guarantee" means each guarantee of a U.S. Subsidiary of
the Obligations of the Borrower, in substantially the form of EXHIBIT O-1, as
amended (if applicable) concurrently with
18163011.1 070894 1656C 93065134 26
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the effectiveness of the Existing Agreement by an amendment substantially in
the form of EXHIBIT H-1.
"Swap Party" means any Bank or affiliate of any Bank, any commercial
bank of recognized standing having capital and surplus in excess of
$500,000,000 or any Person the unsecured commercial paper of whom is rated at
least "A-1" (or the then-equivalent) by Standard & Poor's Corporation or at
least "P-1" (or the then-equivalent) by Moody's Investors Service, Inc., which
has entered or has agreed to enter into a Rate Swap Agreement or an FX Swap
Agreement.
"Swing Loan" is defined in SECTION 2.07(a).
"Swing Note" is defined in SECTION 2.08(c).
"Taxes" relative to any Person means taxes, assessments or other
governmental charges or levies imposed upon such Person, its income or any of
its properties, franchises or assets (excluding, in the case of payments made
to a Bank or any Managing Agent, taxes imposed upon the overall net income of
such Bank or such Managing Agent, franchise taxes imposed upon such Bank or
such Managing Agent with respect to its net income by the jurisdiction under
the laws of which such Bank or such Managing Agent, as the case may be, is
organized or any political subdivision thereof and franchise taxes imposed upon
such Bank or such Managing Agent with respect to its net income by the
jurisdiction in which such Bank's or such Managing Agent's Lending Installation
is located or any political subdivision thereof, all such Taxes being "EXCLUDED
TAXES").
"Temporary Cash Investment" means any Investment in (i) securities
issued or directly and fully guaranteed or insured by the United States or any
agency or instrumentality thereof (provided that the full faith and credit of
the United States is pledged in support thereof) having maturities of not more
than 24 months from the date of acquisition by the Borrower, (ii) time deposits
and certificates of deposit of any Bank with maturities of not more than 24
months from the date of acquisition by the Borrower, (iii) repurchase
obligations with a term of not more than 7 days for underlying securities of
the types described in CLAUSE (i) above entered into with any Bank, (iv)
commercial paper issued by the parent corporation of any Bank or any domestic
or international commercial bank of recognized standing having capital and
surplus in excess of $500,000,000 and commercial paper issued by any Person
rated at least "A-1" (or the then-equivalent thereof) by Standard & Poor's
Corporation or at least "P-1" (or the then-equivalent thereof) by Moody's
Investors Service, Inc. and in each case maturing not more than 6 months after
the date of acquisition by the Borrower, (v) investments in money market funds
substantially all of whose assets are comprised of securities of the types
described in CLAUSES (i) through (iv) above, and (vi) if
18163011.1 070894 1656C 93065134 27
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such Investment is held by any non-U.S. Subsidiary of the Borrower, Investments
comparable to those in CLAUSES (i)-(v) above in obligations issued by
comparable Persons organized or existing under the country of incorporation of
such Subsidiary, for comparable maturities and with comparable
creditworthiness.
"Term Advance" means any Advance consisting solely of Term Loans.
"Term Loan" is defined in SECTION 2.01(a).
"Term Loan Bank" means a Bank to which a Term Loan is outstanding
hereunder.
"Term Loan Commitment" means, relative to each Term Loan Bank, (a)
prior to the Amendment Effective Time, such Bank's obligation to have a Term
Loan at the Amendment Effective Time in an amount equal to such Bank's Term
Loan Percentage of $150,000,000 and (b) after the Amendment Effective Time,
such Bank's Term Loan.
"Term Loan Percentage" of a Term Loan Bank at any time means the
percentage set forth opposite such Bank's name in the column labeled "Term Loan
Percentage" on SCHEDULE 2.01 (or if such Bank has, subsequent to the signing of
this Agreement, executed an Assignment and Acceptance relating to its Term Loan
Commitment, as recorded in the Register).
"Total Commitment Amount" means $275,000,000.
"Total Revolving Credit Commitment Amount" is defined in SECTION
2.02(b).
"Trademark Security Agreement" means each security agreement, in
substantially the form of EXHIBIT O-5, executed and delivered by certain
Subsidiaries, as amended (if applicable) concurrently with the effectiveness of
the Existing Agreement by an amendment substantially in the form of EXHIBIT
H-5.
"Transferee" is defined in SECTION 12.03.
"United States" or "U.S." means the United States of America, its
fifty States, and the District of Columbia.
"Unused Total Revolving Credit Commitment Amount" means, for any
period, the average daily amount for such period by which
(a) the Total Revolving Credit Commitment Amount on each day
during such period, EXCEEDS
(b) the sum of the then aggregate outstanding principal or
stated amount of all Revolving Credits (other than Swing
18163011.1 070894 1656C 93065134 28
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Loans, solely for purposes of calculation of the commitment fee
under SECTION 2.03(a)) on each day during such period.
"U.S./Canadian Capital Expenditures" means, for any period, the
portion of Consolidated Capital Expenditures made in such period by the
Borrower, its U.S. Subsidiaries and its Canadian Subsidiaries.
"U.S. Person" means any citizen, national or resident of the United
States, any corporation or other entity created or organized in or under the
laws of the United States or any political subdivision thereof or any estate or
trust, in each case that is subject to United States Federal income taxation
regardless of the source of its income.
"U.S. Subsidiary" means a Subsidiary of the Borrower incorporated or
organized under the laws of a state of the United States or substantially all
of the business of which is carried on in the United States.
"U.S. Joint Venture" means a Joint Venture of the Borrower
incorporated or organized under the laws of a state of the United States or
substantially all of the business of which is carried on in the United States.
"Welfare Plan" means a "welfare plan", as such term is defined in
ERISA.
"Zell/Chilmark" means Zell/Chilmark Fund, L.P., a Delaware limited
partnership.
"Zell/Chilmark Acquisition Documents" means the Stock Purchase
Agreement dated January 27, 1993 by and among Zell/Chilmark, MB L.P. I, a
Delaware limited partnership, and the Borrower, and each other instrument,
agreement, certificate, stock power and notice executed and/or delivered by the
Borrower or any Subsidiary pursuant thereto.
SECTION 1.02. INTERPRETATION. In this Agreement and each other
Credit Document, unless a clear contrary intention appears:
(a) the singular number includes the plural number and VICE
VERSA;
(b) reference to any Person includes such Person's successors
and assigns but, if applicable, only if such successors and assigns
are permitted by the Credit Documents, and reference to a Person in a
particular capacity excludes such Person in any other capacity or
individually;
(c) reference to any gender includes each other gender;
18163011.1 070894 1656C 93065134 29
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(d) reference to any agreement (including this Agreement and
the SCHEDULES and EXHIBITS and the Credit Documents), document or
instrument means such agreement, document or instrument as amended or
modified and in effect from time to time in accordance with the terms
thereof and, if applicable, the terms hereof and the other Credit
Documents and reference to any promissory note includes any promissory
note which is an extension or renewal thereof or a substitute or
replacement therefor;
(e) reference to any Applicable Law means such Applicable Law
as amended, modified, codified, replaced or reenacted, in whole or in
part, and in effect from time to time, including rules and regulations
promulgated thereunder;
(f) reference to any ARTICLE, SECTION, SCHEDULE or EXHIBIT
means such ARTICLE or SECTION hereof or SCHEDULE or EXHIBIT hereto;
(g) "hereunder", "hereof", "hereto" and words of similar
import shall be deemed references to this Agreement as a whole and not
to any particular ARTICLE, SECTION or other provision hereof;
(h) "including" (and the correlative meaning "include") means
including without limiting the generality of any description preceding
such term;
(i) relative to the determination of any period of time,
"from" means "from and including" and "to" means "to but excluding";
(j) references to financial statements include notes thereto
in accordance with GAAP; and accounting terms used but not defined
herein shall be construed in accordance with GAAP, and whenever the
character or amount of any asset or liability or item of income or
expense is required to be determined, or any consolidation or other
accounting computation is required to be made, for purposes hereof,
such determination or computation shall be made in accordance with
GAAP; PROVIDED that such determinations and computations with respect
to financial covenants and ratios hereunder shall be made in
accordance with GAAP as in effect on the date of this
Agreement; PROVIDED, FURTHER, that if there shall be any change in
accounting principles from GAAP as in effect at the Amendment
Effective Time, then the Required Banks shall make adjustments to such
financial covenants as are determined in good faith to be appropriate
to reflect such changes so that the criteria for evaluating the
financial condition and operations of the Borrower shall be the same
after such changes as if such changes had not been made; and
18163011.1 070894 1656C 93065134 30
<PAGE> 39
(k) in the event of any direct conflict between any
express provision of this Agreement and any express provision of
another Credit Document, the express provision of this Agreement shall
govern.
SECTION 1.03. REALLOCATION OF LOANS AND COMMITMENTS.
(a) Each of the Banks agrees, and by its execution of a signature
page hereto each of the Departing Banks agrees, that effective as of the
Amendment Effective Time,
(i) each of the Existing Banks shall be deemed to have
sold and assigned any portion of its Existing
Revolving Credit Commitment (including Reimbursement
Obligations, obligations to participate and
participations in Letters of Credit and Swing Loans
under the Existing Agreement), Existing Revolving
Loans and Existing Term Loans which is in excess of
the amount of such Existing Bank's Revolving Credit
Commitment, such Existing Bank's Revolving Credit
Percentage of all outstanding Revolving Loans and
such Existing Bank's Term Loan, respectively, after
giving effect to the effectiveness hereof (which
portion sold and assigned, in the case of any
Departing Bank, shall be all of its Existing
Revolving Credit Commitment, Existing Revolving Loans
and Existing Term Loans); and
(ii) each of the Banks shall, to the extent applicable, be
deemed to have purchased and assumed that portion of
the Existing Revolving Credit Commitments, the
Existing Revolving Loans and the Existing Term Loans
which is being sold pursuant to CLAUSE (i) above, and
to have increased its Revolving Credit Commitment in
an amount, which will cause such Bank's Revolving
Credit Commitment, such Bank's Revolving Credit
Percentage of all outstanding Revolving Loans and
such Bank's Term Loan to be as set forth on SCHEDULE
2.01.
(b) Each Existing Bank represents and warrants that, at the Amendment
Effective Time (but before giving effect to the restatement hereof), (i) its
Existing Revolving Credit Commitment, its Existing Revolving Credit Percentage
of all Existing Revolving Loans and its Existing Term Loans are in the amounts
set forth on SCHEDULE 1.03; and (ii) to the extent that such Existing Bank is
making a sale and assignment pursuant to CLAUSE (a)(i) of this SECTION 1.03,
the rights and interests being assigned are free and clear of any adverse claim
or encumbrance created by such Existing Bank.
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(c) The Borrower, the Existing Banks and the Managing Agents agree
that each Existing Bank which is making a sale and assignment pursuant to
CLAUSE (a)(i) of this SECTION 1.03 shall, as of the Amendment Effective Time,
relinquish its rights and be released from its obligations under this Agreement
to the extent of the rights and interests so sold and assigned (and that each
Departing Bank shall have no rights or obligations under this Agreement).
(d) At the Amendment Effective Time, (i) each Bank which is
purchasing Existing Revolving Loans or Existing Term Loans and/or increasing
its Revolving Credit Percentage pursuant to CLAUSE (a)(ii) of this SECTION 1.03
shall deliver to the Administrative Agent immediately available funds to cover
such purchase and/or increase and (ii) the Administrative Agent shall, to the
extent of the funds so received, disburse such funds to the Existing Banks
which are making sales and assignments pursuant to CLAUSE (a)(i) of this
SECTION 1.03.
(e) The Borrower agrees that, at the Amendment Effective Time, the
Borrower will (i) prepay all Eurodollar Rate Advances outstanding under the
Existing Agreement and simultaneously reborrow Advances hereunder and (ii) pay
to the Administrative Agent for the account of each Bank all interest, fees and
other amounts (including amounts payable pursuant to SECTION 3.03, but
excluding principal) owed to such Bank under the Existing Agreement.
ARTICLE II
THE CREDITS
SECTION 2.01. TERM LOANS; COMMITMENTS TO MAKE REVOLVING LOANS. On
the terms and subject to the conditions set forth in this Agreement,
(a) as of the Amendment Effective Time, each Term Loan Bank
shall be deemed to have made a term loan to the Borrower in an amount
equal to such Bank's Term Loan Percentage of $150,000,000 (relative to
each Term Loan Bank, its "TERM LOAN");
(b) as of the Amendment Effective Time, each Revolving Credit
Bank shall be deemed to have made revolving loans to the Borrower, in
an amount equal to such Revolving Credit Bank's Revolving Credit
Percentage of all outstanding Revolving Advances; and
(c) from time to time on any Business Day occurring during
the period from the Amendment Effective Time to the Revolving Credit
Commitment Termination Date, each Revolving
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Credit Bank severally (and not jointly) agrees to make revolving loans
to the Borrower in an amount equal to such Revolving Credit Bank's
Revolving Credit Percentage of the aggregate amount of each Revolving
Advance requested pursuant to SECTION 2.05 (relative to each Revolving
Credit Bank, together with any revolving loans by such Bank pursuant
to CLAUSE (b) above, its "REVOLVING LOANS");
PROVIDED that no Revolving Credit Bank shall be permitted or required to make
any Revolving Loan if, after giving effect thereto, the sum of (i) the
aggregate principal amount of all Revolving Loans then outstanding from all
Revolving Credit Banks PLUS (ii) the aggregate stated amount of all then
outstanding Letters of Credit and all Reimbursement Obligations then due and
payable PLUS (iii) the then aggregate outstanding principal amount of all Swing
Loans, would exceed the Total Revolving Credit Commitment Amount.
Subject to the terms hereof, the Borrower may from time to time
borrow, prepay and reborrow Revolving Loans.
SECTION 2.02. AMOUNTS OF TERM LOANS AND COMMITMENTS; REDUCTION OF
TOTAL REVOLVING CREDIT COMMITMENT AMOUNT.
(a) As of the Amendment Effective Time, the aggregate amount of all
Term Loans shall be $150,000,000.
(b) The aggregate amount of all Revolving Credit Commitments (the
"TOTAL REVOLVING CREDIT COMMITMENT AMOUNT") on any date on or prior to the
Revolving Credit Commitment Termination Date shall be $125,000,000 LESS all
reductions to such amount made pursuant to CLAUSES (c), (d) and (e) below.
(c) The Borrower may permanently reduce the Total Revolving Credit
Commitment Amount in whole, or in part ratably among the Revolving Credit
Banks, in a minimum aggregate amount of $5,000,000, or in larger integral
multiples of $1,000,000, upon at least five Business Days' written notice to
the Administrative Agent, which notice shall specify the amount of any such
reduction; PROVIDED that the Total Revolving Credit Commitment Amount at any
time may not be reduced below the sum of (i) the then aggregate principal
amount of all Revolving Loans PLUS (ii) the aggregate stated amount of all then
outstanding Letters of Credit and Reimbursement Obligations PLUS (iii) the then
aggregate outstanding principal amount of all Swing Loans.
(d) The Total Revolving Credit Commitment Amount shall be reduced
no later than 45 days after receipt by the Borrower or any of its subsidiaries
of any Net Disposition Proceeds in excess of $10,000,000 in any Fiscal Year by
an amount equal to the excess, if any, of (a) 100% of such excess Net
Disposition Proceeds over (b)
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the portion of such Net Disposition Proceeds applied to prepay Term Loans
pursuant to SECTION 2.11.01.
(e) The Total Revolving Credit Commitment Amount shall be reduced
5 days after receipt by the Borrower of any Net Debt Proceeds from the issuance
of Permitted Senior Debt by an amount equal to the excess, if any, of (a) 100%
of such Net Debt Proceeds over (b) the portion of such Net Debt Proceeds
applied to prepay Term Loans pursuant to SECTION 2.11.02.
SECTION 2.03. FEES.
(a) COMMITMENT FEE. The Borrower agrees to pay to the Administrative
Agent for the account of each Revolving Credit Bank a commitment fee at the
Commitment Fee Rate on such Revolving Credit Bank's Revolving Credit Percentage
of the Unused Total Revolving Credit Commitment Amount from the Amendment
Effective Time to the Revolving Credit Commitment Termination Date, payable in
arrears on each Quarterly Payment Date, commencing with the first such date
following the Amendment Effective Time, on the date of the effectiveness of any
reduction in the Total Revolving Credit Commitment Amount and on the Revolving
Credit Commitment Termination Date for each period then ended for which such
commitment fee shall not have been theretofore paid.
(b) ADMINISTRATIVE AGENT'S FEES. The Borrower agrees to pay to the
Administrative Agent fees in such amounts and at such times as are agreed in
the Agents' Fee Letter.
SECTION 2.04. METHOD OF BORROWING OF REVOLVING LOANS; RATABLE
LOANS. (a) Not later than 12 noon, Chicago time, on each Borrowing Date for
Revolving Loans, each Bank shall make available its Revolving Loan or Loans in
immediately available funds, in Chicago, to the Administrative Agent at its
address specified pursuant to ARTICLE XIII. Subject to the satisfaction of the
conditions precedent to such Revolving Loans, the Administrative Agent will
make the funds so received from the Banks available to the Borrower at the
Administrative Agent's aforesaid address.
(b) Each Term Advance or Revolving Advance hereunder shall consist of
Loans made from the several Banks ratably in proportion to their Applicable
Percentages of the aggregate principal amount of the Term Loans or the Total
Revolving Credit Commitment Amount, respectively.
SECTION 2.05. METHOD OF SELECTING RATE OPTIONS AND EURODOLLAR
INTEREST PERIODS; TELEPHONIC NOTICES. (a) The Borrower shall give the
Administrative Agent irrevocable notice, in the form of Exhibit D (a "BORROWING
NOTICE") not later than 11:00 a.m., Chicago time, at least one Business Day
before the Borrowing Date of each
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Floating Rate Advance and at least three Business Days before the Borrowing
Date for each Eurodollar Rate Advance, specifying:
(i) the proposed Borrowing Date, which shall be a Business
Day, of such Advance,
(ii) the aggregate amount of such Advance,
(iii) the Rate Option selected for such Advance, and
(iv) in the case of each Eurodollar Rate Advance, the
Eurodollar Interest Period applicable thereto.
(b) The Borrower hereby authorizes the Banks and the Administrative
Agent to extend Advances and effect Rate Option selections based on telephonic
notices made by any person or persons the Administrative Agent or any Bank in
good faith believes to be acting on behalf of the Borrower. The Borrower
agrees to deliver promptly to the Administrative Agent a written confirmation
of each telephonic notice signed by an Authorized Officer. If the written
confirmation differs in any material respect from the action taken by the
Administrative Agent and the Banks, the records of the Administrative Agent and
the Banks shall govern absent manifest error.
SECTION 2.06. MINIMUM AMOUNT OF EACH ADVANCE. Each Eurodollar Rate
Advance shall be in the minimum aggregate principal amount of $5,000,000, and
each Floating Rate Advance shall be in the minimum aggregate principal amount
of $3,000,000; PROVIDED that any Floating Rate Advance made on any date may be
in the amount by which the Total Revolving Credit Commitment Amount on such
date EXCEEDS the sum of the then aggregate outstanding principal or stated
amount of all Revolving Credits on such date; and PROVIDED, FURTHER, that the
principal amount of any Floating Rate Advance made to repay Swing Loans in
accordance with SECTION 2.07(c)(i) may be in the principal amount required to
repay such Swing Loans.
SECTION 2.07. SWING LOANS.
(a) MAKING OF SWING LOANS. Each of Continental and Paribas may elect
in its sole discretion to make its equal share of revolving loans ("SWING
LOANS") to the Borrower solely for the account of Continental and Paribas,
respectively, from time to time on or after the Amendment Effective Time and
prior to the Revolving Credit Commitment Termination Date up to an aggregate
principal amount at any one time outstanding not to exceed the lesser of (i)
$5,000,000 and (ii) the excess of the Total Revolving Credit Commitment Amount
OVER the aggregate principal or stated amount of all Revolving Credits then
outstanding. Each Swing Loan shall be in the minimum aggregate principal
amount of $200,000 or a larger integral multiple of $100,000. Each of
Continental and Paribas may
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make Swing Loans (subject to the conditions precedent set forth in SECTION
4.01, except SECTION 4.01.01 which shall be deemed satisfied by the terms of
this sentence); PROVIDED that (x) Continental has received a request in writing
or via telephone from an Authorized Officer or designated employee of the
Borrower for funding of a Swing Loan no later than 12 noon, Chicago time, on
the Business Day on which such Swing Loan is requested to be made, (y)
Continental has promptly notified Paribas and the Administrative Agent in
writing or via telephone of such request from the Borrower, and (z) each of
Continental and Paribas has agreed to concurrently fund, and does concurrently
fund, an equal share of any such Swing Loan. Continental and Paribas shall not
make any Swing Loan in the period commencing one Business Day after Continental
or Paribas becomes aware that one or more of the conditions precedent contained
in SECTION 4.01 is not satisfied and ending upon the satisfaction or waiver of
such condition(s). Each outstanding Swing Loan shall be payable on the
Business Day following demand therefor in accordance with SECTION 2.07(c),
shall be secured as part of the Obligations by the Collateral and shall
otherwise be subject to all the terms and conditions applicable to Revolving
Loans, except that all interest thereon shall be payable to the Administrative
Agent solely for the account of Continental and Paribas, in equal shares.
(b) SWING LOAN BORROWING CONFIRMATIONS. The Borrower agrees to
deliver promptly to each of Continental and Paribas a written confirmation of
each telephonic notice for Swing Loans signed by an Authorized Officer. If the
written confirmation differs in any material respect from the action taken by
Continental and Paribas, the records of Continental and Paribas shall govern,
absent manifest error.
(c) REPAYMENT OF SWING LOANS.
(i) At or prior to 9 a.m., Chicago time, on any Business Day
after making a Swing Loan, Continental or Paribas may request the
Borrower to, and upon such request the Borrower shall, promptly borrow
Revolving Loans from all the Revolving Credit Banks and apply the
proceeds of such Revolving Loans to the repayment of the principal
amount of any Swing Loan owing by the Borrower not later than the
Business Day following such request; PROVIDED that any such request
made after 9 a.m., Chicago time, on any Business Day, shall be deemed
to have been made prior to 9 a.m., Chicago time, on the immediately
succeeding Business Day. Notwithstanding the foregoing, upon the
earlier to occur of (A) one Business Day after demand is made by
Continental or Paribas upon each Revolving Credit Bank (of which
demand Continental or Paribas shall notify the Borrower) and (B) the
Revolving Credit Commitment Termination Date, each Revolving Credit
Bank (other than Continental and Paribas) shall irrevocably and
unconditionally purchase from
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Continental and Paribas, without recourse or warranty, an undivided
interest and participation in each of Continental's and Paribas' equal
share of all Swing Loans, in each case in an amount equal to such
Revolving Credit Bank's Revolving Credit Percentage of each such equal
share, and each such Revolving Credit Bank shall promptly pay such
amount to the Administrative Agent, for the sole account of
Continental and Paribas, in immediately available funds. Such payment
shall be made by the other Revolving Credit Banks whether or not a
Default is then continuing or any other condition precedent set forth
in SECTION 4.01 is then met and whether or not the Borrower has then
requested an Advance in such amount; and each such Swing Loan shall
thereupon be deemed to be a Floating Rate Advance hereunder made on
the date of such purchase (notwithstanding, as aforesaid, the
existence of any Default or the meeting of any condition precedent
specified in SECTION 4.01 on such date). If and to the extent that any
such payment is not in fact made to the Administrative Agent by any
Revolving Credit Bank, the Borrower and such Revolving Credit Bank
shall be jointly and severally liable to each of Continental and
Paribas for their respective PRO RATA shares of such payment, such
amount to be payable on demand together with accrued interest thereon
from the due date therefor until the date such amount is paid to the
Administrative Agent (x) in the case of the Borrower, at the Floating
Rate and (y) in the case of such Revolving Credit Bank, at the Federal
Funds Rate for the first three Business Days after such Revolving
Credit Bank receives notice of such required purchase and thereafter
at the Floating Rate. The failure of any Revolving Credit Bank to pay
such amount to the Administrative Agent shall not relieve any other
Revolving Credit Bank of its obligation to pay such amount hereunder.
(ii) Upon the making of any Advance pursuant to a Borrowing
Notice, any Swing Loan then outstanding shall be repaid in full, and
the Borrower hereby irrevocably authorizes the Administrative Agent to
apply all or any necessary portion of the proceeds of any such Advance
to the repayment of any Swing Loan then outstanding.
SECTION 2.08. NOTES. The Loans of each Bank shall be evidenced
(a) in the case of a Term Loan, by a global promissory note of the
Borrower substantially in the form of EXHIBIT A (the "GLOBAL TERM NOTE"),
payable to the order of the Administrative Agent in an original principal
amount equal to $150,000,000,
(b) in the case of a Revolving Loan, by a global promissory note of
the Borrower substantially in the form of EXHIBIT B (the "GLOBAL REVOLVING
NOTE"), payable to the order of the
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<PAGE> 46
Administrative Agent in an original principal amount equal to $125,000,000 or,
if less, the principal amount of Revolving Loans at any time outstanding, and
(c) in the case of the Swing Loans made by Continental and Paribas,
by a promissory note of the Borrower substantially in the form of EXHIBIT C
(the "SWING NOTE"), payable to the order of the Administrative Agent in an
original principal amount equal to $5,000,000 or, if less, the principal amount
of Swing Loans at any time outstanding and owing to Continental and Paribas.
