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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
SCHEDULE 14D-1
Final Amendment
Tender Offer Statement Pursuant to Section 14(D)(1)
of the Securities Exchange Act of 1934
and
SCHEDULE 13D
Amendment No. 3
Under the Securities Exchange Act of 1934
----------------
AMERICAN STUDIOS, INC.
(NAME OF SUBJECT COMPANY)
ASI ACQUISITION CORP.
PCA INTERNATIONAL, INC.
(BIDDERS)
COMMON STOCK, PAR VALUE $0.001 PER SHARE
(TITLE OF CLASS OF SECURITIES)
030102 10 7
(CUSIP NUMBER OF CLASS OF SECURITIES)
----------------
John Grosso
ASI ACQUISITION CORP.
C/O PCA INTERNATIONAL, INC.
815 MATTHEWS-MINT HILL ROAD
MATTHEWS, NORTH CAROLINA 28105
TELEPHONE: (704) 847-8011
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES
AND COMMUNICATIONS ON BEHALF OF BIDDERS)
----------------
COPY TO:
MARC WEINGARTEN, ESQ.
SCHULTE ROTH & ZABEL LLP
900 THIRD AVENUE
NEW YORK, New York 10022
TELEPHONE: (212) 756-2000
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CUSIP No. 030102 10 7 14D-1
- -----------------------------------------------------------------------------
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
ASI Acquisition Corp.
(IRS Identification number to be applied for)
PCA International, Inc.
- -----------------------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
- -----------------------------------------------------------------------------
(3) SEC USE ONLY
- -----------------------------------------------------------------------------
(4) SOURCE OF FUNDS
BK
- -----------------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
- -----------------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
North Carolina
- -----------------------------------------------------------------------------
(7) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
20,333,508 (including 15,311 Shares tendered subject to
guarantees of delivery)
- -----------------------------------------------------------------------------
(8) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7)
EXCLUDES CERTAIN SHARES [ ]
N/A
- -----------------------------------------------------------------------------
(9) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
95%
- -----------------------------------------------------------------------------
(10) TYPE OF REPORTING PERSON
CO
- -----------------------------------------------------------------------------
2
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ASI Acquisition Corp. (the "Purchaser"), a North Carolina corporation and a
wholly owned subsidiary of PCA International, Inc., a North Carolina corporation
("Parent"), and Parent hereby amend and supplement (i) their Statement on
Schedule 14D-1 ("Schedule 14D-1"), filed with the Securities and Exchange
Commission (the "Commission") on December 20, 1996, as amended, with respect to
the Purchaser's offer to purchase all of the outstanding shares of common stock,
par value $.001 per share (the "Shares"), of American Studios, Inc., a North
Carolina corporation (the "Company"), and (ii) their Statement on Schedule 13D.
Unless otherwise indicated, each capitalized term used but not defined
herein shall have the meaning assigned to such term in the Schedule 14D-1.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OF OTHER CONSIDERATION.
The information set forth in Item 4 of the Schedule 14D-1 is hereby
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amended and supplemented by the following:
Parent and certain of its subsidiaries and affiliates have entered into a
Credit Agreement, dated as of January 27, 1997 (the "Credit Agreement"), with
the Lenders named therein and NationsBank, N.A., as Agent. A copy of the Credit
Agreement is attached hereto as Exhibit (b)(2) and is incorporated by reference.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDERS.
The information set forth in Item 5(c) of the Schedule 14D-1 is hereby
amended and supplemented by the following:
On January 27, 1997, pursuant to the terms of the Merger Agreement, all of
the members of the Company's Board of Directors (other than Randy J. Bates and
J. Robert Wren, Jr., who remain on the Board of Directors) have resigned and
were replaced by Parent's designees.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
The information set forth in Items 6(a) and 6(b) of the Schedule 14D-1 is
hereby amended and supplemented by the following:
Parent and the Purchaser accepted for payment all Shares validly tendered
and not withdrawn pursuant to the Offer, including those Shares tendered by
means of a Notice of a Guaranteed Delivery. According to the Depositary, a total
of approximately 20,333,508 Shares (including approximately 15,311 Shares
subject to Notices of Guaranteed Delivery or receipt of additional
documentation) were tendered pursuant to the Offer, which expired at 12:00
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midnight, New York City time, on Wednesday, January 22, 1997.
ITEM 10. ADDITIONAL INFORMATION.
The information set forth in Item 10(a) of the Schedule 14D-1 is hereby
amended and supplemented by the following:
Parent, the Purchaser and the Company entered into an Amendment, dated as
of January 27, 1997 (the "Amendment"), to the Agreement and Plan of Merger
whereby, among other things, the Company will be merged with and into the
Purchaser, and the Purchaser will continue as the Surviving Corporation and a
wholly owned subsidiary of Parent. A copy of the Amendment is attached hereto
as Exhibit (c)(11) and is incorporated by reference.
The information set forth in Item 10(f) of the Schedule 14D-1 is hereby
amended and supplemented by the following:
On January 23, 1997, Parent issued a press release, a copy of which is
attached hereto as Exhibit (a)(11) and is incorporated by reference, relating
to, among other things, completion of the Offer by the Purchaser.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(11) Text of Press Release, dated January 23, 1997, issued by Parent.
(b)(2) Credit Agreement, dated as of January 27, 1997, by and among Parent,
its subsidiaries and affiliates named therein as Guarantors, the Lenders named
therein and NationsBank, N.A., as Agent.
(c)(11) Amendment to the Agreement and Plan of Merger, dated as of January
27, 1997, by and among Parent, the Purchaser and the Company.
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After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Statement is true, complete and correct.
Dated: January 27, 1997
ASI ACQUISITION CORP.
By: /s/ John Grosso
-------------------------------
Name: John Grosso
Title: President
PCA INTERNATIONAL, INC.
By: /s/ John Grosso
-------------------------------
Name: John Grosso
Title: President
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EXHIBIT INDEX
Exhibit No. Description
99(a)(11) Text of Press Release, dated January 23, 1997,
issued by Parent.
99(b)(2) Credit Agreement, dated as of January 27, 1997,
by and among Parent, its subsidiaries and
affiliates named therein as Guarantors, the
Lenders named therein and NationsBank, N.A., as
Agent.
99(c)(11) Amendment to the Agreement and Plan of Merger,
dated as of January 27, 1997, by and among
Parent, the Purchaser and the Company.
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EXHIBIT 99(a)(11)
FOR IMMEDIATE RELEASE
JANUARY 23, 1997
PCA INTERNATIONAL, INC. COMPLETES TENDER OFFER
FOR AMERICAN STUDIOS, INC.
Matthews, North Carolina, January 23, 1997-PCA International, Inc.(NASDAQ: PCAI)
announced today the completion of the $2.50 per share cash tender offer for all
of the outstanding shares of American Studios, Inc. (NASDAQ: AMST).
In the offer, which expired 12:00 midnight, New York City time, on January 22,
1997, a total of 20,333,508 shares of American Studios common stock were
tendered and accepted for payment (including 109,239 shares tendered subject to
notices of guaranteed delivery), representing approximately 95% of the
outstanding American Studios shares.
As previously announced, the remaining American Studios shares will be converted
into the right to receive $2.50 per share in cash in a merger between American
Studios and ASI Acquisition Corp., a wholly owned subsidiary of PCA.
CONTACT:
Bruce A. Fisher
Senior Vice President
Chief Financial Officer
PCA International, Inc.
(704) 847-8011, Ext. 2404
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EXHIBIT 99(b)(2)
CREDIT AGREEMENT
Dated as of January 27, 1997
among
PCA INTERNATIONAL, INC.,
as Borrower,
and Certain Subsidiaries and Affiliates of the Borrower
as Guarantors,
THE LENDERS NAMED HEREIN
AND
NATIONSBANK, N.A.,
as Agent
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TABLE OF CONTENTS
SECTION 1 DEFINITIONS......... ...............................................2
1.1 Definitions......................................................2
1.2 Computation of Time Periods.....................................21
1.3 Accounting Terms................................................21
SECTION 2 CREDIT FACILITIES..................................................21
2.1 Revolving Loans.................................................21
2.2 Letter of Credit Subfacility....................................22
2.3 Tender Loans....................................................27
SECTION 3 OTHER PROVISIONS RELATING TO CREDIT FACILITIES.....................30
3.1 Default Rate....................................................30
3.2 [Intentionally Omitted].........................................30
3.3 Prepayments.....................................................30
3.4 Termination and Reduction of Commitments........................31
3.5 Fees............................................................32
3.6 Capital Adequacy................................................33
3.7 [Intentionally Omitted].........................................33
3.8 [Intentionally Omitted].........................................33
3.9 Requirements of Law.............................................33
3.10 Taxes..........................................................34
3.11 Replacement of Lenders.........................................36
3.12 Pro Rata Treatment.............................................36
3.13 Sharing of Payments............................................37
3.14 Payments, Computations, Etc....................................38
3.15 Evidence of Debt...............................................39
SECTION 4 GUARANTY...........................................................40
4.1 The Guarantee...................................................40
4.2 Obligations Unconditional.......................................40
4.3 Reinstatement...................................................41
4.4 Certain Additional Waivers......................................42
4.5 Remedies........................................................42
4.6 Rights of Contribution..........................................42
4.7 Continuing Guarantee............................................43
SECTION 5 CONDITIONS.........................................................43
5.1 Conditions to Closing...........................................43
5.2 Conditions to All Extensions of Credit..........................47
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SECTION 6 REPRESENTATIONS AND WARRANTIES.....................................48
6.1 Financial Condition.............................................48
6.2 No Changes or Restricted Payments...............................48
6.3 Organization; Existence; Compliance with Law....................49
6.4 Power; Authorization; Enforceable Obligations...................49
6.5 No Legal Bar....................................................49
6.6 No Material Litigation..........................................50
6.7 No Default......................................................50
6.8 Ownership of Property; Liens....................................50
6.9 Intellectual Property...........................................50
6.10 No Burdensome Restrictions.....................................50
6.11 Taxes..........................................................51
6.12 ERISA..........................................................51
6.13 Governmental Regulations, Etc. ................................52
6.14 Subsidiaries...................................................53
6.15 Purpose of Extensions of Credit................................53
6.16 Environmental Matters..........................................53
SECTION 7 AFFIRMATIVE COVENANTS..............................................54
7.1 Financial Statements............................................54
7.2 Certificates; Other Information.................................55
7.3 Notices.........................................................56
7.4 Payment of Obligations..........................................57
7.5 Conduct of Business and Maintenance of Existence................58
7.6 Maintenance of Property; Insurance..............................58
7.7 Inspection of Property; Books and Records; Discussions..........58
7.8 Environmental Laws..............................................59
7.9 Financial Covenants.............................................60
7.10 Agency Fees....................................................61
7.11 Additional Guaranties and Stock Pledges........................61
7.12 Ownership of Subsidiaries......................................62
7.13 Use of Proceeds................................................62
7.14 Employment Contracts, Etc. ....................................62
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SECTION 8 NEGATIVE COVENANTS ................................................62
8.1 Indebtedness....................................................62
8.2 Liens...........................................................63
8.3 Nature of Business..............................................63
8.4 Consolidation, Merger, Sale or Purchase of Assets, Capital
Expenditures, etc. .............................................63
8.5 Advances, Investments and Loans.................................64
8.6 Transactions with Affiliates....................................64
8.7 Ownership of Equity Interests...................................64
8.8 Fiscal Year.....................................................64
8.9 Prepayments of Indebtedness, etc. ..............................65
8.10 Restricted Payments............................................65
8.11 Sale Leasebacks................................................65
8.12 No Further Negative Pledges....................................65
8.13 Amendments to License Agreements...............................66
SECTION 9 EVENTS OF DEFAULT..................................................66
9.1 Events of Default...............................................66
9.2 Acceleration; Remedies..........................................68
SECTION 10 AGENCY PROVISIONS.................................................69
10.1 Appointment....................................................69
10.2 Delegation of Duties...........................................70
10.3 Exculpatory Provisions.........................................70
10.4 Reliance on Communications.....................................70
10.5 Notice of Default..............................................71
10.6 Non-Reliance on Agent and Other Lenders........................71
10.7 Indemnification................................................72
10.8 Agent in its Individual Capacity...............................72
10.9 Successor Agent................................................72
SECTION 11 MISCELLANEOUS ....................................................73
11.1 Notices........................................................73
11.2 Right of Set-Off...............................................75
11.3 Benefit of Agreement...........................................75
11.4 No Waiver; Remedies Cumulative.................................77
11.5 Payment of Expenses, etc. .....................................78
11.6 Amendments, Waivers and Consents...............................79
11.7 Counterparts...................................................79
11.8 Headings.......................................................79
11.9 Survival.......................................................80
11.10 Governing Law; Submission to Jurisdiction; Venue..............80
11.11 Severability..................................................81
11.12 Entirety......................................................81
11.13 Binding Effect; Termination...................................81
11.14 Confidentiality...............................................81
11.15 Source of Funds...............................................82
11.16 Conflict......................................................82
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SCHEDULES
Schedule 1.1(a) Non-Recurring Expenses
Schedule 2.1(a) Schedule of Lenders and Commitments
Schedule 2.1(b)(i) Form of Notice of Borrowing
Schedule 2.1(e) Form of Revolving Note
Schedule 2.2(b)-1 Closing Date Letters of Credit
Schedule 2.2(b)-2 Form of Notice of Request for Letter of Credit
Schedule 2.3(d) Form of Tender Note
Schedule 5.1(f) Form of Legal Opinion
Schedule 5.1(g)(v) Secretary's Certificate
Schedule 5.1(k) List of Real Property Collateral
Schedule 5.1(m) Corporate Structure
Schedule 6.2 Restricted Payments
Schedule 6.6 Litigation
Schedule 6.8 Existing Liens
Schedule 6.14 Subsidiaries
Schedule 7.2(b) Form of Officer's Compliance Certificate
Schedule 7.6 Insurance
Schedule 7.11-1 Form of Joinder Agreement
Schedule 7.11-2 Form of Pledge Joinder Agreement
Schedule 8.1 Indebtedness
Schedule 8.5 Existing Investments
Schedule 11.1 Lenders' Addresses
Schedule 11.3(b) Form of Assignment and Acceptance
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT dated as of January 27, 1997 (the "Credit
Agreement"), is by and among PCA INTERNATIONAL, INC., a North Carolina
corporation (the "Borrower"), and the subsidiaries and affiliates of the
Borrower identified on the signature pages hereto and such other subsidiaries
and affiliates as may from time to time become Guarantors hereunder in
accordance with the provisions hereof (collectively, the "Guarantors"), the
lenders named herein and such other lenders as may become a party hereto (the
"Lenders"), and NATIONSBANK, N.A., as Agent (in such capacity, the "Agent").
W I T N E S S E T H
WHEREAS, on December 20, 1996, an Offer to Purchase for Cash (the
"Tender Offer") all of the outstanding shares (the "ASI Shares") of common stock
of American Studios, Inc., a North Carolina corporation ("Target") was made by
ASI Acquisition Corp., a North Carolina corporation and wholly-owned subsidiary
of the Borrower ("Acquisition Corp") pursuant to that certain Agreement and Plan
of Merger by and among Acquisition Corp, Target and the Borrower, dated as of
December 17, 1996 (as it may be amended on or prior to the Closing Date, the
"Merger Agreement");
WHEREAS, upon the successful completion of the Tender Offer, after all
appropriate statutory waiting periods have expired, Target will be merged with
and into Acquisition Corp. (the "Merger");
WHEREAS, in order to finance the Tender Offer and to provide short-term
working capital financing to the Borrower (including, without limitation, the
making of intercompany loans to Target on and after the successful closing of
the Tender Offer), the Borrower has requested that the Lenders provide a
$70,000,000 credit facility comprised of a $45,000,000 Tender Offer facility and
a $25,000,000 revolving credit facility with a $5,000,000 subfacility for
letters of credit, to the Borrower; and
WHEREAS, the Lenders have agreed to make the requested credit facility
available to the Borrower on the terms and conditions hereinafter set forth;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
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SECTION 1
DEFINITIONS
-----------
1.1 DEFINITIONS.
As used in this Credit Agreement, the following terms shall
have the meanings specified below unless the context otherwise requires:
"Acquisition Corp" has the meaning given to such term in the
first WHEREAS clause hereof, together with any successors or assigns.
"Additional Credit Party" means each Person that becomes a
Guarantor after the Closing Date by execution of a Joinder Agreement.
"Affiliate" means, with respect to any Person, any other
Person (i) directly or indirectly controlling or controlled by or under
direct or indirect common control with such Person or (ii) directly or
indirectly owning or holding five percent (5%) or more of the equity
interest in such Person. For purposes of this definition, "control"
when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative
to the foregoing.
"Agent" shall have the meaning given to such term in the
heading hereof, together with any successors or assigns.
"Agent's Fee Letter" means that certain letter agreement,
dated December 16, 1996, between the Agent and the Borrower, as
amended, modified, supplemented or replaced from time to time.
"Agent's Fees" shall have the meaning assigned to such term in
Section 3.5(c).
"Aggregate Revolving Committed Amount" means the aggregate
amount of Revolving Commitments in effect from time to time, being
initially Twenty-Five Million Dollars ($25,000,000).
"Aggregate Tender Committed Amount" means the aggregate amount
of Tender Commitments in effect from time to time, being initially
Fifty Million Eight Hundred Thirty Three Thousand Seven Hundred Seventy
Dollars ($50,833,770).
"ASI Shares" has the meaning given to such term in the first
WHEREAS clause hereof.
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"Asset Disposition" means, (i) the sale, lease or other
disposition of any property or asset by the Borrower or any Subsidiary
of the Borrower, other than (A) any such sale permitted by Sections
8.4(c)(i), and 8.4(c)(iii) and (B) any such sale permitted by Section
8.4(c)(ii) to the extent the aggregate proceeds received from such
sales in any fiscal year are less than $250,000, and (ii) receipt by
the Borrower or any Subsidiary of the Borrower of any cash insurance
proceeds or condemnation award payable by reason of theft, loss,
physical destruction or damage, taking or similar event with respect to
any of their property or assets in an amount in excess of $250,000.
"Bankruptcy Code" means the Bankruptcy Code in Title 11 of the
United States Code, as amended, modified, succeeded or replaced from
time to time.
"Bankruptcy Event" means, with respect to any Person, the
occurrence of any of the following with respect to such Person: (i) a
court or governmental agency having jurisdiction in the premises shall
enter a decree or order for relief in respect of such Person in an
involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of such Person or for any substantial part of its Property or
ordering the winding up or liquidation of its affairs; or (ii) there
shall be commenced against such Person an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, or any case, proceeding or other action for the appointment
of a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) of such Person or for any substantial part of its
Property or for the winding up or liquidation of its affairs, and such
involuntary case or other case, proceeding or other action shall remain
undismissed, undischarged or unbonded for a period of sixty (60)
consecutive days; or (iii) such Person shall commence a voluntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or consent to the entry of an order for relief in
an involuntary case under any such law, or consent to the appointment
or taking possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of such Person or for any
substantial part of its Property or make any general assignment for the
benefit of creditors; or (iv) such Person shall be unable to, or shall
admit in writing its inability to, pay its debts generally as they
become due.
"Base Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest whole multiple of 1/100 of 1%)
equal to the greater of (a) the Federal Funds Rate in effect on such
day plus 1/2 of 1% or (b) the Prime Rate in effect on such day. If for
any reason the Agent shall have determined (which determination shall
be conclusive absent manifest error) that it is unable after due
inquiry to ascertain the Federal Funds Rate for any reason, including
the inability or failure of the Agent to obtain sufficient quotations
in accordance with the terms hereof, the Base Rate shall be determined
without regard to clause (a) of the first sentence of this definition
until the circumstances giving rise to such inability no longer exist.
Any change in the Base Rate due to a change in the Prime Rate or the
Federal Funds Rate shall be effective on the effective date of such
change in the Prime Rate or the Federal Funds Rate, respectively.
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"Base Rate Loan" means any Revolving Loan bearing interest at
a rate determined by reference to the Base Rate.
"Borrower" means the Person identified as such in the heading
hereof, together with any successors and permitted assigns.
"Business Day" means a day other than a Saturday, Sunday or
other day on which commercial banks in Charlotte, North Carolina are
authorized or required by law to close.
"Capital Expenditures" means all expenditures which in
accordance with GAAP would be classified as capital expenditures.
"Capital Lease" means, as applied to any Person, any lease of
any Property (whether real, personal or mixed) by that Person as lessee
which, in accordance with GAAP, is or should be accounted for as a
capital lease on the balance sheet of that Person.
"Capital Lease Obligation" means the capital lease obligations
relating to a Capital Lease determined in accordance with GAAP.
"Cash Equivalents" means (a) securities issued or directly and
fully guaranteed or insured by the United States of America or any
agency or instrumentality thereof (provided that the full faith and
credit of the United States of America is pledged in support thereof)
having maturities of not more than twelve months from the date of
acquisition, (b) U.S. dollar denominated time deposits and certificates
of deposit of (i) any Lender, or (ii) any domestic commercial bank of
recognized standing (y) having capital and surplus in excess of
$500,000,000 and (z) whose short-term commercial paper rating from S&P
is at least A-1 or the equivalent thereof or from Moody's is at least
P-1 or the equivalent thereof (any such bank being an "Approved Bank"),
in each case with maturities of not more than 270 days from the date of
acquisition, (c) commercial paper and variable or fixed rate notes
issued by any Approved Bank (or by the parent company thereof) and
maturing within six months of the date of acquisition, (d) repurchase
agreements entered into by a Person with a bank or trust company
(including any of the Lenders) or recognized securities dealer having
capital and surplus in excess of $500,000,000 for direct obligations
issued by or fully guaranteed by the United States of America in which
such Person shall have a perfected first priority security interest
(subject to no other Liens) and having, on the date of purchase
thereof, a fair market value of at least 100% of the amount of the
repurchase obligations, (e) obligations of any State of the United
States or any political subdivision thereof, the interest with respect
to which is exempt from federal income taxation under Section 103 of
the Code, having a long term rating of at least AA- or Aa-3 by S&P or
Moody's, respectively, and maturing within three years from the date of
acquisition thereof, (f) Investments in municipal auction preferred
stock (i) rated AAA (or the equivalent thereof) or better by S&P or Aaa
(or the equivalent thereof) or better by Moody's and (ii) with
dividends that reset at least once every 365 days and (g) Investments,
classified in accordance with GAAP as current assets, in money market
investment programs registered under the Investment Company Act of
1940, as amended, which are administered by reputable financial
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institutions having capital of at least $100,000,000 and the portfolios
of which are limited to Investments of the character described in the
foregoing subdivisions (a), (b), (c), (e) and (f).