The Administrative Agent shall hold each of the Global Term Note and
the Global Revolving Note for the ratable benefit of each Term Loan Bank and
Revolving Credit Bank, respectively. Each of the Global Term Note and the
Global Revolving Note shall evidence each Term Loan Bank's and Revolving Credit
Bank's Applicable Percentage, respectively, of the aggregate outstanding Term
Loans and Revolving Loans, respectively. The Administrative Agent shall hold
the Swing Note for the ratable benefit of each of Continental and Paribas, and
the Swing Note shall evidence Continental's and Paribas' equal shares of the
aggregate outstanding Swing Loans.
The Administrative Agent shall record in its records, or at its option
on the schedule attached to the applicable Note, the date and amount of each
Loan, each repayment or prepayment thereof, and, in the case of any Eurodollar
Rate Loans, the dates on which the Eurodollar Interest Period for such Loan
shall begin and end. The aggregate unpaid principal amount so recorded shall
be rebuttable presumptive evidence of the principal amount owing and unpaid on
such Note. The failure to so record or any error in so recording any such
amount in such records or on such schedule shall not, however, limit or
otherwise affect the obligations of the Borrower hereunder or under any Note to
repay the principal amount of the applicable Loans together with all interest
accruing thereon.
As of the Amendment Effective Time, each of the promissory notes
issued under the Existing Agreement shall be null and void (having been
replaced by the Notes hereunder).
SECTION 2.09. SCHEDULED PRINCIPAL PAYMENTS.
(a) TERM LOANS. Subject to SECTION 2.11, the Term Loans shall be
repaid, and the principal amount thereof shall be due and payable, in principal
installments as set forth on SCHEDULE 2.09(a) on each Quarterly Payment Date
starting with the Quarterly Payment Date occurring on August 31, 1994;
PROVIDED that the outstanding Term Loans shall be repaid in full on the Final
Maturity Date.
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(b) REVOLVING LOANS. The Revolving Loans shall be repaid, and the
principal amount thereof shall be due and payable, on the Final Maturity Date.
SECTION 2.10. OPTIONAL PRINCIPAL PREPAYMENTS.
(a) The Borrower may, upon at least two Business Days' notice to the
Administrative Agent, prepay Floating Rate Advances or, subject to SECTION 3.03
and upon at least three Business Days' notice to the Administrative Agent,
Eurodollar Rate Advances, in each case in whole at any time or from time to
time in part, in a minimum aggregate principal amount of $5,000,000 (or
$3,000,000 in the case of Floating Rate Advances), by paying the principal
amount to be prepaid, together with (in the case of a Eurodollar Rate Advance)
unpaid accrued interest thereon to the date of prepayment. No voluntary
prepayment of principal of the Revolving Loans shall, in and of itself, cause a
reduction in the Total Revolving Credit Commitment Amount.
(b) Voluntary prepayments of the Term Loans made at any date may be
applied, at the option of the Borrower, (i) to the Term Loans, in an amount not
to exceed the greater of (A) the total of the two next succeeding scheduled
principal repayment installments of the Term Loans scheduled to be made
following such date pursuant to SECTION 2.09 or (B) 50% of the aggregate
principal repayment installments of the Term Loans scheduled to be made during
the 12 month period following such date, in the order of maturity of scheduled
principal repayment installments of such Loans, or (ii) as an alternative to
the application in clause (i) above or after making the application in the
amount permitted by clause (i) above, to the Term Loans, pro rata across
scheduled principal repayment installments of such Loans.
SECTION 2.11. MANDATORY PRINCIPAL PREPAYMENTS. In addition to the
scheduled principal payments required by SECTION 2.09, the Borrower shall make
the mandatory principal prepayments set forth in this SECTION 2.11.
SECTION 2.11.01. NET DISPOSITION PROCEEDS. The Borrower
shall, as promptly as practicable but not later than 45 days after receipt by
the Borrower or any of its Subsidiaries of any Net Disposition Proceeds in
excess of $10,000,000 in any Fiscal Year, apply an amount equal to 100% of such
excess Net Disposition Proceeds as a mandatory prepayment of the outstanding
principal amount of all Term Loans until paid in full (with any excess to be
applied to reduce the Total Revolving Credit Commitment Amount as provided in
SECTION 2.02(d)); PROVIDED that with respect to any sale or other disposition
yielding Net Disposition Proceeds of less than $500,000, such application of
Net Disposition Proceeds may occur not later than 45 days after the last day of
the Fiscal
18163011.1 070894 1656C 93065134 39
<PAGE> 48
Quarter in which such Net Disposition Proceeds are received by the Borrower or
any Subsidiary.
SECTION 2.11.02. NET DEBT PROCEEDS. The Borrower shall, as
promptly as practicable but not later than 5 days after receipt by the Borrower
of any Net Debt Proceeds from the issuance or incurrence of Permitted Senior
Debt, apply an amount equal to 100% of such Net Debt Proceeds as a mandatory
prepayment of the outstanding principal amount of all Term Loans until paid in
full (with any excess to be applied to reduce the Total Revolving Credit
Commitment Amount as provided in SECTION 2.02(e)).
SECTION 2.11.03. COMMITMENT REDUCTIONS. Concurrently with any
reduction of the Total Revolving Credit Commitment Amount pursuant to SECTION
2.02(d) or (e), the Borrower shall make a prepayment of Revolving Loans (or
otherwise reduce the amount of the outstanding Revolving Credits) in the
amount, if any, by which all outstanding Revolving Credits exceed the Total
Revolving Commitment Amount as so reduced.
SECTION 2.11.04. GENERAL. (a) Each repayment and prepayment
of any Loans made pursuant to this SECTION 2.11 shall (x) be accompanied by a
Repayment Notice of the Borrower, dated as of the date of such payment, and (y)
be without premium or penalty, except as may be required by SECTION 3.03. All
optional prepayments pursuant to SECTION 2.10 shall be in addition to, and
shall not constitute a credit toward, mandatory prepayments required to be made
by the Borrower under this SECTION 2.11; and any mandatory prepayments made by
the Borrower under this SECTION 2.11 shall be in addition to, and shall not
constitute a credit toward, prepayments required to be made by the Borrower
under any other of such subsections. Repayments and prepayments of Term Loans
may not be reborrowed.
(b) Any mandatory prepayment of Term Loans shall be applied to the
scheduled principal repayment installments coming due on or after the date of
such prepayment on a pro rata basis according to the principal amounts of such
installments.
SECTION 2.12. RATE OPTIONS; INTEREST PAYMENT DATES; INTEREST BASIS;
PAYMENTS DUE ON DAYS NOT BUSINESS DAYS. The Advances may be Floating Rate
Advances or Eurodollar Rate Advances, or a combination thereof, selected by the
Borrower in accordance with SECTION 2.05 or 2.18. Except as provided in
SECTION 2.13, Floating Rate Advances shall bear interest at the Floating Rate
and Eurodollar Rate Advances shall bear interest at the Eurodollar Rate.
Interest accrued on each Eurodollar Advance shall be payable on the last day of
its applicable Eurodollar Interest Period, on the applicable Final Maturity
Date, on any date on which such Advance is prepaid whether due to acceleration
or otherwise, and, with respect to any Eurodollar Interest Period of 6 months,
at the
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date 3 months from the beginning of such Eurodollar Interest Period. Interest
accrued on each Floating Rate Advance shall be payable on each Quarterly
Payment Date and on the applicable Final Maturity Date. Interest and fees
shall be calculated for actual days elapsed on the basis of a 360-day year.
Interest shall be payable by the Borrower for the day an Advance is made but
not for the day of any payment on the amount paid if payment is received prior
to 12 noon, local time, at the place of payment provided herein. If any
payment of principal of or interest on an Advance or any fee or other amount
payable hereunder shall become due on a day which is not a Business Day, such
payment shall be made on the immediately succeeding Business Day, and such
extension of time shall be included in computing interest in connection with
such payment in the case of a principal payment.
SECTION 2.13. RATE AFTER DEFAULT.
(a) During the existence of any Event of Default, each Floating
Rate Advance shall bear interest, payable upon demand, until payment in full of
such Advance at a rate per annum equal to the Floating Rate in effect from time
to time PLUS 2.0% per annum (the "DEFAULT RATE").
(b) During the existence of any Event of Default, each Eurodollar
Rate Advance shall bear interest, payable upon demand, (i) until the earlier of
(A) payment in full of such Advance, or (B) the end of the applicable
Eurodollar Interest Period, at the Eurodollar Rate then applicable to such
Advance PLUS 2.0% per annum, and (ii) thereafter at the Default Rate until paid
in full.
SECTION 2.14. METHOD OF PAYMENT; APPLICATION OF PAYMENT. All
payments of principal, interest, and fees hereunder shall be made in Dollars in
immediately available funds to the Administrative Agent at the Administrative
Agent's address specified pursuant to ARTICLE XIII (or at any other Lending
Installation of the Administrative Agent specified in writing by the
Administrative Agent to the Borrower) by 12 noon, local time, on the date when
due, accompanied by a Repayment Notice, and shall be made ratably among the
Banks. Each payment delivered to the Administrative Agent for the account of
any Bank shall be delivered promptly by the Administrative Agent to such Bank
in the same type of funds which the Administrative Agent received at its
address specified pursuant to ARTICLE XIII or at any Lending Installation
specified in a notice received by the Administrative Agent from such Bank. The
Administrative Agent is hereby authorized to charge any account of the Borrower
maintained with Continental for each payment of principal, interest and fees as
it becomes due hereunder. Prior to the occurrence of an Event of Default and
either termination of the Revolving Credit Commitment or acceleration of the
Loans hereunder, the Administrative Agent and the Banks shall apply such
payments as provided in the applicable Repayment Notice. Following the
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<PAGE> 50
occurrence of any Event of Default and either termination of the Revolving
Credit Commitment or acceleration of the Loans hereunder, the Administrative
Agent and the Banks shall apply such payments and any amounts realized from the
Collateral as provided in the Collateral Documents to the extent provided
therein, and if not provided therein, PRO RATA in proportion to the outstanding
Obligations of each Bank.
SECTION 2.15. NOTIFICATION OF ADVANCES, INTEREST RATES, PREPAYMENTS
AND REVOLVING CREDIT COMMITMENT REDUCTIONS. Promptly after receipt thereof,
the Administrative Agent will notify each Bank of the contents of each Total
Revolving Credit Commitment Amount reduction notice, Borrowing Notice and
Repayment Notice received by it hereunder. The Administrative Agent will
notify each Bank and the Borrower of the interest rate applicable to each
Eurodollar Rate Advance promptly upon determination of such interest rate and
will give each Bank and the Borrower prompt notice of each change in the
Corporate Base Rate. All determinations by the Administrative Agent of any
rate of interest applicable to any Loan shall be conclusive in the absence of
manifest error.
SECTION 2.16. LENDING INSTALLATIONS. Subject to SECTION 3.04, each
Bank may book its Loans at any Lending Installation selected by such Bank and
may change its Lending Installation from time to time. All terms of this
Agreement shall apply to any such Lending Installation and the Notes shall be
deemed held by the Administrative Agent for the benefit of such Lending
Installation. Each Bank may, by written or telex notice to the Administrative
Agent and the Borrower, designate a Lending Installation through which Loans
will be made by it and for whose account Loan payments are to be made.
Notwithstanding any such designation of a Lending Installation by a Bank, such
Bank shall remain solely responsible to the other parties hereto for the
performance of its obligations hereunder.
SECTION 2.17. NON-RECEIPT OF FUNDS BY THE ADMINISTRATIVE AGENT.
Unless the Borrower or a Bank, as the case may be, notifies the Administrative
Agent prior to the date on which it is scheduled to make payment to the
Administrative Agent of (i) in the case of a Bank, the proceeds of a Loan or
(ii) in the case of the Borrower, a payment of principal, interest or fees to
the Administrative Agent for the account of the Banks, that it does not intend
to make such payment, the Administrative Agent may assume that such payment has
been made. The Administrative Agent may, but shall not be obligated to, make
the amount of such payment available to the intended recipient in reliance upon
such assumption. If and to the extent that any Bank or the Borrower, as the
case may be, has not in fact made such payment to the Administrative Agent, the
Person obligated to make such payment and the recipient of such payment shall
be jointly and severally obligated to repay to the
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Administrative Agent the amount so made available, such amount to be payable on
demand together with interest thereon in respect of each day during the period
commencing on the date such amount was so made available by the Administrative
Agent until the date the Administrative Agent recovers such amount at a rate
per annum equal to (x) in the case of payment by a Bank, the Federal Funds Rate
for the first three Business Days after demand by the Administrative Agent and
thereafter at the interest rate applicable to the relevant Loan and (y) in the
case of payment by the Borrower, the interest rate applicable to the relevant
Loan.
SECTION 2.18. CONTINUATION AND CONVERSION ELECTIONS. Pursuant to a
Continuation/Conversion Notice delivered to the Administrative Agent on or
before 10:00 a.m., Chicago time, the Borrower may elect, from time to time on
not less than 3 Business Days' notice (or not less than one Business Day's
notice in the case of conversions to Floating Rate Loans):
(a) that all, or any portion in a minimum principal amount of
$5,000,000, of any Revolving Advance or Term Advance be converted from
Floating Rate Loans into Eurodollar Rate Loans (or, subject to SECTION
3.03, from Eurodollar Rate Loans into Floating Rate Loans); and
(b) on the expiration of the Eurodollar Interest Period
applicable to any Eurodollar Rate Loans comprising all or part of any
Advance, that all, or any portion in a minimum principal amount of
$5,000,000, of the outstanding principal amount of such Advance be
continued as Eurodollar Rate Loans or all or any portion in a minimum
principal amount of $3,000,000 be converted into Floating Rate Loans;
PROVIDED that:
(c) no portion of the outstanding principal amount of any
Advance may be continued as, or be converted into, Eurodollar Rate
Loans after any notice of Default is due or has been given pursuant to
SECTION 6.01.06(a)(i) and the relevant Default is continuing;
(d) no portion of the outstanding principal amount of any
Advance may be made or continued as, or be converted into, Floating
Rate Loans or Eurodollar Rate Loans unless, after giving effect to
such action, the principal amount of Loans of each type outstanding
from each Bank then being so made, continued, or converted shall be
equal to such Bank's Applicable Percentage of the outstanding
principal amount of the Advance then being so made, continued, or
converted;
(e) no portion of the outstanding principal amount of any
Term Advance may be made or continued as, or be converted
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into, Eurodollar Rate Loans if, after giving effect to such action,
the Eurodollar Interest Period applicable thereto shall extend beyond
the date of any scheduled repayment pursuant to SECTION 2.09(a) unless
a sufficient principal amount of such Term Advance is being maintained
as Floating Rate Loans, or Eurodollar Rate Loans having a Eurodollar
Interest Period ending on or prior to the date of any such scheduled
repayment, to permit such repayment to be applied in full to Floating
Rate Loans or to fully matured Eurodollar Rate Loans;
(f) no portion of the outstanding principal amount of any
Advance may be made or continued as, or converted into, Eurodollar
Rate Loans or Floating Rate Loans if, after giving effect to such
action, the aggregate principal amount of any Eurodollar Rate Advance
having a particular Eurodollar Interest Period is less than
$5,000,000;
(g) the Borrower shall not be permitted to select Eurodollar
Interest Periods to be in effect at any one time which have expiration
dates falling on more than 12 different dates;
(h) absent the timely selection of a new Eurodollar Interest
Period for a then outstanding Eurodollar Rate Advance, such Eurodollar
Rate Advance shall, immediately upon the expiration of such Eurodollar
Interest Period, automatically and without further action be converted
into a Floating Rate Advance; and
(i) notwithstanding the provisions of CLAUSES (a), (b) and
(f) of this SECTION 2.18 to the contrary, (i) any Term Advance
comprised of Eurodollar Rate Loans with a Eurodollar Interest Period
ending on the date that any scheduled installment of Term Loans is due
may be in the principal amount of such scheduled installment and (ii)
any Term Advance comprised of Eurodollar Rate Loans may be continued
as a Eurodollar Advance in a principal amount less than the minimum
amounts described in CLAUSES (b) or (f) above if such principal amount
has been reduced below such minimum amounts as a result of mandatory
prepayment of Term Loans.
The Borrower shall, in each Continuation/Conversion Notice electing that all,
or any portion, of the principal amount of Advances of any type be continued
as, or be converted into, Eurodollar Rate Advances, select the duration of the
Eurodollar Interest Period commencing upon such continuation or conversion.
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SECTION 2.19. NET PAYMENTS; TAX EXEMPTIONS.
(a) All payments by the Borrower of principal, interest, fees,
indemnities and other amounts payable hereunder and under the Notes shall be
made without setoff or counterclaim and free and clear of, and without
withholding or deduction for or on account of, any present or future Taxes
(other than Excluded Taxes) now or hereafter imposed on such recipient or its
income, property, assets or franchises (such recipient's "RECIPIENT TAXES"),
except to the extent that such withholding or deduction (i) is required by
Applicable Law, (ii) results from the breach by such recipient of its Exemption
Agreement (as hereinafter defined), or (iii) would not be required if such
recipient's Exemption Representation (as hereinafter defined) were true. If
any such withholding or deduction is required by Applicable Law, the Borrower
will:
(A) pay to the relevant authorities the full amount so
required to be withheld or deducted;
(B) promptly forward to the Administrative Agent an official
receipt or other documentation satisfactory to the Administrative
Agent evidencing such payment to such authorities; and
(C) except to the extent that such withholding or deduction
results from the breach, by a recipient of a payment, of its Exemption
Agreement or would not be required if such recipient's Exemption
Representation were true, pay to the Administrative Agent for the
account of the relevant recipient such additional amount as is
necessary to ensure that the net amount actually received by each
recipient will equal the full amount such recipient would have
received had no such withholding or deduction been required.
(b) In consideration of the Borrower's agreements in SECTION 2.19(a),
each Bank which is not a U.S. Person hereby agrees (such Bank's "EXEMPTION
AGREEMENT"), to the extent permitted by Applicable Law (including any
applicable double taxation treaty of the jurisdiction of its incorporation and
the jurisdiction in which its Lending Installation is located), to execute and
deliver to the Borrower (i) on or before the first scheduled payment date
after the Amendment Effective Time, a United States Internal Revenue Service
Form 1001 or 4224 as appropriate (or successor forms), properly completed and
claiming a complete or partial exemption, as the case may be, from withholding
or deduction for or on account of Recipient Taxes of such Bank, and (ii) a new
Form 1001 or 4224 (or successor form), as appropriate, upon the expiration or
obsolescence of any previously delivered Form.
(c) Each Existing Bank hereby represents and warrants (such Bank's
"EXEMPTION REPRESENTATION") to the Borrower that at the
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<PAGE> 54
Amendment Effective Time, its Lending Installation was entitled to receive
payments of principal of, and interest on, Loans made by such Bank from such
Lending Installation without withholding or deduction for or on account of such
Bank's Recipient Taxes imposed by the United States of America or any political
subdivision thereof.
SECTION 2.20. LETTERS OF CREDIT.
SECTION 2.20.01. ISSUANCE OF LETTERS OF CREDIT. On the terms
and subject to the conditions set forth in this Agreement:
(a) Any Issuer may in its sole discretion issue from time to
time on or after the Amendment Effective Time and prior to the
Revolving Credit Commitment Termination Date one or more irrevocable
Letters of Credit on behalf of and for the account of the Borrower or
any Subsidiary, each of which Letters of Credit shall be denominated
in Dollars and issued to support obligations of the Borrower or a
Subsidiary incurred in the ordinary course of business; and
(b) Paribas as Issuer has issued, prior to the Amendment
Effective Time, the Letters of Credit listed on SCHEDULE 2.20.01(b),
and each such Letter of Credit shall be deemed to be outstanding under
this Agreement after giving effect to the Amendment Effective Time for
all purposes of this Agreement and each of the other Credit Documents,
and each Revolving Credit Bank will be deemed to have an undivided
participation in each such Letter of Credit to the extent of its
Revolving Credit Percentage in accordance with SECTION 2.20.05;
PROVIDED that no Letter of Credit shall be issued if after the issuance thereof
the sum of (w) outstanding Revolving Loans and Swing Loans PLUS (x) the
aggregate undrawn stated amounts of Letters of Credit PLUS (y) the aggregate
unpaid Reimbursement Obligations then due and payable hereunder would exceed
the Total Revolving Credit Commitment Amount or if the amounts described in
CLAUSES (x) and (y) above would exceed $30,000,000.
SECTION 2.20.02. ISSUANCE REQUESTS.
(a) By delivering a duly completed issuance request (an "ISSUANCE
REQUEST") in the form of EXHIBIT E-1, accompanied by a duly completed
application for a Letter of Credit, on or before 11:00 a.m., Chicago time, at
least two Business Days prior to the requested Business Day of issuance, to the
Administrative Agent and the applicable Issuer, the Borrower may request the
issuance from time to time of Letters of Credit; IT BEING UNDERSTOOD that such
Issuer may require by notice to the Borrower a postponement of such requested
issuance date to the extent reasonably necessary for the preparation and
negotiation of such Letter of Credit and all
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related documentation. Each Issuance Request and application shall be
irrevocable, and upon its receipt thereof, the Administrative Agent shall
promptly notify the Revolving Credit Banks thereof. Issuance Requests and
applications (and all attachments thereto) may be delivered to the
Administrative Agent and the applicable Issuer by facsimile or telex if such
deliveries are confirmed with the delivery of the original executed Issuance
Requests and applications (and all attachments thereto) to such Persons not
later than two Business Days prior to the date of issuance. The Administrative
Agent shall promptly notify the applicable Issuer and the Borrower if, after
giving effect to the issuance of any requested Letter of Credit, the limitation
set forth in the PROVISO to SECTION 2.20.01 would be violated.
(b) Each Letter of Credit shall be in a form mutually satisfactory to
the applicable Issuer and the Borrower and shall, by its terms,
(i) be stated to expire on a date (its "STATED EXPIRY DATE")
not later than the earlier of (A) one year after the date of issuance
thereof and (B) the Final Maturity Date for Revolving Credits,
(ii) unless the Administrative Agent shall otherwise agree,
terminate on or prior to its Stated Expiry Date immediately upon
notice to the applicable Issuer from the beneficiary thereunder that
all obligations covered thereby have been terminated, paid or
otherwise satisfied in full, and
(iii) provide for payment not earlier than 3 Business Days
(unless the applicable Issuer shall otherwise agree) after demand for
payment under such Letter of Credit and full satisfaction of the
conditions precedent thereto, and provide solely for payment upon the
presentation of a sight draft rather than a time draft.
(c) Each Issuer shall make the original of each Letter of Credit it
issues available (but in the case of replacement Letters of Credit, only
against delivery by such beneficiary of the Letter of Credit being replaced) to
the beneficiary indicated in the respective Issuance Request (and provide on
the date of issuance a copy thereof to the Administrative Agent).
SECTION 2.20.03. AMENDMENTS. Any extension of the Stated
Expiry Date, increase in the stated amount, or other modification of a Letter
of Credit shall be made only upon satisfaction of all of the procedures and
conditions for the issuance of a new Letter of Credit of the same type, except
that the Borrower's request therefor shall be in the form of EXHIBIT E-2 (a
"LETTER OF CREDIT AMENDMENT REQUEST").
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SECTION 2.20.04. LETTER OF CREDIT FEES. (a) The Borrower
agrees to pay to the Administrative Agent with respect to each Letter of
Credit, for the account of the applicable Issuer and each other Revolving
Credit Bank, ratably in accordance with their respective Revolving Credit
Percentages, accrual fees at the applicable L/C Fee Rate for a Letter of Credit
of such type (calculated in each case from and including the date of issuance
(or date of renewal or extension, if any) thereof to but not including the
Stated Expiry Date thereof or, if earlier, the date upon which such Letter of
Credit is cancelled, fully drawn or terminated), in each case on the daily
average undrawn stated amount thereof, payable in arrears for each Fiscal
Quarter within 10 days after the Borrower's receipt of any statement of such
fees provided by the Administrative Agent for such Fiscal Quarter; PROVIDED
that during the existence of any Event of Default, each of such accrual fees
shall be increased by 2.0% per annum.
(b) The Borrower further agrees to pay upon demand made by each
Issuer from time to time, solely to such Issuer:
(i) all reasonable and customary fees and expenses of such
Issuer, as advised by such Issuer from time to time, in connection
with the issuance, negotiation, maintenance, modification (if any),
amendment, renewal, administration and collection of, or drawing
under, Letters of Credit issued by such Issuer; and
(ii) without duplication of payments made under ARTICLE III,
any applicable reserve, assessment, insurance charge, premium or levy
imposed on such Issuer by any governmental authority, including
Federal Deposit Insurance Corporation assessments and charges.
(c) The Borrower further agrees to pay to each Issuer solely for its
own account such other fees as may be agreed from time to time by the Borrower
and such Issuer.
SECTION 2.20.05. OTHER BANKS' PARTICIPATIONS; REIMBURSEMENTS.