"Change of Control" means the occurrence of any of the
following events: (i) any Person or two or more Persons acting in
concert (other than Centennial Associates, L.P., Joseph Reich, Stanley
Tulchin or John Grosso) shall have acquired beneficial ownership,
directly or indirectly, of, or shall have acquired by contract or
otherwise, or shall have entered into a contract or arrangement that,
upon consummation, will result in its or their acquisition of, control
over, Voting Stock of the Borrower (or other securities convertible
into such Voting Stock) representing 20% or more of the combined voting
power of all Voting Stock of the Borrower, or (ii) during any period of
up to 24 consecutive months, commencing after the Closing Date,
individuals who at the beginning of such 24 month period were directors
of the Borrower (together with any new director whose election by the
Borrower's Board of Directors or whose nomination for election by the
Borrower's shareholders was approved by a vote of at least two-thirds
of the directors then still in office who either were directors at the
beginning of such period or whose election or nomination for election
was previously so approved) cease for any reason to constitute a
majority of the directors of the Borrower then in office. As used
herein, "beneficial ownership" shall have the meaning provided in Rule
13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934.
"Closing Date" means the date hereof.
"Code" means the Internal Revenue Code of 1986, as amended,
and any successor statute thereto, as interpreted by the rules and
regulations issued thereunder, in each case as in effect from time to
time. References to sections of the Code shall be construed also to
refer to any successor sections.
"Collateral" means all collateral referred to in and covered
by the Collateral Documents.
"Collateral Documents" means the Security Agreement, the
Pledge Agreement, the Mortgages and such other documents executed and
delivered in connection with the attachment and perfection of the
Lenders' security interests in the assets of the Credit Parties,
including without limitation, the Mortgage Policies, UCC financing
statements and patent and trademark filings.
"Commitment" means the Revolving Commitment, the LOC
Commitment and the Tender Commitment.
"Commitment Fee" shall have the meaning given such term in
Section 3.5(a).
"Commitment Percentage" means the Revolving Commitment
Percentage.
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"Commitment Period" means the period from and including the
Closing Date to but not including the earlier of (i) the Termination
Date, or (ii) the date on which the Revolving Commitments terminate in
accordance with the provisions of this Credit Agreement.
"Consolidated Adjusted EBITDAR" means for any period for the
Borrower and its Subsidiaries on a consolidated basis, the sum of
Consolidated EBITDA plus rent expense minus Capital Expenditures made
or incurred, in each case on a consolidated basis determined in
accordance with GAAP applied on a consistent basis. Except as expressly
provided otherwise, the applicable period shall be for the four
consecutive quarters ending as of the date of determination.
"Consolidated EBITDA" means for any period for the Borrower
and its Subsidiaries on a consolidated basis, the sum of Consolidated
Net Income plus Consolidated Interest Expense plus all provisions for
any Federal, state or other domestic and foreign income taxes plus
depreciation and amortization plus non-recurring expenses set forth on
Schedule 1.1(a) hereto to the extent accrued during the period in
question, in each case on a consolidated basis determined in accordance
with GAAP applied on a consistent basis. Except as expressly provided
otherwise, the applicable period shall be for the four consecutive
quarters ending as of the date of determination.
"Consolidated Excess Cash Flow" means for any period for the
Borrower and its Subsidiaries on a consolidated basis, the sum of
Consolidated Net Income plus the non-cash portion of Consolidated
Interest Expense plus depreciation, amortization and other non-cash
charges minus Capital Expenditures minus the aggregate amount of all
regularly scheduled payments of principal and voluntary prepayments
(other than voluntary prepayments of loans outstanding under revolving
lines of credit, including Revolving Loans hereunder, unless there is a
corresponding permanent reduction in the commitments relating thereto)
on Funded Debt minus the cash portion of Federal, state, local and
foreign income, value added and similar taxes paid (to the extent not
deducted in determining Consolidated Net Income), in each case on a
consolidated basis determined in accordance with GAAP applied on a
consistent basis.
"Consolidated Fixed Charge Coverage Ratio" means for any
period, the ratio of Consolidated Adjusted EBITDAR to Consolidated
Fixed Charges.
"Consolidated Fixed Charges" means for any period for the
Borrower and its Subsidiaries on a consolidated basis, the sum of
Consolidated Interest Expense plus scheduled maturities of Funded Debt
paid during such period plus Restricted Payments made during such
period plus rent expense, in each case on a consolidated basis
determined in accordance with GAAP applied on a consistent basis.
Except as expressly provided otherwise, the applicable period shall be
for the four consecutive quarters ending as of the date of
determination.
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<PAGE> 12
"Consolidated Funded Debt" means Funded Debt of the Borrower
and its Subsidiaries determined on a consolidated basis in accordance
with GAAP applied on a consistent basis.
"Consolidated Group" means the Borrower and its Subsidiaries.
"Consolidated Interest Coverage Ratio" means for any period,
the ratio of Consolidated EBITDA to Consolidated Interest Expense.
"Consolidated Interest Expense" means for any period for the
Borrower and its Subsidiaries on a consolidated basis, all interest
expense, including the amortization of debt discount and premium and
the interest component under Capital Leases, in each case on a
consolidated basis determined in accordance with GAAP applied on a
consolidated basis. Except as expressly provided otherwise, the
applicable period shall be for the four consecutive quarters ending as
of the date of determination.
"Consolidated Leverage Ratio" means, as of the last day of any
fiscal quarter, the ratio of Consolidated Funded Debt on such date to
Consolidated EBITDA for the period of four consecutive fiscal quarters
ending as of such day.
"Consolidated Net Income" means for any period, the net
income of the Borrower and its Subsidiaries on a consolidated basis
determined in accordance with GAAP applied on a consistent basis, but
excluding for purposes of determining the Consolidated Leverage Ratio
and the Consolidated Fixed Charge Coverage Ratio, any extraordinary
gains or losses and any taxes on such excluded gains and any tax
deductions or credits on account of any such excluded gains and any tax
deductions or credits on account of any such excluded losses.
"Consolidated Net Worth" means total stockholders' equity of
the Borrower and its Subsidiaries on a consolidated basis as determined
in accordance with GAAP applied on a consistent basis.
"Contractual Obligation" means, as to any Person, any
provision of any security issued by such Person or of any material
agreement, instrument or undertaking to which such Person is a party or
by which it or any of its property is bound.
"Credit Documents" means a collective reference to this Credit
Agreement, the Notes, the LOC Documents, the Collateral Documents, each
Joinder Agreement, the Agent's Fee Letter, and all other related
agreements and documents issued or delivered hereunder or thereunder or
pursuant hereto or thereto.
"Credit Party" means any of the Borrower and the Guarantors.
"Default" means any event, act or condition which with notice
or lapse of time, or both, would constitute an Event of Default.
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<PAGE> 13
"Defaulting Lender" means, at any time, any Lender that, at
such time, (i) has failed to make an Extension of Credit required
pursuant to the terms of this Credit Agreement, (ii) has failed to pay
to the Agent or any Lender an amount owed by such Lender pursuant to
the terms of the Credit Agreement or any other of the Credit Documents,
or (iii) has been deemed insolvent or has become subject to a
bankruptcy or insolvency proceeding or to a receiver, trustee or
similar proceeding.
"Dollars" and "$" means dollars in lawful currency of the
United States of America.
"Domestic Credit Party" means any Credit Party which is
incorporated or organized under the laws of any State of the United
States or the District of Columbia.
"Domestic Subsidiary" means any Subsidiary which is
incorporated or organized under the laws of any State of the United
States or the District of Columbia.
"Environmental Laws" means any and all lawful and applicable
Federal, state, local and foreign statutes, laws, regulations,
ordinances, rules, judgments, orders, decrees, permits, concessions,
grants, franchises, licenses, agreements or other governmental
restrictions relating to the environment or to emissions, discharges,
releases or threatened releases of pollutants, contaminants, chemicals,
or industrial, toxic or hazardous substances or wastes into the
environment including, without limitation, ambient air, surface water,
ground water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport,
or handling of pollutants, contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes.
"Equity Transaction" means, with respect to the Borrower and
its Subsidiaries, any issuance of shares of its capital stock or other
equity interest; provided that any Equity Transaction shall not include
any such issuance (A) by a Subsidiary of the Borrower to the Borrower
or (B) to an employee, officer or director or former employee, officer
or director pursuant to a stock incentive plan, stock option plan or
other equity-based compensation plan or arrangement except to the
extent that the aggregate annual amount of such issuances under this
subsection (B) exceeds $750,000.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto, as interpreted by
the rules and regulations thereunder, all as the same may be in effect
from time to time. References to sections of ERISA shall be construed
also to refer to any successor sections.
"ERISA Affiliate" means an entity which is under common
control with any Credit Party within the meaning of Section 4001(a)(14)
of ERISA, or is a member of a group which includes the Borrower and
which is treated as a single employer under Sections 414(b) or (c) of
the Code.
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<PAGE> 14
"ERISA Event" means (i) with respect to any Plan, the
occurrence of a Reportable Event or the substantial cessation of
operations (within the meaning of Section 4062(e) of ERISA); (ii) the
withdrawal by the Borrower, any Subsidiary of the Borrower or any ERISA
Affiliate from a Multiple Employer Plan during a plan year in which it
was a substantial employer (as such term is defined in Section
4001(a)(2) of ERISA), or the termination of a Multiple Employer Plan;
(iii) the distribution of a notice of intent to terminate or the actual
termination of a Plan pursuant to Section 4041(a)(2) or 4041A of ERISA;
(iv) the institution of proceedings to terminate or the actual
termination of a Plan by the PBGC under Section 4042 of ERISA; (v) any
event or condition which could reasonably be expected to constitute
grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan; (vi) the complete or
partial withdrawal of the Borrower, any Subsidiary of the Borrower or
any ERISA Affiliate from a Multiemployer Plan; (vii) the conditions for
imposition of a lien under Section 302(f) of ERISA exist with respect
to any Plan; or (vii) the adoption of an amendment to any Plan
requiring the provision of security to such Plan pursuant to Section
307 of ERISA.
"Event of Default" means such term as defined in Section 9.1.
"Extension of Credit" means, as to any Lender, the making of,
or participation in, a Loan by such Lender or the issuance or extension
of, or participation in, a Letter of Credit.
"Fees" means all fees payable pursuant to Section 3.5.
"Federal Funds Rate" means, for any day, the rate of interest
per annum (rounded upwards, if necessary, to the nearest whole multiple
of 1/100 of 1%) equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such day, as published by the
Federal Reserve Bank of New York on the Business Day next succeeding
such day, provided that (A) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions
on the next preceding Business Day and (B) if no such rate is so
published on such next preceding Business Day, the Federal Funds Rate
for such day shall be the average rate quoted to the Agent on such day
on such transactions as determined by the Agent.
"Foreign Credit Party" means a Credit Party which is not a
Domestic Credit Party.
"Foreign Subsidiary" means a Subsidiary which is not a
Domestic Subsidiary.
"Funded Debt" means, with respect to any Person, without
duplication, (i) all Indebtedness of such Person for borrowed money,
(ii) all purchase money Indebtedness of such Person, including without
limitation the principal portion of all obligations of such Person
under Capital Leases, (iii) all Guaranty Obligations of such Person
with respect to Funded Debt of another Person, (iv) the maximum
available amount of all standby letters of credit or acceptances issued
or created for the account of such Person, (v) all Funded Debt
9
<PAGE> 15
of another Person secured by a Lien on any Property of such Person,
whether or not such Funded Debt has been assumed, provided that for
purposes hereof the amount of such Funded Debt shall be limited to the
greater of (A) the amount of such Funded Debt as to which there is
recourse to such Person and (B) the fair market value of the property
which is subject to the Lien and (vi) the principal balance outstanding
under any synthetic lease, tax retention operating lease, off-balance
sheet loan or similar off-balance sheet financing product to which such
Person is a party, where such transaction is considered borrowed money
indebtedness for tax purposes but is classified as an operating lease
in accordance with GAAP. The Funded Debt of any Person shall include
the Funded Debt of any partnership or joint venture in which such
Person is a general partner or joint venturer, but only to the extent
to which there is recourse to such Person for the payment of such
Funded Debt.
"GAAP" means generally accepted accounting principles in the
United States applied on a consistent basis and subject to the terms of
Section 1.3 hereof.
"Governmental Authority" means any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or
regulatory body.
"Guarantor" means each of those Persons identified as a
"Guarantor" on the signature pages hereto and each Additional Credit
Party which may hereafter execute a Joinder Agreement, together with
their successors and permitted assigns.
"Guaranteed Obligations" means, as to each Guarantor, without
duplication, (i) all obligations of the Borrower to the Lenders and the
Agent, whenever arising, under this Credit Agreement , the Notes or the
Credit Documents relating to the Obligations hereunder, and (ii) all
liabilities and obligations, whenever arising, owing from the Borrower
to any Lender, or any Affiliate of a Lender, arising under any Hedging
Agreement relating to Loans or Obligations hereunder.
"Guaranty Obligations" means, with respect to any Person,
without duplication, any obligations of such Person (other than
endorsements in the ordinary course of business of negotiable
instruments for deposit or collection) guaranteeing or intended to
guarantee any Indebtedness of any other Person in any manner, whether
direct or indirect, and including without limitation any obligation,
whether or not contingent, (i) to purchase any such Indebtedness or any
Property constituting security therefor, (ii) to advance or provide
funds or other support for the payment or purchase of any such
Indebtedness or to maintain working capital, solvency or other balance
sheet condition of such other Person (including without limitation keep
well agreements, maintenance agreements, comfort letters or similar
agreements or arrangements) for the benefit of any holder of
Indebtedness of such other Person, (iii) to lease or purchase Property,
securities or services primarily for the purpose of assuring the holder
of such Indebtedness, or (iv) to otherwise assure or hold harmless the
holder of such Indebtedness against loss in respect thereof. The amount
of any Guaranty Obligation hereunder shall (subject to any limitations
set forth therein) be deemed to be an
10
<PAGE> 16
amount equal to the outstanding principal amount (or maximum principal
amount, if larger) of the Indebtedness in respect of which such
Guaranty Obligation is made.
"Hedging Agreements" means any interest rate protection
agreement or foreign currency exchange agreement between the Borrower
and any Lender, or any Affiliate of a Lender.
"Indebtedness" of any Person means (i) all obligations of such
Person for borrowed money, (ii) all obligations of such Person
evidenced by bonds, debentures, notes or similar instruments, or upon
which interest payments are customarily made, (iii) all obligations of
such Person under conditional sale or other title retention agreements
relating to Property purchased by such Person (other than customary
reservations or retentions of title under agreements with suppliers
entered into in the ordinary course of business), (iv) all obligations
of such Person issued or assumed as the deferred purchase price of
Property or services purchased by such Person (other than trade debt
incurred in the ordinary course of business and due within six months
of the incurrence thereof) which would appear as liabilities on a
balance sheet of such Person, (v) all obligations of such Person under
take-or-pay or similar arrangements or under commodities agreements,
(vi) all Indebtedness of others secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien on, or payable out of the proceeds of production
from, Property owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, provided that for
purposes hereof the amount of such Indebtedness shall be limited to the
greater of (A) the amount of such Indebtedness as to which there is
recourse to such Person and (B) the fair market value of the property
which is subject to the Lien, (vii) all Guaranty Obligations of such
Person, (viii) the principal portion of all obligations of such Person
under Capital Leases, (ix) all obligations of such Person in respect of
interest rate protection agreements, foreign currency exchange
agreements, commodity purchase or option agreements or other interest
or exchange rate or commodity price hedging agreements (including, but
not limited to, the Hedging Agreements), (x) the maximum amount of all
standby letters of credit issued or bankers' acceptances facilities
created for the account of such Person and, without duplication, all
drafts drawn thereunder (to the extent unreimbursed), (xi) all
preferred stock issued by such Person and required by the terms thereof
to be redeemed, or for which mandatory sinking fund payments are due,
by a fixed date and (xii) the principal balance outstanding under any
synthetic lease, tax retention operating lease, off-balance sheet loan
or similar off-balance sheet financing product to which such Person is
a party, where such transaction is considered borrowed money
indebtedness for tax purposes but is classified as an operating lease
in accordance with GAAP. The Indebtedness of any Person shall include
the Indebtedness of any partnership or joint venture in which such
Person is a general partner or a joint venturer, but only to the extent
to which there is recourse to such Person for payment of such
Indebtedness.
"Interest Payment Date" means the 15th day of each month and
the Termination Date; provided that if an Interest Payment Date falls
on a date that is not a Business Day, such Interest Payment Date shall
be deemed to be the next succeeding Business Day.
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<PAGE> 17
"Investment", in any Person, means any loan or advance to such
Person, any purchase or other acquisition of any capital stock,
warrants, rights, options, obligations or other securities of, or
equity interest in, such Person, any capital contribution to such
Person or any other investment in such Person, including, without
limitation, any Guaranty Obligation incurred for the benefit of such
Person.
"Issuing Lender" means NationsBank.
"Issuing Lender Fees" has the meaning assigned to such term in
Section 3.5(b)(ii).
"Joinder Agreement" means a Joinder Agreement substantially in
the form of Schedule 7.11-1 hereto, executed and delivered by an
Additional Credit Party in accordance with the provisions of Section
7.11.
"Kmart License Agreement" means the Agreement, dated May 10,
1996, between Kmart Corporation and the Borrower, as amended, modified
or supplemented from time to time.
"Lenders" means each of the Persons identified as a "Lender"
on the signature pages hereto, and their successors and assigns.
"Letter of Credit" means any letter of credit issued by the
Issuing Lender for the account of the Borrower in accordance with the
terms of Section 2.2.
"Letter of Credit Fee" has the meaning given such term in
Section 3.5(b)(i).
"Lien" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, security interest, encumbrance, lien (statutory or
otherwise), preference, priority or charge of any kind (including any
agreement to give any of the foregoing, any conditional sale or other
title retention agreement, any financing or similar statement or notice
filed under the Uniform Commercial Code as adopted and in effect in the
relevant jurisdiction or other similar recording or notice statute, and
any lease in the nature thereof).
"Loan" or "Loans" means the Revolving Loans and the Tender
Loans.
"LOC Commitment" means the commitment of the Issuing Lender to
issue, and to honor payment obligations under, Letters of Credit
hereunder and with respect to each Lender, the commitment of each
Lender to purchase participation interests in the Letters of Credit up
to such Lender's LOC Committed Amount as specified in Schedule 2.1(a),
as such amount may be reduced from time to time in accordance with the
provisions hereof.
"LOC Committed Amount" means, collectively, the aggregate
amount of all of the LOC Commitments of the Lenders to issue and
participate in Letters of Credit as
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<PAGE> 18
referenced in Section 2.2(a), being initially FIVE MILLION DOLLARS
($5,000,000) and, individually, the amount of each Lender's LOC
Commitment as specified in Schedule 2.1(a).
"LOC Documents" means, with respect to any Letter of Credit,
such Letter of Credit, any amendments thereto, any documents delivered
in connection therewith, any application therefor, and any agreements,
instruments, guarantees or other documents (whether general in
application or applicable only to such Letter of Credit) governing or
providing for (i) the rights and obligations of the parties concerned
or at risk or (ii) any collateral security for such obligations.
"LOC Obligations" means, at any time, the sum of (i) the
maximum amount which is, or at any time thereafter may become,
available to be drawn under Letters of Credit then outstanding,
assuming compliance with all requirements for drawings referred to in
such Letters of Credit plus (ii) the aggregate amount of all drawings
under Letters of Credit honored by the Issuing Lender but not
theretofore reimbursed.
"Margin Stock" has the meaning given such term in 12 CFR Part
221.2.
"Material Adverse Effect" means a material adverse effect on
(i) the condition (financial or otherwise), operations, business,
assets, liabilities or prospects of the Borrower and its Subsidiaries
taken as a whole, (ii) the ability of the Credit Parties taken as a
whole to perform any material obligation under the Credit Documents to
which it is a party or (iii) the rights and remedies of the Lenders
under the Credit Documents.
"Materials of Environmental Concern" means any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum
products or any hazardous or toxic substances, materials or wastes,
defined or regulated as such in or under any Environmental Laws,
including, without limitation, asbestos, polychlorinated biphenyls and
urea-formaldehyde insulation.
"Merger" has the meaning given to such term in the second
WHEREAS clause hereof.
"Merger Agreement" has the meaning given to such term in the
first WHEREAS clause hereof.
"Merger Execution Date" means December 17, 1996.
"Moody's" means Moody's Investors Service, Inc., or any
successor or assignee of the business of such company in the business
of rating securities.
"Mortgages" has the meaning given to such term in Section
5.1(k).
"Mortgage Policies" has the meaning given to such term in
Section 5.1(k).
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<PAGE> 19
"Multiemployer Plan" means a Plan which is a multiemployer
plan as defined in Sections 3(37) or 4001(a)(3) of ERISA.
"Multiple Employer Plan" means a Plan which the Borrower, any
Subsidiary of the Borrower or any ERISA Affiliate and at least one
employer other than the Borrower, any Subsidiary of the Borrower or any
ERISA Affiliate are contributing sponsors.
"NationsBank" means NationsBank, N.A. and its successors.
"Net Proceeds" means gross cash proceeds (including any cash
received by way of deferred payment pursuant to a promissory note,
receivable or otherwise, but only as and when received) received in
connection with an Asset Disposition or Equity Transaction, net of (i)
reasonable transaction costs, including in the case of an Equity
Transaction, underwriting discounts and commissions and in the case of
an Asset Disposition occurring in connection with a claim under an
insurance policy, costs incurred in connection with adjustment and
settlement of the claim, (ii) estimated taxes payable in connection
therewith, and (iii) in the case of an Asset Disposition, any amounts
payable in respect of Indebtedness, including without limitation
principal, interest, premiums and penalties, which is secured by, or
otherwise related to, any property or asset which is the subject
thereof to the extent that such Indebtedness and any payments in
respect thereof are paid with a portion of the proceeds therefrom.