(a) Each Letter of Credit shall, effective upon issuance and without
further action (or, if issued prior to the Amendment Effective Time, effective
at the Amendment Effective Time), be issued on behalf of all Revolving Credit
Banks (including the Issuer thereof) in accordance with the immediately
succeeding sentence, in each case PRO RATA according to such Revolving Credit
Bank's respective Revolving Credit Percentage. Each Revolving Credit Bank
shall, to the extent of its Revolving Credit Percentage, be deemed to have
irrevocably purchased a participation in the amount of its Revolving Credit
Percentage in each Letter of Credit issued on its behalf and shall reimburse
promptly the Issuer thereof for Reimbursement Obligations not reimbursed in
accordance with SECTION 2.20.07 by the Borrower, or which have been reimbursed
by the Borrower but must be returned, restored or disgorged by such Issuer for
any reason, and each Revolving Credit Bank (including
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such Issuer) shall, to the extent of its Revolving Credit Percentage, be
entitled to receive from the Administrative Agent a ratable portion of the fees
received by the Administrative Agent, pursuant to SECTION 2.20.04(a), with
respect to such Letter of Credit.
(b) If the Borrower fails to satisfy its obligations set forth in
SECTIONS 2.20.06 and 2.20.07 to reimburse any Issuer in an amount equal to the
amount of any drawing honored by such Issuer under a Letter of Credit, such
Issuer shall promptly notify the Administrative Agent and each Revolving Credit
Bank of the unreimbursed amount of such drawing and of such Revolving Credit
Bank's respective participation therein. If such notice is delivered, each
Revolving Credit Bank shall make available to such Issuer, whether or not any
Default shall have occurred and is continuing, an amount equal to the amount of
such participation, in same day or immediately available funds, at such
Issuer's office specified in such notice, not later than 12 noon, Chicago time,
on the Business Day after the date notified by such Issuer. If any Revolving
Credit Bank fails to make available to such Issuer, as provided herein, the
amount of such participation, such Issuer shall be entitled to recover such
amount, together in each case with interest thereon at the Federal Funds Rate
for three Business Days and thereafter at the Floating Rate, (x) on demand to
such Revolving Credit Bank, (y) by setoff against any payments made to such
Issuer hereunder for the account of such Revolving Credit Bank, or (z) by
payment to such Issuer by the Administrative Agent of the amounts otherwise
payable to such Revolving Credit Bank under this Agreement. Each Revolving
Credit Bank hereby authorizes the Administrative Agent to make the payments
described in CLAUSE (z) of the preceding sentence. Nothing in this Section
shall be deemed to prejudice the right of any Revolving Credit Bank to recover
from any Issuer any amount made available by such Revolving Credit Bank to such
Issuer pursuant to this Section if a court of competent jurisdiction determines
that the making of any payment by such Issuer with respect to its Letter of
Credit, and in respect of which a participation payment was made by such
Revolving Credit Bank, constituted gross negligence or willful misconduct on
the part of such Issuer. Each Issuer shall transfer to the Administrative
Agent, not later than the Business Day following receipt, all payments received
by such Issuer from the Borrower in, or otherwise applied to, reimbursement of
drawings honored by such Issuer under any Letter of Credit and the
Administrative Agent shall promptly distribute to each Revolving Credit Bank
that has paid all amounts payable by such Revolving Credit Bank under this
Section with respect to any Letter of Credit, such Revolving Credit Bank's
Revolving Credit Percentage of such payments.
SECTION 2.20.06. DISBURSEMENTS. The applicable Issuer will
notify the Administrative Agent and the Borrower in writing no later than the
Business Day following receipt of the presentment of
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any demand for payment under any Letter of Credit, together with notice of the
amount of such payment and the date under the time zone of the jurisdiction of
such Issuer (the "DISBURSEMENT DATE") such payment shall be made. Subject to
the terms and provisions of such Letter of Credit, such Issuer shall make such
payment ("DISBURSEMENT") to the respective beneficiary (or its designee).
Prior to 12 noon, Chicago time, on the applicable Disbursement Date, the
Borrower shall reimburse such Issuer for such Disbursement. To the extent such
Issuer is not, by 12 noon, Chicago time, on the Disbursement Date of any
Disbursement under a Letter of Credit, reimbursed in full by the Borrower, such
unreimbursed (or any returned or disgorged) amount shall accrue interest on and
after such date at the Default Rate, payable on demand.
SECTION 2.20.07. REIMBURSEMENT. The obligation of the
Borrower ("REIMBURSEMENT OBLIGATIONS") under SECTION 2.20.06 to reimburse the
applicable Issuer for each Disbursement (including interest thereon) made under
such Issuer's Letters of Credit, and the obligation of each Revolving Credit
Bank under SECTION 2.20.05 to make participation payments in each unreimbursed,
returned or disgorged drawing thereunder, shall be, to the fullest extent
permitted by Applicable Law, absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to
payment which the Borrower may have or have had against any Managing Agent, any
Issuer, any Bank or the beneficiary of any Letter of Credit, including any
defense based upon the occurrence of any Default, any draft, demand or
certificate or other document presented under such Letter of Credit proving to
be forged, fraudulent, invalid or insufficient, the failure of any Disbursement
to conform to the terms of such Letter of Credit (if, in the applicable
Issuer's good faith opinion, such Disbursement is determined to be appropriate)
or any non-application or misapplication by such beneficiary of the proceeds of
such Disbursement, or the legality, validity, form, regularity or
enforceability of such Letter of Credit.
SECTION 2.20.08. DEEMED DISBURSEMENTS. Upon the occurrence
and during the continuation of any Event of Default, amounts equal to the
respective amounts undrawn and available under each Letter of Credit shall, at
the option of the Administrative Agent or at the direction of the Required
Revolving Credit Banks and without demand upon or notice to the Borrower, be
deemed to have been paid or disbursed by the Issuers (notwithstanding that such
amounts may not in fact have been so paid or disbursed) and, upon notification
by the Administrative Agent to the Issuers and the Borrower of the Borrower's
obligations under this Section, the Borrower shall be immediately obligated to
reimburse the Administrative Agent for the benefit of each Issuer the amount
deemed to have been so paid or disbursed with respect to the Letters of Credit;
PROVIDED that, with respect to any such amounts deemed disbursed but not
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reimbursed by the Borrower to the Administrative Agent, such amounts shall not
be deemed to bear interest until such time as a Reimbursement Obligation with
respect thereto shall arise. All amounts so received by the Administrative
Agent from the Borrower pursuant to this Section shall be held as collateral
security for the repayment of the Borrower's obligations in connection with the
Letters of Credit. To the extent the aggregate amount deposited by the
Borrower with the Administrative Agent pursuant to this Section and not
previously applied by the Administrative Agent to any Reimbursement Obligation
exceeds the sum of (x) the aggregate undrawn stated amounts of Letters of
Credit PLUS (y) all unpaid Reimbursement Obligations, the Administrative Agent
will promptly return the amount of such excess to the Borrower (except to the
extent applied by the Administrative Agent to the payment of amounts then due
and owing hereunder). When all Events of Default have been cured or waived,
the Administrative Agent shall promptly return to the Borrower all amounts,
including interest as described in the immediately succeeding sentence, then on
deposit pursuant to this Section with the Administrative Agent. All amounts on
deposit pursuant to this Section shall, until their application to any
Reimbursement Obligation or their return to the Borrower bear interest at the
Federal Funds Rate from time to time in effect (net of the costs of any reserve
requirements, in respect of amounts on deposit pursuant to this SECTION
2.20.08, pursuant to Regulation D), which interest shall be held by the
Administrative Agent as additional collateral security for the repayment of the
Reimbursement Obligations of the Borrower in connection with the Letters of
Credit.
SECTION 2.20.09. NATURE OF REIMBURSEMENT OBLIGATIONS. The
Borrower shall assume all risks of acts, omissions or misuse by the beneficiary
of each Letter of Credit issued on its behalf. Neither the Issuer thereof
(except to the extent of its own gross negligence or willful misconduct), any
Bank nor any Managing Agent shall be responsible for:
(a) the form, validity, sufficiency, accuracy, genuineness or
legal effect of such Letter of Credit or any particular conditions
stipulated in the documents or superimposed thereon, or any document
presented under the Letter of Credit, or any document submitted by any
party in connection with the application for and issuance of such
Letter of Credit, even if it should be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged;
(b) the form, validity, sufficiency, accuracy, genuineness or
legal effect of any instrument transferring or assigning or purporting
to transfer or assign such Letter of Credit or the rights or benefits
thereunder or proceeds thereof in whole or in part, which instrument
may be invalid or ineffective for any reason;
18163011.1 070894 2007C 93065134 51
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(c) failure of such beneficiary to comply fully with
conditions required to demand payment under such Letter of Credit;
(d) errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, facsimile,
telex or otherwise;
(e) any loss or delay in the transmission or otherwise of any
document or draft required in order to make a Disbursement under such
Letter of Credit or of the proceeds thereof;
(f) the existence of the property purporting to be
represented by documents;
(g) any difference in character, quality, quantity, condition
or value between any property description in documents presented under
the Letter of Credit and the property purporting to be represented by
such documents;
(h) partial or incomplete shipment or failure or omission to
ship any and all of the property referred to in the Letter of Credit;
(i) the character, validity, adequacy or genuineness of any
insurance or any risk connected with insurance;
(j) any deviation from instructions, delay, default or fraud
by the shipper or anyone else in connection with the property or
shipment thereof;
(k) the solvency, responsibility or relationship to the
property of any Person issuing any documents relating thereto;
(l) any delay in giving or failure to give any necessary
notices;
(m) any breach of contract between the shippers or
vendors and the Borrower; or
(n) the failure of any instrument to bear any reference
or adequate reference to the Letter of Credit, or the failure of any
draft to be accompanied by documents at negotiation, or the failure of
any Person to note the amount of any draft on the reverse of the
Letter of Credit or to surrender or take up the Letter of Credit or to
send forward documents apart from drafts as required by the terms of
the Letter of Credit.
None of the foregoing shall affect, impair or prevent the vesting of any rights
or powers granted the Issuer thereof or any Bank or
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Managing Agent hereunder. In furtherance of any of the foregoing, any action
taken or omitted to be taken by the Issuer of a Letter of Credit in good faith
shall be binding upon the Borrower and shall not put such Issuer under any
resulting liability to such Person.
ARTICLE III
CHANGE IN CIRCUMSTANCES
SECTION 3.01. YIELD PROTECTION. (a) If any Applicable Law or any
governmental or regulatory policy, guideline or directive (whether or not
having the force of law), or any interpretation thereof, adopted or changed
(except with respect to SECTION 3.01(a)(iv)) after the Amendment Effective
Time, or compliance of any Bank with such,
(i) subjects any Bank or any applicable Lending Installation
to any tax, duty, charge or withholding on or from payments due from
the Borrower (other than Excluded Taxes), or changes the basis of
taxation (excluding changes in tax rates applicable to Excluded Taxes)
of payments to any Bank in respect of its Commitment, Credit
Extensions or other amounts due it hereunder, or
(ii) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar requirement
against commitments by, assets of, deposits with or for the account
of, or credit extended by, any Bank or any applicable Lending
Installation (other than reserves and assessments taken into account
in determining the interest rate applicable to Eurodollar Rate
Advances), or
(iii) imposes any other condition the result of which is to
increase the cost to any Bank or any applicable Lending Installation
of making Commitments or making, funding or maintaining Credit
Extensions or reduces any amount receivable by any Bank or any
applicable Lending Installation in connection with Commitments or
Credit Extensions, or requires any Bank or any applicable Lending
Installation to make any payment calculated by reference to the amount
of Credit Extensions held, Commitments made, or interest received by
it by an amount deemed material by such Bank, or
(iv) affects the amount of capital required or expected to be
maintained by any Bank or Lending Installation or any corporation
controlling any Bank and such Bank determines the amount of capital
required is increased by or based upon the existence of this Agreement
or its obligation to make Credit Extensions hereunder or of
commitments of this type,
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then, within 90 days after demand by such Bank or at the immediately succeeding
Quarterly Payment Date, whichever period is shorter (but in no event less than
ten Business Days), the Borrower shall pay such Bank that portion (after giving
effect to any payment made or to be made under SECTION 2.19, if applicable) of
such increased expense incurred (including, in the case of SECTION 3.01(a)(iv),
any reduction in the rate of return on capital to an amount below that which it
could have achieved but for such regulation after taking into account such
Bank's policies as to capital adequacy) or reduction in an amount received
which such Bank determines is attributable to making, funding and maintaining
its Credit Extensions or its Commitment.
(b) In determining such increased expense, reduction in rate of
return of capital or reduction in an amount received pursuant to SECTION
3.01(a), each Bank shall act reasonably and in good faith and will, to the
extent the increased costs or reductions in amounts received or receivable
relate to such Bank's loans in general and are not specifically attributable to
the Credit Extensions hereunder, use averaging and attribution methods which
are reasonable and which cover all loans similar to the Credit Extensions made
by such Bank whether or not the loan documentation for such other loans permits
the Bank to receive increased costs of the type described in SECTION 3.01(a),
with written notice as to the additional amounts owed to such Bank, showing the
basis for the calculation thereof and containing a description of the event
giving rise to such increased expense, reduction in rate of return of capital
or reduction in amount received hereunder, to the Borrower by such Bank to be,
absent manifest error, final and conclusive and binding upon all the parties
hereto.
SECTION 3.02. AVAILABILITY OF RATE OPTIONS; ILLEGALITY.
(a) If the Required Banks determine that (i) deposits of a
type and maturity appropriate to match fund Eurodollar Rate Advances
are not available or (ii) the Eurodollar Base Rate does not accurately
reflect the cost of making or maintaining a Eurodollar Rate Loan, then
the Administrative Agent may, and at the request of the Required Banks
shall, suspend the availability of the Eurodollar Rate Advances and
require that, at the option of the Borrower, any Eurodollar Rate
Advances outstanding either be repaid or converted to Floating Rate
Advances on the last day of the relevant Eurodollar Interest Period
therefor.
(b) If any Bank determines that maintenance of its Eurodollar
Rate Loans at a suitable Lending Installation would violate any
Applicable Law, or any policy, guideline or directive of any
governmental authority having jurisdiction over such Bank, whether or
not having the force of law, then such Bank shall promptly notify the
Borrower and the
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Administrative Agent and, so long as such circumstances shall
continue, (i) such Bank shall have no obligation to make or convert
into Eurodollar Rate Loans (but shall make Floating Rate Loans
concurrently with the making of or conversion into Eurodollar Rate
Loans by the Banks which are not so affected, in each case in an
amount equal to such Bank's Applicable Percentage of all Eurodollar
Rate Loans which would be made or converted into at such time in the
absence of such circumstances) and (ii) on the last day of the current
Eurodollar Interest Period for each Eurodollar Rate Loan of such Bank
(or, in any event, if such Bank so requests, on such earlier date as
may be required by such Applicable Law, policy, guideline or
directive), such Eurodollar Rate Loan shall, unless then repaid in
full, automatically convert to a Floating Rate Loan. Each Floating
Rate Loan made by a Bank which, but for the circumstances described in
the foregoing sentence, would be a Eurodollar Rate Loan (an AFFECTED
LOAN") shall, notwithstanding any other provision of this Agreement,
remain outstanding for the same period as the Eurodollar Rate Advance
of which such Affected Loan would be a part absent such circumstances.
SECTION 3.03. FUNDING INDEMNIFICATION. If any payment of a
Eurodollar Rate Advance occurs on a date which is not the last day of a
Eurodollar Interest Period, whether because of acceleration, prepayment or
otherwise, or a Eurodollar Rate Advance is not made on the date specified by
the Borrower for any reason other than default by the Banks or other than
following a Required Bank determination pursuant to SECTION 3.02, the Borrower
will indemnify each Bank for any loss (including lost profits) or cost incurred
by it resulting therefrom, including any loss or cost in liquidating or
employing deposits acquired to fund or maintain the Eurodollar Rate Advance.
SECTION 3.04. CHANGE OF LENDING OFFICE, REPLACEMENT OF BANK, ETC.
(a) Each Bank agrees that, upon the occurrence of any event giving
rise to the operation of SECTION 2.19, 3.01 or 3.02 with respect to such Bank,
it will, to the extent permitted by Applicable Law or by the relevant
governmental authority, in consultation with the Administrative Agent, for a
period of 30 days endeavor in good faith to avoid or minimize the increase in
costs or reduction in payments resulting from such event (including, but not
limited to, endeavoring to change its Lending Installation); PROVIDED, HOWEVER,
that such avoidance or minimization can be made in such a manner that such
Bank, in its sole determination, suffers no economic, legal or regulatory
disadvantage. If any Bank (an "AFFECTED BANK") shall make a demand for payment
under any of such SECTIONS (or, in the case of SECTION 3.02(b), be required to
make or convert to Floating Rate Loan(s)), and the Borrower shall find a
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Bank or an Eligible Assignee which offers in writing to purchase the
Commitments and Credit Extensions of such Affected Bank without recourse at par
on a specified date, together with accrued and unpaid interest and commitment
fees thereon to the date of purchase, and tenders the purchase price of such
Commitments and Credit Extensions on such specified date, and if, in the
reasonable opinion of such Affected Bank, its acceptance of such offer would be
permitted by Applicable Law and all relevant governmental authorities and would
not result in its suffering any economic, legal or other regulatory
disadvantage, then the Borrower shall be excused from the payment of the
increased costs claimed by such Affected Bank under any of such SECTIONS
accruing after the first interest payment date pursuant to SECTION 2.12 for
each Loan of such Affected Bank on or following such specified date, if the
Affected Bank demanding payment under either such SECTION declines such
purchase offer, PROVIDED that the Administrative Agent shall first consent to
any such Eligible Assignee becoming a Bank under this Agreement, which consent
the Administrative Agent shall not unreasonably withhold. If such Affected
Bank accepts such purchase offer, upon consummation of such purchase offer such
Affected Bank shall cease to be a party hereto. Except as provided in the
immediately preceding sentence, nothing in this SECTION 3.04(a) shall affect or
postpone the obligations of the Borrower to make payments as provided in
SECTION 2.19 or 3.01. Any reasonable expenses incurred by such Affected Bank
under this SECTION 3.04(a) shall be paid by the Borrower upon delivery to the
Borrower of a certificate as to the amount of such expenses, which certificate
shall be conclusive and binding, in the absence of manifest error.
(b) A certificate of a Bank as to the amount due under SECTION 3.01
or 3.03 shall be final, conclusive and binding on the Borrower in the absence
of manifest error; PROVIDED, in the case of amounts due under SECTION 3.01,
that such certificate is accompanied by the written notice from the Bank
specified in SECTION 3.01(b). Determination of amounts payable under such
SECTIONS in connection with a Eurodollar Rate Loan shall be reasonable and
customary and calculated as though each Bank funded its Eurodollar Rate Loan
through the purchase of a deposit of the type and maturity corresponding to the
deposit used as a reference in determining the Eurodollar Rate applicable to
such Loan, whether in fact that is the case or not. Unless otherwise provided
herein, the amount specified in the certificate shall be payable on demand
after receipt by the Borrower of the certificate. The obligations of the
Borrower under SECTIONS 3.01 and 3.03 shall survive payment of the Obligations
and termination of this Agreement.
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ARTICLE IV
CONDITIONS PRECEDENT
The obligation of each Bank to make a Loan on the occasion of each
Advance or of any Issuer to issue a Letter of Credit (and the right of the
Borrower to request any Swing Loan) is subject to the satisfaction of all the
following conditions:
SECTION 4.01. ALL CREDIT EXTENSIONS. In the case of each Credit
Extension (except as provided in SECTION 2.07(c) and except for Reimbursement
Obligations):
SECTION 4.01.01. REQUIRED NOTICE. The Administrative Agent
shall have received a Borrowing Notice for such Advance or a request for such
Swing Loan, or an Issuance Request for such Letter of Credit, as the case may
be.
SECTION 4.01.02. NO DEFAULT. Immediately prior to and after
such Credit Extension, no Default shall have occurred and be continuing.
SECTION 4.01.03. REPRESENTATIONS AND WARRANTIES CORRECT. The
representations and warranties of the Borrower contained in this Agreement and
the other Credit Documents shall be true and correct in all material respects
on and as of the date of such Advance.
SECTION 4.01.04. NO LITIGATION, ETC. Except as set forth in
ITEM C ("Litigation [SECTION 5.08]") of the Disclosure Schedule, no
litigation, arbitration, governmental investigation, proceeding or inquiry
shall be pending, or, to the best knowledge of the Borrower (after due
inquiry), threatened
(a) which seeks to enjoin or otherwise prevent the
consummation of, or to recover any damages or obtain relief as a
result of, the transactions contemplated by the Credit Documents, any
Subordinated Debt Document, any Senior Debt Document, any material
agreement pursuant to which equity capital is contributed to the
Borrower or the Borrower's capital stock is issued, or any agreement,
instrument or other document related to any of the foregoing, or which
relates to the validity or enforceability of any of the foregoing
agreements or instruments; or
(b) which is a development in the litigation, arbitration,
governmental investigation, proceeding or inquiry set forth in such
ITEM C ("Litigation [Section 5.08]") that has or is reasonably likely
to have a Materially Adverse Effect with respect to any of the
agreements described in CLAUSE (a) above or any transactions
contemplated hereby or thereby; or
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(c) which has or is reasonably likely to have a Materially
Adverse Effect or with respect to any of the agreements described in
CLAUSE (a) above or any transactions contemplated hereby or thereby.
SECTION 4.01.05. FURTHER REQUESTS. The Administrative Agent
shall have received all documents any Managing Agent may reasonably request
relating to the existence of the Borrower or any Subsidiary, the corporate
authority for and the validity of this Agreement and each Credit Document and
any other matters relevant hereto, and all documents any Managing Agent may
reasonably request to update, as of the date of such Credit Extension, any of
the documents or assurances provided pursuant to SECTION 4.02, all in form and
substance reasonably satisfactory to the Managing Agents.
SECTION 4.01.06. SATISFACTORY LEGAL FORM. All documents
executed or submitted pursuant hereto by or on behalf of the Borrower and any
Subsidiary shall be reasonably satisfactory in form and substance to the
Managing Agents and their respective counsel; the Administrative Agent and its
counsel shall have received all information and such counterpart originals or
such certified or other copies of such materials as any Managing Agent or its
counsel may reasonably request; and all legal matters incident to the
transactions contemplated by this Agreement shall be reasonably satisfactory to
counsel to the Managing Agents.
Each Credit Extension hereunder shall be deemed to be a representation
and warranty by the Borrower on the date of such Credit Extension as to the
facts specified in SECTIONS 4.01.02 through 4.01.04, except as to any such
SECTION waived as provided herein.
SECTION 4.02. AMENDMENT EFFECTIVE TIME. On and from the first date
that the Managing Agents shall have received counterparts of this Agreement
duly executed by the Borrower, each Managing Agent and each Bank listed on the
signature pages hereof, and that each of the following conditions in this
SECTION 4.02 shall have been satisfied, the terms and conditions of the
Existing Agreement shall be superseded and restated in their entirety by the
terms and conditions of this Agreement and this Agreement shall take effect.
This Agreement shall not constitute a novation, and the execution and delivery
by the Borrower of this Agreement and the Notes is in substitution for, but not
in payment of, the Borrower's obligations incurred under or evidenced by the
Existing Agreement and the "Notes" delivered thereunder and as defined therein.
The Administrative Agent shall give notice to the Borrower and to each
Bank that the Amendment Effective Time has occurred. Each agreement, opinion
or certificate described in this SECTION 4.02 shall be dated the date of the
Amendment Effective Time, unless the
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applicable subsection of this SECTION 4.02 explicitly provides otherwise or the
Managing Agents in their sole discretion allow otherwise.
SECTION 4.02.01. RESOLUTIONS, ETC. The Managing Agents shall
have received, for the Borrower and each Subsidiary executing Credit Documents
at the Amendment Effective Time, a certificate of an Authorized Officer thereof
as to:
(a) resolutions of the Board of Directors of such Person then
in full force and effect authorizing the execution, delivery, and
performance by such Person of, as applicable, this Agreement, the
Notes, the Collateral Documents and each other Credit Document to be
executed by it;
(b) the incumbency and signatures of the Authorized Officers
of such Person authorized to act relative to, as applicable, this
Agreement, the Notes, the Collateral Documents and each other Credit
Document to be executed by it (upon which certificate each Managing
Agent and each Bank may conclusively rely until each Managing Agent
and each Bank shall have received a further certificate of an
Authorized Officer of such Person cancelling or amending such prior
certificate, which further certificate shall be reasonably
satisfactory to each Managing Agent); and
(c) such other matters as the Managing Agents may reasonably
request.
SECTION 4.02.02. NO MATERIALLY ADVERSE EFFECT. There shall
not have been any Materially Adverse Effect since November 30, 1993.
SECTION 4.02.03. CLOSING FEES AND EXPENSES. The Managing
Agents shall have received payment in full of all fees, expenses and
out-of-pocket costs then or theretofore payable hereunder or under the Agents'
Fee Letter, an invoice for which fees, expenses and out-of-pocket costs shall
have been previously delivered to the Borrower.
SECTION 4.02.04. NOTES. The Administrative Agent shall have
received the duly executed Global Term Note, Global Revolving Note and Swing
Note, in each case complying with the provisions of SECTION 2.08.