"Non-Excluded Taxes" means such term as is defined in Section
3.10.
"Note" or "Notes" means any Revolving Notes or any Tender
Notes.
"Notice of Borrowing" means a written notice of borrowing in
substantially the form of Schedule 2.1(b)(i), as required by Section
2.1(b)(i).
"Obligations" means, collectively, the Tender Loans, the
Revolving Loans and the LOC Obligations.
"Operating Lease" means, as applied to any Person, any lease
(including, without limitation, leases which may be terminated by the
lessee at any time) of any Property (whether real, personal or mixed)
which is not a Capital Lease other than any such lease in which that
Person is the lessor.
"Participation Interest" means the purchase by a Lender of a
participation in Letters of Credit and LOC Obligations as provided in
Section 2.2(c), and in Loans as provided in Section 3.13.
"PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA and any
successor thereof.
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<PAGE> 20
"Permitted Investments" means Investments which are either (i)
cash and Cash Equivalents; (ii) accounts receivable created, acquired
or made in the ordinary course of business and payable or dischargeable
in accordance with customary trade terms; (iii) Investments consisting
of stock, obligations, securities or other property received in
settlement of accounts receivable (created in the ordinary course of
business) from bankrupt obligors; (iv) Investments existing as of the
Closing Date and set forth in Schedule 8.5; (v) Guaranty Obligations
permitted by Section 8.1; (vi) loans to employees, directors or
officers in connection with the award of convertible bonds or stock
under a stock incentive plan, stock option plan or other equity-based
compensation plan or arrangement in the aggregate not to exceed
$500,000 (calculated on the exercise price for any such shares) in the
aggregate at any time outstanding; (vii) other advances or loans to
employees, directors, officers or agents not to exceed $750,000 in the
aggregate at any time outstanding; (viii) advances or loans to
customers or suppliers that do not exceed $250,000 in the aggregate at
any one time outstanding; (ix) Investments by one Credit Party in and
to another Credit Party; (x) loans, advances and investments in Foreign
Subsidiaries in an amount not to exceed $5,000,000 in the aggregate at
any time outstanding and (xi) other loans, advances and investments of
a nature not contemplated in the foregoing subsections in an amount not
to exceed $500,000 in the aggregate at any time outstanding.
"Permitted Liens" means:
(i) Liens in favor of the Agent on behalf of the
Lenders;
(ii) Liens (other than Liens created or imposed under
ERISA) for taxes, assessments or governmental charges or
levies not yet due or Liens for taxes being contested in good
faith by appropriate proceedings for which adequate reserves
determined in accordance with GAAP have been established (and
as to which the Property subject to any such Lien is not yet
subject to foreclosure, sale or loss on account thereof);
(iii) statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics, materialmen and suppliers
and other Liens imposed by law or pursuant to customary
reservations or retentions of title arising in the ordinary
course of business, provided that such Liens secure only
amounts not yet due and payable or, if due and payable, are
unfiled and no other action has been taken to enforce the same
or are being contested in good faith by appropriate
proceedings for which adequate reserves determined in
accordance with GAAP have been established (and as to which
the Property subject to any such Lien is not yet subject to
foreclosure, sale or loss on account thereof);
(iv) Liens (other than Liens created or imposed
under ERISA) incurred or deposits made by the Borrower
and its Subsidiaries in the ordinary course of business in
connection with workers' compensation, unemployment insurance
and other types of social security, or to secure the
performance of tenders, statutory obligations, bids, leases,
government contracts, performance and return-of-
15
<PAGE> 21
money bonds and other similar obligations (exclusive of
obligations for the payment of borrowed money);
(v) Liens in connection with attachments or
judgments (including judgment or appeal bonds) provided that
the judgments secured shall, within 30 days after the entry
thereof, have been discharged or execution thereof stayed
pending appeal, or shall have been discharged within 30 days
after the expiration of any such stay;
(vi) easements, rights-of-way, restrictions
(including zoning restrictions), minor defects or
irregularities in title and other similar charges or
encumbrances not, in any material respect, impairing the use
of the encumbered Property for its intended purposes;
(vii) Liens securing purchase money
Indebtedness (including Capital Leases) to the extent
permitted under Section 8.1(c), provided that any such Lien
attaches only to the Property financed and such Lien attaches
thereto concurrently with or within 90 days after the
acquisition thereof;
(viii) leases or subleases granted to
others not interfering in any material respect with the
business of any member of the Consolidated Group;
(ix) any interest of title of a lessor
under, and Liens arising from UCC financing statements (or
equivalent filings, registrations or agreements in foreign
jurisdictions) relating to, leases permitted by this Credit
Agreement;
(x) Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of
customs duties in connection with the importation of goods;
(xi) Liens deemed to exist in connection
with Investments in repurchase agreements permitted under
Section 8.5;
(xii) normal and customary rights of setoff
upon deposits of cash in favor of banks or other depository
institutions; and
(xiii) Liens existing as of the Closing Date
and set forth on Schedule 6.8; provided that (a) no such Lien
shall at any time be extended to or cover any Property other
than the Property subject thereto on the Closing Date and (b)
the principal amount of the Indebtedness secured by such Liens
shall not be extended, renewed, refunded or refinanced.
"Person" means any individual, partnership, joint venture,
firm, corporation, limited liability company, association, trust or
other enterprise (whether or not incorporated) or any Governmental
Authority.
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<PAGE> 22
"Plan" means any employee benefit plan (as defined in Section
3(3) of ERISA) which is covered by ERISA and with respect to which the
Borrower, any Subsidiary of the Borrower or any ERISA Affiliate is (or,
if such plan were terminated at such time, would under Section 4069 of
ERISA be deemed to be) an "employer" within the meaning of Section 3(5)
of ERISA.
"Pledge Agreement" means the Pledge Agreement dated as of the
date hereof entered into by the Credit Parties in favor of the Agent
for the benefit of the Lenders (and affiliates of Lenders as to certain
obligations under Hedge Agreements), as amended and modified.
"Prime Rate" means the rate of interest per annum publicly
announced from time to time by NationsBank as its prime rate in effect
at its principal office in Charlotte, North Carolina, with each change
in the Prime Rate being effective on the date such change is publicly
announced as effective (it being understood and agreed that the Prime
Rate is a reference rate used by NationsBank in determining interest
rates on certain loans and is not intended to be the lowest rate of
interest charged on any extension of credit by NationsBank to any
debtor).
"Property" means any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"Receivables" means any right of payment from or on behalf of
any obligor, whether constituting an account, chattel paper,
instrument, general intangible or otherwise, arising from the sale or
financing by a member of the Consolidated Group or merchandise or
services, and monies due thereunder, security in the merchandise and
services financed thereby, records related thereto, and the right to
payment of any interest or finance charges and other obligations with
respect thereto, proceeds from claims on insurance policies related
thereto, any other proceeds related thereto, and any other related
rights.
"Register" has the meaning given such term in Section 11.3(c).
"Regulation G, T, U, or X" means Regulation G, T, U or X,
respectively, of the Board of Governors of the Federal Reserve System
as from time to time in effect and any successor to all or a portion
thereof.
"Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping
or disposing into the environment (including the abandonment or
discarding of barrels, containers and other closed receptacles
containing any Materials of Environmental Concern).
"Reportable Event" means any of the events set forth in
Section 4043(c) of ERISA, other than those events as to which the
notice requirement has been waived by regulation.
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"Required Lenders" means, at any time, Lenders having more
than fifty percent (50%) of the Commitments, or if the Commitments have
been terminated, Lenders having more than fifty percent (50%) of the
aggregate principal amount of the Obligations outstanding (taking into
account in each case Participation Interests or obligation to
participate therein); provided that the Commitments of, and outstanding
principal amount of Obligations (taking into account Participation
Interests therein) owing to, a Defaulting Lender shall be excluded for
purposes hereof in making a determination of Required Lenders.
"Requirement of Law" means, as to any Person, the certificate
of incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or
any of its material property is subject.
"Responsible Officer" means the President, the Chief Financial
Officer, the Controller and any Vice President.
"Restricted Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class
of stock of the Borrower now or hereafter outstanding, (ii) any
redemption, retirement, sinking fund or similar payment, purchase or
other acquisition for value, direct or indirect, of any shares of any
class of stock of the Borrower now or hereafter outstanding, and (iii)
any payment made to retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire shares of any
class of stock of the Borrower now or hereafter outstanding.
"Revolving Commitment" means, with respect to each Lender, the
commitment of such Lender to make Revolving Loans in an aggregate
principal amount at any time outstanding of up to such Lender's
Commitment Percentage of the Aggregate Revolving Committed Amount as
specified in Schedule 2.1(a), as such amount may be reduced from time
to time in accordance with the provisions hereof.
"Revolving Commitment Percentage" means, for each Lender, a
fraction (expressed as a decimal) the numerator of which is the
Revolving Commitment of such Lender at such time and the denominator of
which is the Aggregate Revolving Committed Amount at such time. The
initial Revolving Commitment Percentages are set out on Schedule
2.1(a).
"Revolving Committed Amount" means, collectively, the
aggregate amount of all of the Revolving Commitments as referenced in
Section 2.1(a) and, individually, the amount of each Lender's Revolving
Commitment as specified in Schedule 2.1(a).
"Revolving Loans" has the meaning assigned to such term in
Section 2.1(a).
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"Revolving Note" or "Revolving Notes" means the promissory
notes of the Borrower in favor of each of the Lenders evidencing the
Revolving Loans in substantially the form attached as Schedule 2.1(e),
individually or collectively, as appropriate, as such promissory notes
may be amended, modified, supplemented, extended, renewed or replaced
from time to time.
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw Hill, Inc., or any successor or assignee of the business of such
division in the business of rating securities.
"Security Agreement" means the Security Agreement dated as of
the date hereof entered into by the Credit Parties in favor of the
Agent for the benefit of the Lenders (and affiliates of Lenders as to
certain obligations under Hedge Agreements), as amended and modified.
"Single Employer Plan" means any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan or a Multiple
Employer Plan.
"Solvent" or "Solvency" means, with respect to any Person as
of a particular date, that on such date (i) such Person is able to
realize upon its assets and pay its debts and other liabilities,
contingent obligations and other commitments as they mature in the
normal course of business, (ii) such Person does not intend to, and
does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature in their
ordinary course, (iii) such Person is not engaged in a business or a
transaction, and is not about to engage in a business or a transaction,
for which such Person's Property would constitute unreasonably small
capital after giving due consideration to the prevailing practice in
the industry in which such Person is engaged or is to engage, (iv) the
fair value of the Property of such Person is greater than the total
amount of liabilities, including, without limitation, contingent
liabilities, of such Person and (v) the present fair saleable value of
the assets of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its debts as
they become absolute and matured. In computing the amount of contingent
liabilities at any time, it is intended that such liabilities will be
computed at the amount which, in light of all the facts and
circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
"Stock Agreements" means the agreements, each dated December
17, 1996, between ASI Acquisition Corp. and various shareholders of
American Studios, Inc. pursuant to which such shareholders (i) granted
an option to ASI Acquisition Corp. to purchase their ASI common shares
and (ii) agreed to tender their ASI common shares in connection with
the Tender Offer.
"Subsidiary" means, as to any Person, (a) any corporation more
than 50% of whose stock of any class or classes having by the terms
thereof ordinary voting power to elect a majority of the directors of
such corporation (irrespective of whether or not at the
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time, any class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency) is at the
time owned by such Person directly or indirectly through Subsidiaries,
and (b) any partnership, association, joint venture or other entity in
which such Person directly or indirectly through Subsidiaries has more
than 50% of the voting interests at any time. Unless otherwise
identified, "Subsidiary" or "Subsidiaries" shall mean Subsidiaries of
the Borrower.
"Target" has the meaning given to such term in the first
WHEREAS clause hereof.
"Tender Commitment" means, with respect to each Lender, the
commitment of such Lender to make Tender Loans in an aggregate
principal amount at any time outstanding of up to such Lender's
Commitment Percentage of the Aggregate Tender Committed Amount as
specified in Schedule 2.1(a), as such amount may be reduced from time
to time in accordance with the provisions hereof.
"Tender Committed Amount" means, collectively, the aggregate
amount of all of the Tender Commitments as referenced in Section 2.1(a)
and, individually, the amount of each Lender's Tender Commitment as
specified in Schedule 2.1(a).
"Tender Loans" has the meaning assigned to such term in
Section 2.3(a).
"Tender Note" or "Tender Notes" means the promissory notes of
the Borrower in favor of each of the Lenders evidencing the Tender
Loans in substantially the form attached as Schedule 2.3(d),
individually or collectively, as appropriate, as such promissory notes
may be amended, modified, supplemented, extended, renewed or replaced
from time to time.
"Tender Offer" has the meaning given to such term in the first
WHEREAS clause hereof.
"Termination Date" means the earlier to occur of (i) June 30,
1997 and (ii) the date on which the Merger is consummated, or if
extended with the written consent of each of the Lenders, such later
date as to which the Termination Date may be extended.
"Voting Stock" means, with respect to any Person, capital
stock issued by such Person the holders of which are ordinarily, in the
absence of contingencies, entitled to vote for the election of
directors (or persons performing similar functions) of such Person,
even though the right so to vote has been suspended by the happening of
such a contingency.
"Wal*Mart License Agreement" means any agreements entered into
from time to time between the Borrower (or its Subsidiaries) and
Wal*Mart Stores, Inc. granting the Borrower or its Subsidiaries the
right to operate retail portrait photography studios in Wal*Mart stores
in the United States.
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"Wholly Owned Subsidiary" of any Person means any Subsidiary
100% of whose Voting Stock or other equity interests is at the time
owned by such Person directly or indirectly through other Wholly Owned
Subsidiaries.
1.2 COMPUTATION OF TIME PERIODS.
For purposes of computation of periods of time hereunder, the
word "from" means "from and including" and the words "to" and "until" each mean
"to but excluding."
1.3 ACCOUNTING TERMS.
Except as otherwise expressly provided herein, all accounting
terms used herein shall be interpreted, and all financial statements and
certificates and reports as to financial matters required to be delivered to the
Lenders hereunder shall be prepared, in accordance with GAAP applied on a
consistent basis. All calculations made for the purposes of determining
compliance with this Credit Agreement shall (except as otherwise expressly
provided herein) be made by application of GAAP applied on a basis consistent
with the most recent annual or quarterly financial statements delivered pursuant
to Section 7.1 hereof (or, prior to the delivery of the first financial
statements pursuant to Section 7.1 hereof, consistent with the annual audited
financial statements referenced in Section 6.1(i)); provided, however, if (a)
the Borrower shall object to determining such compliance on such basis at the
time of delivery of such financial statements due to any change in GAAP or the
rules promulgated with respect thereto or (b) the Agent or the Required Lenders
shall so object in writing within 30 days after delivery of such financial
statements, then such calculations shall be made on a basis consistent with the
most recent financial statements delivered by the Borrower to the Lenders as to
which no such objection shall have been made.
SECTION 2
CREDIT FACILITIES
-----------------
2.1 REVOLVING LOANS.
(a) Revolving Commitment. During the Commitment Period, subject
to the terms and conditions hereof, each Lender severally agrees to make
revolving credit loans (the "Revolving Loans") to the Borrower from time to time
in the amount of such Lender's Revolving Commitment Percentage of such Revolving
Loans for the purposes hereinafter set forth; provided that (i) with regard to
the Lenders collectively, the aggregate principal amount of Obligations
outstanding at any time shall not exceed TWENTY-FIVE MILLION DOLLARS
($25,000,000) (as referenced on Schedule 2.1(a), the "Revolving Committed
Amount") and (ii) with regard to each Lender individually, such Lender's
Revolving Commitment Percentage of Obligations outstanding at any time shall not
exceed such Lender's Revolving Committed Amount. Revolving Loans may be repaid
and reborrowed in accordance with the provisions hereof.
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(b) Revolving Loan Borrowings.
(i) Notice of Borrowing. The Borrower shall request a
Revolving Loan borrowing by written notice (or telephone notice
promptly confirmed in writing) to the Agent not later than 11:00 A.M.
(Charlotte, North Carolina time) on the date of the requested borrowing
(which shall be a Business Day). Each such request for borrowing shall
be irrevocable and shall specify (A) that a Revolving Loan is requested
(B) the date of the requested borrowing (which shall be a Business
Day), and (C) the aggregate principal amount to be borrowed. The Agent
shall give notice to each Lender promptly upon receipt of each Notice
of Borrowing pursuant to this Section 2.1(b)(i), the contents thereof
and each such Lender's share of any borrowing to be made pursuant
thereto.
(ii) Minimum Amounts. Each Revolving Loan shall be in a
minimum aggregate principal amount of $500,000 (or the remaining
Revolving Committed Amount, if less), and integral multiples of
$500,000 in excess thereof.
(iii) Advances. Each Lender will make its Revolving Commitment
Percentage of each Revolving Loan borrowing available to the Agent for
the account of the Borrower as specified in Section 3.14(a), or in such
other manner as the Agent may specify in writing, by 1:00 P.M.
(Charlotte, North Carolina time) on the date of the applicable Notice
of Borrowing in Dollars (or the date on which a borrowing is deemed
requested pursuant to Section 2.2(e) hereof) and in funds immediately
available to the Agent. Such borrowing will then be made available to
the Borrower by the Agent by crediting the account of the Borrower on
the books of such office with the aggregate of the amounts made
available to the Agent by the Lenders and in like funds as received by
the Agent.
(c) Repayment. The principal amount of all Revolving Loans shall be due
and payable in full on the Termination Date.
(d) Interest. Subject to the provisions of Section 3.1, Revolving Loans
shall bear interest at a per annum rate equal to the Base Rate plus one percent
(1%);
Interest on Revolving Loans shall be payable in arrears on each
applicable Interest Payment Date (or at such other times as may be
specified herein).
(e) Revolving Notes. The Revolving Loans shall be evidenced by a
duly executed Revolving Note in favor of each Lender.
2.2 LETTER OF CREDIT SUBFACILITY.
(a) Issuance. During the Commitment Period, subject to the terms
and conditions hereof and of the LOC Documents, if any, and such other terms and
conditions which the Issuing Lender may reasonably require, the Issuing Lender
shall issue, and the Lenders shall participate in, such Letters of Credit as the
Borrower may request for its own account or for the account of another Credit
Party as provided herein, in a form acceptable to the Issuing Lender, for the
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purposes hereinafter set forth; provided that (i) the aggregate amount of LOC
Obligations shall not exceed FIVE MILLION DOLLARS ($5,000,000) at any time (the
"LOC Committed Amount"), (ii) with regard to the Lenders collectively, the
aggregate principal amount of Obligations outstanding at any time shall not
exceed the Aggregate Revolving Committed Amount and (iii) with regard to each
Lender individually, such Lender's Revolving Commitment Percentage of
Obligations outstanding at any time shall not exceed such Lender's Revolving
Committed Amount. Letters of Credit issued hereunder shall not have an original
expiry date, whether as originally issued or by extension, extending beyond one
year from the date of issuance or extension thereof. With respect to all Letters
of Credit which have an expiry date which occurs after the Termination Date, the
Agent shall have the right on the Termination Date to direct the Borrower to pay
(and the Borrower agrees that upon receipt of such direction, it will
immediately pay) to the Agent additional cash, to be held by the Agent, for the
benefit of the Lenders, in a cash collateral account as additional security for
the LOC Obligations in respect of subsequent drawings under all such outstanding
Letters of Credit in an amount equal to the maximum aggregate amount which may
be drawn under all such Letters of Credits then outstanding. Each Letter of
Credit shall comply with the related LOC Documents. The issuance date of each
Letter of Credit shall be a Business Day.
(b) Notice and Reports. Except for those Letters of Credit described on
Schedule 2.2(b)-1 which shall be issued on the Closing Date, the request for the
issuance of a Letter of Credit shall be submitted by the Borrower to the Issuing
Lender at least three (3) Business Days prior to the requested date of issuance
(or such shorter period as may be agreed by the Issuing Lender. A form of Notice
of Request for Letter of Credit is attached as Schedule 2.2(b)-2. The Issuing
Lender will provide to the Agent at least monthly, and more frequently upon
request, a detailed summary report on its Letters of Credit and the activity
thereon, in form and substance acceptable to the Agent.
(c) Participation. Each Lender, upon issuance of a Letter of Credit,
shall be deemed to have purchased without recourse a risk participation from the
applicable Issuing Lender in such Letter of Credit and the obligations arising
thereunder, in each case in an amount equal to its pro rata share of the
obligations under such Letter of Credit (based on the respective Commitment
Percentages of the Lenders) and shall absolutely, unconditionally and
irrevocably assume, as primary obligor and not as surety, and be obligated to
pay to the Issuing Lender therefor and discharge when due, its pro rata share of
the obligations arising under such Letter of Credit. Without limiting the scope
and nature of each Lender's participation in any Letter of Credit, to the extent
that the Issuing Lender has not been reimbursed as required hereunder or under
any such Letter of Credit, each such Lender shall pay to the Issuing Lender its
pro rata share of such unreimbursed drawing in same day funds on the day of
notification by the Issuing Lender of an unreimbursed drawing pursuant to the
provisions of subsection (d) hereof. The obligation of each Lender to so
reimburse the Issuing Lender shall be absolute and unconditional and shall not
be affected by the occurrence of a Default, an Event of Default or any other
occurrence or event. Any such reimbursement shall not relieve or otherwise
impair the obligation of the Borrower to reimburse the Issuing Lender under any
Letter of Credit, together with interest as hereinafter provided.