SECTION 4.02.05. OPINIONS OF COUNSEL. The Managing Agents
shall have received opinions addressed to each Managing Agent and all Banks,
from each of:
(a) Calfee, Halter & Griswold, counsel for the Borrower and
its Subsidiaries, substantially in the form of
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EXHIBIT K-1, and covering such other additional matters related to the
transactions contemplated hereby as the Managing Agents may reasonably
request;
(b) Kramer, Levin, Naftalis, Nessen, Kamin & Frankel, special
New York counsel for the Borrower and its Subsidiaries, substantially
in the form of EXHIBIT K-2;
(c) Rosenberg & Liebentritt, counsel for Zell/Chilmark,
substantially in the form of EXHIBIT K-3; and
(d) Mayer, Brown & Platt, counsel for the Managing Agents,
substantially in the form of EXHIBIT K-4.
SECTION 4.02.06. CONFIRMATION. The Managing Agents shall have
received the Confirmation, duly executed by the Borrower and each Subsidiary
party to any Credit Document.
SECTION 4.02.07. REAL ESTATE. The Managing Agents shall have
received assurances from the title insurance company providing title insurance
with respect to all Mortgages on real property of the Borrower or any
Subsidiary that the Administrative Agent will receive, promptly following the
Amendment Effective Time, (a) date down endorsements of the title insurance
policies as to all such Mortgages, effective as of the Amendment Effective
Time, in form and substance satisfactory to the Managing Agents or (b) such
other documentation as the Managing Agents may reasonably request, in form and
substance satisfactory to the Managing Agents, as to the priority and continued
validity of such Mortgages.
SECTION 4.02.08. OTHER CONDITIONS. Immediately prior to and
after giving effect to the Amendment Effective Time, the conditions set forth
in SECTIONS 4.01.02 through 4.01.06 shall have been satisfied as if such
SECTIONS were set forth herein (except that references to a "Credit Extension"
shall be references to the "Amendment Effective Time").
SECTION 4.02.09. ALL PROCEEDINGS AND INSTRUMENTS SATISFACTORY.
All corporate and legal proceedings and all instruments and agreements
delivered in connection with the transactions contemplated by this Agreement
and each other Credit Document shall be reasonably satisfactory in form and
substance to the Managing Agents, and the Managing Agents shall have received
all information and copies of all documents and papers, including records of
corporate existence, authority and proceedings and governmental approvals, if
any, which any Managing Agent or any Bank reasonably may have requested in
connection therewith, and such documents and papers, where appropriate, shall
be certified by proper corporate or governmental authorities.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 5.01. CORPORATE EXISTENCE AND POWER. The Borrower and each
of its Subsidiaries is a corporation validly organized and existing and in good
standing under the laws of the jurisdiction of its incorporation, is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction where the nature of its business makes such qualification
necessary and where the failure to so qualify is reasonably likely to have a
Materially Adverse Effect, and has full corporate power and authority and holds
all requisite governmental licenses, permits and other approvals to own and
hold under lease its property and to conduct its business substantially as
presently conducted by it which the failure to so hold is reasonably likely,
individually or in the aggregate, to have a Materially Adverse Effect.
SECTION 5.02. CORPORATE AND GOVERNMENTAL AUTHORIZATION;
CONTRAVENTION. The execution and delivery by the Borrower and, where
applicable, each Subsidiary of the Borrower of this Agreement, the Notes, the
Collateral Documents to which it is or is to be a party, and each other Credit
Document to which it is or is to be a party, the performance by the Borrower
and, where applicable, each Subsidiary, of its obligations hereunder and
thereunder, and all Credit Extensions obtained hereunder by the Borrower, have
been duly authorized by all necessary corporate action, do not require any
Approvals, do not and will not conflict with, result in any violation of, or
constitute any default under, any provision of any Organic Document or any
Contractual Obligation (except for conflicts, violations or defaults under
Contractual Obligations which, individually or in the aggregate, are not
reasonably likely to have a Materially Adverse Effect) or any law or
governmental regulation or court decree or order applicable to it or its
property and will not result in or require the creation or imposition of any
Lien on any of its properties pursuant to the provisions of any Contractual
Obligation (excluding, however, the Liens created by the Collateral Documents).
SECTION 5.03. BINDING EFFECT; RANKING. This Agreement and each of
the Collateral Documents to which the Borrower is a party has been duly
executed and delivered by the Borrower and is, and each of the Notes upon the
execution and delivery thereof by the Borrower will be, the legal, valid and
binding obligation of the Borrower, enforceable in accordance with its terms,
subject to any applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors' rights generally and to general principles of
equity. Each Collateral Document to which a Subsidiary is a party constitutes
the legal, valid and binding
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obligation of the Subsidiary party thereto, enforceable in accordance with its
terms, subject to any applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally and to general
principles of equity.
SECTION 5.04. FINANCIAL STATEMENTS. (a) All balance sheets, all
statements of earnings, stockholders' equity and cash flow, and all other
financial information which have been furnished by or on behalf of the Borrower
and its Subsidiaries or by any other Person at the direction of the Borrower or
any of its Subsidiaries to any Bank or any Managing Agent for the purposes of
or in connection with this Agreement or any transaction contemplated hereby,
including:
(i) the audited consolidated balance sheet at November 30,
1993 and the related audited consolidated statements of earnings,
stockholders' equity and cash flow, for the Fiscal Year then ended, of
the Borrower and its Subsidiaries, certified by KPMG Peat Marwick; and
(ii) the unaudited consolidated balance sheet dated February
28, 1994 and the related unaudited consolidated statements of earnings
and cash flow for the Fiscal Quarter then ended of the Borrower and
its Subsidiaries,
have been prepared in accordance with GAAP consistently applied, except where
not applicable thereto or as otherwise disclosed therein, throughout the
periods involved and present fairly (subject to normal year-end adjustments)
the financial condition of the Borrower and its Subsidiaries, taken as a whole,
covered thereby as at the dates thereof and the results of their operations for
the periods then ended. Neither the Borrower nor any of its Subsidiaries had,
as of such dates, any material contingent liability or liabilities for taxes,
long-term leases or unusual forward or long-term commitments which are not
reflected in the financial statements described in CLAUSE (i) or (ii), as the
case may be, or in the Disclosure Schedule and which, in accordance with GAAP,
should have been reflected in such financial statements.
(b) The Initial Financial Projections delivered to the Managing
Agents and the Banks prior to the execution of this Agreement represent the
best estimates of the future performance of the Borrower and its Subsidiaries,
and were prepared by the Borrower based upon historical financial information
and assumptions the Borrower deems reasonable and appropriate in light of
current circumstances.
SECTION 5.05. MATERIALLY ADVERSE EFFECT. Since November 30, 1993,
no events have occurred or contracts entered into which, individually or in the
aggregate, constitute or are reasonably likely to constitute a Materially
Adverse Effect.
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SECTION 5.06. INSURANCE. The Insurance Report previously
distributed to the Managing Agents (as supplemented by insurance information
distributed to the Managing Agents with respect to insurance replaced or
acquired since the date of such insurance report) is a complete and accurate
listing of the property and casualty insurance program and policies carried by
the Borrower and its Subsidiaries at the Amendment Effective Time. Such
Insurance Report (as so supplemented) includes the insurer's(s') name(s),
policy number(s), expiration date(s), amount(s) of coverage, type(s) of
coverage, the annual premium(s), deductibles and self-insured retention and
describes in detail any retrospective rating plan, fronting arrangement or any
other self-insurance or risk assumption agreed to by the Borrower or any
Subsidiary or imposed upon the Borrower or any Subsidiary by any such insurer,
and any other property or casualty self-insurance program in effect.
SECTION 5.07. SUBSIDIARIES; CAPITALIZATION.
(a) The Borrower has no Subsidiaries except
(i) the corporations that are identified in ITEM
(E)-1 ("Existing Subsidiaries [SECTION 5.07(a)]") of the
Disclosure Schedule, and
(ii) the corporations of which 100% of the
outstanding shares of capital stock are acquired by the
Borrower from time to time in accordance with SECTION 6.02.05.
(b) The Borrower has no Subsidiaries as of the Amendment
Effective Time that were not Subsidiaries as of April 20, 1989.
(c) The Borrower has no authorized capital stock outstanding
as of the Amendment Effective Time other than 29,433,330 shares of
Class A common stock, $0.01 par value, all of which are issued and
outstanding and Beneficially Owned, as of the Amendment Effective
Time, by the Persons listed, and in the approximate respective amounts
listed, in ITEM E-2 ("Stock Ownership [SECTION 5.07(c)]") of the
Disclosure Schedule.
SECTION 5.08. LITIGATION. Except as set forth in ITEM C
("Litigation [SECTION 5.08]") of the Disclosure Schedule or disclosed by the
Borrower in accordance with SECTION 6.01.06(b), no litigation, arbitration,
governmental investigation, proceeding or inquiry is pending, or, to the best
knowledge of the Borrower (after due inquiry), threatened:
(a) which seeks to enjoin or otherwise prevent the
consummation of, or to recover any damages or obtain relief as
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a result of, the transactions contemplated by the Credit Documents,
any material agreement pursuant to which equity capital is contributed
to the Borrower or the Borrower's capital stock is issued, or any
agreement, instrument or other document related to any of the
foregoing, or which relates to the validity of any of the foregoing
agreements or instruments; or
(b) which is a development in the litigation, arbitration,
governmental investigation, proceeding or inquiry set forth in such
ITEM C that would have or is reasonably likely to have a Materially
Adverse Effect or with respect to any of the agreements described
in CLAUSE (a) above or any transactions contemplated hereby or thereby;
or
(c) which otherwise could reasonably be expected to have a
Materially Adverse Effect or with respect to any of the agreements
described in CLAUSE (a) above or any transactions contemplated hereby
or thereby.
SECTION 5.09. INVESTMENT COMPANY. Neither the Borrower nor any
Subsidiary is an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940.
SECTION 5.10. PUBLIC UTILITY COMPANY. Neither the Borrower nor any
Subsidiary is a "public-utility company", or a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of a "holding
company" or a "subsidiary company" of a "holding company", within the meaning
of the Public Utility Holding Company Act of 1935.
SECTION 5.11. ABSENCE OF DEFAULT. Neither the Borrower nor any of
its Subsidiaries is in default in the payment of (or in the performance of any
obligation applicable to) any Debt, or in violation of any Applicable Law, in
any such case which has had, or is reasonably likely to have, a Materially
Adverse Effect.
SECTION 5.12. DISCLOSURE. Except as otherwise disclosed in ITEM F
("Update of Factual Information [SECTION 5.12]") of the Disclosure Schedule,
all factual information heretofore or contemporaneously furnished by or on
behalf of the Borrower in writing to any Managing Agent or any Bank for
purposes of or in connection with this Agreement or any other Credit Document
or any transaction contemplated hereby is, and all such other factual
information hereafter furnished by or on behalf of the Borrower in writing to
any Managing Agent or any Bank will be, taken as a whole, true and accurate in
all material respects on the date as of which such information is or will be
dated or certified and does not or will not omit to state any material fact
necessary to make such
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information not misleading in light of the circumstances at the time
prevailing.
SECTION 5.13. REGULATIONS G, T, U AND X. Neither the Borrower nor
any of its Subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing
or carrying margin stock. None of the proceeds of any Advance will be used for
the purpose of, or be made available by the Borrower or any of its Subsidiaries
in any manner to any other Person to enable or assist such Person in,
purchasing or carrying "margin stock". Terms for which meanings are provided
in Regulations G, T, U and X or any regulations substituted therefor, as from
time to time in effect, are used in this SECTION 5.13 with such meanings.
SECTION 5.14. SECURITIES REGULATIONS. All offerings or sales of
any Subordinated Debt, any Senior Debt or other securities issued or guaranteed
by the Borrower or any Subsidiary, will be made in compliance with, or pursuant
to an exemption to, the registration or qualification requirements of the
Securities Act of 1933, applicable state securities or blue sky laws and the
rules and regulations promulgated thereunder. No prospectus, offering
memorandum or other offering material or information furnished by the Borrower
or any Subsidiary to any Person in connection with any such offering or sale of
securities shall contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are made,
not misleading.
SECTION 5.15. BURDENSOME AGREEMENTS. Neither the Borrower nor any
of its Subsidiaries is a party to any agreement or instrument or subject to any
Organic Document or Contractual Obligation which could reasonably be expected
to have a Materially Adverse Effect.
SECTION 5.16. TAXES. Each of the Borrower and its Subsidiaries has
filed all tax returns and reports required by law to have been filed by it and
has paid all taxes and governmental charges thereby shown to be owing, except
any such taxes or charges which are being contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with GAAP
shall have been set aside on its books. No tax Liens (other than Liens for
taxes which are not yet due and payable) have been filed with respect to the
Borrower or any of its Subsidiaries and, to the best knowledge of the Borrower,
except as otherwise disclosed in ITEM (C) ("Litigation [SECTION 5.08]") of the
Disclosure Schedule, no claims are being asserted with respect to any such
taxes or charges, which Liens and claims, individually or in the aggregate,
have had, or could reasonably be expected to have, a Materially Adverse Effect.
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SECTION 5.17. PENSION AND WELFARE PLANS. During the four
consecutive Fiscal Quarters prior to the date of this Agreement and as of the
date of any Credit Extension hereunder, no formal action has been taken to
terminate any Pension Plan (except for terminations of Pension Plans which, as
of the date of this Agreement or any Credit Extension, can be terminated
without incurring any liability under section 4062 of ERISA) and no
contribution failure has occurred with respect to any Pension Plan sufficient
to give rise to a Lien under section 302(f) of ERISA. No condition exists or
event or transaction has occurred with respect to any Pension Plan which has
had, or could reasonably be expected to have, a Materially Adverse Effect.
Neither the Borrower nor any of its Subsidiaries has any contingent liability
with respect to any post-termination benefit under a Welfare Plan, other than
liability for continuation coverage described in part 6 of title I of ERISA,
except as otherwise disclosed on ITEM (D) ("Pension and Welfare Plans [SECTION
5.17]") of the Disclosure Schedule.
SECTION 5.18. LABOR CONTROVERSIES. Except as set forth in ITEM C
("Litigation" [Section 5.08]) of the Disclosure Schedule, there are no labor
controversies pending or, to the best knowledge of the Borrower, threatened
against the Borrower or any of its Subsidiaries, which, if adversely
determined, could reasonably be expected to have a Materially Adverse Effect.
SECTION 5.19. OWNERSHIP OF PROPERTIES; LIENS. The Borrower and
each of its Subsidiaries has valid fee or leasehold interests in all real
property, and good and marketable title to all of its respective properties and
assets, real and personal, of any nature whatsoever the termination or loss of
which could reasonably be expected to cause any Materially Adverse Effect and
is not in default beyond the expiration of any applicable grace period of any
material obligation under any leases creating any of its leasehold interests in
real property the termination or loss of which could reasonably be expected to
cause any Materially Adverse Effect, and none of such property is subject to
any Lien, except as permitted pursuant to SECTION 6.02.03 and except for Liens
upon leased property securing Debt of landlords or owners thereof. The real
property described in ITEM (B-2) ("Major Properties [SECTION 5.19]") of the
Disclosure Schedule constitutes all real property of the Borrower and its
Subsidiaries the termination or loss of which could reasonably be expected to
cause any Materially Adverse Effect. As of the Amendment Effective Time, the
real property described in ITEM (B-3) ("Locker Stock/Third Party Warehouse
Inventory") of the Disclosure Schedule constitutes all locations of real
property at which significant inventory of the Borrower or such Subsidiaries is
held subject to consignment arrangements or in public warehouses is located,
and the approximate amount of such inventory held at such locations.
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SECTION 5.20. PATENTS, TRADEMARKS, ETC. The Borrower and each of
its Subsidiaries owns (or is licensed to use) and possesses all such patents,
patent rights, trademarks, trademark rights, trade names, trade name rights,
service marks, service mark rights, and copyrights as the Borrower considers
necessary for the conduct of the businesses of the Borrower and its
Subsidiaries as now conducted without, individually or in the aggregate, any
infringement or alleged infringement, except as disclosed in ITEM C
("Litigation [SECTION 5.08]") of the Disclosure Schedule, upon rights of other
Persons which might reasonably be expected to have a Materially Adverse Effect,
and (except as disclosed on ITEM (I) ("Patents and Trademarks [SECTION 5.20]")
of the Disclosure Schedule) there is no individual patent or patent license or
trademark or trademark right the loss of which might reasonably be expected to
have a Materially Adverse Effect.
SECTION 5.21. SUBORDINATED DEBT, ETC. The Senior Subordinated
Notes and the Senior Subordinated Note Indenture constitute the legal, valid
and binding obligations of the Borrower enforceable against the Borrower in
accordance with their respective terms. The subordination provisions of the
Senior Subordinated Notes and the Senior Subordinated Note Indenture are
enforceable against the holders of the Senior Subordinated Notes by the holder
of any "Senior Debt" (as defined in the Senior Subordinated Note Indenture)
which has not effectively waived the benefits thereof. All monetary
Obligations, including the Obligations to pay principal of and interest on the
Loans, the Letters of Credit, the Reimbursement Obligations, and fees and
expenses in connection therewith, constitute "Bank Debt" and "Senior Debt", as
defined in the Senior Subordinated Note Indenture, and all such Obligations are
entitled to the benefits of subordination created by the Senior Subordinated
Note Indenture and the Senior Subordinated Notes. The principal of and
interest on the Notes and all other Obligations will constitute "Senior Debt"
as that or any similar term is or may be used in any other instrument
evidencing or applicable to any other Subordinated Debt. As of the date of the
execution and delivery of the Senior Subordinated Notes, the Senior
Subordinated Notes were duly registered or qualified under all applicable
United States Federal and state securities laws or exempt therefrom. The
Borrower acknowledges that each Managing Agent and each Bank is entering into
this Agreement, and is extending its Commitments in reliance upon, the
subordination provisions of the Senior Subordinated Note Indenture, the Senior
Subordinated Notes and this Section. All payments of principal of or interest
on any Subordinated Debt made by the Borrower or from the liquidation of its
property will be subject to such subordination provisions.
SECTION 5.22. THE COLLATERAL DOCUMENTS. The provisions of the
Collateral Documents executed by the Borrower or any Subsidiary in favor of the
Administrative Agent securing the Notes and all
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other Obligations from time to time outstanding are effective to create, in
favor of the Administrative Agent, on behalf of the Banks, a legal, valid and
enforceable Lien in all right, title and interest of the Borrower and such
Subsidiary in any and all of the Collateral described therein, and each of such
Collateral Documents constitutes a fully perfected Lien in all right, title and
interest of the Borrower or such Subsidiary in such Collateral superior in
right to any Liens, existing or future, which the Borrower or such Subsidiary
or any creditors thereof or purchasers therefrom, or any other Person, may have
against such collateral or interests therein, except to the extent, if any,
otherwise provided therein or in this Agreement. The Collateral described in
the Collateral Documents constitutes all of the real and personal property of
the Borrower and its Subsidiaries, except property described in ITEM J, SECTION
1 ("Property Not Pledged [SECTION 5.22]") of the Disclosure Schedule or as may
hereafter be agreed by the Required Banks. Each parcel of owned real property
and the leasehold interest in leased real property of the Borrower and its
Subsidiaries listed in ITEM J, SECTION 2 of the Disclosure Schedule has, to the
best of the Borrower's knowledge and belief, a fair market value of less than
$2,000,000.
SECTION 5.23. HAZARDOUS MATERIALS. Except as set forth in ITEM (K)
("Hazardous Materials [SECTION 5.23]") of the Disclosure Schedule:
(a) No notice, notification, demand, request for information,
citation, summons or order has been issued, no complaint has been
filed, no penalty has been assessed and no investigation or review is
pending or threatened by any governmental or other entity with respect
to any alleged failure by the Borrower or any Subsidiary to have any
permit, certificate, license, approval, registration or authorization
required in connection with the conduct of the Borrower's or such
Subsidiary's business or with respect to any generation, treatment,
storage, recycling, transportation or disposal or release as defined
in 42 U.S.C. Section 9601(22) (a "RELEASE") of any substance
regulated under federal, state or local environmental statutes,
ordinances, rules, regulations or orders (HAZARDOUS MATERIALS")
generated by the Borrower or such Subsidiary, except for any of the
foregoing which do not, and are not reasonably likely to, individually
or in the aggregate, have a Materially Adverse Effect.
(b) Neither the Borrower nor any Subsidiary has handled any
Hazardous Material on any property now or previously owned or leased
by the Borrower or such Subsidiary to an extent that has, or is
reasonably likely to have, a Materially Adverse Effect; and
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(i) no PCB is or has been present at any property
now or previously owned or leased by the Borrower or any
Subsidiary to an extent that has, or is reasonably likely to
have, a Materially Adverse Effect;
(ii) no asbestos is or has been present at any
property now or previously owned or leased by the Borrower or
any Subsidiary to an extent that has, or is reasonably likely
to have, a Materially Adverse Effect;
(iii) there are no underground storage tanks for
Hazardous Materials, active or abandoned, at any property now
or previously owned or leased by the Borrower or any
Subsidiary to an extent that has, or is reasonably likely to
have, a Materially Adverse Effect;
(iv) no Hazardous Materials have been Released at,
on or under any property now or previously owned or leased by
the Borrower or any Subsidiary to an extent that has, or is
reasonably likely to have, a Materially Adverse Effect; and
(v) no Hazardous Materials have been Released, in a
reportable quantity, where such a quantity has been
established by statute, ordinance, rule, regulation or order,
at, on or under any property now or previously owned by the
Borrower or any Subsidiary to an extent that has, or is
reasonably likely to have, a Materially Adverse Effect.
(c) Neither the Borrower nor any Subsidiary has directly
transported or directly arranged for the transportation of any
Hazardous Material to any location which is listed or proposed for
listing under CERCLA or on any similar state list or which is the
subject of federal, state or local enforcement actions or other
investigations which may lead to claims against the Borrower or any
Subsidiary for clean-up costs, remedial work, damages to natural
resources or for personal injury claims, including, but not limited
to, claims under CERCLA, where the fact of any such act is, or is
reasonably likely to have, a Materially Adverse Effect.
(d) No Hazardous Material generated by the Borrower or any
Subsidiary has been recycled, treated, stored, disposed of or
transported by any entity other than those listed in ITEM (K)
("Hazardous Materials [SECTION 5.23]") of the Disclosure Schedule or
Released by the Borrower or such Subsidiary at any location other than
those listed in ITEM (K) ("Hazardous Materials [SECTION 5.23]") of the
Disclosure Schedule where the fact of any such act has, or is
reasonably likely to have, a Materially Adverse Effect.
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(e) No oral or written notification of a Release of a
Hazardous Material has been filed by or on behalf of the Borrower or
any Subsidiary and no property now or previously owned or leased by
the Borrower or any Subsidiary is listed or proposed for listing on
the National Priority list promulgated pursuant to CERCLA, or on any
similar state list of sites requiring investigation or clean-up, where
any such listing has, or is reasonably likely to have, a Materially
Adverse Effect.
(f) There are no environmental Liens on any of the real
property or properties owned or leased by the Borrower or any
Subsidiary, and no government actions have been taken or are in
process which could subject any of such properties to such Liens,
where such subjection has, or is reasonably likely to have, a
Materially Adverse Effect, and neither the Borrower nor any Subsidiary
would be required to place any notice or restriction relating to the
presence of Hazardous Materials at any property owned by it in any
deed to such property where the failure to so place any such notice
has, or is reasonably likely to have, a Materially Adverse Effect.
(g) Except as set forth in ITEM (K) ("Hazardous Materials
[SECTION 5.23]") of the Disclosure Schedule, there have been no
environmental investigations, studies, audits, tests, reviews or other
analyses conducted by or which are in the possession of the Borrower
or any Subsidiary in relation to any property or facility now or
previously owned or leased by the Borrower or any Subsidiary and which
have not been made available to the Managing Agents.