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(d) Reimbursement. In the event of any drawing under any Letter of
Credit, the Issuing Lender will promptly notify the Borrower. Unless the
Borrower shall immediately notify the Issuing Lender that the Borrower intends
to otherwise reimburse the Issuing Lender for such drawing, the Borrower shall
be deemed to have requested that the Lenders make a Revolving Loan in the amount
of the drawing as provided in subsection (e) hereof on the related Letter of
Credit, the proceeds of which will be used to satisfy the related reimbursement
obligations. The Borrower promises to reimburse the Issuing Lender on the day of
drawing under any Letter of Credit (either with the proceeds of a Revolving Loan
obtained hereunder or otherwise) in same day funds. If the Borrower shall fail
to reimburse the Issuing Lender as provided hereinabove, the unreimbursed amount
of such drawing shall bear interest at a per annum rate equal to the Base Rate
plus three percent (3%). The Borrower's reimbursement obligations hereunder
shall be absolute and unconditional under all circumstances irrespective of any
rights of setoff, counterclaim or defense to payment the Borrower may claim or
have against the Issuing Lender, the Agent, the Lenders, the beneficiary of the
Letter of Credit drawn upon or any other Person, including without limitation
any defense based on any failure of the Borrower or any other Credit Party to
receive consideration or the legality, validity, regularity or unenforceability
of the Letter of Credit. The Issuing Lender will promptly notify the other
Lenders of the amount of any unreimbursed drawing and each Lender shall promptly
pay to the Agent for the account of the Issuing Lender in Dollars and in
immediately available funds, the amount of such Lender's pro rata share of such
unreimbursed drawing. Such payment shall be made on the day such notice is
received by such Lender from the Issuing Lender if such notice is received at or
before 2:00 P.M. (Charlotte, North Carolina time) otherwise such payment shall
be made at or before 12:00 Noon (Charlotte, North Carolina time) on the Business
Day next succeeding the day such notice is received. If such Lender does not pay
such amount to the Issuing Lender in full upon such request, such Lender shall,
on demand, pay to the Agent for the account of the Issuing Lender interest on
the unpaid amount during the period from the date of such drawing until such
Lender pays such amount to the Issuing Lender in full at a rate per annum equal
to, if paid within two (2) Business Days of the date that such Lender is
required to make payments of such amount pursuant to the preceding sentence, the
Federal Funds Rate and thereafter at a rate equal to the Base Rate. Each
Lender's obligation to make such payment to the Issuing Lender, and the right of
the Issuing Lender to receive the same, shall be absolute and unconditional,
shall not be affected by any circumstance whatsoever and without regard to the
termination of this Credit Agreement or the Commitments hereunder, the existence
of a Default or Event of Default or the acceleration of the obligations of the
Borrower hereunder and shall be made without any offset, abatement, withholding
or reduction whatsoever. Simultaneously with the making of each such payment by
a Lender to the Issuing Lender, such Lender shall, automatically and without any
further action on the part of the Issuing Lender or such Lender, acquire a
participation in an amount equal to such payment (excluding the portion of such
payment constituting interest owing to the Issuing Lender) in the related
unreimbursed drawing portion of the LOC Obligation and in the interest thereon
and in the related LOC Documents, and shall have a claim against the Borrower
with respect thereto.
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(e) Repayment with Revolving Loans. On any day on which the Borrower
shall have requested, or been deemed to have requested, a Revolving Loan to
reimburse a drawing under a Letter of Credit, the Agent shall give notice to the
Lenders that a Revolving Loan has been requested or deemed requested by the
Borrower to be made in connection with a drawing under a Letter of Credit, in
which case a Revolving Loan comprised of Base Rate Loans shall be immediately
made to the Borrower by all Lenders (notwithstanding any termination of the
Commitments pursuant to Section 9.2) pro rata based on the respective Commitment
Percentages of the Lenders (determined before giving effect to any termination
of the Commitments pursuant to Section 9.2) and the proceeds thereof shall be
paid directly to the Issuing Lender for application to the respective LOC
Obligations. Each such Lender hereby irrevocably agrees to make its pro rata
share of each such Revolving Loan immediately upon any such request or deemed
request in the amount, in the manner and on the date specified in the preceding
sentence notwithstanding (i) the amount of such borrowing may not comply with
the minimum amount for advances of Revolving Loans otherwise required hereunder,
(ii) whether any conditions specified in Section 5.2 are then satisfied, (iii)
whether a Default or an Event of Default then exists, (iv) failure for any such
request or deemed request for Revolving Loan to be made by the time otherwise
required hereunder, (v) whether the date of such borrowing is a date on which
Revolving Loans are otherwise permitted to be made hereunder or (vi) any
termination of the Commitments relating thereto immediately prior to or
contemporaneously with such borrowing. In the event that any Revolving Loan
cannot for any reason be made on the date otherwise required above (including,
without limitation, as a result of the commencement of a proceeding under the
Bankruptcy Code with respect to the Borrower or any Credit Party), then each
such Lender hereby agrees that it shall forthwith purchase (as of the date such
borrowing would otherwise have occurred, but adjusted for any payments received
from the Borrower on or after such date and prior to such purchase) from the
Issuing Lender such participation in the outstanding LOC Obligations as shall be
necessary to cause each such Lender to share in such LOC Obligations ratably
(based upon the respective Commitment Percentages of the Lenders (determined
before giving effect to any termination of the Commitments pursuant to Section
9.2)), provided that in the event such payment is not made on the day of
drawing, such Lender shall pay in addition to the Issuing Lender interest on the
amount of its unfunded Participation Interest at a rate equal to, if paid within
two (2) Business Days of the date of drawing, the Federal Funds Rate, and
thereafter at the Base Rate.
(f) Designation of other Credit Parties as Account Parties.
Notwithstanding anything to the contrary set forth in this Credit Agreement,
including without limitation Section 2.2(a) hereof, a Letter of Credit issued
hereunder may contain a statement to the effect that such Letter of Credit is
issued for the account of a Credit Party other than the Borrower, provided that
notwithstanding such statement, the Borrower shall be the actual account party
for all purposes of this Credit Agreement for such Letter of Credit and such
statement shall not affect the Borrower's reimbursement obligations hereunder
with respect to such Letter of Credit.
(g) Renewal, Extension. The renewal or extension of any Letter of
Credit shall, for purposes hereof, be treated in all respects the same as the
issuance of a new Letter of Credit hereunder.
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(h) Uniform Customs and Practices. The Issuing Lender may have the
Letters of Credit be subject to The Uniform Customs and Practice for Documentary
Credits, as published as of the date of issue by the International Chamber of
Commerce (the "UCP"), in which case the UCP may be incorporated therein and
deemed in all respects to be a part thereof.
(i) Indemnification; Nature of Issuing Lender's Duties.
(i) In addition to its other obligations under this Section
2.2, the Borrower hereby agrees to protect, indemnify, pay and save the
Issuing Lender harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including
reasonable attorneys' fees) that the Issuing Lender may incur or be
subject to as a consequence, direct or indirect, of (A) the issuance of
any Letter of Credit or (B) the failure of the Issuing Lender to honor
a drawing under a Letter of Credit as a result of any act or omission,
whether rightful or wrongful, of any present or future de jure or de
facto government or governmental authority (all such acts or omissions,
herein called "Government Acts").
(ii) As between the Borrower and the Issuing Lender, the
Borrower shall assume all risks of the acts, omissions or misuse of any
Letter of Credit by the beneficiary thereof. The Issuing Lender shall
not be responsible: (A) for the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any party in
connection with the application for and issuance of any Letter of
Credit, even if it should in fact prove to be in any or all respects
invalid, fraudulent or forged; (B) for the validity or sufficiency of
any instrument transferring or assigning or purporting to transfer or
assign any Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, that may prove to be invalid or
ineffective for any reason; (C) for errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable,
telegraph, telex or otherwise, whether or not they be in cipher; (D)
for any loss or delay in the transmission or otherwise of any document
required in order to make a drawing under a Letter of Credit or of the
proceeds thereof; and (E) for any consequences arising from causes
beyond the control of the Issuing Lender, including, without
limitation, any Government Acts. None of the above shall affect,
impair, or prevent the vesting of the Issuing Lender's rights or powers
hereunder.
(iii) In furtherance and extension of, and not in limitation
of, the specific provisions hereinabove set forth, any action taken or
omitted by the Issuing Lender, under or in connection with any Letter
of Credit or the related certificates, if taken or omitted in good
faith and without gross negligence or willful misconduct, shall not put
such Issuing Lender under any resulting liability to the Borrower or
any other Credit Party. It is the intention of the parties that this
Credit Agreement shall be construed and applied to protect and
indemnify the Issuing Lender against any and all risks involved in the
issuance of the Letters of Credit, all of which risks are hereby
assumed by the Borrower (on behalf of itself and each of the other
Credit
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Parties), including, without limitation, any and all Government
Acts. The Issuing Lender shall not, in any way, be liable for any
failure by the Issuing Lender or anyone else to pay any drawing under
any Letter of Credit as a result of any Government Acts or any other
cause beyond the control of the Issuing Lender.
(iv) Nothing in this subsection (i) is intended to limit the
reimbursement obligations of the Borrower contained in subsection (d)
above. The obligations of the Borrower under this subsection (i) shall
survive the termination of this Credit Agreement. No act or omissions
of any current or prior beneficiary of a Letter of Credit shall in any
way affect or impair the rights of the Issuing Lender to enforce any
right, power or benefit under this Credit Agreement.
(v) Notwithstanding anything to the contrary contained in this
subsection (i), the Borrower shall have no obligation to indemnify the
Issuing Lender in respect of any liability incurred by the Issuing
Lender (A) arising solely out of the gross negligence or willful
misconduct of the Issuing Lender, as determined by a court of competent
jurisdiction, or (B) caused by the Issuing Lender's failure to pay
under any Letter of Credit after presentation to it of a request
strictly complying with the terms and conditions of such Letter of
Credit, as determined by a court of competent jurisdiction, unless such
payment is prohibited by any law, regulation, court order or decree.
(j) Responsibility of Issuing Lender. It is expressly understood and
agreed that the obligations of the Issuing Lender hereunder to the Lenders are
only those expressly set forth in this Credit Agreement and that the Issuing
Lender shall be entitled to assume that the conditions precedent set forth in
Section 5.2 have been satisfied unless it shall have acquired actual knowledge
that any such condition precedent has not been satisfied; provided, however,
that nothing set forth in this Section 2.2 shall be deemed to prejudice the
right of any Lender to recover from the Issuing Lender any amounts made
available by such Lender to the Issuing Lender pursuant to this Section 2.2 in
the event that it is determined by a court of competent jurisdiction that the
payment with respect to a Letter of Credit constituted gross negligence or
willful misconduct on the part of the Issuing Lender.
(k) Conflict with LOC Documents. In the event of any conflict between
this Credit Agreement and any LOC Document (including any letter of credit
application), this Credit Agreement shall control.
2.3 TENDER LOANS.
(a) Tender Loans. Subject to the terms and conditions set forth herein
(including specifically without limitation the satisfaction of each of the
conditions contained in Section 5 hereof), each Lender severally agrees, on the
Closing Date, to make a tender loan (collectively, the "Tender Loans") to the
Borrower, in Dollars, in an amount equal to such Lender's Commitment Percentage,
if any, of the Tender Committed Amount; provided that the aggregate amount of
such Tender Loans made on the Closing Date shall not exceed the lesser of (i)
Aggregate Tender
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Committed Amount or (ii) $2.50 multiplied times the number of
ASI Shares purchased at the Closing of the Tender Offer. No Tender Loans shall
be made after the Closing Date. Once repaid, Tender Loans cannot be reborrowed.
(b) Funding of Tender Loans. On the Closing Date, each applicable
Lender will make its Commitment Percentage of the Tender Loans available to the
Agent by deposit, in Dollars and in immediately available funds, at the offices
of the Agent at its principal office in Charlotte, North Carolina or at such
other address as the Agent may designate in writing. The amount of the Tender
Loans will then be made available to the Borrower by the Agent by crediting the
account of the Borrower on the books of such office of the Agent, to the extent
the amount of such Tender Loans are made available to the Agent.
No Lender shall be responsible for the failure or delay by any other
Lender in its obligation to make a Tender Loan hereunder; provided, however,
that the failure of any Lender to fulfill its obligations hereunder shall not
relieve any other Lender of its obligations hereunder. If the Agent shall have
received an executed signature page to this Credit Agreement (whether an
original or via telecopy) from a Lender, the Agent may assume that such Lender
has or will make the amount of its Tender Loans available to the Agent on the
Closing Date, and the Agent in reliance upon such assumption, may (in its sole
discretion but without any obligation to do so) make available to the Borrower a
corresponding amount. If such corresponding amount is not in fact made available
to the Agent, the Agent shall be able to recover such corresponding amount from
such Lender. If such Lender does not pay such corresponding amount forthwith
upon the Agent's demand therefor, the Agent will promptly notify the Borrower,
and the Borrower shall immediately pay such corresponding amount to the Agent.
The Agent shall also be entitled to recover from the Lender or the Borrower, as
the case may be, interest on such corresponding amount in respect of each day
from the date such corresponding amount was made available by the Agent to the
Borrower to the date such corresponding amount is recovered by the Agent at a
per annum rate equal to (i) from the Borrower at the applicable rate for such
Tender Loan and (ii) from a Lender at the Federal Funds Rate.
(c) Interest and Amortization. (i) The principal amount of the Tender
Loans shall be repaid in full on the Termination Date.
(ii) Subject to the provisions of Section 3.1, all Tender
Loans shall bear interest at a per annum rate equal to the Base Rate
plus one percent (1.0%). Interest on the Tender Loans shall be payable
in arrears on each Interest Payment Date (or at such other times as may
be specified herein).
(d) Tender Notes. The Tender Loans shall be evidenced by a duly
executed Tender Note in favor of each Lender.
2.4 REGULATION U.
(a) The Borrower and the Lenders agree that proceeds of the Tender
Loans shall be used to purchase ASI Shares which are Margin Stock (all such
Tender Loans being referred to in
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this Section 2.4 as "Purpose Loans" and all other Loans being referred to in
this Section 2.4 as "Non-Purpose Loans"). Accordingly, the Loans made under
this Credit Agreement by each Lender shall at all times be treated for purposes
of Regulation U as three separate extensions of credit (the "X Credit", the "Y
Credit" and the "Z Credit" of such Lender and, collectively, the "X Credits",
the "Y Credits" and the "Z Credits"), as follows:
(i) the principal amount of the X Credit and the principal
amount of the Y Credit of such Lender shall each be an amount equal to
fifty percent (50%) of the principal amount of the Tender Loans
advanced by such Lender.
(ii) the principal amount of the Z Credit of such Lender shall
be an amount equal to the aggregate of the Revolving Loans and LOC
Obligations made or participated in by such Lender.
(b) The benefits of the provisions of this Agreement and the other
Credit Documents, to the extent that any such provisions relate to the ASI
Shares held by the Borrower or any of its Subsidiaries or the proceeds thereof
and to the extent of the Lenders' interests in such Margin Stock, shall be
allocated first to the benefit and security of the payment of the principal of
and interest on the X Credits of the Lenders and of all other amounts payable by
the Borrower under this Agreement in connection with the X Credits
(collectively, the "X Credit Amounts"), and only after the payment in full of
such principal and interest and other amounts, to the benefit and security of
(i) the payment of the principal of and interest on the Y Credits of the Lenders
and of all other amounts payable by the Borrower under this Agreement in
connection with the Y Credits (collectively, the "Y Credit Amounts") and (ii)
the payment of principal of and interest on the Z Credits of the Lenders and of
all other amounts payable by the Borrower under this Agreement in connection
with the Z Credits (collectively, the "Z Credit Amounts").
(c) The benefits of the provisions of this Agreement and the other
Credit Documents, to the extent that any such provisions relate to assets other
than the ASI Shares held by the Borrower or any of its Subsidiaries or the
proceeds thereof and to the extent of the Lenders' interests in such assets,
shall be allocated first to the equal and ratable benefit and security of the
payment of the Y Credit Amounts and the Z Credit Amounts and, only after the
payment in full of all Y Credit Amounts and Z Credit Amounts, to the benefit and
security of the payment of the X Credit Amounts.
(d) Each Lender will mark its records irrevocably to identify the X
Credit of such Lender with the benefits and security described in paragraph (b)
of this Section 2.4 and the Y Credit and Z Credit of such Lender with the
benefits and security described in paragraph (c) of this Section 2.4 and, solely
for the purposes of complying with Regulation U, the X, Y and Z Credits shall be
treated as separate loans.
(e) Except as otherwise specifically provided in this Agreement or the
other Credit Documents (but in any event subject to the requirements of
Regulation U), (i) all payments and prepayments by the Borrower of the Loans
with proceeds of ASI Shares shall be applied (A) first to the payment or
prepayment of the Purpose Loans and (B) second to the payment or
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prepayment of the Non-Purpose Loans, and (ii) all payments and prepayments by
the Borrower of the Loans with funds derived from assets other than the ASI
Shares, which are subject to the provisions referred to in paragraph (c) of
this Section 2.4, shall be applied (A) first to the equal and ratable payment
or prepayment of the Y Credit Amounts and Z Credit Amounts and (B) second to
the payment or prepayment of the X Credit Amounts.
(f) The Borrower will furnish to each Lender, prior to the making of
any Loan, such information and documents as such Lender may require to
distinguish between Purpose Loans and Non-Purpose Loans and to determine the X,
Y and Z Portions thereof, and from time to time such other information and
documents as such Lender may require to comply with paragraphs (d) and (e) of
this Section 2.4 and to further determine compliance with Regulation U and such
documents as such Lender may require to comply with Regulation U.
(g) Each Lender shall be responsible for its own compliance with and
administration of the provisions of this Section 2.4 and the Agent (in its
capacity as such) shall have no responsibility for any determinations or
allocations (including, without limitation, any allocations of payments or
prepayments) made or to be made by any Lender as required by such provisions.
(h) Each Lender represents severally and for itself that it has
required as much direct and indirect security for its Y Credit and Z Credit as
such Lender typically would require in good faith and exercising sound banking
judgment in other similar transactions, and that it is not relying on the value
of the ASI Shares in making its decision to extend the Y Credit and the Z
Credit.
SECTION 3
OTHER PROVISIONS RELATING TO CREDIT FACILITIES
----------------------------------------------
3.1 DEFAULT RATE.
Upon the occurrence, and during the continuance, of an Event of
Default, the principal of and, to the extent permitted by law, interest on the
Loans and any other amounts owing hereunder or under the other Credit Documents
shall bear interest, payable on demand, at a per annum rate equal to the Base
Rate plus 3%.
3.2 [INTENTIONALLY OMITTED].
3.3 PREPAYMENTS.
(a) Voluntary Prepayments. The Loans may be repaid in whole or in part
without premium or penalty; provided that partial prepayments shall be minimum
principal amounts of $1,000,000 and in integral multiples of $1,000,000 in
excess thereof.
(b) Mandatory Prepayments. The Borrower will make the following
prepayments (to be applied as set forth in paragraph (c) below):
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(i) Commitment Limitations. If at any time, (A) the aggregate
principal amount of Revolving Loans shall exceed the Aggregate
Revolving Committed Amount or (B) the aggregate amount of LOC
Obligations shall exceed the LOC Committed Amount, the Borrower shall
immediately make payment on the Revolving Loans and/or to a cash
collateral account in respect of the LOC Obligations, in an amount
sufficient to eliminate the deficiency.
(ii) Asset Dispositions. The Borrower will make prepayment on
the Loans and/or to a cash collateral account in respect of LOC
Obligations in an amount equal to one hundred percent (100%) of the Net
Proceeds received from Asset Dispositions.
(iii) Equity Transactions. The Borrower will make prepayment
on the Loans and/or to a cash collateral account in respect of LOC
Obligations in an amount equal to one hundred percent (100%) of the Net
Proceeds received from any Equity Transaction (it being agreed that any
such payments required in connection with the issuance of stock under
stock incentive, stock option or other similar plans shall be made
quarterly within sixty days following the end of each quarter).
(iv) Excess Cash Flow. Within 10 days after the date the
audited financial statements are required to be delivered pursuant to
Section 7.1(a) (commencing with the fiscal year ending January 31,
1998), the Borrower shall make a prepayment on the Loans and/or to a
cash collateral account in respect of the LOC Obligations in an amount
equal to 75% of Consolidated Excess Cash Flow.
(c) Application of Prepayments. All amounts required to be paid
pursuant to Section 3.3(b)(i) shall be applied first to Revolving Loans and
second to a cash collateral account in respect of LOC Obligations. All amounts
required to be paid pursuant to Section 3.3(b)(ii), (iii) and (iv) above shall
be applied first to the Tender Loans and second to the Revolving Loans (with a
corresponding reduction in the Aggregate Revolving Committed Amount). Each
application under this Section 3.3(b) shall be made in a manner consistent with
the requirements of Section 2.4 hereof.
3.4 TERMINATION AND REDUCTION OF COMMITMENTS
(a) Voluntary Reductions. The Revolving Commitments may be terminated
or permanently reduced in whole or in part upon three (3) Business Days' prior
written notice to the Agent, provided that (i) after giving effect to any
voluntary reduction the aggregate amount of Obligations shall not exceed the
Aggregate Committed Amount, as reduced, and (ii) partial reductions shall be in
a minimum principal amount of $2,000,000, and in integral multiples of
$1,000,000 in excess thereof.
(b) Mandatory Reduction. The Revolving Commitments hereunder shall
terminate on the Termination Date.
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3.5 FEES.
(a) Commitment Fee. In consideration of the Revolving Commitments
hereunder, the Borrower agrees to pay to the Agent for the ratable benefit of
the Lenders a commitment fee (the "Commitment Fee") equal to 0.50% per annum on
the average daily unused amount of the Revolving Committed Amount for the
applicable period. The Commitment Fee shall be payable in arrears on each
Interest Payment Date beginning with the first such date to occur after the
Closing Date.
(b) Letter of Credit Fees.
(i) Letter of Credit Fee. In consideration of the LOC
Commitment hereunder, the Borrower agrees to pay to the Agent for the
ratable benefit of the Lenders a fee (the "Letter of Credit Fee") equal
to two-and-one-half percent (2.50%) per annum on the average daily
maximum amount available to be drawn under Letters of Credit from the
date of issuance to the date of expiration. The Letter of Credit Fee
shall be payable in arrears on each Interest Payment Date beginning
with the first such date to occur after the Closing Date.
(ii) Issuing Lender Fee. In addition to the Letter of Credit
Fee, the Borrower agrees to pay to the Issuing Lender for its own
account without sharing by the other Lenders (A) if more than one
Lender becomes a party to this Credit Agreement, such fronting and
negotiation fees as may be mutually agreed upon by the Issuing Lender
and the Borrower from time to time and (B) customary charges of the
Issuing Lender with respect to the issuance, amendment, transfer,
administration, cancellation and conversion of, and drawings under,
such Letters of Credit (collectively, the "Issuing Lender Fees").