ARTICLE VI
COVENANTS
SECTION 6.01. CERTAIN AFFIRMATIVE COVENANTS. The Borrower agrees
that, unless the Required Banks consent thereto in writing, so long as any Bank
has any Commitment hereunder or any Obligation remains outstanding or unpaid:
SECTION 6.01.01. FINANCIAL INFORMATION, ETC. The Borrower will
furnish, or will cause to be furnished, to each Bank and to the Administrative
Agent copies of the following financial statements, reports and information:
(a) promptly when available and in any event within 90 days
after the close of each Fiscal Year,
(i) a consolidated balance sheet at the close of
such Fiscal Year, and related consolidated statements of
earnings, stockholders' equity and cash flow for such
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Fiscal Year, of the Borrower and its Subsidiaries, audited and
certified without Impermissible Qualification by an
Independent Public Accountant,
(ii) a written statement of such Independent Public
Accountant, setting forth in reasonable detail a calculation
of the financial tests contained in SECTION 6.02.04 at the
close of such Fiscal Year, to the effect that it has examined
the provisions of this Agreement and the Compliance
Certificate then being furnished pursuant to CLAUSE (a)(iii)
at the date of such statement and is not aware of any
miscalculation in such Compliance Certificate of such
financial tests or of any default in the performance by the
Borrower of any obligation to be performed by it hereunder or
under any other Credit Document, except such miscalculation or
default, if any, as may be disclosed in such statement,
(iii) a Compliance Certificate calculated as of the
computation date at the close of such Fiscal Year, and
(iv) sales and operating profit data for the
Borrower and its Subsidiaries on a business segment basis for
such Fiscal Year;
(b) promptly when available and in any event within 60 days
after the close of each of the first three Fiscal Quarters of each
Fiscal Year,
(i) consolidated balance sheets at the close of such
Fiscal Quarter, and related consolidated statements of
earnings and cash flow for such Fiscal Quarter and for the
period from the commencement of such Fiscal Year to the end of
such Fiscal Quarter, of the Borrower and its Subsidiaries,
setting forth comparative figures at the close of and for the
corresponding Fiscal Quarter and period of the prior Fiscal
Year, certified by the chief accounting or financial
Authorized Officer of the Borrower,
(ii) a Compliance Certificate calculated as of the
computation date at the close of such Fiscal Quarter, and
(iii) sales and operating profit data for the
Borrower and its Subsidiaries on a business segment basis for
such Fiscal Quarter;
(c) promptly upon receipt thereof, (i) copies of all detailed
financial and management reports (including an income statement and
balance sheet) submitted to the Borrower by an Independent Public
Accountant in connection with each annual
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or interim audit made by such Independent Public Accountant of the
books of the Borrower or any of its Subsidiaries and (ii) copies of
all material OSHA or similar notices received by the Borrower or any
of its Subsidiaries;
(d) promptly upon any filing thereof by the Borrower with the
Commission, any annual, periodic or special report or registration
statement generally available to the public;
(e) promptly upon completion or receipt thereof, a copy of
all notices, documents, or other instruments required to be delivered
pursuant to any Subordinated Debt Document or Senior Debt Document and
not otherwise required to be delivered hereunder;
(f) promptly upon completion thereof, but in no event later
than January 31 of each year, (i) a copy of the Borrower's annual
sales and profit forecast, including a forecasted balance sheet and
statement of cash flow (and a sales and profit forecast on a business
segment basis), in each case on an annual basis, and (ii) a copy of
the Borrower's annual sales and profit forecast and budget (the
"BUDGET"), including a forecasted balance sheet and statement of cash
flow, in each case on a monthly basis, and upon the delivery of any
financial statements relating to a period included in such Budget, a
summary comparing the Borrower's actual financial performance during
such period to that provided for in such Budget;
(g) promptly upon the execution and delivery thereof, copies
of any shareholder or similar agreement entered into by the Borrower
and any holder of the capital stock of the Borrower;
(h) promptly upon completion thereof but in no event later
than 40 days after the end of each calendar month, a copy of the
Borrower's monthly financial reporting package, including monthly
operating statements, which package shall include substantially all of
the information (and be set out in the format) of the report attached
as SCHEDULE 6.01.01; and
(i) promptly, such additional financial and other information
with respect to the Borrower and its Subsidiaries as any Bank may from
time to time reasonably request through the Administrative Agent.
SECTION 6.01.02. MAINTENANCE OF CORPORATE EXISTENCE, ETC. The
Borrower will cause to be done at all times all things necessary to maintain
and preserve the corporate existences, rights (charter and statutory) and
franchises of the Borrower and each Subsidiary, and, except as permitted by
SECTIONS 6.02.05 and
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6.02.11, the Borrower will continue to own and hold, directly or indirectly,
free and clear of all Liens (except such as have been created or permitted
pursuant hereto), all of the outstanding shares of capital stock (excluding
directors' qualifying shares, if any) or other ownership interests of each of
its Subsidiaries; PROVIDED that the Borrower shall not be required to preserve
any such existence, right or franchise if the Borrower's board of directors
shall determine that the preservation thereof is not material or no longer
desirable in the conduct of the business of the Borrower and its Subsidiaries
as a whole and that the loss thereof will not result in a Materially Adverse
Effect.
SECTION 6.01.03. FOREIGN QUALIFICATION. The Borrower will,
and will cause each Subsidiary to, cause to be done at all times all things
necessary to be duly qualified to do business and be in good standing as a
foreign corporation in each jurisdiction where the nature of its business makes
such qualification necessary and where the failure to so qualify is reasonably
likely to have a Materially Adverse Effect.
SECTION 6.01.04. PAYMENT OF TAXES, ETC. The Borrower will,
and will cause each Subsidiary to, pay and discharge, as the same may become
due and payable, all federal, state, and local taxes, assessments, and other
governmental charges or levies against or on any of its income, profits or
property, as well as claims of any kind which, if unpaid, might become a Lien
upon any of its properties; PROVIDED that the foregoing shall not require the
Borrower or any Subsidiary to pay or discharge any such tax, assessment,
charge, levy or Lien, so long as it shall contest the validity thereof in good
faith by appropriate proceedings and shall set aside on its books adequate
reserves in accordance with GAAP with respect thereto.
SECTION 6.01.05. MAINTENANCE OF PROPERTY. The Borrower will,
and will cause each of its Subsidiaries to, at their respective expense:
(a) acquire and maintain its property which is, or is
intended to be, Collateral in a manner that will enable the Borrower
or such Subsidiary to cause such property to be subject to the Liens
of the Collateral Documents; and
(b) maintain and keep its properties which are used or useful
to its business in good repair, working order and condition (ordinary
wear and tear excepted), and from time to time make all necessary or
desirable repairs, renewals and replacements, in a manner consistent
with its existing practices, so that its businesses may be properly
and advantageously conducted at all times.
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SECTION 6.01.06. NOTICE OF DEFAULT, LITIGATION, ETC. The
Borrower will, upon an Authorized Officer obtaining knowledge thereof, give
notice promptly to each Bank and the Administrative Agent of:
(a) the occurrence of
(i) any Default, or
(ii) any event of default or unmatured event of
default under any Subordinated Debt Document
or Senior Debt Document;
(b) any litigation, arbitration, or governmental
investigation or proceeding not previously disclosed in writing by the
Borrower to the Banks which has been instituted or, to the knowledge
of the Borrower, is threatened against, the Borrower or any Subsidiary
or to which any of its properties is subject which
(i) if adversely determined, could reasonably be
expected to have a Materially Adverse Effect (unless the
Borrower shall, in good faith and upon consultation with
counsel, have determined such Materially Adverse Effect to be
unlikely), or
(ii) relates to this Agreement, any Note, any
Collateral Document, any other Credit Document, any
Subordinated Debt Document, any Senior Debt Document, any
Zell/Chilmark Acquisition Document or any agreement pursuant
to which equity capital is contributed to the Borrower or the
Borrower's capital stock is issued;
(c) any material adverse development which shall occur in any
litigation, arbitration, or governmental investigation or proceeding
required to be disclosed by the Borrower to the Banks, or any
development which shall occur in any litigation, arbitration or
governmental investigation or proceeding, regardless of whether
previously disclosed by the Borrower to the Banks, if such development
has or would be reasonably likely to have a Materially Adverse Effect;
(d) any development in the business, operations, financial
condition or prospects of the Borrower and its Subsidiaries (taken as
a whole) which, in the reasonable judgment of the Borrower is
reasonably likely to have a Materially Adverse Effect;
(e) the taking of any formal action by the Borrower or any
other Person to terminate any Pension Plan (other than in a standard
termination described in section 4041(b) of ERISA
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with respect to which the Borrower would have no liability), or the
failure to make a required contribution to any Pension Plan if such
failure is sufficient to give rise to a Lien on any assets of the
Borrower or any Subsidiary under section 302(f) of ERISA, or the
taking of any action with respect to a Pension Plan which could result
in the requirement that the Borrower or any Subsidiary furnish a bond
or other security to the PBGC or such Pension Plan, or the occurrence
of any event with respect to any Pension Plan which could result in
the incurrence by the Borrower or any Subsidiary of any material
liability, fine or penalty; and promptly after the incurrence thereof,
notice of any material increase in the contingent liability of the
Borrower or any Subsidiary with respect to any post-termination
Welfare Plan benefit; and
(f) any material notices (including notices of default or of
acceleration thereunder) received from any holder or trustee of any
Subordinated Debt Document or Senior Debt Document.
SECTION 6.01.07. PERFORMANCE OF INSTRUMENTS. The Borrower
will, and will cause each Subsidiary to, perform promptly and faithfully all of
its Obligations under the Notes and each Credit Document executed by it,
subject to any applicable grace periods.
SECTION 6.01.08. COLLATERAL AUDITS; BOOKS AND RECORDS. Any
Managing Agent may conduct physical audits of the inventory and accounts of the
Borrower as often as such Managing Agent may deem necessary or desirable, each
of which shall (unless a Default shall have occurred and be continuing) be held
on reasonable notice and at reasonable times and intervals during ordinary
business hours. The Borrower will, and will cause each of its Subsidiaries to,
keep proper books and records reflecting all of its business affairs and
transactions (including all loans and advances by the Borrower to any of its
Subsidiaries) in accordance with GAAP and permit the Managing Agents and the
Banks, on reasonable notice and at reasonable times and intervals during
ordinary business hours, to visit all of its offices, discuss its financial
matters with officers of the Borrower or any of its Subsidiaries and its
independent public accountants (PROVIDED that each Bank shall give the Borrower
prior notice of any meeting with such independent public accountants and permit
a representative of the Borrower to be present at such meeting), and examine
and make abstracts from any of its books or other corporate records. The
Borrower shall pay any fees of such independent public accountants incurred in
connection with the exercise by the Managing Agents and the Banks of their
rights pursuant to this Section. The Borrower will, and will cause each of its
Subsidiaries to, continue in full force and effect all of its inventory control
procedures in effect on the date of this Agreement, except for improvements
thereto.
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SECTION 6.01.09. RATE PROTECTION.
(a) The Borrower shall maintain Rate Swap Agreements with one or more
Swap Parties, which agreements shall ensure that the effective rate of interest
on not less than 50% of the aggregate principal amount of the Term Loans will
not exceed 9% per annum at any time prior to May 7, 1996 (assuming, for
purposes of calculating such per annum interest rate during such period, that
the applicable interest margins hereunder are those that would apply if the
Consolidated Adjusted Leverage Ratio were greater than 4.0 to 1).
(b) Neither the Borrower nor any Subsidiary shall enter into or
become liable (directly or indirectly, absolutely or contingently) in any way
under or with respect to any Rate Swap Agreements except as required under
SECTION 6.01.09(a) and except for Rate Swap Agreements entered into by the
Borrower with one or more Swap Parties (in addition to those maintained
pursuant to SECTION 6.01.09(a)) in connection with the Term Loans.
SECTION 6.01.10. COMPLIANCE WITH LAWS, ETC. The Borrower
will, and will cause each Subsidiary to, comply with the requirements of all
Applicable Laws, noncompliance with which might have a Materially Adverse
Effect.
SECTION 6.01.11. SECURITY. (a) The Borrower hereby agrees to
take, and cause each Subsidiary to take, such actions as any Managing Agent or
the Required Banks may from time to time reasonably request to establish and
maintain first-priority, perfected security interests in and Liens on all of
their real and personal property Collateral, except (i) to the extent otherwise
expressly provided herein or in any Collateral Document, and (ii) with respect
to inventory held subject to consignment arrangements or in public warehouses
described from time to time to the Administrative Agent, with an aggregate fair
market value not to exceed $5,000,000 at any time; PROVIDED that if the
Borrower and its Subsidiaries should own inventory held subject to consignment
arrangements or in public warehouses with an aggregate fair market value in
excess of $5,000,000, then the Borrower or such Subsidiary, respectively, shall
have 30 days to obtain such waivers or agreements, make such filings or take
such other actions as the Administrative Agent may require to ensure that the
aggregate fair market value of such inventory as to which the Administrative
Agent and the Banks do not have a first-priority, perfected security interest
does not exceed $5,000,000.
(b) The Borrower agrees to cause each Person that becomes a U.S.
Subsidiary after the Amendment Effective Time to promptly (i) execute and
deliver to the Administrative Agent a Subsidiary Guarantee, (ii) execute and
deliver to the Administrative Agent a counterpart of the Intercompany
Subordination Agreement, (iii)
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execute and deliver to the Borrower an Intercompany Note payable to the order
of the Borrower, which Intercompany Note the Borrower will endorse to the order
of the Administrative Agent and deliver to the Administrative Agent, and (iv)
grant to the Administrative Agent, for the benefit of the Banks, such security
interests and Liens as are required under SECTION 6.01.11(a). The Borrower
further agrees to, or to cause the applicable Subsidiary owning each Person
that becomes a Subsidiary after the Amendment Effective Time to, pledge
pursuant to the Pledge Agreement executed by the Borrower or such applicable
Subsidiary, as the case may be, 100% of the shares of capital stock or other
ownership interests of such Person (65% of such shares of such Person if such
Person is a corporation which is not incorporated in the United States) owned
by the Borrower or such applicable Subsidiary, as the case may be.
SECTION 6.01.12. CASH MANAGEMENT SYSTEM. (a) The Borrower
will not, nor will it permit any of its U.S. Subsidiaries to, establish or
maintain any lockbox account or similar arrangement with any financial
institution unless such financial institution, the Administrative Agent and the
Borrower or such U.S. Subsidiary shall have entered into a Cash Management
Letter.
(b) The Borrower will (i) maintain its cash management system to
permit the Borrower and its U.S. Subsidiaries to access electronic deposit and
disbursement information necessary to provide historical reports of collection
account deposits and disbursement account transactions for any previous 30-day
period, (ii) maintain records derived from such electronic deposit and
disbursement account transactions on paper or some other medium for any
immediately preceding 12 month period and (iii) maintain a dedicated collection
account at a bank that has executed a Cash Management Letter, exclusively for
the purposes of collecting all electronic transfer receipts of the Borrower and
its U.S. Subsidiaries.
SECTION 6.01.13. ANNUAL CLEANDOWN OF REVOLVING LOANS. The
Borrower will cause the aggregate principal amount of all Revolving Loans and
Swing Loans to be equal to or less than $75,000,000 for 30 consecutive calendar
days in the period beginning September 1 and ending December 31 in each year.
SECTION 6.01.14. LETTER TO INDEPENDENT PUBLIC ACCOUNTANT. The
Borrower will, prior to the date on which the Borrower's Independent Public
Accountant begins its audit of the Borrower's financial statements with respect
to any Fiscal Year, execute and deliver to such Independent Public Accountant a
letter substantially in the form of EXHIBIT Q.
SECTION 6.01.15. INSURANCE. (a) The Borrower shall maintain,
and shall cause each Subsidiary to maintain, at its sole cost and expense and
with financially sound insurance companies, insurance
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to such extent and against such hazards and liabilities, and including such
reasonable deductibles, retention amounts or similar risk management
arrangements, as is commonly maintained by Persons similarly situated. The
Borrower will, and will cause each Subsidiary to, (i) keep the applicable
Collateral insured for its insurable value (as determined by the Borrower's
insurance appraisers and other than with respect to coinsurance requirements)
against physical loss or damage by such risks as are customarily insured
against by Persons engaged in business similar to that of the Borrower or such
Subsidiary, and (ii) maintain comprehensive general liability insurance,
workers' compensation insurance and automobile liability insurance covering the
Borrower and its Subsidiaries in such amounts as are customary in business
similar to that of the Borrower or such Subsidiary, as the case may be.
Certificates of all such policies of insurance have been delivered to the
Administrative Agent prior to the date hereof together with evidence of payment
of all premiums therefor.
(b) The Borrower shall, and shall cause each Subsidiary to, cause
each issuer of an insurance policy to provide the Administrative Agent, on or
prior to the date of effectiveness of such policy, with an endorsement or an
independent instrument (i) substantially in the form of EXHIBIT P and (ii)
showing loss payable to the Administrative Agent and, if required by the
Administrative Agent, naming the Administrative Agent as an additional insured.
The Borrower shall notify the Administrative Agent promptly of any insured loss
in excess of any applicable deductible, of any real or personal property and
the estimated (or actual, if available) amount of such loss.
(c) The Borrower hereby directs all insurers under such policies
of insurance to pay, after the occurrence and during the continuance of an
Event of Default, all proceeds payable thereunder directly to the
Administrative Agent (other than in respect to workers' compensation and
liability, health, life and disability insurance) to be held and/or disbursed
by the Administrative Agent in accordance with this Agreement and the
Collateral Documents. The Borrower hereby appoints the Administrative Agent
and any Person whom the Administrative Agent may from time to time designate
(and all officers, employees or agents designated by the Administrative Agent
or such Person) as the Borrower's true and lawful attorney and agent-in-fact
with power, after the occurrence and during the continuance of an Event of
Default, to make, settle and adjust claims under such policies of insurance
(provided that the Administrative Agent or such Person shall consult with the
Borrower prior to finally making, settling or adjusting claims under such
policies of insurance), endorse the name of the Borrower on any check, draft,
instrument or other item of payment for the proceeds of such policies of
insurance, and to make all other determinations and decisions with respect to
such policies of insurance. The foregoing appointment and power, being coupled
with
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an interest, is irrevocable until all Obligations are paid and performed in
full and the Commitments are terminated. In the event that the Borrower at any
time or times hereafter shall fail to obtain or maintain any of the policies of
insurance required above or to pay any premium in whole or in part relating
thereto, the Administrative Agent, without waiving or releasing any obligations
or default by the Borrower hereunder, may at any time or times thereafter (but
shall not be obligated to) obtain and maintain such policies of insurance and
pay such premium and take any other action with respect thereto which the
Administrative Agent deems advisable.
SECTION 6.01.16 INSURANCE SURVEY. The Borrower shall provide
to the Administrative Agent at least annually within 90 days of the end of the
Borrower's Fiscal Year, an insurance report, substantially in the form of the
Insurance Report, prepared by a reputable insurance brokerage firm.
SECTION 6.01.17. ENVIRONMENTAL MATTERS. The Borrower will,
and will cause each of its Subsidiaries to,
(a) use and operate all of its facilities and properties
in compliance with all Applicable Laws relating to the environment or
Hazardous Materials, maintain all necessary permits, approvals,
certificates, licenses and other authorizations relating to
environmental matters in effect and maintain in compliance therewith,
and handle all Hazardous Materials in compliance with all such
Applicable Laws, to the extent that any failure to so use, operate,
maintain or handle would reasonably be likely to have a Materially
Adverse Effect;
(b) immediately notify the Administrative Agent and
provide copies upon receipt of all written claims, complaints, notices
or inquiries relating to the condition of its facilities and
properties or compliance with such Applicable Laws, to the extent that
such condition or non-compliance would reasonably be likely to have a
Materially Adverse Effect, and promptly cure and have dismissed with
prejudice to the satisfaction of the Administrative Agent any actions
and proceedings relating to compliance with such Applicable Laws, to
the extent that non-compliance would reasonably be likely to have a
Materially Adverse Effect; and
(c) provide such information and certifications which the
Administrative Agent may reasonably request from time to time to
evidence compliance with this Section.
SECTION 6.01.18 REAL ESTATE MATTERS. No later than 30 days
after the Amendment Effective Time, the Borrower will deliver to the
Administrative Agent (a) date down endorsements, in form and
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substance satisfactory to the Managing Agents, from the title insurance company
providing title insurance with respect to all Mortgages on real property of the
Borrower or any Subsidiary or (b) such other documentation as the Managing
Agents may reasonably request, in form and substance satisfactory to the
Managing Agents, as to the priority and continued validity of such Mortgages.
SECTION 6.02. CERTAIN NEGATIVE COVENANTS. The Borrower
agrees that, unless the Required Banks consent thereto in writing, so long as
any Bank has any Commitment hereunder or any Obligation remains outstanding
or unpaid:
SECTION 6.02.01. BUSINESS ACTIVITIES. The Borrower will not,
and will not permit any Subsidiary to, engage primarily in any business
activity except the historic business of the Borrower and its Subsidiaries and
such activities as may be incidental or related thereto or closely-related
extensions thereof.
SECTION 6.02.02. DEBT. The Borrower will not, and will not
permit any Subsidiary to, create, incur, assume, or suffer to exist or
otherwise become or be liable in respect of any Debt other than:
(a) Debt in respect of the Credit Extensions;
(b) other Debt of the Borrower or any Subsidiary outstanding
on the date of this Agreement and identified in ITEM (G) ("Ongoing
Debt" [SECTION 6.02.02]) of the Disclosure Schedule;
(c) (i) the Senior Subordinated Notes and (ii) any other
Subordinated Debt satisfactory in form and substance to the Required
Banks;
(d) (i) Debt in an aggregate principal amount not to exceed
$15,000,000 at any time outstanding which is hereafter incurred by the
Borrower or any U.S. Subsidiary to a vendor of any assets (or an
Affiliate of such vendor) permitted to be acquired pursuant to SECTION
6.02.07 to finance its acquisition of such assets, but no extensions
or renewals of any such Debt and (ii) Debt of the Borrower or any U.S.
Subsidiary arising under Capitalized Leases;
(e) Debt incurred by the Borrower under any Rate Swap
Agreement or FX Swap Agreement in accordance with SECTION 6.01.09 and
6.02.2, respectively;
(f) Guarantees by the Borrower or any Subsidiary permitted by
SECTION 6.02.08;
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(g) Debt of the Borrower or any Subsidiary owing to any other
Subsidiary subject to the Intercompany Subordination Agreement; Debt
of any U.S. Subsidiary owing to the Borrower evidenced by Intercompany
Notes; and Debt of any non-U.S. Subsidiary owing to the Borrower
evidenced by Intercompany Notes so long as such Debt is permitted to
exist under SECTION 6.02.05(e).
(h) Debt which is hereafter incurred by any non-U.S.
Subsidiary of the Borrower (other than Debt permitted pursuant to
CLAUSE (G) of this SECTION 6.02.02) in an aggregate principal amount
not to exceed $50,000,000;
(i) Debt which is hereafter incurred by the Borrower or
any Subsidiary in connection with industrial revenue, pollution
control or similar tax incentive bonds issued to construct new
facilities for the Borrower or such Subsidiary, in an aggregate
principal amount not to exceed $20,000,000;
(j) other Senior Debt in an aggregate amount not to
exceed $50,000,000 at any one time outstanding, which Senior Debt, if
secured, shall be secured on terms no more favorable to the lenders of
such Senior Debt than PARI PASSU with the Obligations (such Senior
Debt being PERMITTED SENIOR DEBT") in accordance with SECTION
6.02.03(a)(ii); and
(k) Debt in respect of declared but unpaid dividends pursuant
to and in accordance with SECTION 6.02.06(a).
SECTION 6.02.03. LIENS. The Borrower will not, and will not
permit any Subsidiary to, create, incur, assume, or suffer to exist any Lien
upon any of its revenues, property or assets, whether now owned or hereafter
acquired, except:
(a) Liens in favor of the Administrative Agent under the
Collateral Documents to secure (i) the Credit Extensions and other
Obligations and (ii) other Permitted Senior Debt subject to an
intercreditor agreement in form and substance satisfactory to the
Managing Agents;
(b) Liens on assets which were granted prior to the date of
this Agreement to secure any Debt permitted by SECTION 6.02.02 and
which are described in ITEM (G) ("Ongoing Debt [SECTION 6.02.02]") of
the Disclosure Schedule;
(c) Liens securing obligations under any purchase money Debt
permitted by SECTION 6.02.02(d) in the property acquired with the
proceeds thereof; PROVIDED that such purchase money Debt shall not be
secured by or under the Collateral Documents and any Liens relating
thereto shall not cover any property on
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which a Lien has been granted by the Collateral Documents or any other
property;
(d) Liens on assets located outside of the United States of
any non-U.S. Subsidiary securing obligations of such non-U.S.
Subsidiary under any Debt permitted by CLAUSE (h) of SECTION 6.02.02;
(e) Liens for taxes, assessments, or other governmental
charges or levies to the extent that payment thereof shall not at the
time be required to be made in accordance with the provisions of
SECTION 6.01.04 and for which appropriate reserves with respect
thereto have been established and maintained on the consolidated books
of the Borrower or any Subsidiary in accordance with GAAP to the
extent required under GAAP; PROVIDED that any such Liens securing
overdue amounts being contested in good faith shall be stayed during
the pendency of such contest;
(f) Liens of carriers, warehousemen, mechanics, materialmen
and landlords incurred in the ordinary course of business for sums not
overdue or being contested in good faith by appropriate proceedings
and for which appropriate reserves with respect thereto have been
established and maintained on the consolidated books of the Borrower
or any Subsidiary in accordance with GAAP to the extent required under
such principles; PROVIDED that any such Liens securing overdue amounts
being contested in good faith shall be stayed during the pendency of
such contest;
(g) Liens incurred in the ordinary course of business in
connection with workmen's compensation, unemployment insurance, or
other forms of governmental insurance or benefits, or to secure
performance of tenders, statutory obligations, leases, and contracts
(other than Debt for borrowed money) entered into in the ordinary
course of business or to secure obligations on surety or appeal bonds;
(h) easements, rights-of-way, zoning and similar covenants
and restrictions and other similar encumbrances or title defects
which, in the aggregate, are not substantial in amount, and which do
not in any case materially detract from the value of the property
subject thereto or interfere with the ordinary conduct of the business
of the Borrower or its Subsidiaries;
(i) leases and subleases of real property which do not
interfere with the ordinary conduct of the business of the Borrower or
any Subsidiary, as the case may be, and which are made on customary
and usual terms applicable to similar properties;
18163011.1 070894 2007C 93065134 82
<PAGE> 91
(j) judgment Liens securing amounts not in excess of
$5,000,000 (to the extent not covered by insurance provided by a
reputable and creditworthy insurance carrier that has acknowledged
coverage) in existence or bonded pending appeal less than 30 days
after the entry thereof or with respect to which execution has been
stayed;
(k) Liens arising by reason of the entering into of
Capitalized Leases permitted under SECTION 6.02.02(d), but only if
such Liens apply to the property financed under such Capitalized
Leases and not to any other property; and
(l) Liens securing the payment of the industrial revenue
bonds listed under ITEM G ("Ongoing Debt [SECTION 6.02.02]") of the
Disclosure Schedule or any refinancing thereof, PROVIDED that assets
of the Borrower serving as security therefor are substantially
identical to those assets of the Borrower securing such payment as of
March 1, 1989.