(c) Administrative Fees. The Borrower agrees to pay to the Agent, for
its own account, an annual administrative fee and such other fees, if any,
referred to in the Agent's Fee Letter (collectively, the "Agent Fees").
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3.6 CAPITAL ADEQUACY.
If any Lender has determined, after the date hereof, that the adoption
or the becoming effective of, or any change in, or any change by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof in the interpretation or administration
of, any applicable law, rule or regulation regarding capital adequacy, or
compliance by such Lender with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of reducing the rate of
return on such Lender's capital or assets as a consequence of its commitments or
obligations hereunder to a level below that which such Lender could have
achieved but for such adoption, effectiveness, change or compliance (taking into
consideration such Lender's policies with respect to capital adequacy), then,
upon notice from such Lender to the Borrower, the Borrower shall be obligated to
pay within thirty days of demand therefor to such Lender such additional amount
or amounts as will compensate such Lender for such reduction. The Lender shall
provide the Borrower notice of any such claim within ninety days of the
occurrence of any event constituting the basis for such claim. Each
determination by any such Lender of amounts owing under this Section shall,
absent manifest error, be conclusive and binding on the parties hereto.
3.7 [INTENTIONALLY OMITTED].
3.8 [INTENTIONALLY OMITTED].
3.9 REQUIREMENTS OF LAW.
If, after the date hereof, the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof applicable to
any Lender, or compliance by any Lender with any request or directive (whether
or not having the force of law) from any central bank or other Governmental
Authority, in each case made subsequent to the Closing Date (or, if later, the
date on which such Lender becomes a Lender):
(a) shall subject such Lender to any tax of any kind
whatsoever with respect to any Letter of Credit or change the basis of
taxation of payments to such Lender in respect thereof (except for (i)
Non-Excluded Taxes covered by Section 3.10 (including Non-Excluded
Taxes imposed solely by reason of any failure of such Lender to comply
with its obligations under Section 3.10(b)) and (ii) changes in taxes
measured by or imposed upon the overall net income, or franchise tax
(imposed in lieu of such net income tax), of such Lender or its
applicable lending office, branch, or any affiliate thereof)); or
(b) shall impose on such Lender any other condition (excluding
any tax of any kind whatsoever);
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of issuing or participating
in Letters of Credit or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, upon notice to the Borrower
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from such Lender, through the Agent, in accordance herewith, the Borrower shall
be obligated to pay within 30 days of demand therefor to such Lender, any
additional amounts necessary to compensate such Lender for such increased cost
or reduced amount receivable. The Lender shall provide the Borrower notice of
any such claim within ninety days of the occurrence of any event constituting
the basis for such claim. If any Lender becomes entitled to claim any additional
amounts pursuant to this subsection, it shall provide prompt notice thereof to
the Borrower, through the Agent, certifying (x) that one of the events described
in this paragraph (a) has occurred and describing in reasonable detail the
nature of such event, (y) as to the increased cost or reduced amount resulting
from such event and (z) as to the additional amount demanded by such Lender and
a reasonably detailed explanation of the calculation thereof. Such a certificate
as to any additional amounts payable pursuant to this subsection submitted by
such Lender, through the Agent, to the Borrower shall be conclusive and binding
on the parties hereto in the absence of manifest error. This covenant shall
survive the termination of this Credit Agreement and the payment of the Loans
and all other amounts payable hereunder.
3.10 TAXES.
(a) Except as provided below in this subsection, all payments made by
the Borrower under this Credit Agreement and any Notes shall be made free and
clear of, and without deduction or withholding for or on account of, any present
or future income, stamp or other taxes, levies, imposts, duties, charges, fees,
deductions or withholdings, now or hereafter imposed, levied, collected,
withheld or assessed by any court, or governmental body, agency or other
official, excluding taxes measured by or imposed upon the overall net income of
any Lender or its applicable lending office, or any branch or affiliate thereof,
and all franchise taxes, branch taxes, taxes on doing business or taxes on the
overall capital or net worth of any Lender or its applicable lending office, or
any branch or affiliate thereof imposed: (i) by the jurisdiction under the laws
of which such Lender, applicable lending office, branch or affiliate is
organized or is located, or in which its principal executive office is located,
or any nation within which such jurisdiction is located or any political
subdivision thereof; or (ii) by reason of any connection between the
jurisdiction imposing such tax and such Lender, applicable lending office,
branch or affiliate other than a connection arising solely from such Lender
having executed, delivered or performed its obligations, or received payment
under or enforced, this Credit Agreement or any Notes. If any such non-excluded
taxes, levies, imposts, duties, charges, fees, deductions or withholdings
("Non-Excluded Taxes") are required to be withheld from any amounts payable to
the Agent or any Lender hereunder or under any Notes, (A) the amounts so payable
to the Agent or such Lender shall be increased to the extent necessary to yield
to the Agent or such Lender (after payment of all Non-Excluded Taxes) interest
or any such other amounts payable hereunder at the rates or in the amounts
specified in this Credit Agreement and any Notes, provided, however, that the
Borrower shall be entitled to deduct and withhold any Non-Excluded Taxes and
shall not be required to increase any such amounts payable to any Lender that is
not organized under the laws of the United States of America or a state thereof
if such Lender fails to comply with the requirements of paragraph (b) of this
subsection whenever any Non-Excluded Taxes are payable by the Borrower, and (B)
as promptly as possible thereafter the Borrower shall send to the Agent for its
own account or for the account of such Lender, as the case may be, a certified
copy of an original official receipt received by the Borrower showing payment
thereof. If the Borrower fails to pay any Non-Excluded
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Taxes when due to the appropriate taxing authority or fails to remit to the
Agent the required receipts or other required documentary evidence, the Borrower
shall indemnify the Agent and the Lenders for any incremental taxes, interest or
penalties that may become payable by the Agent or any Lender as a result of any
such failure. The agreements in this subsection shall survive the termination of
this Credit Agreement and the payment of the Loans and all other amounts payable
hereunder.
(b) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof shall:
(X)(i) on or before the date of any payment by the Borrower
under this Credit Agreement or Notes to such Lender, deliver to the
Borrower and the Agent (A) two (2) duly completed copies of United
States Internal Revenue Service Form 1001 or 4224, or successor
applicable form, as the case may be, certifying that it is entitled to
receive payments under this Credit Agreement and any Notes without
deduction or withholding of any United States federal income taxes and
(B) an Internal Revenue Service Form W-8 or W-9, or successor
applicable form, as the case may be, certifying that it is entitled to
an exemption from United States backup withholding tax;
(ii) deliver to the Borrower and the Agent two (2) further
copies of any such form or certification on or before the date that any
such form or certification expires or becomes obsolete and after the
occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrower; and
(iii) obtain such extensions of time for filing and complete
such forms or certifications as may reasonably be requested by the
Borrower or the Agent; or
(Y) in the case of any such Lender that is not a "bank" within
the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, (i)
represent to the Borrower (for the benefit of the Borrower and the
Agent) that it is not a bank within the meaning of Section 881(c)(3)(A)
of the Internal Revenue Code, (ii) agree to furnish to the Borrower on
or before the date of any payment by the Borrower, with a copy to the
Agent two (2) accurate and complete original signed copies of Internal
Revenue Service Form W-8, or successor applicable form certifying to
such Lender's legal entitlement at the date of such certificate to an
exemption from U.S. withholding tax under the provisions of Section
881(c) of the Internal Revenue Code with respect to payments to be made
under this Credit Agreement and any Notes (and to deliver to the
Borrower and the Agent two (2) further copies of such form on or before
the date it expires or becomes obsolete and after the occurrence of any
event requiring a change in the most recently provided form and, if
necessary, obtain any extensions of time reasonably requested by the
Borrower or the Agent for filing and completing such forms), and (iii)
agree, to the extent legally entitled to do so, upon reasonable request
by the Borrower, to provide to the Borrower (for the benefit of the
Borrower and the Agent) such other forms as may be reasonably required
in order to establish the legal entitlement of such Lender to an
exemption from withholding with respect to payments under this Credit
Agreement and any Notes;
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unless in any such case any change in treaty, law or regulation has occurred
after the date such Person becomes a Lender hereunder which renders all such
forms inapplicable or which would prevent such Lender from duly completing and
delivering any such form with respect to it and such Lender so advises the
Borrower and the Agent. Each Person that shall become a Lender or a participant
of a Lender pursuant to subsection 11.3 shall, upon the effectiveness of the
related transfer, be required to provide all of the forms, certifications and
statements required pursuant to this subsection, provided that in the case of a
participant of a Lender the obligations of such participant of a Lender pursuant
to this subsection (b) shall be determined as if the participant of a Lender
were a Lender except that such participant of a Lender shall furnish all such
required forms, certifications and statements to the Lender from which the
related participation shall have been purchased.
3.11 REPLACEMENT OF LENDERS.
In the event any Lender delivers to the Borrower any notice in
accordance with Section 3.6, 3.9 or 3.10, then the Borrower shall have the
right, if no Default or Event of Default then exists, to replace such Lender
(the "Replaced Lender") with one or more additional banks or financial
institutions (collectively, the "Replacement Lender"), provided, that (a) at the
time of any replacement pursuant to this Section 3.11, the Replacement Lender
shall enter into one or more Assignment and Acceptance agreements pursuant to,
and in accordance with the terms of, Section 11.3(b) (and with all processing
and recordation fees payable pursuant to said Section 11.3(b) to be paid by the
Replacement Lender or, at its option, the Borrower) pursuant to which the
Replacement Lender shall acquire all of the rights and obligations of the
Replaced Lender hereunder and, in connection therewith, shall pay to the
Replaced Lender in respect thereof an amount equal to the sum of (i) the
principal of, and all accrued interest on, all outstanding Loans of the Replaced
Lender, and (ii) all accrued, but theretofore unpaid, fees owing to the Replaced
Lender pursuant to Section 3.5, and (b) all other obligations of the Borrower
owing to the Replaced Lender (including all other obligations, if any, owing
pursuant to Sections 3.6, 3.9 and 3.10) shall be paid in full to such Replaced
Lender concurrently with such replacement.
3.12 PRO RATA TREATMENT.
Except to the extent otherwise provided herein:
(a) Loans. Each Loan, each payment or prepayment of principal of any
Loan or reimbursement obligations arising from drawings under Letters of Credit,
each payment of interest on the Loans or reimbursement obligations arising from
drawings under Letters of Credit, each payment of Unused Fees, each payment of
the Letter of Credit Fee, each reduction of the Revolving Committed Amount and
each conversion or extension of any Loan, shall be allocated pro rata among the
Lenders in accordance with the respective principal amounts of their outstanding
Loans and Participation Interests.
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(b) Advances. Unless the Agent shall have been notified in writing by
any Lender prior to a borrowing that such Lender will not make the amount that
would constitute its ratable share of such borrowing available to the Agent, the
Agent may assume that such Lender is making such amount available to the Agent,
and the Agent may, in reliance upon such assumption, make available to the
Borrower a corresponding amount. If such amount is not made available to the
Agent by such Lender within the time period specified therefor hereunder, such
Lender shall pay to the Agent, on demand, such amount with interest thereon at a
rate equal to the Federal Funds Rate for the period until such Lender makes such
amount immediately available to the Agent. A certificate of the Agent submitted
to any Lender with respect to any amounts owing under this subsection shall be
conclusive in the absence of manifest error.
3.13 SHARING OF PAYMENTS.
The Lenders agree among themselves that, in the event that any Lender
shall obtain payment in respect of any Loan, LOC Obligations or any other
obligation owing to such Lender under this Credit Agreement through the exercise
of a right of setoff, banker's lien or counterclaim, or pursuant to a secured
claim under Section 506 of Title 11 of the United States Code or other security
or interest arising from, or in lieu of, such secured claim, received by such
Lender under any applicable bankruptcy, insolvency or other similar law or
otherwise, or by any other means, in excess of its pro rata share of such
payment as provided for in this Credit Agreement, such Lender shall promptly
purchase from the other Lenders a participation in such Loans, LOC Obligations
and other obligations in such amounts, and make such other adjustments from time
to time, as shall be equitable to the end that all Lenders share such payment in
accordance with their respective ratable shares as provided for in this Credit
Agreement. The Lenders further agree among themselves that if payment to a
Lender obtained by such Lender through the exercise of a right of setoff,
banker's lien, counterclaim or other event as aforesaid shall be rescinded or
must otherwise be restored, each Lender which shall have shared the benefit of
such payment shall, by repurchase of a participation theretofore sold, return
its share of that benefit (together with its share of any accrued interest
payable with respect thereto) to each Lender whose payment shall have been
rescinded or otherwise restored. The Borrower agrees that any Lender so
purchasing such a participation may, to the fullest extent permitted by law,
exercise all rights of payment, including setoff, banker's lien or counterclaim,
with respect to such participation as fully as if such Lender were a holder of
such Loan, LOC Obligations or other obligation in the amount of such
participation. Except as otherwise expressly provided in this Credit Agreement,
if any Lender or the Agent shall fail to remit to the Agent or any other Lender
an amount payable by such Lender or the Agent to the Agent or such other Lender
pursuant to this Credit Agreement on the date when such amount is due, such
payments shall be made together with interest thereon for each date from the
date such amount is due until the date such amount is paid to the Agent or such
other Lender at a rate per annum equal to the Federal Funds Rate. If under any
applicable bankruptcy, insolvency or other similar law, any Lender receives a
secured claim in lieu of a setoff to which this Section 3.13 applies, such
Lender shall, to the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the Lenders under this
Section 3.13 to share in the benefits of any recovery on such secured claim.
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3.14 PAYMENTS, COMPUTATIONS, ETC.
(a) Except as otherwise specifically provided herein, all payments
hereunder shall be made to the Agent in dollars in immediately available funds,
without offset, deduction, counterclaim or withholding of any kind, at the
Agent's office specified in Section 11.1 not later than 2:00 P.M. (Charlotte,
North Carolina time) on the date when due. Payments received after such time
shall be deemed to have been received on the next succeeding Business Day. The
Agent may (but shall not be obligated to) debit the amount of any such payment
which is not made by such time to any ordinary deposit account of the Borrower
maintained with the Agent (with notice to the Borrower). The Borrower shall, at
the time it makes any payment under this Credit Agreement, specify to the Agent
the Loans, LOC Obligations, Fees, interest or other amounts payable by the
Borrower hereunder to which such payment is to be applied (and in the event that
it fails so to specify, or if such application would be inconsistent with the
terms hereof, the Agent shall distribute such payment to the Lenders in such
manner as the Agent may determine to be appropriate in respect of obligations
owing by the Borrower hereunder, subject to the terms of Section 3.12(a)). The
Agent will distribute such payments to such Lenders, if any such payment is
received prior to 12:00 Noon (Charlotte, North Carolina time) on a Business Day
in like funds as received prior to the end of such Business Day and otherwise
the Agent will distribute such payment to such Lenders on the next succeeding
Business Day. Whenever any payment hereunder shall be stated to be due on a day
which is not a Business Day, the due date thereof shall be extended to the next
succeeding Business Day (subject to accrual of interest and Fees for the period
of such extension). Except as expressly provided otherwise herein, all
computations of interest and fees shall be made on the basis of actual number of
days elapsed over a year of 360 days, except with respect to computation of
interest on Base Rate Loans which (unless the Base Rate is determined by
reference to the Federal Funds Rate) shall be calculated based on a year of 365
or 366 days, as appropriate. Interest shall accrue from and include the date of
borrowing, but exclude the date of payment.
(b) Allocation of Payments After Event of Default. Notwithstanding any
other provisions of this Credit Agreement to the contrary, after the occurrence
and during the continuance of an Event of Default, all amounts collected or
received by the Agent or any Lender on account of the Guaranteed Obligations or
any other amounts outstanding under any of the Credit Documents shall be paid
over or delivered as follows (in each case to be applied in a manner consistent
with Section 2.4 hereof):
FIRST, to the payment of all reasonable out-of-pocket costs
and expenses (including without limitation reasonable attorneys' fees)
of the Agent in connection with enforcing the rights of the Lenders
under the Credit Documents;
SECOND, to payment of any fees owed to the Agent;
THIRD, to the payment of all reasonable out-of-pocket costs
and expenses (including without limitation, reasonable attorneys' fees)
of each of the Lenders in connection with enforcing its rights under
the Credit Documents or otherwise with respect to the Obligations owing
to such Lender;
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FOURTH, to the payment of all accrued interest and fees on or
in respect of the Obligations;
FIFTH, to the payment of the outstanding principal amount of
the Guaranteed Obligations (including the payment or cash
collateralization of the outstanding LOC Obligations);
SIXTH, to all other Obligations and other obligations which
shall have become due and payable under the Credit Documents or
otherwise and not repaid pursuant to clauses "FIRST" through "FIFTH"
above; and
SEVENTH, to the payment of the surplus, if any, to whoever may
be lawfully entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; and (ii) each of the Lenders shall receive an amount equal
to its pro rata share (based on the proportion that the then outstanding
Obligations held by such Lender bears to the aggregate then outstanding
Obligations) of amounts available to be applied pursuant to clauses "THIRD",
"FOURTH", "FIFTH" and "SIXTH" above; and (iii) to the extent that any amounts
available for distribution pursuant to clause "FIFTH" above are attributable to
the issued but undrawn amount of outstanding Letters of Credit, such amounts
shall be held by the Agent in a cash collateral account and applied (A) first,
to reimburse the Issuing Lender for any drawings under such Letters of Credit
and (B) then, following the expiration of all Letters of Credit, to all other
obligations of the types described in clauses "FIFTH" and "SIXTH" above in the
manner provided in this Section 3.14(b).
3.15 EVIDENCE OF DEBT.
(a) Each Lender shall maintain an account or accounts evidencing each
Loan made by such Lender to the Borrower from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Credit Agreement. Each Lender will make reasonable efforts to
maintain the accuracy of its account or accounts and to promptly update its
account or accounts from time to time, as necessary.
(b) The Agent shall maintain the Register pursuant to Section 11.3(c)
hereof, and a subaccount for each Lender, in which Register and subaccounts
(taken together) shall be recorded (i) the amount and type of each such Loan
hereunder, (ii) the amount of any principal or interest due and payable or to
become due and payable to each Lender hereunder and (iii) the amount of any sum
received by the Agent hereunder from or for the account of the Borrower and each
Lender's share thereof. The Agent will make reasonable efforts to maintain the
accuracy of the subaccounts referred to in the preceding sentence and to
promptly update such subaccounts from time to time, as necessary.
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(c) The entries made in the accounts, Register and subaccounts
maintained pursuant to subsection (b) of this Section 3.15 (and, if consistent
with the entries of the Agent, subsection (a)) shall be prima facie evidence of
the existence and amounts of the obligations of the Borrower therein recorded;
provided, however, that the failure of any Lender or the Agent to maintain any
such account, such Register or such subaccount, as applicable, or any error
therein, shall not in any manner affect the obligation of the Borrower to repay
the Loans made by such Lender in accordance with the terms hereof.
SECTION 4
GUARANTY
--------
4.1 THE GUARANTEE.
Each of the Guarantors hereby jointly and severally guarantees to each
Lender, to each Affiliate of a Lender that enters into a Hedging Agreement and
to the Agent as hereinafter provided, the prompt payment of the Guaranteed
Obligations in full when due (whether at stated maturity, as a mandatory
prepayment, by acceleration, a mandatory cash collateralization or otherwise)
strictly in accordance with the terms thereof. The Guarantors hereby further
agree that if any of the Guaranteed Obligations are not paid in full when due
(whether at stated maturity, as a mandatory prepayment, by acceleration, as
mandatory cash collateralization or otherwise), the Guarantors will, jointly and
severally, promptly pay the same, without any demand or notice whatsoever, and
that in the case of any extension of time of payment or renewal of any of the
Guaranteed Obligations, the same will be promptly paid in full when due (whether
at extended maturity, as a mandatory prepayment, by acceleration or otherwise)
in accordance with the terms of such extension or renewal.
Notwithstanding any provision to the contrary contained herein or in
any other of the Credit Documents or Hedging Agreements, to the extent the
obligations of a Guarantor shall be adjudicated to be invalid or unenforceable
for any reason (including, without limitation, because of any applicable state
or federal law relating to fraudulent conveyances or transfers) then the
obligations of each Guarantor hereunder shall be limited to the maximum amount
that is permissible under applicable law (whether federal or state and
including, without limitation, the Bankruptcy Code).
4.2 OBLIGATIONS UNCONDITIONAL.
The obligations of the Guarantors under Section 4.1 hereof are joint
and several, absolute and unconditional, irrespective of the value, genuineness,
validity, regularity or enforceability of any of the Credit Documents or Hedging
Agreements, or any other agreement or instrument referred to therein, or any
substitution, release or exchange of any other guarantee of or security for any
of the Guaranteed Obligations, and, to the fullest extent permitted by
applicable law, irrespective of any other circumstance whatsoever which might
otherwise constitute a legal or equitable discharge or defense of a surety or
guarantor, it being the intent of this Section 4.2 that the obligations of the
Guarantors hereunder shall be absolute and unconditional under any and all
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circumstances. Each Guarantor agrees that such Guarantor shall have no right of
subrogation, indemnity, reimbursement or contribution against the Borrower or
any other Guarantor of the Guaranteed Obligations for amounts paid under this
Guaranty until such time as the Lenders (and any Affiliates of Lenders entering
into Hedging Agreements) have been paid in full and all Commitments under the
Credit Agreement have been terminated. Without limiting the generality of the
foregoing, it is agreed that, to the fullest extent permitted by law, the
occurrence of any one or more of the following shall not alter or impair the
liability of any Guarantor hereunder which shall remain absolute and
unconditional as described above:
(i) at any time or from time to time, without notice to any
Guarantor, the time for any performance of or compliance with any of
the Guaranteed Obligations shall be extended, or such performance or
compliance shall be waived;
(ii) any of the acts mentioned in any of the provisions of any
of the Credit Documents, any Hedging Agreement or any other agreement
or instrument referred to in the Credit Documents or Hedging Agreements
shall be done or omitted;
(iii) the maturity of any of the Guaranteed Obligations shall
be accelerated, or any of the Guaranteed Obligations shall be modified,
supplemented or amended in any respect, or any right under any of the
Credit Documents, any Hedging Agreement or any other agreement or
instrument referred to in the Credit Documents or Hedging Agreements
shall be waived or any other guarantee of any of the Guaranteed
Obligations or any security therefor shall be released or exchanged in
whole or in part or otherwise dealt with;
(iv) any Lien granted to, or in favor of, the Agent or any
Lender or Lenders as security for any of the Guaranteed Obligations
shall fail to attach or be perfected; or
(v) any of the Guaranteed Obligations shall be determined to
be void or voidable (including, without limitation, for the benefit of
any creditor of any Guarantor) or shall be subordinated to the claims
of any Person (including, without limitation, any creditor of any
Guarantor).