SECTION 6.02.04. FINANCIAL CONDITION. The Borrower will not
permit:
(a) The Consolidated Current Ratio on the last day of any Fiscal
Quarter to be less than 1.00 to 1.00.
(b) The Consolidated Interest Coverage Ratio on the last day of any
Fiscal Quarter occurring during any period set forth below to be less than the
ratio set forth opposite such period below:
<TABLE>
<CAPTION>
Minimum
Period Consolidated Interest
------ Coverage Ratio
---------------------
<S> <C>
All Fiscal Quarters of 1994 Fiscal 2.40 to 1.00
Year and first three Fiscal
Quarters of 1995 Fiscal Year
Fourth Fiscal Quarter of 1995 2.50 to 1.00
Fiscal Year and first three Fiscal
Quarters of 1996 Fiscal Year
Fourth Fiscal Quarter of 1996 2.70 to 1.00
Fiscal Year and first three Fiscal
Quarters of 1997 Fiscal Year
Fourth Fiscal Quarter of 1997 3.00 to 1.00
Fiscal Year and first three Fiscal
Quarters of 1998 Fiscal Year
All Fiscal Quarters thereafter 3.35 to 1.00.
</TABLE>
18163011.1 070894 2007C 93065134 83
<PAGE> 92
(c) The Consolidated Fixed Charge Coverage Ratio on the last day of
any Fiscal Quarter occurring during any period set forth below to be less than
the ratio set forth opposite such period below:
<TABLE>
<CAPTION>
Minimum Fixed
Charge
Period Coverage Ratio
------ --------------
<S> <C>
Any Fiscal Quarter through Third 1.05 to 1.00
Quarter of 1997 Fiscal Year
Fourth Quarter of 1997 Fiscal 1.10 to 1.00.
Year and thereafter
</TABLE>
(d) Adjusted Net Worth at any date (excluding any adjustments for
non-cash charges relating to the Performance Share Plan in the current Fiscal
Year) to be less than 97% of the amount of Adjusted Net Worth at the Fiscal
Year end-date immediately preceding such date; PROVIDED that Adjusted Net Worth
shall not at any date be less than the greater of (x) $250,000,000 and (y) 97%
of the highest amount of Adjusted Net Worth achieved as of the end of any
Fiscal Year ending prior to such date.
(e) The Consolidated Leverage Ratio on the last day of any Fiscal
Quarter occurring during any period set forth below to be greater than the
ratio set forth opposite such period below:
<TABLE>
<CAPTION>
Maximum Consolidated
Period Leverage Ratio
------ --------------------
<S> <C>
Second and Third Fiscal Quarters 4.40 to 1.0
of 1994 Fiscal Year
Fourth Fiscal Quarter of 1994 Fiscal 4.00 to 1.0
Year and first three Fiscal Quarters
of 1995 Fiscal Year
Fourth Fiscal Quarter of 1995 Fiscal 3.75 to 1.0
Year and first three Fiscal Quarters
of 1996 Fiscal Year
Fourth Fiscal Quarter of 1996 Fiscal 3.30 to 1.0
Year and first three Fiscal Quarters
of 1997 Fiscal Year
</TABLE>
18163011.1 070894 2007C 93065134 84
<PAGE> 93
<TABLE>
<CAPTION>
<S> <C>
Fourth Fiscal Quarter of 1997 Fiscal 2.90 to 1.0
Year and first three Fiscal Quarters
of 1998 Fiscal Year
Fourth Fiscal Quarter of 1998 Fiscal 2.50 to 1.0.
Year and thereafter
</TABLE>
SECTION 6.02.05. INVESTMENTS. The Borrower will not, and will
not permit any Subsidiary to, make, incur, assume, or suffer to exist any
Investment in any other Person, except:
(a) Investments existing on the date of this Agreement by the
Borrower or any Subsidiary in any Person identified in ITEM (E)
("Existing Subsidiaries [SECTION 5.07]") or ITEM (H) ("Ongoing
Investments [SECTION 6.02.05]") of the Disclosure Schedule;
(b) Temporary Cash Investments by the Borrower or any
Subsidiary; PROVIDED that Temporary Cash Investments of non-U.S.
Subsidiaries pursuant to CLAUSE (vi) of the definition of "Temporary
Cash Investment" shall not exceed $50,000,000 at any one time
outstanding;
(c) Investments by the Borrower or any Subsidiary in any
Person which (i) (A) result in the creation of an account arising in
the ordinary course of the Borrower's or any Subsidiary's business or
(B) result from the restructure, reorganization, or similar
composition of trade account obligations which had arisen in the
ordinary course of the Borrower's or such Subsidiary's business and
which are owing to the Borrower or such Subsidiary from financially
distressed debtors ("RESTRUCTURE INVESTMENTS"), and which (ii) in each
case are subject to the Lien of the Administrative Agent for the
benefit of the Banks under a Security Agreement;
(d) Guarantees by the Borrower or any Subsidiary permitted by
SECTION 6.02.08;
(e) Investments by the Borrower or any Subsidiary, or the
acquisition of all or substantially all of the assets of any Person or
any business unit of any Person by the Borrower or any Subsidiary, for
aggregate consideration for all such Investments or acquisitions
entered into after the Amendment Effective Time which, when taken
together with the amount of any Overseas Capital Expenditures made by
any Overseas Subsidiary pursuant to SECTION 6.02.07(a), shall not
exceed the sum of (i) the Investment/Overseas CapEx Limit PLUS (ii) the
amount of all Debt incurred for such purpose(s) pursuant to SECTION
6.02.02(h);
18163011.1 070894 2007C 93065134 85
<PAGE> 94
(f) any promissory note received by the Borrower or any
Subsidiary in the sale or other disposition of any assets (including
the capital stock of any Affiliate), in accordance with SECTION
6.02.11;
(g) obligations under the Rate Swap Agreements and FX Swap
Agreements;
(h) the Investment by the Borrower or any Subsidiary, or the
acquisition of all or substantially all of the assets of any Person or
any business unit of any Person by the Borrower or any Subsidiary, so
long as the aggregate consideration for such Investment or acquisition
(other than assumed Debt) has been received by the Borrower as a
capital contribution (by the issuance of stock or otherwise) during
the 180-day period preceding the date of such Investment or
acquisition (PROVIDED that such capital contribution or the portion
thereof so applied to such Investment or acquisition was not applied
to prepay Senior Subordinated Notes in accordance with SECTION
6.02.06(e));
(i) so long as there does not then exist a public trading
market in the Borrower's capital stock, (i) any promissory note
received by the Borrower from a member of management of the Borrower
or its Subsidiaries at any time after November 30, 1996 in order to
satisfy the Borrower's obligations under Sections 7.4-7.6 of the
Performance Share Plan PROVIDED that the Borrower may only make a loan
evidenced by any such promissory note if the Borrower has previously
delivered to the Banks a certificate to the effect that, and
containing projections in reasonable detail which demonstrate that,
the Borrower will be in compliance with all financial covenants set
forth in this Agreement (including SECTION 6.01.13) during the
12-month period following such loan) and (ii) any promissory note
received by the Borrower from an officer, executive, managerial or
professional employee of, or a consultant to, the Borrower and its
Subsidiaries, in order to satisfy the Borrower's obligations under
Section 2.5(e) of the Stock Option Plan; and
(j) any loan necessary to satisfy the Borrower's
obligations under any Employment Incentive Agreement existing as of
May 7, 1993 with any executive officer of the Borrower;
PROVIDED that no Investment otherwise permitted by CLAUSE (d), (e), (f), (h),
(i) or (j) above shall be permitted to be made if, immediately before or after
giving effect thereto, any Default shall have occurred and be continuing; and
PROVIDED, FURTHER, that no Investment otherwise permitted by CLAUSES (e) or (h)
18163011.1 070894 2007C 93065134 86
<PAGE> 95
above shall be permitted to be made if (x) a Default would have occurred and
would be continuing if the Person or business unit acquired under CLAUSES (e)
or (h), as the case may be, had been a consolidated Subsidiary for (and, in the
case of CLAUSE (h), the relevant capital contribution been on the first day of)
the four full Fiscal Quarters immediately preceding the purchase date or
acquisition date of such Person or business unit, as reflected on pro forma
consolidated financial statements for such four full Fiscal Quarters for the
Borrower and its Subsidiaries (including such Person), (y) the representations
and warranties of the Borrower hereunder would be incorrect or misleading in
any material respect if made both immediately before and after giving effect to
such Investment, or (z) in the case of the acquisition of any Person, the
purchase or acquisition of such Person by the Borrower or any Subsidiary shall
be challenged by the Board of Directors or other governing body of such Person.
SECTION 6.02.06. RESTRICTED PAYMENTS, ETC. On or after the
Amendment Effective Time:
(a) the Borrower will not declare, pay, or make any dividend
or distribution (in cash, property, or obligations) on any shares of
any class of capital stock (now or hereafter outstanding) of the
Borrower or on any warrants, options, or other rights with respect to
any shares of any class of capital stock (now or hereafter
outstanding) of the Borrower (other than dividends or distributions
payable in its stock, or warrants to purchase its stock, or options to
purchase its stock granted to management or directors of the Borrower
or any Subsidiary, or splitups or reclassifications of its stock into
additional or other shares of its stock) or apply, or permit any
Subsidiary to apply, any of its funds, property, or assets to the
purchase, redemption, sinking fund, or other retirement of any shares
of any class of capital stock (now or hereafter outstanding) of the
Borrower or of any warrants, options or other rights to acquire shares
of any class of capital stock of the Borrower;
(b) the Borrower will not, and will not permit any Subsidiary
to, prepay or repay any principal of, or make any payment of interest
on, or redeem, purchase or defease, the Senior Subordinated Notes or
any other Subordinated Debt;
(c) the Borrower will not, and will not permit any Subsidiary
to, prepay any principal of any Debt (other than (i) prepayments of
the Credit Extensions and (ii) prepayments of other Debt (other than
Subordinated Debt) existing as of the Amendment Effective Time in a
principal amount under this CLAUSE (ii) not to exceed $3,000,000);
18163011.1 070894 2007C 93065134 87
<PAGE> 96
(d) the Borrower will not, and will not permit any Subsidiary
to, make any deposit for any of the foregoing purposes;
PROVIDED that, if no Default (or, in the case of CLAUSES (e)(i) and (f) below,
no Event of Default and no Default described in CLAUSES (h) or (i) of SECTION
7.01) shall then exist or arise therefrom:
(e) the Borrower may, subject to the subordination provisions
of the Senior Subordinated Note Indenture, (i) pay interest when due
on the Senior Subordinated Notes and (ii) prepay up to $60,000,000 of
the Senior Subordinated Notes (plus pay any prepayment premium
required in connection therewith in an amount not to exceed the lesser
of the prepayment premium actually paid in any such prepayment and the
prepayment premium required under the Senior Subordinated Notes) with
the proceeds of any public offering of the capital stock of the
Borrower (PROVIDED that such proceeds or the portion thereof so applied
to such prepayment were not applied to make any Investment or
acquisition in accordance with SECTION 6.02.05(h));
(f) the Borrower may, subject to the subordination provisions
applicable to any of its other Subordinated Debt, pay interest when
due under the relevant Subordinated Debt Document entered into in
accordance with SECTION 6.02.15;
(g) the Borrower may pay dividends on its capital stock after
the occurrence of an initial public offering of at least 20% of such
capital stock of the Borrower; PROVIDED that the maximum amount of
such dividends that the Borrower may pay in any Fiscal Year (the
"PAYMENT YEAR") shall be the lesser of (x) an amount equal to 25% of
Consolidated Net Income for the Fiscal Year immediately preceding the
Payment Year and (y) an amount equal to the sum of (i) 25% of
cumulative Consolidated Net Income accrued during the period beginning
with the first full Fiscal Quarter after the occurrence of such
initial public offering described in CLAUSE (i) above and ending with
the last full Fiscal Quarter preceding the date such dividend is
declared LESS (ii) the sum of all dividends declared or paid during
such period and all amounts paid to purchase capital stock of the
Borrower pursuant to SECTION 6.02.06(h) and (j) after the occurrence
of such initial public offering;
(h) the Borrower may purchase capital stock of the Borrower,
and options or warrants for such capital stock, owned by management of
the Borrower or its Subsidiaries whose employment with the Borrower or
such Subsidiary has terminated (including by reason of death,
disability or
18163011.1 070894 2007C 93065134 88
<PAGE> 97
retirement), in an aggregate amount not to exceed $1,000,000 in each
Fiscal Year (PROVIDED that any unused amounts in any Fiscal Year, up
to a maximum amount of $1,000,000, may be carried over and used in
succeeding Fiscal Years);
(i) so long as there does not then exist a public trading
market in the Borrower's capital stock, (i) the Borrower may purchase
such capital stock of the Borrower owned by management of the Borrower
or its Subsidiaries at any time after November 30, 1996, in order to
satisfy the Borrower's obligations under Sections 7.4 to 7.6 of the
Performance Share Plan or (ii) the Borrower may acquire such capital
stock of the Borrower owned by an officer or executive, managerial or
professional employee of, or consultant to, the Borrower or any
Subsidiary at any time in order to satisfy the Borrower's obligations
under Section 3.5 of the Stock Option Plan; PROVIDED that the Borrower
may only purchase such capital stock if the Borrower has previously
delivered to the Banks a certificate to the effect that, and
containing projections in reasonable detail which demonstrate that,
the Borrower will be in compliance with all financial covenants set
forth in this Agreement (including SECTION 6.01.13) during the
12-month period following such purchase; PROVIDED, FURTHER, that no
such certificate shall be required in connection with acquisitions of
capital stock under the Stock Option Plan in an amount in any Fiscal
Year of $500,000 or less;
(j) the Borrower may purchase from the applicable
executive officer(s) of the Borrower or any Subsidiary capital stock
of the Borrower for a total consideration not in excess of the sum of
(i) such amounts as may be necessary to satisfy the Borrower's
obligations under any stockholder agreement provided for in any
Employment Incentive Agreement existing as of May 7, 1993 with such
executive officer PLUS (ii) $500,000 with respect to any Employment
Incentive Agreement coming into effect after May 7, 1993; and
(k) the Borrower may repay or prepay Debt incurred after
the Amendment Effective Time pursuant to SECTION 6.02.02(d), (g), (h),
(i) or (j).
SECTION 6.02.07. CONSOLIDATED CAPITAL EXPENDITURES, ETC.
(a) The Borrower will not permit the aggregate amount of
Overseas Capital Expenditures during the term of this Agreement to
exceed the remainder of (x) the sum of (i) the Investment/Overseas
CapEx Limit PLUS (ii) the amount of any Debt incurred for such purpose
pursuant to SECTION 6.02.02(h) MINUS (y) the amount of any Investments
or acquisitions previously made pursuant to SECTION 6.02.05(e).
18163011.1 070894 2007C 93065134 89
<PAGE> 98
(b) The Borrower will not permit the aggregate amount of
U.S./Canadian Capital Expenditures to exceed in any Fiscal Year the
amount set forth below for such Fiscal Year (PROVIDED that any unused
amount in any Fiscal Year, up to a maximum of $10,000,000, may be
carried over and used in succeeding Fiscal Years; IT BEING UNDERSTOOD
that during Fiscal Year 1994 the carry-over amount available for
U.S./Canadian Capital Expenditures shall be $6,600,000):
<TABLE>
<CAPTION>
Capital
Fiscal Year Expenditure Amount
----------- ------------------
<S> <C>
1994 $23,000,000
1995 $27,000,000
Each Fiscal Year thereafter $16,000,000.
</TABLE>
SECTION 6.02.08. GUARANTEES. The Borrower will not, and will
not permit any Subsidiary to, create, incur, assume, suffer to exist or
otherwise be or become liable with respect to any Guarantees, except:
(a) the Subsidiary Guarantees;
(b) Guarantees of Debt of the Borrower or any U.S. Subsidiary
permitted under SECTION 6.02.02 and leases of the Borrower or any U.S.
Subsidiary permitted under SECTION 6.02.09 made (i) (A) by the Borrower
with respect to obligations of a Subsidiary or (B) by Subsidiaries in
the ordinary course of the Subsidiaries' business and (ii) on
customary and usual terms applicable to similar transactions for
companies similarly situated;
(c) Guarantees of Debt of any non-U.S. Subsidiary permitted
under SECTION 6.02.02(h) or of any non-U.S. Joint Venture, in an
aggregate principal amount for all such Guarantees not to exceed
$30,000,000;
(d) Guarantees of obligations incurred by any Subsidiary
under any workmen's compensation self-insurance program of such
Subsidiary administered in accordance with any Applicable Law relating
to workmen's compensation; and
(e) Guarantees of obligations of any Subsidiary, which
obligations and Guarantees shall be entered into in the ordinary
course of business, consistent with the business requirements of such
Subsidiary and the Borrower, respectively, in an aggregate outstanding
amount not to exceed $2,000,000.
SECTION 6.02.09. LEASE OBLIGATIONS. The Borrower will not,
and will not permit any Subsidiary to, enter into at
18163011.1 070894 2007C 93065134 90
<PAGE> 99
any time any arrangement which does not create a Capitalized Lease Liability
and which involves the leasing by the Borrower or such Subsidiary from any
lessor of any real or personal property (or any interest therein), if such
arrangement, together with all other such arrangements which shall then be in
effect, will require the payment in any Fiscal Year of an aggregate amount of
rentals by the Borrower and all Subsidiaries in excess of $20,000,000 PLUS
rentals due with respect to any sale and leaseback transaction permitted
pursuant to CLAUSE (g) of SECTION 6.02.11; PROVIDED that
(a) any calculation made for the purposes of this Section
shall exclude any amounts required to be expended for maintenance and
repairs, insurance, taxes, assessments, and other similar charges; and
(b) notwithstanding anything in the foregoing to the
contrary, the provisions of this SECTION 6.02.09 shall not be
applicable to any such lease so long as it expires within one year
from the date of its execution and delivery by the Borrower and will
not at any time result in the payment by the Borrower of aggregate
rentals, together with the aggregate rentals of all other such leases,
in excess of $1,500,000.
SECTION 6.02.10. TAKE OR PAY CONTRACTS. The Borrower will
not, and will not permit any Subsidiary to, enter into or be a party to any
arrangement for the purchase of materials, supplies, other property, or
services if such arrangement by its express terms requires that payment be made
by the Borrower or such Subsidiary regardless of whether or not such materials,
supplies, other property, or services are delivered or furnished to the
Borrower or such Subsidiary.
SECTION 6.02.11. CONSOLIDATION, MERGER, SALE OF ASSETS, ETC.
The Borrower will not, and will not permit any Subsidiary to, wind-up,
liquidate or dissolve itself (or suffer any thereof), consolidate or amalgamate
with or merge into or with any other corporation or any other Person, or
purchase or otherwise acquire all or substantially all of the assets of any
Person (or of any business unit thereof) or convey, sell, transfer, lease or
otherwise dispose of all or any part of its assets (including any stock or
receivables) or issue any capital stock, in one transaction or a series of
transactions, to any Person or Persons except:
(a) the sale of inventory in the ordinary course of business;
(b) so long as no Default has occurred and is continuing or
would occur after giving effect thereto, the pur-
18163011.1 070894 2007C 93065134 91
<PAGE> 100
chase or acquisition by the Borrower of all or substantially all of
the assets of any Person (or of any business unit thereof) if
permitted by SECTION 6.02.05(e) OR (h);
(c) so long as no Default has occurred and is continuing or
would occur after giving effect thereto, the sale of assets by the
Borrower or any of its Subsidiaries, PROVIDED that the cash proceeds of
such transaction are applied as provided in SECTION 2.11.0;
(d) leases or subleases of real property which do not detract
from the value of the property subject thereto or interfere with the
ordinary conduct of the business of the Borrower or any Subsidiary, as
the case may be, and which are made on customary and usual terms
applicable to similar properties;
(e) sales by the Borrower to any wholly-owned Subsidiary and
by a wholly-owned Subsidiary to the Borrower or another wholly-owned
Subsidiary, PROVIDED that all such sales are made in accordance with
SECTION 6.02.13;
(f) sales by the Borrower or any Subsidiary of obsolete
equipment on customary and usual terms applicable to similar
equipment, and sales by the Borrower or any Subsidiary of Restructure
Investments;
(g) sales by the Borrower or any Subsidiary as part of sale
and leaseback transactions, executed on usual and customary terms, of
any facility or equipment so long as the related rent or lease
obligations, net of imputed interest, do not exceed $10,000,000 at any
time; PROVIDED that each such transaction has been approved by the
Required Banks; PROVIDED, FURTHER, that the proceeds of each
transaction are applied as provided in SECTION 2.11.01;
(h) issuance by the Borrower of capital stock for cash
consideration;
(i) the changes in corporate structure described in
SUBCLAUSES (1) - (4) below, subject to full and concurrent compliance
by the Borrower and each relevant Subsidiary with their obligations
pursuant to SECTION 6.01.11, the execution by each relevant Subsidiary
of a Subsidiary Guarantee and the amendment by each relevant
Subsidiary of its existing Subsidiary Guarantee, in each case in a
manner reasonably satisfactory to the Administrative Agent:
(1) liquidation of each of the corporations listed in CLAUSES
(A) - (D) below, or merger of any of such
18163011.1 070894 2007C 93065134 92
<PAGE> 101
corporations with and into a wholly-owned Subsidiary of the
Borrower:
(A) Sealy Mattress Company of San Diego,
(B) Ohio-Sealy Mattress Manufacturing Co.
(Atlanta)
(C) Sealy of S.W. Virginia, and
(D) A. Brandwein and Co.;
(2) a restructuring of each of the components and licensing
business of the Borrower as direct subsidiaries of the
Borrower;
(3) merger or amalgamation of Gestion Centurion with Matelas
Centurion; and
(4) restructuring of Sealy Mattress Manufacturing Company,
Inc. and Sealy Canada, Ltd. as direct subsidiaries of
Sealy Mattress Company;
(j) the liquidation of Advanced Sleep Products and/or its
Subsidiary; IT BEING UNDERSTOOD that the business, assets and
liabilities of such Persons have previously been liquidated; and
(k) any license agreement executed by the Borrower or any
Subsidiary as licensor entered into in the ordinary course of business
of the Borrower or such Subsidiary consistent with business
requirements of the Borrower or such Subsidiary.
SECTION 6.02.12. MODIFICATION, ETC. OF CERTAIN AGREEMENTS. The
Borrower shall not consent to or enter into any amendment, supplement or other
modification of
(a) the Senior Subordinated Notes, the Senior Subordinated
Indenture or any other Subordinated Debt Document;
(b) any material term, provision or agreement contained in
the certificate of incorporation of the Borrower; or
(c) any material term, provision or agreement relating to any
obligation of the Borrower to make loans to, or purchase capital stock
from, any Person contained in the Performance Share Plan, the Stock
Option Plan or any Employment Incentive Agreement.
18163011.1 070894 2007C 93065134 93
<PAGE> 102
SECTION 6.02.13. TRANSACTIONS WITH AFFILIATES. The Borrower
will not, and will not permit any Subsidiary to, enter into, or cause, suffer,
or permit to exist:
(a) any arrangement or contract with any of its Affiliates of
a nature customarily entered into by Persons which are Affiliates of
each other (including management or similar contracts or arrangements
relating to the allocation of revenues, taxes, and expenses or
otherwise) requiring any payments to be made by the Borrower or any
Subsidiary to any Affiliate unless such arrangement is fair and
equitable to the Borrower or such Subsidiary; or
(b) any other transaction, arrangement, or contract with any
of its Affiliates which would not be entered into by a prudent Person
in the position of the Borrower or such Subsidiary with, or which is
on terms which are less favorable than are obtainable from, any Person
which is not one of its Affiliates.
Without limiting the foregoing, the Borrower will not, and will not
permit any Subsidiary to, pay or become obligated to pay any management,
consulting or similar fee to Zell/Chilmark or any of its Affiliates (other than
reasonable and customary (x) fees for directors and professional services and
(y) out-of-pocket expenses for services actually rendered).
SECTION 6.02.14. NEGATIVE PLEDGES; SUBSIDIARY PAYMENTS. The
Borrower will not, and will not permit any Subsidiary to, enter into any
agreement (excluding this Agreement, any other Credit Document, the Senior
Subordinated Note Indenture, any other Subordinated Debt Document or Senior
Debt Document governing any Permitted Senior Debt) (a) prohibiting the creation
or assumption of any Lien upon its properties, revenues, or assets, whether now
owned or hereafter acquired, or (b) which would restrict the ability of any
Subsidiary to pay or make dividends or distributions in cash or kind, to make
loans, advances or other payments of whatsoever nature, or to make transfers or
distributions of all or any part of its assets, in each case to the Borrower or
to any corporation as to which such Subsidiary is a Subsidiary, except, with
respect only to CLAUSE (b), (i) non-assignment clauses in existing leases and
leases entered into after the date of this Agreement (PROVIDED, with respect to
leases entered into after the date of this Agreement, the Borrower or such
Subsidiary, as the case may be, shall use its best efforts to avoid the
inclusion of such non-assignment clauses in such lease), (ii) security
agreements, pledge agreements and similar instruments existing on the date of
this Agreement and (iii) loan, security and similar agreements entered into by
any non-U.S. Subsidiary with respect to Debt permitted pursuant to SECTION
6.02.02(h).
18163011.1 070894 2007C 93065134 94
<PAGE> 103
SECTION 6.02.15. SUBORDINATED DEBT INSTRUMENTS. The Borrower
will not, and will not permit any Subsidiary to, enter into any Subordinated
Debt Document, except the Senior Subordinated Notes and the Senior Subordinated
Note Indenture, unless such Subordinated Debt Document is satisfactory in form
and substance to the Required Banks.
SECTION 6.02.16. INCONSISTENT AGREEMENTS. The Borrower will
not, and will not permit any Subsidiary to, enter into any agreement containing
any provision which would be violated or breached by any Credit Extension or by
the performance by the Borrower or such Subsidiary, as the case may be, of its
obligations hereunder or under any Credit Document.
SECTION 6.02.17. FISCAL YEAR. The Borrower will not change
its Fiscal Year.
SECTION 6.02.18. USE OF PROCEEDS. The Borrower will not use
the proceeds of any Credit Extension except for general corporate purposes,
including to pay interest, subject to the terms of this Agreement and
Applicable Law.
SECTION 6.02.19. TAX SHARING AGREEMENTS. The Borrower will
not enter into any tax sharing or similar agreement or arrangement other than
as may be approved in writing by the Required Banks.
SECTION 6.02.20. FX SWAP AGREEMENTS. Neither the Borrower nor
any Subsidiary shall enter into or become liable (directly or indirectly,
absolutely or contingently) in any way under or with respect to any FX Swap
Agreement except any FX Swap Agreement intended to protect the Borrower or such
Subsidiary against foreign currency fluctuations arising in the ordinary course
of business consistent with its business requirements.
ARTICLE VII
DEFAULTS
SECTION 7.01. EVENTS OF DEFAULT. If one or more of the following
events ("EVENTS OF DEFAULT") shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal of
any Note or any Reimbursement Obligation or shall fail to pay within 5
days of the same becoming due any interest on any Note or any
Reimbursement Obligation or any fees or other amounts payable
hereunder;
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(b) the Borrower or any Subsidiary shall fail to observe or
perform any covenant, agreement or other obligation contained in
ARTICLE VI other than SECTION 6.01.01, 6.01.03, 6.01.04, 6.01.05,
6.01.08 (with respect only to maintenance of books and records),
6.02.0, 6.02.09, or 6.02.17;
(c) the Borrower or any Subsidiary shall fail to observe or
perform any covenant, agreement or other obligation contained in this
Agreement or any other Credit Document other than those covered
by CLAUSE (a) or (b) above), for more than 30 days after the Borrower
has knowledge thereof or written notice thereof has been given to the
Borrower by the Administrative Agent;
(d) any representation, warranty, certification or statement
made by the Borrower or, where applicable, any Subsidiary in this
Agreement or any Credit Document or made by any Person party to any
Collateral Document, or any certificate, financial statement or other
document delivered pursuant to any of such agreement, shall prove to
have been incorrect or misleading in any material respect when made or
deemed to be repeated;
(e) the Borrower or any Subsidiary shall fail to make any
payment in respect of any Debt (other than hereunder) when due,
subject to any applicable grace period; PROVIDED that such payment
with respect to any such Debt is in an aggregate amount greater than
$5,000,000;
(f) any event or condition shall occur which results in the
acceleration of the maturity of any other Debt (other than hereunder)
in an aggregate principal amount greater than $5,000,000 of the
Borrower or any Subsidiary, or enables (or, with the giving of notice
or lapse of time or both, would enable) the holder of such Debt or any
Person acting on such holder's behalf to accelerate the maturity
thereof;
(g) any party to any Subordinated Debt Document or Senior
Debt Document shall fail in any material respect to honor its
obligations thereunder;
(h) the Borrower or any Subsidiary shall commence a voluntary
case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking
the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, or
shall consent to any such relief or to the appointment of or
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taking of possession by any such official in an involuntary case or
other proceeding commenced against it, or shall make a general
assignment for the benefit of creditors, or shall fail generally to
pay its debts as they become due, or shall take any corporate action
to authorize any of the foregoing;
(i) an involuntary case or other proceeding shall be
commenced against the Borrower or any Subsidiary seeking liquidation,
reorganization or other relief with respect to it or its debts under
any bankruptcy, insolvency, reorganization or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 60
days; or an order for relief shall be entered against the Borrower or
any Subsidiary under the federal bankruptcy laws as now or hereafter
in effect;
(j) a judgment or judgments or order for the payment of money
in an aggregate amount in excess of $5,000,000 (to the extent not
covered by insurance provided by a reputable and creditworthy
insurance carrier that has acknowledged coverage) shall be rendered
against the Borrower or any Subsidiary and such judgment or order
shall not have been vacated, discharged, stayed or bonded pending
appeal for a period of 30 days;
(k) any Subsidiary Guarantee shall, for any reason, fail to
be in full force and effect (except as contemplated by the terms
thereof); or any Subsidiary shall repudiate its obligations or
liability under any Subsidiary Guarantee;
(l) the Administrative Agent shall fail to have a
first-priority perfected security interest in any Collateral under the
Collateral Documents, (i) except to the extent expressly provided
herein or by the Collateral Documents and (ii) except for Collateral
having a fair market value not to exceed $1,000,000; PROVIDED that the
Borrower and each Subsidiary shall comply in all respects with SECTION
6.01.11 with respect to such Collateral;
(m) there shall occur a Change in Control; or
(n) any Person shall take formal action to terminate any
Pension Plan, if as a result of such termination the Borrower or any
Subsidiary could incur a liability to such Pension Plan or to the PBGC
in excess of $1,000,000, or a contribution failure occurs with respect
to any Pension Plan sufficient to give rise to a Lien under section
302(f) of ERISA;
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then, and in every such event, the Administrative Agent may, and if requested
by the Required Banks shall, by notice to the Borrower (i) terminate each
Bank's Commitment (to the extent of any unfunded obligations thereunder), and
it shall thereupon terminate, and/or (ii) declare the Notes, the Reimbursement
Obligations, accrued interest thereon and all accrued commitment fees and other
amounts payable hereunder and under the Credit Documents to be, and such Notes,
Reimbursement Obligations and such other amounts shall thereupon become,
immediately due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Borrower, and/or
(iii) require the reimbursement referred to in SECTION 2.20.08; PROVIDED that
in the case of any of the Events of Default specified in CLAUSE (h) or (i)
above, without any notice to the Borrower or any other act by the
Administrative Agent or the Banks, each Bank's Commitment (to the extent of any
unfunded obligations thereunder) shall thereupon terminate and the Notes,
Reimbursement Obligations, accrued interest thereon and all accrued commitment
fees and other amounts payable hereunder and under the Credit Documents shall
become immediately due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Borrower.
SECTION 7.02. NOTICE OF DEFAULT. The Administrative Agent shall
give notice to the Borrower and Zell/Chilmark under SECTION 7.01(c) promptly
upon being requested to do so by any Bank and shall thereupon notify all the
Banks thereof.
ARTICLE VIII
AMENDMENTS AND REMEDIES
SECTION 8.01. AMENDMENTS. Subject to the provisions of this
ARTICLE VIII, the Required Banks (or the Administrative Agent with the consent
in writing of the Required Banks) and the Borrower may enter into agreements
supplemental hereto for the purpose of adding or modifying any provisions to
the Credit Documents or changing in any manner the rights of the Banks or the
Borrower hereunder or waiving any Event of Default hereunder; PROVIDED that no
such supplemental agreement shall, without the consent of all of the Banks:
(a) reduce any percentage specified in the definition of
Required Banks;
(b) permit the Borrower to assign its rights under this
Agreement or under any other Credit Document;
(c) amend this SECTION 8.01; or
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(d) release all or substantially all of the Collateral;
PROVIDED, FURTHER, that no such supplemental agreement shall, without the
consent of all of the Term Loan Banks, or all of the Revolving Credit Banks, as
the case may be:
(e) extend the maturity of any scheduled principal repayment
installment of any Term Note or extend the maturity of any Revolving
Note, respectively, or reduce the principal amount thereof, or reduce
the rate or extend the time of payment of interest thereon or any
commitment fees payable with respect thereto; or
(f) increase the amount of the Term Loan Commitment or
Revolving Credit Commitment, respectively, of any Bank hereunder; and
PROVIDED, FURTHER, that no such supplemental agreement shall waive any
condition precedent to any Revolving Advance unless the Required Revolving
Credit Banks consent thereto.
No amendment of any provision of this Agreement or any Credit Document relating
to any Managing Agent (in its capacity as Managing Agent) shall be effective
without the written consent of such Managing Agent.
SECTION 8.02. PRESERVATION OF RIGHTS. No delay or omission of the
Banks or any Managing Agent to exercise any right under the Credit Documents
shall impair such right or be construed to be a waiver of any Event of Default
or any acquiescence therein, and the making or issuance of a Credit Extension
notwithstanding the existence of an Event of Default or the inability of the
Borrower to satisfy the conditions precedent to such Credit Extension shall not
constitute any waiver or acquiescence therein. Any single or partial exercise
of any such right shall not preclude other or further exercise thereof or the
exercise of any other right, and no waiver, amendment or other variation of the
terms, conditions or provisions of the Credit Documents whatsoever shall be
valid unless in writing signed by the Banks required pursuant to SECTION 8.01,
and then only to the extent in such writing specifically set forth. All
remedies contained in the Credit Documents or by law afforded shall be
cumulative and all shall be available to any Managing Agent and the Banks until
the Obligations have been paid in full.
SECTION 8.03. COLLATERAL MATTERS.
(a) The Administrative Agent is authorized on behalf of all Banks,
without the necessity of any notice to or further consent from the Banks, from
time to time to take any action with respect
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to any Collateral or the Collateral Documents which may be necessary to perfect
and maintain perfected the security interest in and Liens upon the Collateral
granted pursuant to the Collateral Documents.
(b) The Banks irrevocably authorize the Administrative Agent, at
its option and in its discretion, to release any Lien granted to or held by the
Administrative Agent upon any Collateral (i) upon termination of the
Commitments and payment in full of all Advances and all other Obligations
payable under this Agreement and under any other Credit Document; (ii)
constituting property sold or to be sold or disposed of as part of or in
connection with any disposition permitted hereunder; (iii) constituting
property in which the Borrower or any Subsidiary of the Borrower owned no
interest at the time the Lien was granted or at any time thereafter; (iv)
constituting property leased to the Borrower or any Subsidiary of the Borrower
under a lease which has expired or been terminated in a transaction permitted
under this Agreement or is about to expire and which has not been, and is not
intended by the Borrower or such Subsidiary to be, renewed or extended; (v)
consisting of an instrument evidencing Debt if the Debt evidenced thereby has
been paid in full; or (vi) if approved, authorized or ratified in writing by
the Required Banks, subject to SECTION 8.01(d). Upon request by the
Administrative Agent at any time, the Banks will confirm in writing the
Administrative Agent's authority to release particular types or items of
Collateral pursuant to this subsection 8.03(b). The Administrative Agent will
notify the Banks of any such release of Collateral in a single transaction or
series of related transactions having a fair market value of $10,000,000 or
more.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. SURVIVAL OF REPRESENTATIONS. All representations and
warranties of the Borrower contained in this Agreement or of any Affiliates
contained in any Credit Document shall survive delivery of the Notes and the
making or issuance of the Credit Extensions herein contemplated.
SECTION 9.02. GOVERNMENTAL REGULATION. Anything contained in this
Agreement to the contrary notwithstanding, no Bank shall be obligated to extend
credit to the Borrower in violation of any limitation or prohibition provided
by any Applicable Law.
SECTION 9.03. TAXES. Subject to SECTION 12.03, any taxes (other
than Excluded Taxes) payable or ruled payable by Federal or State authority in
respect of the Credit Documents (other than
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taxes specifically covered to the contrary by other provisions of this
Agreement) shall be paid by the Borrower, together with interest and penalties,
if any.
SECTION 9.04. HEADINGS. Section headings in the Credit Documents
are for convenience of reference only, and shall not govern the interpretation
of any of the provisions of the Credit Documents.
SECTION 9.05. ENTIRE AGREEMENT. The Credit Documents embody the
entire agreement and understanding among the Borrower, the Managing Agents and
the Banks and supersede all prior agreements and understandings among the
Borrower, the Managing Agents and the Banks relating to the subject matter
thereof.
SECTION 9.06. SEVERAL OBLIGATIONS. The respective obligations of
the Banks hereunder are several and not joint and no Bank shall be the partner
or agent of any other (except to the extent to which any Managing Agent is
authorized to act as such). The failure of any Bank to perform any of its
obligations hereunder shall not relieve any other Bank from any of its
obligations hereunder. This Agreement shall not be construed so as to confer
any right or benefit upon any Person other than the parties to this Agreement
and their respective successors and assigns.
SECTION 9.07. EXPENSES; INDEMNIFICATION. (a) The Borrower shall
reimburse the Managing Agents for any reasonable costs and out-of- pocket
expenses (including reasonable fees and expenses of Mayer, Brown & Platt, as
group counsel for the Managing Agents, or such other firm as may replace Mayer,
Brown & Platt as group counsel for the Managing Agents) paid or incurred by the
Managing Agents in connection with (i) the preparation, review, execution,
delivery, amendment, modification, administration and collection of the Credit
Documents and (ii) the syndication of the Total Commitment Amount to the Banks
(but not any assignment or participation pursuant to ARTICLE XII). The
Borrower shall reimburse any Managing Agent and any Bank for any reasonable
costs, internal legal charges and out-of-pocket expenses (including reasonable
fees and time charges of any attorneys for any such Bank or Managing Agent,
which attorneys may be employees of any such Bank or Managing Agent) paid or
incurred by such Bank or Managing Agent in connection with the enforcement of
the Credit Documents. The Borrower acknowledges that the Managing Agents have
determined that the requirements of Title XI of the Financial Institutions
Reform, Recovery and Enforcement Act of 1989 and regulations promulgated
pursuant thereto by the Board of Governors of the Federal Reserve System and
the Office of the Comptroller of the Currency concerning appraisals for certain
real estate financings do not apply to the transactions contemplated by this
Agreement. If such requirements are
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subsequently determined to apply to the transactions contemplated hereby, the
Borrower shall reimburse the Managing Agents for any costs and expenses
incurred in connection with appraisals obtained pursuant to such requirements.
(b) The Borrower further agrees to indemnify each Managing Agent,
each Bank, and each of their respective directors, officers and employees (each
an "INDEMNIFIED PARTY") against all losses, claims, damages, penalties,
judgments, liabilities and expenses (including all reasonable attorneys' fees
and other expenses of litigation or preparation therefor whether or not any
Managing Agent or any Bank is a party thereto) which any of them may pay or
incur arising out of or relating to this Agreement, the other Credit Documents,
the "Refinancing Documents" (as defined in the Existing Agreement), the
"Zell/Chilmark Acquisition Documents" (as defined in the Existing Agreement),
the "Tender Credit Documents" (as defined in the Original Amended Credit
Agreement), the transactions contemplated hereby or the direct or indirect
application or proposed application of the proceeds of any Loan hereunder
(including any loss, damage, penalty, judgment, liability and expense that
would not have been paid or incurred but for (x) a portion of the Credit
Extensions hereunder having been extended under the Original Amended Credit
Agreement or the Second Amended Credit Agreement or (y) this Agreement being a
restatement of the Existing Agreement), unless it is determined by a judgment
of a court that is binding on the relevant Indemnified Party and is final and
not subject to appeal, that such losses, claims, damages, penalties, judgments,
liabilities or expenses were the result of acts or omissions on the part of
such Indemnified Party constituting gross negligence or willful misconduct. If
and to the extent that the foregoing indemnity is unenforceable for any reason,
the Borrower hereby agrees to make the maximum contribution to the payment and
satisfaction of each of such amounts which is permissible under Applicable Law.
The obligations of the Borrower under this SECTION 9.07 (and the obligations of
the Borrower under Section 9.07 of each of the Existing Agreement, the Second
Amended Credit Agreement and the Original Amended Credit Agreement shall
survive the termination of this Agreement.
SECTION 9.08. NUMBERS OF DOCUMENTS. All statements, notices,
closing documents, and requests hereunder shall be furnished to the
Administrative Agent with sufficient counterparts so that the Administrative
Agent may furnish one to each of the Banks and Managing Agents, and the
Administrative Agent shall furnish such counterparts to the Banks and Managing
Agents.
SECTION 9.09. SEVERABILITY OF PROVISIONS. Any provisions in any
Credit Document that are held to be inoperative, unenforceable, or invalid in
any jurisdiction shall, as to that
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jurisdiction, be inoperative, unenforceable, or invalid without affecting the
remaining provisions in that jurisdiction or the operation, enforceability, or
validity of such provisions in any other jurisdiction, and to this end the
provisions of all Credit Documents are declared to be severable.
SECTION 9.10. NONLIABILITY OF BANKS. The relationship between the
Borrower and the Banks and Managing Agents shall be solely that of borrower and
lenders. Neither any Managing Agent nor any Bank shall have any fiduciary
responsibilities to the Borrower under or in connection with the Credit
Documents. Neither any Managing Agent nor any Bank undertakes any
responsibility to the Borrower to review or inform the Borrower of any matter
in connection with any phase of the Borrower's business or operations.
SECTION 9.11. CHOICE OF LAW. THE CREDIT DOCUMENTS (OTHER THAN
THOSE CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE
STATE OF NEW YORK, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL
BANKS.
SECTION 9.12. CONSENT TO JURISDICTION. THE BORROWER, EACH MANAGING
AGENT AND EACH BANK HEREBY IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION
OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN THE CITY OF NEW
YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY CREDIT
DOCUMENTS AND THE BORROWER, EACH MANAGING AGENT AND EACH BANK HEREBY
IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVE ANY OBJECTION
THEY MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM.
NOTHING HEREIN SHALL LIMIT THE RIGHT OF ANY MANAGING AGENT, ANY BANK OR THE
BORROWER TO BRING PROCEEDINGS AGAINST THE BORROWER OR ANY MANAGING AGENT OR ANY
BANK, AS THE CASE MAY BE, IN THE COURTS OF ANY OTHER JURISDICTION. ANY
JUDICIAL PROCEEDING BY THE BORROWER AGAINST ANY MANAGING AGENT OR ANY BANK OR
ANY AFFILIATE OF ANY MANAGING AGENT OR ANY BANK INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH
ANY CREDIT DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN NEW YORK, NEW YORK, TO
THE EXTENT THAT JURISDICTION MAY BE EFFECTED AGAINST SUCH MANAGING AGENT OR
SUCH BANK, WITH RESPECT TO THE APPLICABLE SUBJECT MATTER, IN NEW YORK, NEW
YORK.
SECTION 9.13. WAIVER OF JURY TRIAL. THE BORROWER, EACH MANAGING
AGENT AND EACH BANK HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT,
CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH
ANY CREDIT DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.
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SECTION 9.14. LIMITATION ON MANAGING AGENT AND BANK LIABILITY. The
Borrower agrees that (i) neither any Managing Agent nor any Bank shall have any
liability to the Borrower (whether sounding in tort, contract or otherwise) for
losses suffered by the Borrower in connection with, arising out of, or in any
way related to, the transactions contemplated and the relationship established
by the Credit Documents, or any act, omission or event occurring in connection
therewith, unless, it is determined by a judgment of a court that is binding on
such Managing Agent or such Bank and is final and not subject to appeal that
such losses were the result of acts or omissions on the part of such Managing
Agent or such Bank, as the case may be, constituting gross negligence or
willful misconduct, and (ii) the Borrower waives, releases and agrees not to
sue upon any claim against any Managing Agent or any Bank (whether sounding in
tort, contract or otherwise) except a claim based upon gross negligence or
willful misconduct. Whether or not such damages are related to a claim that is
subject to the waiver effected above and whether or not such waiver is
effective, neither any Managing Agent nor any Bank shall have any liability
with respect to, and the Borrower hereby waives, releases and agrees not to sue
upon any claim for, any special, indirect or consequential damages suffered by
the Borrower in connection with, arising out of, or in any way related to the
transactions contemplated or the relationship established by the Credit
Documents, or any act, omission or event occurring in connection therewith,
unless, it is determined by a judgment of a court that is binding on such
Managing Agent or such Bank, as the case may be, and is final and not subject
to review on appeal, that such damages were the result of acts or omissions on
the part of such Managing Agent or such Bank, as the case may be, constituting
gross negligence or willful misconduct.
SECTION 9.15. CONFIDENTIALITY. Each Managing Agent and each Bank
shall hold confidential all non-public information (which has been identified
as such by the Borrower) obtained pursuant to the requirements of this
Agreement in accordance with their customary and reasonable procedures for
handling confidential information of this nature and in accordance with safe
and sound lending practices, but in any event may (a) make disclosure to their
respective examiners, Affiliates, outside auditors, counsel and other
professional advisors reasonably necessary in connection with this Agreement or
as reasonably required by any then-current or prospective transferee or
participant, subject to SECTION 12.02(g), in connection with the contemplated
transfer or participation by a Bank of any Obligations or as required or
requested by any governmental agency or representative thereof or pursuant to
legal process or (b) make disclosure of any such information that becomes
publicly available other than through the actions of any Managing Agent or any
Bank constituting a breach of its obligations under this
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SECTION 9.15. For purposes hereof, such confidential information shall include
the financial statements, reports and information provided to the Managing
Agents and the Banks pursuant to SECTIONS 6.01.01(a)(ii) and (a)(iii), SECTION
6.01.01(b)(ii), SECTIONS 6.01.01(c), (e), (f), (g), (h) and (i), SECTION
6.01.08, SECTION 6.01.16 and SECTION 6.01.17.
ARTICLE X
THE MANAGING AGENTS
SECTION 10.01. APPOINTMENT. Continental is hereby appointed a
Managing Agent (including Administrative Agent) hereunder and under the Credit
Documents; GE Capital is hereby appointed a Managing Agent hereunder and under
the Credit Documents; Paribas is hereby appointed a Managing Agent hereunder
and under the Credit Documents; and Citicorp is hereby appointed a Managing
Agent hereunder and under the Credit Documents. Each of the Banks irrevocably
authorizes each Managing Agent to act as the agent of such Bank; PROVIDED that
any Managing Agent may in its discretion transfer such appointment and
authority to one of its affiliates without requiring the consent of the Banks
thereto, whereupon such affiliate shall be such Managing Agent. Each Managing
Agent agrees to act as such upon the express conditions contained in this
ARTICLE X. No Managing Agent shall have a fiduciary relationship with any Bank
by reason of this Agreement.
SECTION 10.02. POWERS. Each Managing Agent shall have and may
exercise such powers hereunder as are specifically delegated to such Managing
Agent by the terms hereof, together with such powers as are reasonably
incidental thereto. No Managing Agent shall have any implied duties to the
Banks, or any obligation to the Banks to take any action hereunder, except, in
the case of any Managing Agent, for any action specifically provided by this
Agreement to be taken by such Managing Agent.
SECTION 10.03. GENERAL IMMUNITY. Neither any Managing Agent nor any
of their respective directors, officers, agents or employees shall be liable to
the Banks or any Bank for any action taken or omitted to be taken by it or them
hereunder or in connection herewith except for its or their own gross
negligence or willful misconduct.
SECTION 10.04. NO RESPONSIBILITY FOR LOANS, RECITALS, ETC. No
Managing Agent shall be responsible to the Banks for any recitals, reports,
statements, warranties or representations herein or in any Credit Document or
be bound to ascertain or inquire as to the performance or observance of any of
the terms of this Agreement.
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SECTION 10.05. ACTION ON INSTRUCTIONS OF BANKS. Each Managing Agent
shall in all cases be fully protected in acting, or in refraining from acting,
hereunder in accordance with written instructions signed by the Required Banks
(or Banks having Loan and Commitments in such greater amount as may be required
by the express provisions of this Agreement or the applicable Credit Document),
and such instructions and any action taken or failure to act pursuant thereto
shall be binding on all of the Banks and on all holders of Notes.
SECTION 10.06. EMPLOYMENT OF AGENTS AND COUNSEL. Each Managing
Agent may execute any of its duties as such Managing Agent hereunder by or
through employees, agents, and attorneys-in-fact and shall not be answerable to
the Banks, except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. Each Managing Agent shall be entitled to
advice of counsel concerning all matters pertaining to the agency hereby
created and its duties hereunder.
SECTION 10.07. RELIANCE ON DOCUMENTS; COUNSEL. Each Managing Agent
shall be entitled to rely upon any Note, notice, consent, certificate,
affidavit, letter, telegram, statement, paper or document believed by it to be
genuine and correct and to have been signed or sent by the proper person or
persons, and, in respect to legal matters, upon the opinion of counsel selected
by such Managing Agent, which counsel may be employees of such Managing Agent.
SECTION 10.08. MANAGING AGENTS' REIMBURSEMENT AND INDEMNIFICATION.
The Banks agree to reimburse and indemnify each Managing Agent ratably, prior
to the occurrence of an Event of Default and termination of the Commitments
hereunder, in proportion to their respective Commitments and, after the
occurrence of any Event of Default and termination of the Commitments
hereunder, in proportion to the respective aggregate unpaid principal balance
of the Obligations then owed to them, (i) for any amounts not reimbursed by the
Borrower for which such Managing Agent is entitled to reimbursement by the
Borrower under the Credit Documents, (ii) for any other expenses incurred by
such Managing Agent on behalf of the Banks, in connection with the preparation,
execution, delivery, administration and enforcement of the Credit Documents and
(iii) for any liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind and nature
whatsoever which may be imposed on, incurred by or asserted against such
Managing Agent in any way relating to or arising out of the Credit Documents or
any other document delivered in connection with the Credit Documents or the
transactions contemplated hereby or the enforcement of any of the
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terms hereof or of any such other documents, provided that no Bank shall be
liable for any of the foregoing to the extent they arise (x) from the gross
negligence or willful misconduct of the such Managing Agent or (y) under the
Agents' Fee Letter.