With respect to its obligations hereunder, each Guarantor hereby expressly
waives diligence, presentment, demand of payment, protest and all notices
whatsoever, and any requirement that the Agent or any Lender exhaust any right,
power or remedy or proceed against any Person under any of the Credit Documents,
any Hedging Agreement or any other agreement or instrument referred to in the
Credit Documents or Hedging Agreements, or against any other Person under any
other guarantee of, or security for, any of the Guaranteed Obligations.
4.3 REINSTATEMENT.
The obligations of the Guarantors under this Section 4 shall be
automatically reinstated if and to the extent that for any reason any payment by
or on behalf of any Person in respect of the Guaranteed Obligations is rescinded
or must be otherwise restored by any holder of any of the Guaranteed
Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or
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otherwise, and each Guarantor agrees that it will indemnify the Agent and each
Lender on demand for all reasonable costs and expenses (including, without
limitation, fees and expenses of counsel) incurred by the Agent or such Lender
in connection with such rescission or restoration, including any such costs and
expenses incurred in defending against any claim alleging that such payment
constituted a preference, fraudulent transfer or similar payment under any
bankruptcy, insolvency or similar law.
4.4 CERTAIN ADDITIONAL WAIVERS.
Without limiting the generality of the provisions of this Section 4,
each Guarantor hereby specifically waives the benefits of N.C. Gen. Stat. ss.ss.
26-7 through 26-9, inclusive. Each Guarantor further agrees that such Guarantor
shall have no right of recourse to security for the Guaranteed Obligations,
except through the exercise of the rights of subrogation pursuant to Section
4.2.
4.5 REMEDIES.
The Guarantors agree that, to the fullest extent permitted by law, as
between the Guarantors, on the one hand, and the Agent and the Lenders, on the
other hand, the Guaranteed Obligations may be declared to be forthwith due and
payable as provided in Section 9.2 hereof (and shall be deemed to have become
automatically due and payable in the circumstances provided in said Section 9.2)
for purposes of Section 4.1 hereof notwithstanding any stay, injunction or other
prohibition preventing such declaration (or preventing the Guaranteed
Obligations from becoming automatically due and payable) as against any other
Person and that, in the event of such declaration (or the Guaranteed Obligations
being deemed to have become automatically due and payable), the Guaranteed
Obligations (whether or not due and payable by any other Person) shall forthwith
become due and payable by the Guarantors for purposes of said Section 4.1.
4.6 RIGHTS OF CONTRIBUTION.
The Guarantors hereby agree, as among themselves, that if any Guarantor
shall become an Excess Funding Guarantor (as defined below), each other
Guarantor shall, on demand of such Excess Funding Guarantor (but subject to the
succeeding provisions of this Section 4.6), pay to such Excess Funding Guarantor
an amount equal to such Guarantor's Pro Rata Share (as defined below and
determined, for this purpose, without reference to the properties, assets,
liabilities and debts of such Excess Funding Guarantor) of such Excess Payment
(as defined below). The payment obligation of any Guarantor to any Excess
Funding Guarantor under this Section 4.6 shall be subordinate and subject in
right of payment to the prior payment in full of the obligations of such
Guarantor under the other provisions of this Section 4, and such Excess Funding
Guarantor shall not exercise any right or remedy with respect to such excess
until payment and satisfaction in full of all of such obligations. For purposes
hereof, (i) "Excess Funding Guarantor" shall mean, in respect of any obligations
arising under the other provisions of this Section 4 (hereafter, the "Guarantied
Obligations"), a Guarantor that has paid an amount in excess of its Pro Rata
Share of the Guarantied Obligations; (ii) "Excess Payment" shall mean, in
respect of any Guarantied Obligations, the amount paid by an Excess Funding
Guarantor in excess of its Pro Rata Share of such Guarantied Obligations; and
(iii) "Pro Rata Share", for the purposes of this Section 4.6, shall
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mean, for any Guarantor, the ratio (expressed as a percentage) of (a) the amount
by which the aggregate present fair saleable value of all of its assets and
properties exceeds the amount of all debts and liabilities of such Guarantor
(including contingent, subordinated, unmatured, and unliquidated liabilities,
but excluding the obligations of such Guarantor hereunder) to (b) the amount by
which the aggregate present fair saleable value of all assets and other
properties of the Borrower and all of the Guarantors exceeds the amount of all
of the debts and liabilities (including contingent, subordinated, unmatured, and
unliquidated liabilities, but excluding the obligations of the Borrower and the
Guarantors hereunder) of the Borrower and all of the Guarantors, all as of the
Closing Date (if any Guarantor becomes a party hereto subsequent to the Closing
Date, then for the purposes of this Section 4.6 such subsequent Guarantor shall
be deemed to have been a Guarantor as of the Closing Date and the information
pertaining to, and only pertaining to, such Guarantor as of the date such
Guarantor became a Guarantor shall be deemed true as of the Closing Date).
4.7 CONTINUING GUARANTEE.
The guarantee in this Section 4 is a continuing guarantee, and shall
apply to all Guaranteed Obligations whenever arising.
SECTION 5
CONDITIONS
----------
5.1 CONDITIONS TO CLOSING.
This Credit Agreement shall become effective, and the initial
Extensions of Credit may be made, upon the satisfaction of the following
conditions precedent:
(a) Execution of Credit Agreement and Credit Documents.
Receipt of (i) multiple counterparts of this Credit Agreement, (ii) a Revolving
Note for each Lender, (iii) a Tender Note for each Lender, and (iv) the
Collateral Documents, in each case executed by a duly authorized officer of each
party thereto and in each case conforming to the requirements of this Credit
Agreement.
(b) Financial Information. Receipt of financial information
regarding the Borrower and its Subsidiaries, as may be requested by, and in each
case in form and substance satisfactory to the Agent.
(c) Environmental Reports. Evidence that there has been no
change in the information presented and the conclusions made in the
environmental assessment reports and other environmental documentation relating
to properties owned or leased by members of the Consolidated Group delivered to
the Agent on or prior to the Merger Execution Date.
(d) Absence of Legal Proceedings. The absence of any action ,
suit, investigation or proceeding pending in any court or before any arbitrator
or governmental instrumentality
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which could reasonably be expected to have a Material Adverse Effect on the
Consolidated Group taken as a whole or on the transactions contemplated by this
Credit Agreement.
(e) Target Indebtedness. An officer's certificate from a
Responsible Officer of the Target certifying that the Indebtedness outstanding
at the Target does not exceed $15,000,000.
(f) Legal Opinions. Receipt of multiple counterparts of
opinions of counsel for the Credit Parties relating to the Credit Documents and
the transactions contemplated herein, in form and substance satisfactory to the
Agent.
(g) Corporate Documents. Receipt of the following (or their
equivalent) for each of the Credit Parties:
(i) Articles of Incorporation. Copies of the articles
of incorporation or charter documents certified to be true and complete
as of a recent date by the appropriate governmental authority of the
state of its incorporation.
(ii) Resolutions. Copies of resolutions of the Board
of Directors approving and adopting the respective Credit Documents,
the transactions contemplated therein and authorizing execution and
delivery thereof, certified by a secretary or assistant secretary as of
the Closing Date to be true and correct and in force and effect as of
such date.
(iii) Bylaws. Copies of the bylaws certified by a
secretary or assistant secretary as of the Closing Date to be true and
correct and in force and effect as of such date.
(iv) Good Standing. Copies, where applicable, of (A)
certificates of good standing, existence or its equivalent certified as
of a recent date by the appropriate governmental authorities of the
state of incorporation and each other state in which the failure to so
qualify and be in good standing would have a material adverse effect on
the business or operations in such state and (B) a certificate
indicating payment of all corporate franchise taxes certified as of a
recent date by the appropriate governmental taxing authorities.
(v) Officer's Certificate. An officer's certificate
for each of the Credit Parties dated as of the Closing Date
substantially in the form of Schedule 5.1(g)(v) with appropriate
insertions and attachments.
(h) Tender Offer. The Merger Agreement and the other
documentation related to the Tender Offer (including without limitation the
Stock Agreements) shall be in full force and effect and the purchase of ASI
Shares at the closing of the Tender Offer shall have been consummated in
accordance with the terms and subject to each of the conditions contained in
such agreements. Without limiting the generality of the foregoing, the Agent
shall receive
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evidence that at least 51% (on a fully diluted basis) of the ASI Shares have
been purchased in connection with the Tender Offer for no more than $2.50 per
share.
(i) KeyMan Life Insurance. Evidence of key man life insurance
for John Grosso in the amount of at least $3,000,000 naming the Borrower as
beneficiary.
(j) Personal Property Collateral. The Agent shall have
received:
(i) searches of Uniform Commercial Code ("UCC")
filings in the jurisdiction of the chief executive office of
each Credit Party and each jurisdiction where any Collateral
is located or where a filing would need to be made in order to
perfect the Lenders' security interest in the Collateral
(other than locations where the Agent determines that the
value of Collateral located thereon is not material), copies
of the financing statements on file in such jurisdictions and
evidence that no Liens exist other than Permitted Liens;
(ii) duly executed UCC financing statements for
each appropriate jurisdiction as is necessary, in the Agent's
sole discretion, to perfect the Lenders' security interest in
the Collateral (other than locations where the Agent
determines that the value of Collateral located thereon is not
material);
(iii) searches of ownership of intellectual
property in the appropriate governmental offices and such
patent/trademark/copyright filings as requested by the Agent
in order to perfect the Agent's security interest in the
Collateral; and
(iv) all stock certificates evidencing the stock
pledged to the Agent pursuant to the Pledge Agreements,
together with duly executed in blank undated stock powers
attached thereto.
(k) Real Property Collateral. The Agent shall have received:
(i) fully executed and notarized mortgages,
deeds of trust or deeds to secure debt (each a "Mortgage" and
collectively the "Mortgages") encumbering the fee interest of
the Credit Parties in each real property asset owned by a
Credit Party set forth on Schedule 5.1(k) (each a "Mortgaged
Property" and collectively the "Mortgaged Properties"),
together with such UCC-1 financing statements as the Agent
shall deem appropriate with respect to each such Mortgaged
Property;
(ii) ALTA or other appropriate form mortgagee
title insurance policies (the "Mortgage Policies") issued by
title insurers satisfactory to the Agent (the "Title Insurance
Company"), in an amount satisfactory to the Agent with respect
to each parcel of real property encumbered by a Mortgage and
otherwise in form and substance satisfactory to the Agent;
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(iii) maps or plats of an as-built survey of the
sites of the Mortgaged Properties certified to the Agent and
the Title Insurance Company in a manner satisfactory to them,
dated a date satisfactory to the Agent and the Title Insurance
Company by an independent professional licensed land surveyor
satisfactory to the Agent and the Title Insurance Company,
which maps or plats and the surveys on which they are based
shall be sufficient to delete any standard printed survey
exception contained in the applicable title policy and be made
in accordance with the Minimum Standard Detail Requirements
for Land Title Surveys jointly established and adopted by the
American Land Title Association and the American Congress on
Surveying and Mapping in 1992; and
(iv) certification from a registered engineer or
land surveyor in a form satisfactory to the Agent or other
evidence acceptable to the Agent that none of the improvements
on the real property encumbered by the Mortgages are located
within any area designated by the Director of the Federal
Emergency Management Agency as a "special flood hazard" area
or if any improvements on such properties are located within a
"special flood hazard" area, evidence of a flood insurance
policy from a company and in an amount satisfactory to the
Agent for the applicable portion of the premises, naming the
Agent, for the benefit of the Lenders, as mortgagee;
(l) Evidence of Insurance. Receipt by the Agent of copies of
insurance policies or certificates of insurance of the Credit Parties evidencing
liability and casualty insurance meeting the requirements set forth in the
Credit Documents, including, but not limited to, naming the Agent as sole loss
payee on behalf of the Lenders.
(m) Corporate Structure. The corporate capital and ownership
structure of the Borrower and the Guarantors (after giving effect to the
purchase of the ASI Shares at the closing of the Tender Offer) shall be as
described in Schedule 5.1(m).
(n) Government Consent. Receipt by the Agent of evidence that
all governmental, shareholder and material third party consents (including
Hart-Scott-Rodino clearance) and approvals necessary or desirable in connection
with the acquisition of the ASI Shares at the closing of the Tender Offer and
the related financings and other transactions contemplated hereby and expiration
of all applicable waiting periods without any action being taken by any
authority that could reasonably be likely to restrain, prevent or impose any
material adverse conditions on the acquisition of the ASI Shares at the closing
of the Tender Offer or such other transactions or that could reasonably be
likely to seek or threaten any of the foregoing, and no law or regulation shall
be applicable which in the judgment of the Agent could reasonably be likely to
have such effect.
(o) Severance Payments. Evidence satisfactory to the Agent
that the aggregate amounts to be paid by the Target (or the Borrower on behalf
of the Target) in
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connection with required termination and/or severance payments to key employees
of the Target upon a change of control of the Target shall not exceed $2.8
million.
(p) Material Contracts. The Agent shall be satisfied with the
status of all material contracts of the Consolidated Group (including the
Target).
(q) Fees. Receipt of all fees, if any, owing pursuant to the
Agent's Fee Letter and Section 3.5 or otherwise.
(r) Subsection 5.2 Conditions. The conditions specified in
Section 5.2 shall be satisfied.
(s) Form U-1. Receipt of a Federal Reserve Form U-1 for each
of the Lenders, duly executed by a Responsible Officer of the Borrower and
containing appropriate statements, which in the opinion of the Agent, are
sufficient to permit the transactions contemplated hereby in accordance with
Regulation U.
(t) Additional Matters. All other documents and legal matters
in connection with the transactions contemplated by this Credit Agreement shall
be reasonably satisfactory in form and substance to the Agent.
5.2 CONDITIONS TO ALL EXTENSIONS OF CREDIT.
The obligation of each Lender to make any Extension of Credit hereunder
(including the initial Extension of Credit to be made hereunder) is subject to
the satisfaction of the following conditions precedent on the date of making
such Extension of Credit:
(a) Representations and Warranties. The representations and
warranties made by the Credit Parties herein or in any other Credit Documents or
which are contained in any certificate furnished at any time under or in
connection herewith shall be true and correct in all material respects on and as
of the date of such Extension of Credit as if made on and as of such date
(except for those which expressly relate to an earlier date).
(b) No Default or Event of Default. No Default or Event of
Default shall have occurred and be continuing on such date or after giving
effect to the Extension of Credit to be made on such date unless such Default or
Event of Default shall have been waived in accordance with this Credit
Agreement.
(c) Additional Conditions to Revolving Loans. If a Revolving
Loan is made pursuant to Section 2.1, all conditions set forth therein shall
have been satisfied.
(d) Additional Conditions to Letters of Credit. If such
Extension of Credit is made pursuant to Section 2.2, all conditions set forth
therein shall have been satisfied.
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Each request for Extension of Credit (including extensions and
conversions) and each acceptance by the Borrower of an Extension of Credit
(including extensions and conversions) shall be deemed to constitute a
representation and warranty by the Borrower as of the date of such Extension of
Credit that the applicable conditions in paragraphs (a), (b), (c) and (d) of
this subsection have been satisfied.
SECTION 6
REPRESENTATIONS AND WARRANTIES
------------------------------
To induce the Lenders to enter into this Credit Agreement and to make
Extensions of Credit herein provided for, each of the members of the
Consolidated Group parties hereto hereby represents and warrants to the Agent
and to each Lender that:
6.1 FINANCIAL CONDITION.
Each of the financial statements described below (copies of which have
heretofore been provided to the Agent for distribution to the Lenders), have
been prepared in accordance with GAAP consistently applied throughout the
periods covered thereby, are complete and correct in all material respects and
present fairly the financial condition and results from operations of the
entities and for the periods specified, subject in the case of interim
company-prepared statements to normal year-end adjustments and the absence of
notes required by GAAP:
(i) an audited consolidated balance sheet of the Borrower and
its consolidated subsidiaries dated as of January 31, 1996, together
with related statements income and cash flows certified by KPMG Peat
Marwick certified public accountants;
(ii) a company-prepared consolidated balance sheet of the
Borrower and its consolidated subsidiaries dated as of October 31,
1996, together with related consolidated statements of income and cash
flows; and
(iii) a company-prepared consolidated balance sheet of the
Target and its consolidated subsidiaries dated as of September 30,
1996, together with related consolidated statements of income and cash
flows.
6.2 NO CHANGES OR RESTRICTED PAYMENTS.
Since the date of the audited financial statements referenced in
Section 6.1(i), (a) there has been no circumstance, development or event
relating to or affecting the members of the Consolidated Group which has had or
would be reasonably expected to have a Material Adverse Effect, and (b) except
as set forth on Schedule 6.2 or as permitted herein, no Restricted Payments have
been made or declared or are contemplated by any members of the Consolidated
Group.
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6.3 ORGANIZATION; EXISTENCE; COMPLIANCE WITH LAW.
Each of the members of the Consolidated Group (a) is a corporation duly
organized, validly existing in good standing under the laws of the jurisdiction
of its organization, (b) has the corporate or other necessary power and
authority, and the legal right to own and operate its property, to lease the
property it operates as lessee and to conduct the business in which it is
currently engaged, (c) is duly qualified as a foreign entity and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such
qualification, other than in such jurisdictions where the failure to be so
qualified and in good standing would not, in the aggregate, have a Material
Adverse Effect, and (d) is in compliance with all Requirements of Law, except to
the extent that the failure to comply therewith would not, in the aggregate, be
reasonably expected to have a Material Adverse Effect.
6.4 POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS.
Each of the Credit Parties has the corporate or other necessary power
and authority, and the legal right, to make, deliver and perform the Credit
Documents to which it is a party and has taken all necessary corporate action to
authorize the execution, delivery and performance by it of the Credit Documents
to which it is a party. No consent or authorization of, filing with, notice to
or other act by or in respect of, any Governmental Authority or any other Person
is required in connection with the borrowings hereunder or with the execution,
delivery or performance of any Credit Documents by the Credit Parties (other
than those which have been obtained, such filings as are required by the
Securities and Exchange Commission and to fulfill other reporting requirements
with Governmental Authorities) or with the validity or enforceability of any
Credit Document against the Credit Parties (except such filings as are necessary
in connection with the perfection of the Liens created by such Credit
Documents). Each Credit Document to which it is a party constitutes a legal,
valid and binding obligation of such Credit Parties enforceable against such
Credit Parties in accordance with their respective terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law.
6.5 NO LEGAL BAR.
The execution, delivery and performance of the Credit Documents, the
borrowings hereunder and the use of the Extensions of Credit will not violate
any Requirement of Law, which violation has or would reasonably be expected to
have a Material Adverse Effect, or any Contractual Obligation of any member of
the Consolidated Group (except those as to which waivers or consents have been
obtained ), and will not result in, or require, the creation or imposition of
any Lien on any of their respective properties or revenues pursuant to any
Requirement of Law or Contractual Obligation other than the Liens arising under
or contemplated in connection with the Credit Documents. No member of the
Consolidated Group is in default under or with respect to any of its Contractual
Obligations in any respect which has or would reasonably be expected to have a
Material Adverse Effect.
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6.6 NO MATERIAL LITIGATION.
No claim, litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the best knowledge of the
Credit Parties, threatened by or against, any members of the Consolidated Group
or against any of their respective properties or revenues which (a) relate to
the Credit Documents or any of the transactions contemplated hereby or thereby
(including specifically without limitation the Tender Offer and the Merger), (b)
if adversely determined, would reasonably be expected to have a Material Adverse
Effect. Set forth on Schedule 6.6 is a summary of all claims, litigation,
investigations and proceedings pending or, to the best knowledge of the Credit
Parties, threatened by or against the members of the Consolidated Group or
against any of their respective properties or revenues, and none of such
actions, individually or in the aggregate, is reasonably expected to have a
Material Adverse Effect.
6.7 NO DEFAULT.
No Default or Event of Default has occurred and is continuing.
6.8 OWNERSHIP OF PROPERTY; LIENS.
Each of members of the Consolidated Group has good record and
marketable title in fee simple to, or a valid leasehold interest in, all its
material real property, and good title to, or a valid leasehold interest in, all
its other material property, and none of such property is subject to any Lien,
except for Permitted Liens.
6.9 INTELLECTUAL PROPERTY.
Each of the members of the Consolidated Group owns, or has the legal
right to use, all United States trademarks, tradenames, copyrights, technology,
know-how and processes, if any, necessary for each of them to conduct its
business as currently conducted (the "Intellectual Property") except for those
the failure to own or have such legal right to use would not be reasonably
expected to have a Material Adverse Effect. No claim has been asserted and is
pending by any Person challenging or questioning the use of any such
Intellectual Property or the validity or effectiveness of any such Intellectual
Property, nor does any Credit Party know of any such claim, and the use of such
Intellectual Property by the members of the Consolidated Group does not infringe
on the rights of any Person, except for such claims and infringements that in
the aggregate, would not be reasonably expected to have a Material Adverse
Effect.
6.10 NO BURDENSOME RESTRICTIONS.
No Requirement of Law applicable to, or Contractual Obligation of, the
members of the Consolidated Group has or would be reasonably expected to have a
Material Adverse Effect.
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6.11 TAXES.
Each of the members of the Consolidated Group has filed or caused to be
filed all United States federal income tax returns and all other material tax
returns which, to the best knowledge of the Credit Parties, are required to be
filed and has paid (a) all taxes shown to be due and payable on said returns or
(b) all taxes shown to be due and payable on any assessments of which it has
received notice made against it or any of its property and all other taxes, fees
or other charges imposed on it or any of its property by any Governmental
Authority (other than any (i) taxes, fees or other charges with respect to which
the failure to pay, in the aggregate, would not have a Material Adverse Effect
or (ii) taxes, fees or other charges the amount or validity of which are
currently being contested and with respect to which reserves in conformity with
GAAP have been provided on the books of such Person), and no tax Lien has been
filed, and, to the best knowledge of the Credit Parties, no claim is being
asserted, with respect to any such tax, fee or other charge.