SECTION 10.09. RIGHTS AS A LENDER. With respect to its Commitment
and the Credit Extensions made by it, each of the Managing Agents shall have
the same rights and powers hereunder as any Bank and may exercise the same as
though it were not such Managing Agent, and the term "Bank" or "Banks" shall,
unless the context otherwise indicates, include the Managing Agents in their
individual capacity. Each Managing Agent and its respective affiliates may
accept deposits from, lend money to, act as depositary for and generally engage
in any kind of banking or trust business with the Borrower or any Subsidiaries
or Affiliates as fully as if it were not such Managing Agent.
SECTION 10.10. BANK CREDIT DECISION. Each Bank acknowledges that it
has, independently and without reliance upon any Managing Agent or any other
Bank and based on such documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this Agreement and the
other Credit Documents. Each Bank also acknowledges that it will,
independently and without reliance upon any Managing Agent or any other Bank
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement and the other Credit Documents.
SECTION 10.11. SUCCESSOR MANAGING AGENT. Any Managing Agent may
resign at any time by giving not less than 30 days' prior written notice
thereof to the Banks, the Borrower and the other Managing Agents, and any
Managing Agent may be removed at any time with cause by written notice received
by such Managing Agent from the Required Banks. Except with respect to the
Administrative Agent, any Managing Agent that resigns or is removed may, but
need not, at the option of the Borrower, be succeeded by a successor Managing
Agent. Upon the appointment of a successor Managing Agent with respect to any
Managing Agent, resignation or removal of such Managing Agent hereunder will
result in resignation or removal of such Managing Agent under the other Credit
Documents. Upon any such resignation or removal, the Required Banks shall have
the right to appoint, with the consent of the Borrower and the other Managing
Agents (which consent shall not be unreasonably withheld), on behalf of the
Borrower and the Banks, a successor Managing Agent. If no successor Managing
Agent shall have been so appointed by the Required Banks and shall have
accepted such appointment within sixty days after the retiring Managing Agent's
giving notice of resignation, then the retiring Managing Agent may appoint, on
behalf of the Borrower and the Banks, a successor Managing Agent.
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Such successor Managing Agent shall be a Bank hereunder. Upon the acceptance
of any appointment as Managing Agent hereunder by a successor Managing Agent,
such successor Managing Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Managing Agent,
and the retiring Managing Agent shall be discharged from its duties and
obligations hereunder. After any retiring Managing Agent's resignation
hereunder as Managing Agent, the provisions of this ARTICLE X shall continue in
effect for its benefit in respect of any actions taken or omitted to be taken
by it while it was acting as such Managing Agent hereunder.
ARTICLE XI
SETOFF; RATABLE PAYMENTS
SECTION 11.01. SETOFF. In addition to, and without limitation of,
any rights of the Banks under Applicable Law, if the Borrower becomes
insolvent, however evidenced, or any Event of Default (or any Default described
in SECTION 7.01(h) or (i)) occurs and is continuing, any indebtedness from any
Bank to the Borrower (including all account balances, whether provisional or
final and whether or not collected or available) may be set off and applied
toward the payment of the Obligations owing to such Bank, whether or not the
Obligations, or any part thereof, shall then be due; PROVIDED that the Required
Banks shall consent thereto and that such Bank shall notify the Borrower of any
such setoff promptly thereafter.
SECTION 11.02. RATABLE PAYMENTS. If any Bank, whether by setoff or
otherwise, has payment made to it upon its Credit Extensions in a greater
proportion than that received by any other Bank, such Bank agrees, promptly
upon demand, to purchase a portion of the Credit Extensions held by the other
Banks so that after such purchase each Bank will hold its ratable proportion of
Credit Extensions. If any Bank, whether in connection with setoff or amounts
which might be subject to setoff or otherwise, receives collateral or other
protection for its Obligations on such amounts which may be subject to set off,
such Bank agrees, promptly upon demand, to take such action necessary such that
all Banks share in the benefits of such collateral ratably in proportion to
their Credit Extensions. In case any such payment is disturbed by legal
process or otherwise, appropriate further adjustments shall be made.
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ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
SECTION 12.01. SUCCESSORS AND ASSIGNS. The terms and provisions of
the Credit Documents shall be binding upon and inure to the benefit of the
Borrower and the Banks and their respective successors and assigns, except that
the Borrower shall not have the right to assign its rights under the Credit
Documents and any assignment by any Bank must be made in compliance with
SECTION 12.02. Any request, authority or consent of any Person, who at the
time of making such request or giving such authority or consent is the holder
of any Credit Extension, shall be conclusive and binding on any subsequent
holder, transferee or assignee of such Credit Extension.
SECTION 12.02. ASSIGNMENTS AND PARTICIPATIONS. Assignments by Banks
of, and the granting of participations in, their rights and obligations arising
under and with respect to this Agreement shall be permitted as follows:
(a) Each Bank may, upon the giving in writing to the
Administrative Agent of at least 3 Business Days' prior notice or the
delivery of the Assignment and Acceptance referred to in CLAUSE (b)(v)
below (of which notice or Assignment and Acceptance the Administrative
Agent shall promptly inform the Borrower), assign to one or more Banks
or other banks, savings and loan associations, insurance companies,
pension funds, mutual funds, commercial finance companies and other
similar financial institutions (the ELIGIBLE ASSIGNEE") all or a
portion of its rights and obligations under this Agreement (including
all or a portion of its Commitments, Loans and Reimbursement
Obligations and its obligation to participate, and its participations,
in Letters of Credit and Swing Loans) subject only to the conditions
set forth in CLAUSE (b) below; PROVIDED that any assignment to any
Eligible Assignee other than a Bank or an Affiliate of such assignor
Bank shall require the prior written consents of the Administrative
Agent and the Borrower, which consents shall not be unreasonably
withheld or delayed.
(b) Any assignments made pursuant to this SECTION 12.02 shall
comply with the following conditions:
(i) each such assignment shall be of a constant, and
not a varying, percentage of the assigning Bank's rights and
assignable obligations with respect to each Term Loan or
Revolving Credit (including Reimbursement Obligations and
obligations to participate, and participations, in Letters of
Credit and Swing Loans)
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and each Term Loan Commitment or Revolving Credit Commitment
of such Bank being assigned, PROVIDED that (A) such Bank may
assign percentages of its Term Loans and Revolving Credits
and its related Term Loan Commitment and Revolving Credit
Commitment that differ as between such types of Term Loans or
Revolving Credits and Commitments and (B) the amount of the
Term Loan Percentage and Revolving Credit Percentage that
such Bank may retain may vary (any such assignment of
different Applicable Percentages being a "NON-PRO RATA
ASSIGNMENT");
(ii) the amount of the Commitments and Credit
Extensions of the assigning Bank being assigned pursuant to
each such assignment (determined as of the date of the
Assignment and Acceptance (with respect to such assignment)
shall (except in the case of assignments to other Banks or an
assignment by a Bank of all of its Commitments and Credit
Extensions) in no event be less than $5,000,000 and the
aggregate amount of the Commitments and Credit Extensions
retained by such assigning Bank, after giving effect to such
assignment, shall be not less than $5,000,000;
(iii) each such assignment shall be to an Eligible
Assignee;
(iv) no such assignment shall violate any "blue sky"
or other securities law of any jurisdiction or shall require
the Borrower to file a registration statement with the
Commission or apply to qualify any Commitments or Credit
Extensions, or any interest in any thereof, under the "blue
sky" or other securities law of any jurisdiction; and
(v) the parties to each such assignment shall
execute and deliver to the Administrative Agent at least 3
Business Days prior to its effective date, for its recording
in the Register, an Assignment and Acceptance substantially in
the form of EXHIBIT L (an "ASSIGNMENT AND ACCEPTANCE"),
together with any Note subject to such assignment and a
processing and recordation fee of $4000, payable by the
assignee. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each
Assignment and Acceptance, and subject to CLAUSE (a) above,
(x) the assignee thereunder shall be a party hereto and, to
the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance,
have the rights and obligations of a Bank hereunder with
respect to all
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Term Loans or Revolving Credits and Commitments thereby
assigned, including the right to approve or disapprove
actions with respect to such Term Loans or Revolving Credits
and Commitments which require the approval of the Required
Banks or the Banks (or the Term Loan Banks or the Revolving
Credit Banks, as the case may be), and (y) the assigning
Bank thereunder shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to
such Assignment and Acceptance, relinquish its rights and be
released from its unmatured obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering
all or the remaining portion of an assigning Bank's rights
and obligations under this Agreement, such Bank shall cease
to be a party hereto).
(c) By executing and delivering an Assignment and Acceptance,
the assigning Bank thereunder and the assignee thereunder confirm to
and agree with each other and the other parties hereto as follows:
(i) other than as provided in such Assignment and Acceptance, such
assigning Bank makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or with
respect to the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any other
instrument or document furnished pursuant hereto; (ii) such assigning
Bank makes no representation or warranty and assumes no responsibility
with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of its obligations
under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms that it has received a
copy of this Agreement and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to
enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon any Managing Agent, such
assigning Bank or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make
its own credit decisions in taking or not taking action under this
Agreement; (v) such assignee confirms that it is an Eligible Assignee;
(vi) such assignee appoints and authorizes each Managing Agent to take
such action as agent on its behalf and to exercise such powers under
this Agreement as are delegated to such Managing Agent by the terms
hereof, together with such powers as are reasonably incidental
thereto; and (vii) such assignee agrees that it will perform in
accordance with their terms all of the obligations which
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by the terms of this Agreement are required to be performed by it as a
Bank.
(d) The Administrative Agent shall maintain at its address
indicated below its signature to this Agreement a copy of each
Assignment and Acceptance delivered to and accepted by it and a
register for the recordation of the names and addresses of the Banks
and the Commitments of, and principal amount of the Term Loans and/or
Revolving Credits owing to each Bank from time to time (the
"REGISTER"). The entries in the Register shall be conclusive and
binding for all purposes, absent manifest error, and the Borrower, the
Administrative Agent and the Banks may treat each Person whose name is
recorded in the Register as a Bank hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the
Borrower or any Bank at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed
by an assigning Bank and an assignee representing that it is an
Eligible Assignee, the Administrative Agent shall, if such Assignment
and Acceptance has been completed and is in substantially the form of
EXHIBIT L, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register and (iii) give prompt
notice thereof to the Borrower.
(f) Each Bank may sell participations to participants in or
to all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitments, Loans, and
Reimbursement Obligations, and obligations to participate, and
participations, in Letters of Credit); PROVIDED that (i) such Bank's
obligations under this Agreement (including its Commitments to the
Borrower hereunder) shall remain unchanged; (ii) such Bank shall
remain solely responsible to the other parties hereto for the
performance of such obligations; (iii) such Bank shall remain the
holder of any such Notes for all purposes of this Agreement; (iv) the
Borrower, each Managing Agent and the other Banks shall continue to
deal solely and directly with such Bank in connection with such Bank's
rights and obligations under this Agreement; (v) any participant which
is not an Affiliate of such Bank shall have no right to require such
Bank to take or omit to take any action under this Agreement, except
action extending the maturity of any Loan or any scheduled principal
repayment installment thereof, reducing the interest rate or fees on
any Loans in which such participation was sold, forgiving any
principal of or interest or fees payable on the Loans or releasing all
or substantially all of the Collateral to the extent such
18163011.1 070894 2007C 93065134 112
<PAGE> 121
Bank has a right to take or omit to take such action; and (vi) any
participant shall have the right to payments from the Borrower
pursuant to SECTION 2.19, 3.01(a) or 3.03 only to the extent such Bank
had such right. Each Bank agrees to incorporate the requirements set
forth in the preceding sentence into each participation agreement
which such Bank enters into with any participant. The Borrower agrees
that if amounts outstanding under this Agreement are due and unpaid,
or shall have been declared or shall have become due and payable, each
participant shall, to the extent permitted by Applicable Law, be
deemed to have the right of setoff in respect of its participating
interest in amounts owing under this Agreement to the same extent as
if the amount of its participating interest were owing directly to it
as a Bank under this Agreement; PROVIDED that any participant
exercising such right shall be obligated to share with Banks, as if
such participant were a "Bank" hereunder, the amount of any such
setoff.
(g) Any Bank may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this
SECTION 12.02, disclose to the assignee or participant, or proposed
assignee or participant, any information relating to the Borrower
furnished to such Bank by or on behalf of the Borrower; PROVIDED that,
prior to any such disclosure, the assignee or participant or proposed
assignee or participant shall agree to preserve the confidentiality of
any confidential information relating to the Borrower received by it
from such Bank to the same extent as the Banks hereunder.
(h) Notwithstanding the foregoing provisions of this
SECTION 12.02, each Bank may at any time create a security interest in
all or any portion of its rights hereunder (including the Loans owing
to it) in favor of any Federal Reserve Bank in accordance with
Regulation A of the Board of Governors of the Federal Reserve System.
For purposes of facilitating any such pledge, the Borrower will,
promptly upon request of any Bank, execute and deliver to such Bank
one or more notes (in form and substance reasonably satisfactory to
the Borrower and such Bank) evidencing such Bank's Term Loan and/or
Revolving Loans, as applicable, in partial substitution for the
applicable Global Note(s) (and the Administrative Agent will attach an
allonge to the applicable Global Note(s) to indicate that such Bank's
applicable Loan(s) are evidenced by the note(s) issued to such Bank
and that the principal amount of Loans evidenced by such Global
Note(s) is reduced by the principal amount of such note(s)).
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SECTION 12.03. TAX TREATMENT. If, pursuant to this ARTICLE XII, any
interest in any Credit Document is transferred to any assignee or participant
(each a "TRANSFEREE") which is organized under the laws of any jurisdiction
other than the United States or any State thereof, the transferor Bank shall
cause such Transferee, concurrently with the effectiveness of such transfer,
(i) to represent to the transferor Bank (for the benefit of the transferor
Bank, the Administrative Agent and the Borrower) that under Applicable Law and
treaties no Taxes will be required to be withheld by the Administrative Agent,
the Borrower or the transferor Bank with respect to any payments to be made to
such Transferee in respect of the Loans, (ii) to furnish to the transferor
Bank, the Administrative Agent and the Borrower either U.S. Internal Revenue
Service Form 4224 or U.S. Internal Revenue Service Form 1001 or successor form
(wherein such Transferee claims entitlement to complete exemption from U.S.
Federal withholding tax on all interest payments hereunder) and (iii) to agree
(for the benefit of the transferor Bank, the Administrative Agent and the
Borrower) to provide the transferor Bank, the Administrative Agent and the
Borrower a new Form 4224 or Form 1001 upon the obsolescence of any previously
delivered form and comparable statements in accordance with applicable U.S.
laws and regulations, duly executed and completed by such Transferee, and to
comply from time to time with all applicable U.S. laws and regulations with
regard to such withholding tax exemption.
ARTICLE XIII
NOTICES
SECTION 13.01. GIVING NOTICE. Any notice required or permitted to
be given under this Agreement may be, and shall be deemed, given (a) 3 Business
Days after being deposited in the United States mail, postage prepaid, or (b)
by overnight delivery service when delivered to representatives of any major
overnight delivery service, charges prepaid, addressed to the Borrower, the
Banks or the Managing Agents at the addresses indicated below their signatures
to this Agreement or on any applicable Assignment and Acceptance or (c) by
telecopy or telex when telexed or telecopied; PROVIDED that notices and
communications to any Managing Agent shall not be effective until received by
such Managing Agent.
SECTION 13.02. CHANGE OF ADDRESS. The Borrower, any Managing Agent
and any Bank may each change the address for service of notice upon it by a
notice in writing to the Borrower and the Administrative Agent.
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<PAGE> 123
ARTICLE XIV
COUNTERPARTS; REFERENCES; CONFIRMATION
SECTION 14.01. COUNTERPARTS. This Agreement and any other Credit
Document may be executed in any number of counterparts, all of which taken
together shall constitute one agreement, and any of the parties hereto or
thereto may execute this Agreement or any such other Credit Document,
respectively, by signing any such counterpart.
SECTION 14.02. REFERENCES. References to the Original Amended
Credit Agreement, the Second Amended Credit Agreement or the Existing Agreement
in any Credit Document shall be deemed to include such document as restated
hereby, whether or not reference is made to this Agreement.
SECTION 14.03. CONFIRMATION. The Borrower hereby confirms to the
Banks, the Administrative Agent and the Managing Agents that (i) each Credit
Document to which the Borrower is a party continues in full force and effect on
and after the date hereof and is the legal, valid and binding obligation of the
Borrower, enforceable against the Borrower in accordance with its terms and
(ii) the obligations and liabilities secured under each Credit Document include
any and all obligations and liabilities of the Borrower to the Banks under this
Agreement.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
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<PAGE> 124
IN WITNESS WHEREOF, the Borrower, the Banks and the Managing Agents
have executed this Agreement as of the date first above written.
SEALY CORPORATION
By:___________________________
Title:________________________
The Halle Building
10th Floor
1228 Euclid Avenue
Cleveland, Ohio 44115
Attention: Treasurer
BANQUE PARIBAS, individually and as
Managing Agent
By:____________________________
Title:_________________________
By:_____________________________
Title:_________________________
227 West Monroe
Suite 3300
Chicago, Illinois 60606
Attention: Mr. O. Garwood Lippincott
Vice President
CONTINENTAL BANK N.A., individually
and as Managing Agent (including
as Administrative Agent)
By:____________________________
Title:_________________________
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Mr. Eric A. Schubert
Managing Director
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CITICORP USA, INC., individually
and as Managing Agent
By:____________________________
Title:_________________________
c/o Citicorp North America, Inc.
200 South Wacker Drive
Chicago, Illinois 60606
Attention: Mr. Colin Cohen
Vice President
GENERAL ELECTRIC CAPITAL
CORPORATION, individually and as
Managing Agent
By:____________________________
Title:_________________________
190 South LaSalle
Suite 1200
Chicago, Illinois 60603
Attention: Operations Manager
BANK OF SCOTLAND
By:____________________________
Title:_________________________
181 West Madison Street
Suite 4710
Chicago, Illinois 60602
Attention: Mr. Colin J.D. Ferguson
380 Madison Avenue
New York, New York 10017
Attention: Mr. Craig Wilson
Vice President
18163011.1 070894 2007C 93065134 117
<PAGE> 126
COMPAGNIE FINANCIERE de CIC et de
L'UNION EUROPEENNE
By:____________________________
Title:_________________________
520 Madison Avenue
37th Floor
New York, New York 10022
Attention: Mr. Alan Merle D'Aubigne
CAISSE NATIONALE DE CREDIT AGRICOLE
By:____________________________
Title:_________________________
55 East Monroe Street
47th Floor
Chicago, Illinois 60603-5702
Attention: Ms. Karen Coons
CREDIT LYONNAIS CHICAGO BRANCH
By:____________________________
Title:_________________________
227 West Monroe Street
Suite 3800
Chicago, Illinois 60606
Attention: Mr. Brian Jackson
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By:____________________________
Title:_________________________
c/o Credit Lyonnais Chicago Branch
227 West Monroe Street
Suite 3800
Chicago, Illinois 60606
Attention: Mr. Brian Jackson
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<PAGE> 127
DRESDNER BANK AG CHICAGO AND GRAND
CAYMAN BRANCHES
By:____________________________
Title:_________________________
By:____________________________
Title:_________________________
190 South LaSalle Street
Suite 2700
Chicago, Illinois 60603
Attention: Mr. John Schaus
With a copy to:
75 Wall Street
29th Floor
New York, New York 10005
Attention: Mr. Christopher Williams
FIRST BANK NATIONAL ASSOCIATION
By:____________________________
Title:_________________________
First Bank Place
601 Second Avenue South
Minneapolis, Minnesota 55402
Attention: Ms. Megan Mourning
THE FIRST NATIONAL BANK OF CHICAGO
By:____________________________
Title:_________________________
1301 East 9th Street, Suite 2150
Cleveland, Ohio 44114
Attention: ___________________
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<PAGE> 128
With a copy to:
One First National Plaza
Suite #0617, 1-10
Chicago, Illinois 60670
Attention: Mr. Michael Basak
THE FUJI BANK, LIMITED
By:____________________________
Title:_________________________
225 West Wacker Drive
Suite 2000
Chicago, Illinois 60606
Attention: Mr. Edward Reilly Tierney
HELLER FINANCIAL, INC.
By:____________________________
Title:_________________________
500 West Monroe Street
Chicago, Illinois 60661
Attention: Mr. Rob Rotering
Assistant Vice President
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., CHICAGO BRANCH
By:____________________________
Title:_________________________
190 South LaSalle Street
Suite 800
Chicago, Illinois 60603
Attention: Ms. Melinda Ellsworth
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<PAGE> 129
MELLON BANK N.A.
By:____________________________
Title:_________________________
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
Attention: Loan Administration
With a copy to:
55 West Monroe
Suite 2600
Chicago, Illinois 60603
Attention: Mr. Mark Downs
NATIONAL CANADA FINANCE CORP.
By:____________________________
Title:_________________________
By:____________________________
Title:_________________________
1375 East 9th Street
Suite 2430
Cleveland, Ohio 44114
Attention: Mr. G. Timothy O'Rourke
Assistant Vice President
NATIONSBANK OF NORTH CAROLINA, N.A.
By:____________________________
Title:_________________________
100 N. Tryon Street, 20th Floor
Charlotte, NC 28255
Attention: Ms. Jennifer Heath
With a copy to:
Mr. Jay Johnston
Vice President
8th Floor
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PNC BANK, NATIONAL ASSOCIATION
By:____________________________
Title:_________________________
PNC Bank Building, 2nd Floor
Fifth & Wood Street
Pittsburgh, Pennsylvania 15265
Attention: Regional Corporate Banking
Administration
With a copy to:
1801 E. 9th Street, Suite 715
Cleveland, Ohio 44114-3103
Attention: Ms. Julianne S. McKinzie
SHAWMUT BANK CONNECTICUT, N.A.
By:____________________________
Title:_________________________
777 Main Street
Hartford, Connecticut 06115
Attention: Mr. Manfred O. Eigenbrod
Vice President
UNITED STATES NATIONAL BANK OF OREGON
By:____________________________
Title:_________________________
309 S.W. Sixth Avenue, 12th Floor
Portland, Oregon 97204
Attention: Mr. Bob Krueger
Assistant Vice President
Attention: Mr. Brad Lynott
Legal Department
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<PAGE> 131
Signatures of Departing Banks
-----------------------------
Each of the undersigned Departing Banks is executing and delivering a
counterpart hereof solely for purposes of Section 1.03. By such execution and
delivery:
1. Each Departing Bank agrees that, effective at the Amendment
Effective Time, such Departing Bank shall be deemed to have sold and assigned
all of its Existing Revolving Credit Commitment (including any Reimbursement
Obligations and any obligation to participate and any participation in Letters
of Credit and Swing Loans under the Existing Agreement), all of its Existing
Revolving Loans and all of its Existing Term Loans, all as more fully set forth
in SECTION 1.03.
2. Each Departing Bank represents and warrants that, at the
Amendment Effective Time, (i) its Existing Revolving Credit Commitment, its
Existing Revolving Credit Percentage of all Existing Revolving Loans and its
Existing Term Loans are in the amounts set forth on SCHEDULE 1.03; and (ii) the
rights and interests being assigned by such Departing Bank pursuant to SECTION
1.03 are free and clear of any adverse claim or encumbrance created by such
Departing Bank.
3. Each Departing Bank agrees that, effective at the Amendment
Effective Time, it shall have no rights or obligations under the Restated
Credit Agreement.
The agreements of each Departing Bank set forth in items (1) and (3)
above are subject to receipt by such Departing Bank, at or prior to the
Amendment Effective Time, of all amounts owed to such Departing Bank under the
Existing Credit Agreement as of the Amendment Effective Time as contemplated by
CLAUSES (d) and (e) of SECTION 1.03.
PRIME INCOME TRUST
By:______________________________
Title:___________________________
EATON VANCE PRIME RATE RESERVES
By:______________________________
Title:___________________________
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<PAGE> 132
MITSUI NEVITT CAPITAL CORPORATION
By:______________________________
Title:___________________________
PILGRIM PRIME RATE TRUST
By:______________________________
Title:___________________________
VAN KAMPEN MERRITT PRIME RATE
INCOME TRUST
By:______________________________
Title:___________________________
CHANCELLOR CAPITAL MANAGEMENT, INC.
By:______________________________
Title:___________________________
PROSPECT STREET SENIOR
PORTFOLIO L.P.
By:______________________________
Title:___________________________
CRESCENT/MACH I PARTNERS L.P.
By:______________________________
Title:___________________________
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<PAGE> 133
RESTRUCTURED OBLIGATIONS BACKED BY
SENIOR OBLIGATIONS
By:______________________________
Title:___________________________
STICHTING RESTRUCTURED OBLIGATIONS
BACKED BY SENIOR ASSETS 2
By:______________________________
Title:___________________________
18163011.1 070894 2007C 93065134 125