6.12 ERISA
Except as would not reasonably be expected to have a Material Adverse
Effect:
(a) During the five-year period prior to the date on which this
representation is made or deemed made: (i) no ERISA Event has occurred, and, to
the best knowledge of the Credit Parties, no event or condition has occurred or
exists as a result of which any ERISA Event could reasonably be expected to
occur, with respect to any Plan; (ii) no "accumulated funding deficiency," as
such term is defined in Section 302 of ERISA and Section 412 of the Code,
whether or not waived, has occurred with respect to any Plan; (iii) each Plan
has been maintained, operated, and funded in compliance with its own terms and
in material compliance with the provisions of ERISA, the Code, and any other
applicable federal or state laws; and (iv) no lien in favor of the PBGC or a
Plan has arisen or is reasonably likely to arise on account of any Plan.
(b) The actuarial present value of all "benefit liabilities" (as
defined in Section 4001(a)(16) of ERISA), whether or not vested, under each
Single Employer Plan, as of the last annual valuation date prior to the date on
which this representation is made or deemed made (determined, in each case, in
accordance with Financial Accounting Standards Board Statement 87, utilizing the
actuarial assumptions used in such Plan's most recent actuarial valuation
report), did not exceed as of such valuation date the fair market value of the
assets of such Plan.
(c) No member of the Consolidated Group nor any ERISA Affiliate has
incurred, or, to the best knowledge of the Credit Parties, could be reasonably
expected to incur, any withdrawal liability under ERISA to any Multiemployer
Plan or Multiple Employer Plan. No member of the Consolidated Group nor any
ERISA Affiliate would become subject to any withdrawal liability under ERISA if
any member of the Consolidated Group or any ERISA Affiliate were to withdraw
completely from all Multiemployer Plans and Multiple Employer Plans as of the
valuation date most closely preceding the date on which this representation is
made or deemed made. No member of the Consolidated Group nor any ERISA Affiliate
has received any notification that any Multiemployer Plan is in reorganization
(within the meaning of Section 4241 of ERISA), is insolvent (within the meaning
of Section 4245 of ERISA), or has been terminated (within the
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meaning of Title IV of ERISA), and no Multiemployer Plan is, to the best
knowledge of the Credit Parties, reasonably expected to be in reorganization,
insolvent, or terminated.
(d) No prohibited transaction (within the meaning of Section 406 of
ERISA or Section 4975 of the Code) or breach of fiduciary responsibility has
occurred with respect to a Plan which has subjected or may subject any member of
the Consolidated Group or any ERISA Affiliate to any liability under Sections
406, 409, 502(i), or 502(l) of ERISA or Section 4975 of the Code, or under any
agreement or other instrument pursuant to which any member of the Consolidated
Group or any ERISA Affiliate has agreed or is required to indemnify any person
against any such liability.
(e) No member of the Consolidated Group nor any ERISA Affiliates has
any material liability with respect to "expected post-retirement benefit
obligations" within the meaning of the Financial Accounting Standards Board
Statement 106. Each Plan which is a welfare plan (as defined in Section 3(1) of
ERISA) to which Sections 601-609 of ERISA and Section 4980B of the Code apply
has been administered in compliance in all material respects of such sections.
6.13 GOVERNMENTAL REGULATIONS, ETC.
(a) Except for the Tender Loans as described in Section 2.4
hereof, no part of the proceeds of the Loans will be used, directly or
indirectly, for the purpose of purchasing or carrying any "margin
stock" within the meaning of Regulation G or Regulation U, or for the
purpose of purchasing or carrying or trading in any securities. If
requested by any Lender or the Agent, the Borrower will furnish to the
Agent and each Lender additional statements to the foregoing effect in
conformity with the requirements of FR Form U-1 referred to in said
Regulation U. No indebtedness being reduced or retired out of the
proceeds of the Loans was or will be incurred for the purpose of
purchasing or carrying any margin stock within the meaning of
Regulation U or any "margin security" within the meaning of Regulation
T. None of the transactions contemplated by this Credit Agreement
(including, without limitation, the direct or indirect use of the
proceeds of the Loans) will violate or result in a violation of the
Securities Act of 1933, as amended, or the Securities Exchange Act of
1934, as amended, or regulations issued pursuant thereto, or Regulation
G, T, U or X.
(b) None of the members of the Consolidated Group is subject
to regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act or the Investment Company Act of 1940, each as
amended. In addition, none of the members of the Consolidated Group is
(i) an "investment company" registered or required to be registered
under the Investment Company Act of 1940, as amended, and is not
controlled by such a company, or (ii) a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of a
"holding company" or of a "subsidiary" of a "holding company", within
the meaning of the Public Utility Holding Company Act of 1935, as
amended.
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(c) Each of the members of the Consolidated Group has obtained
all material licenses, permits, franchises or other governmental
authorizations necessary to the ownership of its respective Property
and to the conduct of its business.
(d) None of the members of the Consolidated Group is in
violation of any applicable statute, regulation or ordinance of the
United States of America, or of any state, city, town, municipality,
county or any other jurisdiction, or of any agency thereof (including
without limitation, environmental laws and regulations), which
violation could reasonably be expected to have a Material Adverse
Effect.
(e) Each of the members of the Consolidated Group is current
with all material reports and documents, if any, required to be filed
with any state or federal securities commission or similar agency and
is in full compliance in all material respects with all applicable
rules and regulations of such commissions.
6.14 SUBSIDIARIES.
Set forth on Schedule 6.14 are all the Subsidiaries of the Borrower at
the Closing Date, the jurisdiction of their incorporation and the direct or
indirect ownership interest of the Borrower therein.
6.15 PURPOSE OF EXTENSIONS OF CREDIT.
The Extensions of Credit will be used to purchase the ASI Shares,
refinance existing Funded Debt, and to finance working capital and other
corporate purposes (including without limitation the payment of fees and
expenses related to the purchase of the ASI Shares). The Letters of Credit shall
be used only for or in connection with appeal bonds, reimbursement obligations
arising in connection with surety and reclamation bonds, reinsurance, domestic
or international trade transactions and obligations not otherwise aforementioned
relating to transactions entered into by the applicable account party in the
ordinary course of business.
6.16 ENVIRONMENTAL MATTERS.
Except as would not reasonably be expected to have a Material Adverse
Effect:
(a) Each of the facilities and properties owned, leased or operated by
the members of the Consolidated Group (the "Properties") and all operations at
the Properties are in compliance with all applicable Environmental Laws, and
there is no violation of any Environmental Law with respect to the Properties or
the businesses operated by the members of the Consolidated Group (the
"Businesses"), and there are no conditions relating to the Businesses or
Properties that could give rise to liability under any applicable Environmental
Laws.
(b) None of the Properties contains, or has previously contained, any
Materials of Environmental Concern at, on or under the Properties in amounts or
concentrations that constitute or constituted a violation of, or could give rise
to liability under, Environmental Laws.
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(c) None of the members of the Consolidated Group has received any
written or verbal notice of, or inquiry from any Governmental Authority
regarding, any violation, alleged violation, non-compliance, liability or
potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of the Properties or the Businesses, nor
does any member of the Consolidated Group have knowledge or reason to believe
that any such notice will be received or is being threatened.
(d) Materials of Environmental Concern have not been transported or
disposed of from the Properties, or generated, treated, stored or disposed of
at, on or under any of the Properties or any other location, in each case by or
on behalf any members of the Consolidated Group in violation of, or in a manner
that would be reasonably likely to give rise to liability under, any applicable
Environmental Law.
(e) No judicial proceeding or governmental or administrative action is
pending or, to the best knowledge of any Credit Party, threatened, under any
Environmental Law to which any member of the Consolidated Group is or will be
named as a party, nor are there any consent decrees or other decrees, consent
orders, administrative orders or other orders, or other administrative or
judicial requirements outstanding under any Environmental Law with respect to
any member of the Consolidated Group, the Properties or the Businesses.
(f) There has been no release or, threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related to
the operations (including, without limitation, disposal) of any member of the
Consolidated Group in connection with the Properties or otherwise in connection
with the Businesses, in violation of or in amounts or in a manner that could
give rise to liability under Environmental Laws.
SECTION 7
AFFIRMATIVE COVENANTS
---------------------
Each of the Credit Parties covenants and agrees that on the Closing
Date, and so long as this Credit Agreement is in effect and until the
Commitments have been terminated, no Obligations remain outstanding and all
amounts owing hereunder or in connection herewith have been paid in full, each
of the members of the Consolidated Group party hereto shall:
7.1 FINANCIAL STATEMENTS.
Furnish, or cause to be furnished, to the Agent and to each of the
Lenders:
(a) Audited Financial Statements. As soon as available, but in
any event within 90 days after the end of each fiscal year, an audited
consolidated balance sheet of the Borrower and its subsidiaries as of
the end of the fiscal year and the related consolidated statements of
income, retained earnings, shareholders' equity and cash flows for the
year, audited by KPMG Peat Marwick, or other firm of independent
certified public
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accountants of nationally recognized standing reasonably acceptable to the
Required Lenders, setting forth in each case in comparative form the figures for
the previous year, reported without a "going concern" or like qualification or
exception, or qualification indicating that the scope of the audit was
inadequate to permit such independent certified public accountants to certify
such financial statements without such qualification.
(b) Company-Prepared Financial Statements. As soon as
available, but in any event
(i) within 30 days after the end of each month, a
company-prepared unaudited consolidated and consolidating
balance sheet of the Borrower and its subsidiaries as of the
end of such month and related company-prepared consolidated
and consolidating statements of income for such monthly period
and for the fiscal year to date;
(ii) within 45 days after the end of each of the
first three fiscal quarters, the company-prepared unaudited
consolidated and consolidating balance sheet of the Borrower
and its subsidiaries as of the end of such quarter and related
company-prepared consolidated and consolidating statements of
income, retained earnings, shareholders' equity and cash flows
for such quarterly period and for the fiscal year to date or,
in lieu thereof, the Borrower's report on Form 10Q filed with
the Securities and Exchange Commission for such period;
(iii) within 45 days following the end of each fiscal
year, an annual business plan and budget for the members of
the Consolidated Group, containing, among other things, pro
forma financial statements for the then current fiscal year,
in each case setting forth in comparative form the consolidated and
consolidating figures for the corresponding period or periods of the
preceding fiscal year or the portion of the fiscal year ending with
such period, as applicable, in each case subject to normal recurring
year-end audit adjustments and the absence of notes required by GAAP.
All such financial statements to be complete and correct in all material
respects (subject, in the case of interim statements, to normal recurring
year-end audit adjustments) and to be prepared in reasonable detail and, in the
case of the annual and quarterly financial statements provided in accordance
with subsections (a) and (b) above, in accordance with GAAP applied consistently
throughout the periods reflected therein) and further accompanied by a
description of, and an estimation of the effect on the financial statements on
account of, a change in the application of accounting principles as provided in
Section 1.3.
7.2 CERTIFICATES; OTHER INFORMATION.
Furnish, or cause to be furnished, to the Agent and to each of the
Lenders:
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(a) Accountant's Certificate and Reports. Concurrently with
the delivery of the financial statements referred to in subsection
7.1(a) above, a certificate of the independent certified public
accountants reporting on such financial statements stating that in
making the examination necessary therefor no knowledge was obtained of
any Default or Event of Default, except as specified in such
certificate.
(b) Officer's Certificate. Concurrently with the delivery of
the financial statements referred to in Sections 7.1(a) and 7.1(b)(ii)
above, a certificate of a Responsible Officer stating that, to the best
of such Responsible Officer's knowledge and belief, (i) the financial
statements fairly present in all material respects the financial
condition of the parties covered by such financial statements, (ii)
during such period the members of the Consolidated Group have observed
or performed in all material respects the covenants and other
agreements hereunder and under the other Credit Documents relating to
them, and satisfied in all material respects the conditions, contained
in this Credit Agreement to be observed, performed or satisfied by
them, (iii) such Responsible Officer has obtained no knowledge of any
Default or Event of Default except as specified in such certificate and
(iv) such certificate shall include the calculations required to
indicate compliance with Section 7.9. A form of Officer's Certificate
is attached as Schedule 7.2(b).
(c) Accountants' Reports. Promptly upon receipt, a copy of any
final (as distinguished from a preliminary or discussion draft)
"management letter" or other similar report submitted by independent
accountants or financial consultants to the members of the Consolidated
Group in connection with any annual, interim or special audit.
(d) Public Information. Within ten days after the same are
sent, copies of all reports (other than those otherwise provided
pursuant to subsection 7.1) and other financial information which any
member of the Consolidated Group sends to its public stockholders, and
within ten days after the same are filed, copies of all financial
statements and non-confidential reports which any member of the
Consolidated Group may make to, or file with, the Securities and
Exchange Commission or any successor or analogous Governmental
Authority.
(e) Other Information. Promptly, such additional financial and
other information as the Agent, at the request of any Lender, may from
time to time reasonably request.
7.3 NOTICES.
Give notice to the Agent (which shall promptly transmit such notice to
each Lender) of:
(a) Defaults. Immediately (and in any event within five (5)
Business Days) after a Responsible Officer of any Credit Party knows or
has reason to know thereof, the occurrence of any Default or Event of
Default.
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(b) Contractual Obligations. Promptly, the occurrence of any
default or event of default under any Contractual Obligation of any
member of the Consolidated Group which would reasonably be expected to
have a Material Adverse Effect.
(c) Legal Proceedings. Promptly, the initiation of any
litigation, or any investigation or proceeding (including without
limitation, any environmental proceeding) known to any Responsible
Officer of a member of the Consolidated Group, or any material
development in respect thereof, against any member of the Consolidated
Group which, if adversely determined, would reasonably be expected to
have a Material Adverse Effect (and in any event, where compensation,
reimbursement, damages or relief is sought in excess of $500,000 in any
instance).
(d) ERISA. Promptly, after any Responsible Officer of the
Borrower knows or has reason to know of (i) any event or condition,
including, but not limited to, any Reportable Event, that constitutes,
or might reasonably lead to, an ERISA Event; (ii) with respect to any
Multiemployer Plan, the receipt of notice as prescribed in ERISA or
otherwise of any withdrawal liability assessed against any of their
ERISA Affiliates, or of a determination that any Multiemployer Plan is
in reorganization or insolvent (both within the meaning of Title IV of
ERISA); (iii) the failure to make full payment on or before the due
date (including extensions) thereof of all amounts which the members of
the Consolidated Group or any ERISA Affiliate are required to
contribute to each Plan pursuant to its terms and as required to meet
the minimum funding standard set forth in ERISA and the Code with
respect; or (iv) any change in the funding status of any Plan that
reasonably could be expected to have a Material Adverse Effect;
together with a description of any such event or condition or a copy of
any such notice and a statement by the chief financial officer of the
Borrower briefly setting forth the details regarding such event,
condition, or notice, and the action, if any, which has been or is
being taken or is proposed to be taken by the Credit Parties with
respect thereto. Promptly upon request, the members of the Consolidated
Group shall furnish the Agent and the Lenders with such additional
information concerning any Plan as may be reasonably requested,
including, but not limited to, copies of each annual report/return
(Form 5500 series), as well as all schedules and attachments thereto
required to be filed with the Department of Labor and/or the Internal
Revenue Service pursuant to ERISA and the Code, respectively, for each
"plan year" (within the meaning of Section 3(39) of ERISA).
(e) Other. Promptly, any other development or event which a
Responsible Officer determines could reasonably be expected to have a
Material Adverse Effect.
Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the relevant Credit Parties propose to take with respect
thereto.
7.4 PAYMENT OF OBLIGATIONS.
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Pay, discharge or otherwise satisfy at or before maturity or before
they become delinquent, as the case may be, in accordance with prudent business
practice (subject, where applicable, to specified grace periods) all material
obligations of each member of the Consolidated Group of whatever nature and any
additional costs that are imposed as a result of any failure to so pay,
discharge or otherwise satisfy such obligations, except when the amount or
validity of such obligations and costs is currently being contested in good
faith by appropriate proceedings and reserves, if applicable, in conformity with
GAAP with respect thereto have been provided on the books of the Consolidated
Group, as the case may be.
7.5 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE.
Continue to engage in business of the same general type as now
conducted by it on the date hereof, and preserve, renew and keep in full force
and effect its corporate existence and take all reasonable action to maintain
all rights, privileges, licenses and franchises necessary or desirable in the
normal conduct of its business; and comply with all Contractual Obligations and
Requirements of Law applicable to it except to the extent that failure to comply
therewith would not, in the aggregate, have a Material Adverse Effect.
7.6 MAINTENANCE OF PROPERTY; INSURANCE.
Keep all material property useful and necessary in its business in
reasonably good working order and condition (ordinary wear and tear excepted);
maintain with financially sound and reputable insurance companies casualty,
liability and such other insurance (which may include plans of self-insurance)
with such coverage and deductibles, and in such amounts as may be consistent
with prudent business practice and in any event consistent with normal industry
practice (except to any greater extent as may be required by the terms of any of
the other Credit Documents); and furnish to the Agent, upon written request,
full information as to the insurance carried. The Agent shall be named as loss
payee or mortgagee, as its interest may appear, and/or as additional insured
with respect to any such insurance providing coverage in respect of any
Collateral, and each provider of any such insurance shall agree, by endorsement
upon the policy or policies issued by it or by independent instruments furnished
to the Agent, that it will give the Agent thirty (30) days prior written notice
before any such policy or policies shall be altered or canceled, and that no act
or default of the Borrower or any of its Subsidiaries or any other Person shall
affect the rights of the Agent or the Lenders under such policy or policies. The
present insurance coverage of the Borrower and its Subsidiaries is outlined as
to carrier, policy number, expiration date, type and amount on Schedule 7.6, as
Schedule 7.6 may be amended from time to time by written notice to the Agent.
7.7 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS.
(a) Keep proper books of records and account in which full, true and
correct entries in conformity with GAAP and all Requirements of Law shall be
made of all dealings and transactions in relation to its businesses and
activities; and permit, during regular business hours and upon reasonable notice
by the Agent, the Agent to visit and inspect any of its properties and
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examine and make abstracts (including photocopies) from any of its books and
records (other than materials protected by the attorney-client privilege and
materials which the Credit Parties may not disclose without violation of a
confidentiality obligation binding upon them) at any reasonable time, and to
discuss the business, operations, properties and financial and other condition
of the members of the Consolidated Group with officers and employees of the
members of the Consolidated Group and with their independent certified public
accountants. The cost of the inspection referred to in the preceding sentence
shall be for the account of the Lenders unless an Event of Default has occurred
and is continuing, in which case the cost of such inspection shall be for the
account of the Credit Parties.
(b) In addition to the foregoing subsection (a), permit the Agent to
have agents or representatives to conduct a "field audit" of its inventory and
accounts, including inspection of the inventory and account records and a right
to examine and make abstracts (including photocopies) from its books and records
relating to its inventory and accounts once in each fiscal year, and more
frequently after the occurrence of an Event of Default.
7.8 ENVIRONMENTAL LAWS.
(a) Comply in all material respects with, and take reasonable actions
to ensure compliance in all material respects by all tenants and
subtenants, if any, with, all applicable Environmental Laws and obtain
and comply in all material respects with and maintain, and take
reasonable actions to ensure that all tenants and subtenants obtain and
comply in all material respects with and maintain, any and all
licenses, approvals, notifications, registrations or permits required
by applicable Environmental Laws except to the extent that failure to
do so would not reasonably be expected to have a Material Adverse
Effect;
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with
all lawful orders and directives of all Governmental Authorities
regarding Environmental Laws except to the extent that the same are
being contested in good faith by appropriate proceedings and the
failure to do or the pendency of such proceedings would not reasonably
be expected to have a Material Adverse Effect; and
(c) Defend, indemnify and hold harmless the Agent and the Lenders, and
their respective employees, agents, officers and directors, from and
against any and all claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature
known or unknown, contingent or otherwise, arising out of, or in any
way relating to the violation of, noncompliance with or liability
under, any Environmental Law applicable to the operations of the
members of the Consolidated Group or the Properties, or any orders,
requirements or demands of Governmental Authorities related thereto,
including, without limitation, reasonable attorney's and consultant's
fees, investigation and laboratory fees, response costs, court costs
and litigation expenses, except to the extent that any of the foregoing
arise out of the gross
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negligence or willful misconduct of the party seeking indemnification
therefor. The agreements in this paragraph shall survive repayment of
the Loans and all other amounts payable hereunder, and termination of
the Commitments.
7.9 FINANCIAL COVENANTS.
(a) Consolidated Net Worth. There shall be maintained, as of the end of
each fiscal quarter commencing with the fiscal quarter ending February 2, 1997,
Consolidated Net Worth equal to not less than the sum of (i) $27,500,000 plus
(ii) one hundred percent (100%) of the Net Proceeds of any Equity Transaction
occurring after the Closing Date plus (iii) on the last day of each fiscal
quarter, beginning with the fiscal quarter ending May 4, 1997, an amount equal
to fifty percent (50%) of Consolidated Net Income for the quarter then ended
(but not less than zero).
(b) Consolidated Leverage Ratio. There shall be maintained, as of the
end of each fiscal quarter to occur during the periods shown, a Consolidated
Leverage Ratio of not greater than:
Closing Date to February 1, 1998 3.75 to 1.0
February 2, 1998 to August 2, 1998 3.00 to 1.0
August 3, 1998 to January 31, 1999 2.50 to 1.0
February 1, 1999 and thereafter 2.00 to 1.0
(c) Consolidated Fixed Charge Coverage Ratio. There shall be
maintained, as of the end of each fiscal quarter to occur during the periods
shown, a Consolidated Fixed Charge Coverage Ratio of at least:
Closing Date to November 2, 1997 1.00 to 1.0
November 3, 1997 and thereafter 1.50 to 1.0
(d) Consolidated Interest Coverage Ratio. There shall be maintained, as
of the end of each fiscal quarter to occur during the periods shown, a
Consolidated Interest Coverage Ratio of at least:
Closing Date to November 1, 1998 3.0 to 1.0
November 2, 1998 and thereafter 3.5 to 1.0
(e) Capital Expenditures. The aggregate amount of Capital Expenditures
for the Borrower and its consolidated subsidiaries will not exceed the amounts
shown in the fiscal years set forth below:
1998 $18,000,000
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1999 $18,000,000
2000 and thereafter $16,000,000
provided, however, if the Consolidated Fixed Charge Coverage Ratio shall fall
below 2.0 to 1.0 for a period of two consecutive fiscal quarters then this
Section 7.9(e) shall have no further force and effect.
7.10 AGENCY FEES.
Pay to the Agent the annual agency fee and comply with the other
agreements provided for in the Agent's Fee Letter.
7.11 ADDITIONAL GUARANTIES AND STOCK PLEDGES.
(a) Domestic Subsidiaries. At any time any Person becomes a
Domestic Subsidiary, the Borrower will promptly notify the Agent
thereof and within 15 days of such event, cause such Domestic
Subsidiary to become a Guarantor hereunder by (i) execution of a
Joinder Agreement, (ii) delivery of supporting resolutions, incumbency
certificates, corporation formation and organizational documentation
and opinions of counsel as the Agent may reasonably request, (iii)
delivery of security agreements, mortgages and other related documents
(in a form acceptable to the Agent) necessary to perfect a lien on or
security interest in all material assets of such Domestic Subsidiary
and (iv) delivery of stock certificates and a related pledge agreement
or pledge joinder agreement evidencing the pledge of 100% of the Voting
Stock of such Domestic Subsidiary and of 100% of the Voting Stock of
each of its Domestic Subsidiaries and 65% of the Voting Stock of each
of its Foreign Subsidiaries, together in each case with undated stock
transfer powers executed in blank; provided, however, that this Section
7.11(a) shall not apply to the Target until the earlier of June 30,
1997 or the completion of the Merger.
(b) Foreign Subsidiaries. At any time that (i) either of the
Foreign Subsidiaries named on Schedule 7.11-3 has assets with a book
value of $100,000 or more, or (ii) any other Person becomes a Foreign
Subsidiary, then in each such case the Borrower will promptly notify
the Agent thereof and cause (A) delivery of supporting resolutions,
incumbency certificates, corporation formation and organizational
documentation and opinions of counsel as the Agent may reasonably
request, and (B) delivery of stock certificates (where required for
perfection under local law) and a related pledge agreement or pledge
joinder agreement evidencing the pledge of 65% of the Voting Stock of
such Foreign Subsidiary and of 65% of the Voting Stock of each of its
Domestic Subsidiaries and 65% of the Voting Stock of each of its
Foreign Subsidiaries, together in each case with undated stock transfer
powers executed in blank.
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7.12 OWNERSHIP OF SUBSIDIARIES.
Except to the extent otherwise permitted in Section 8.7 and except as
set forth on Schedule 6.14, the Borrower shall, directly or indirectly, own at
all times 100% of the Voting Stock of each of its Subsidiaries.
7.13 USE OF PROCEEDS.
Extensions of Credit will be used solely for the purposes provided in
Section 6.15.
7.14 EMPLOYMENT CONTRACTS, ETC.
The Borrower shall deliver or cause to be delivered to the Agent on or
prior to June 30, 1997 copies of executed employment contracts (with non-compete
provisions) with each of John Grosso, Jan Reivenbark and Eric Jeltrup. Such
contracts shall have an employment term of at least two years from the date of
execution and a non-compete term of at least four years from the date of
execution and such other terms and provisions as are typical for employment
contracts of this type and for companies similar to the Borrower.
SECTION 8
NEGATIVE COVENANTS
------------------
Each of the Credit Parties covenants and agrees that on the Closing
Date, and so long as this Credit Agreement is in effect and until the
Commitments have been terminated, no Obligations remain outstanding and all
amounts owing hereunder or in connection herewith, have been paid in full, no
member of the Consolidated Group shall:
8.1 INDEBTEDNESS.
Contract, create, incur, assume or permit to exist any Indebtedness,
except:
(a) Indebtedness arising or existing under this Credit
Agreement and the other Credit Documents;
(b) Indebtedness set forth in Schedule 8.1, and renewals,
refinancings and extensions thereof on terms and conditions no less
favorable than for such existing Indebtedness;
(c) Capital Lease Obligations and Indebtedness incurred, in
each case, to provide all or a portion of the purchase price or costs
of construction of an asset, provided that (i) such Indebtedness when
incurred shall not exceed the purchase price or cost of construction of
such asset, (ii) no such Indebtedness shall be refinanced for a
principal amount in excess of the principal balance outstanding thereon
at the time of such
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refinancing, and (iii) the total amount of all such Indebtedness shall
not exceed $2,500,000 at any time outstanding;
(d) Indebtedness and obligations owing under interest rate
protection agreements relating to the Obligations hereunder and under
interest rate, commodities and foreign currency exchange protection
agreements entered into in the ordinary course of business to manage
existing or anticipated risks and not for speculative purposes;
(e) unsecured intercompany Indebtedness owing by the Target to
the Borrower in an aggregate amount outstanding not to exceed
$20,000,000;
(f) (i) unsecured intercompany Indebtedness owing by one
Credit Party to another Credit Party and (ii) unsecured intercompany
Indebtedness owing by a Credit Party to a Subsidiary of the Borrower
which is not a Credit Party, in each case to the extent permitted under
Section 8.5 hereof;
(g) other unsecured Indebtedness of the Borrower of up to
$1,000,000 in the aggregate at any time outstanding; and
(h) Guaranty Obligations of Indebtedness permitted under this
Section 8.1.
8.2 LIENS.
Contract, create, incur, assume or permit to exist any Lien with
respect to any of their respective property or assets of any kind (whether real
or personal, tangible or intangible), whether now owned or hereafter acquired,
except for Permitted Liens.
8.3 NATURE OF BUSINESS.
Alter the character of their business in any material respect from that
conducted as of the Closing Date.
8.4 CONSOLIDATION, MERGER, SALE OR PURCHASE OF ASSETS, CAPITAL
EXPENDITURES, ETC.
(a) Dissolve, liquidate or wind up their affairs, except (i) in
connection with a disposition of assets permitted by the terms of subsection (c)
hereof and (ii) for the dissolution and liquidation of a wholly-owned Subsidiary
of a Credit Party where the parent company Credit Party receives the assets of
such Subsidiary;
(b) Enter into any transaction of merger or consolidation; provided,
however, that, so long as no Default or Event of Default would be directly or
indirectly caused as a result thereof, a member of the Consolidated Group may
merge or consolidate with another member of the Consolidated Group, provided
that (A) if the Borrower is a party thereto, the Borrower shall be the surviving
corporation and (B) if one of the parties thereto is a Credit Party, such Credit
Party shall be the surviving corporation;
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(c) Sell, lease, transfer or otherwise dispose of any Property
(including without limitation pursuant to any sale/leaseback transaction or
securitization transaction ) other than (i) the sale of inventory in the
ordinary course of business for fair consideration, (ii) the sale or disposition
of machinery and equipment no longer used or useful in the conduct of such
Person's business, and (iii) other sales of assets, provided that after giving
effect to such sale or other disposition, the aggregate book value of assets
sold or otherwise disposed of pursuant to this clause (iii) in any given fiscal
year does not exceed an amount equal to $250,000;
(d) Except as otherwise permitted by Section 7.11, Section 8.4(b) and
Section 8.5 hereof, (i) acquire all or any portion of the capital stock or
securities of any other Person or (ii) purchase, lease or otherwise acquire (in
a single transaction or a series of related transactions) all or any substantial
part of the Property of any other Person; or
(e) Take or permit any action, or fail to take any action, the effect
of which would be to cause a Domestic Credit Party to lose its status as such,
other than as expressly permitted in this Section.
8.5 ADVANCES, INVESTMENTS AND LOANS.
Lend money or extend credit or make advances to any Person, or purchase
or acquire any stock, obligations or securities of, or any other interest in, or
make any capital contribution to, or otherwise make an Investment in, any Person
except for Permitted Investments.
8.6 TRANSACTIONS WITH AFFILIATES.
Enter into or permit to exist any transaction or series of
transactions, whether or not in the ordinary course of business, with any
officer, director, shareholder, Subsidiary or Affiliate other than (i)
transactions permitted by Section 8.1, Section 8.4(b), Section 8.5 or Section
8.10, (ii) customary fees and expenses paid to directors and (iii) where such
transactions are on terms and conditions substantially as favorable as would be
obtainable in a comparable arm's-length transaction with a Person other than an
officer, director, shareholder or Affiliate.
8.7 OWNERSHIP OF EQUITY INTERESTS.
Issue, sell, transfer, pledge or otherwise dispose of any partnership
interests, shares of capital stock or other equity or ownership interests
("Equity Interests") in any member of the Consolidated Group, except (i)
issuance, sale or transfer of Equity Interests to a Credit Party by a Subsidiary
of such Credit Party, (ii) in connection with a transaction permitted by Section
8.4, and (iii) as needed to qualify directors under applicable law.
8.8 FISCAL YEAR.
Change its fiscal year end from the Sunday falling closest to January
31st of each year.
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8.9 PREPAYMENTS OF INDEBTEDNESS, ETC.
(a) After the issuance thereof, amend or modify (or permit the
amendment or modification of), the terms of any other Indebtedness in a manner
adverse to the interests of the Lenders (including specifically shortening any
maturity or average life to maturity or requiring any payment sooner than
previously scheduled or increasing the interest rate or fees applicable
thereto);
(b) Make any prepayment, redemption, defeasance or acquisition for
value of (including without limitation, by way of depositing money or securities
with the trustee with respect thereto before due for the purpose of paying when
due), or refund, refinance or exchange of any Funded Debt other than (i)
intercompany Indebtedness permitted hereunder, (ii) regularly scheduled payments
of principal and interest on such Funded Debt, and (iii) to the extent permitted
by Section 8.10.
8.10 RESTRICTED PAYMENTS.
Make or permit any Restricted Payments, provided, that the Borrower may
pay dividends on shares of common stock of the Borrower so long as : (a)
immediately before and after making such payment, no Default or Event of Default
then exists or would result from the making of such payment, (b) the Borrower
and its Subsidiaries, after giving effect to such payment on a pro forma basis,
will be in compliance with each of the financial covenants contained in Section
7.9 hereof and (c) the aggregate amount of such dividends paid in any fiscal
year shall not exceed 25% of Consolidated Excess Cash Flow for the fiscal year
prior to the year in which such dividends are paid.
8.11 SALE LEASEBACKS.
Directly or indirectly become or remain liable as lessee or as
guarantor or other surety with respect to any lease, whether an Operating Lease
or a Capital Lease, of any Property (whether real or personal or mixed), whether
now owned or hereafter acquired, (i) which such Person has sold or transferred
or is to sell or transfer to any other Person other than a Credit Party or (ii)
which such Person intends to use for substantially the same purpose as any other
Property which has been sold or is to be sold or transferred by such Person to
any other Person in connection with such lease.
8.12 NO FURTHER NEGATIVE PLEDGES.
Except with respect to prohibitions against other encumbrances on
specific Property encumbered to secure payment of particular Indebtedness (which
Indebtedness relates solely to such specific Property, and improvements and
accretions thereto, and is otherwise permitted hereby), no member of the
Consolidated Group will enter into, assume or become subject to any agreement
prohibiting or otherwise restricting the creation or assumption of any Lien upon
its properties or assets, whether now owned or hereafter acquired, or requiring
the grant of any security for such obligation if security is given for some
other obligation.
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8.13 AMENDMENTS TO LICENSE AGREEMENTS.
Terminate or permit to expire the Kmart License Agreement or the US
Wal*Mart License Agreement, or close its operations at fifty or more individual
photography studios located in the United States in any single fiscal year
(provided, that, in determining the immediately foregoing, the number of studios
closed during such fiscal year will be offset against the number of studios
opened during such fiscal year) unless, after giving effect to such closings and
any such prior closings or other studio closings, determined as of the end of
the next succeeding fiscal quarter, the Borrower is able to establish to the
satisfaction of the Agent that the Borrower will be in compliance on a pro forma
basis with each of the financial covenants contained in Section 7.9 hereof;
provided, however, that notwithstanding the foregoing to the contrary, up to an
additional 415 studios may be closed in calendar year 1997.
SECTION 9
EVENTS OF DEFAULT
-----------------
9.1 EVENTS OF DEFAULT.
An Event of Default shall exist upon the occurrence of any of the
following specified events (each an "Event of Default"):
(a) Payment. Any Credit Party shall
(i) default in the payment when due of any principal of any of
the Loans or of any reimbursement obligations arising from drawings
under Letters of Credit, or
(ii) default, and such defaults shall continue for three (3)
or more Business Days, in the payment when due of any interest on the
Loans or on any reimbursement obligations arising from drawings under
Letters of Credit, or of any Fees or other amounts owing hereunder,
under any of the other Credit Documents or in connection herewith or
therewith; or
(b) Representations. Any representation, warranty or statement
made or deemed to be made herein, in any of the other Credit Documents, or in
any statement or certificate delivered or required to be delivered pursuant
hereto or thereto shall prove untrue in any material respect on the date as of
which it was deemed to have been made; or
(c) Covenants.
(i) Default in the due performance or observance of any term,
covenant or agreement contained in Section 7.3(a), 7.9, 7.13 or 8.1
through 8.13, inclusive, or
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(ii) Default in the due performance or observance by it of any
term, covenant or agreement (other than those referred to in
subsections (a), (b) or (c)(i) of this Section 9.1) contained in this
Credit Agreement and such default shall continue unremedied for a
period of at least 30 days after the earlier of a Responsible Officer
of a Credit Party having knowledge of such default or notice thereof by
the Agent; or
(d) Other Credit Documents. (i) Any Credit Party shall default
in the due performance or observance of any material term, covenant or
agreement in any of the other Credit Documents (subject to applicable grace or
cure periods, if any), or (ii) any Credit Document shall fail to be in full
force and effect or to give the Agent and/or the Lenders any material part of
the Liens, rights, powers and privileges purported to be created thereby; or
(e) Guaranties. Except as to the Credit Party which is dissolved,
merged or consolidated out of existence as the result of or in connection with a
dissolution, merger or consolidation permitted by Section 8.4(a) or Section
8.4(b), the guaranty given by any Guarantor hereunder or any material provision
thereof shall cease to be in full force and effect, or any Guarantor hereunder
or any Person acting by or on behalf of such Guarantor shall deny or disaffirm
such Guarantor's obligations under such guaranty, or any Guarantor shall default
in the due performance or observance of any term, covenant or agreement on its
part to be performed or observed pursuant to any guaranty; or
(f) Bankruptcy, etc. Any Bankruptcy Event shall occur with respect
to any member of the Consolidated Group; or
(g) Defaults under Other Agreements.
(i) (A) There shall occur a default (beyond the applicable
grace period with respect thereto, if any) under either the Kmart
License Agreement or the Wal*Mart License Agreement, or (B) any member
of the Consolidated Group shall default in the performance or
observance (beyond the applicable grace period with respect thereto, if
any) of any other material obligation or condition of any contract or
lease material to the Consolidated Group, taken as a whole; or
(ii) With respect to any Indebtedness (other than Indebtedness
outstanding under this Credit Agreement) in excess of $250,000 in the
aggregate for the Consolidated Group taken as a whole, (A) (1) any
member of the Consolidated Group shall default in any payment (beyond
the applicable grace period with respect thereto, if any) with respect
to any such Indebtedness, or (2) the occurrence and continuance of a
default in the observance or performance relating to such Indebtedness
or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event or condition shall occur or
condition exist, the effect of which default or other event or
condition is to cause, or permit, the holder or holders of such
Indebtedness (or trustee or agent on behalf of such holders) to cause
(determined without regard to whether any notice or lapse of time is
required), any such Indebtedness to become due prior to its stated
maturity; or (B) any
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such Indebtedness shall be declared due and payable, or required to be prepaid
other than by a regularly scheduled required prepayment, prior to the stated
maturity thereof; or
(h) Judgments. Any member of the Consolidated Group shall fail
within 30 days of the date due and payable to pay, bond or otherwise discharge
any judgment, settlement or order for the payment of money which judgment,
settlement or order, when aggregated with all other such judgments, settlements
or orders due and unpaid at such time, exceeds $250,000, and which is not
stayed on appeal (or for which no motion for stay is pending) or is not
otherwise being executed; or
(i) ERISA. Any of the following events or conditions, if such
event or condition could reasonably be expected to have a Material Adverse
Effect: (1) any "accumulated funding deficiency," as such term is defined in
Section 302 of ERISA and Section 412 of the Code, whether or not waived, shall
exist with respect to any Plan, or any lien shall arise on the assets of a
member of the Consolidated Group or any ERISA Affiliate in favor of the PBGC or
a Plan; (2) an ERISA Event shall occur with respect to a Single Employer Plan,
which is, in the reasonable opinion of the Agent, likely to result in the
termination of such Plan for purposes of Title IV of ERISA; (3) an ERISA Event
shall occur with respect to a Multiemployer Plan or Multiple Employer Plan,
which is, in the reasonable opinion of the Agent, likely to result in (i) the
termination of such Plan for purposes of Title IV of ERISA, or (ii) a member of
the Consolidated Group or any ERISA Affiliate incurring any liability in
connection with a withdrawal from, reorganization of (within the meaning of
Section 4241 of ERISA), or insolvency of (within the meaning of Section 4245 of
ERISA) such Plan; or (4) any prohibited transaction (within the meaning of
Section 406 of ERISA or Section 4975 of the Code) or breach of fiduciary
responsibility shall occur which may subject a member of the Consolidated Group
or any ERISA Affiliate to any liability under Sections 406, 409, 502(i), or
502(l) of ERISA or Section 4975 of the Code, or under any agreement or other
instrument pursuant to which a member of the Consolidated Group or any ERISA
Affiliate has agreed or is required to indemnify any person against any such
liability; or
(j) Ownership. There shall occur, without the prior written
consent of the Lenders, which consent shall not be unreasonably withheld or
delayed, a Change of Control.
9.2 ACCELERATION; REMEDIES.
Upon the occurrence of an Event of Default, and at any time thereafter,
the Agent shall, upon the request and direction of the Required Lenders, by
written notice to the Credit Parties take any of the following actions:
(i) Termination of Commitments. Declare the Commitments
terminated whereupon the Commitments shall be immediately terminated.
(ii) Acceleration. Declare the unpaid principal of and any
accrued interest in respect of all Loans, any reimbursement obligations
arising from drawings under Letters of Credit and any and all other
indebtedness or obligations
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of any and every kind owing by the Credit Parties to the Agent and/or
any of the Lenders hereunder to be due whereupon the same shall be
immediately due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by each of the
Credit Parties.
(iii) Cash Collateral. Direct the Borrower to pay (and the
Borrower agrees that upon receipt of such notice, or upon the
occurrence of an Event of Default under Section 9.1(f), it will
immediately pay) to the Agent additional cash, to be held by the Agent,
for the benefit of the Lenders, in a cash collateral account as
additional security for the LOC Obligations in respect of subsequent
drawings under all then outstanding Letters of Credit in an amount
equal to the maximum aggregate amount which may be drawn under all
Letters of Credits then outstanding.
(iv) Enforcement of Rights. Enforce any and all rights and
interests created and existing under the Credit Documents and all
rights of set-off.
Notwithstanding the foregoing, if an Event of Default specified in Section
9.1(f) shall occur, then the Commitments shall automatically terminate and all
Loans, all reimbursement obligations arising from drawings under Letters of
Credit, all accrued interest in respect thereof, all accrued and unpaid Fees and
other indebtedness or obligations owing to the Agent and/or any of the Lenders
hereunder automatically shall immediately become due and payable without
presentment, demand, protest or the giving of any notice or other action by the
Agent or the Lenders, all of which are hereby waived by the Credit Parties.
SECTION 10
AGENCY PROVISIONS
-----------------
10.1 APPOINTMENT.
Each Lender hereby designates and appoints NationsBank, N.A. as Agent
(in such capacity, the "Agent") of such Lender to act as specified herein and
the other Credit Documents, and each such Lender hereby authorizes the Agent as
the Agent for such Lender, to take such action on its behalf under the
provisions of this Credit Agreement and the other Credit Documents and to
exercise such powers and perform such duties as are expressly delegated by the
terms hereof and of the other Credit Documents, together with such other powers
as are reasonably incidental thereto. Each Lenders further directs and
authorizes the Agent to execute releases (or similar agreements) to give effect
to the provisions of this Credit Agreement and the other Credit Documents.
Notwithstanding any provision to the contrary elsewhere herein and in the other
Credit Documents, the Agent shall not have any duties or responsibilities,
except those expressly set forth herein and therein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Credit Agreement or any of the other Credit Documents, or shall otherwise exist
against the Agent. The provisions of this Section are solely for the benefit of
the Agent and the Lenders and none of the Credit Parties shall
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have any rights as a third party beneficiary of the provisions hereof. In
performing its functions and duties under this Credit Agreement and the other
Credit Documents, the Agent shall act solely as Agent of the Lenders and does
not assume and shall not be deemed to have assumed any obligation or
relationship of agency or trust with or for any Credit Party or any of their
respective Affiliates.
10.2 DELEGATION OF DUTIES.
The Agent may execute any of their respective duties hereunder or under
the other Credit Documents by or through agents or attorneys-in-fact and shall
be entitled to advice of counsel concerning all matters pertaining to such
duties. The Agent shall not be responsible for the negligence or misconduct of
any agents or attorneys-in-fact selected by it with reasonable care.
10.3 EXCULPATORY PROVISIONS.
The Agent and its officers, directors, employees, agents,
attorneys-in-fact or affiliates shall not be (i) liable for any action lawfully
taken or omitted to be taken by it or such Person under or in connection
herewith or in connection with any of the other Credit Documents (except for its
or such Person's own gross negligence or willful misconduct), or (ii)
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by any of the Credit Parties contained herein
or in any of the other Credit Documents or in any certificate, report, document,
financial statement or other written or oral statement referred to or provided
for in, or received by the Agent under or in connection herewith or in
connection with the other Credit Documents, or enforceability or sufficiency
therefor of any of the other Credit Documents, or for any failure of any Credit
Party to perform its obligations hereunder or thereunder. The Agent shall not be
responsible to any Lender for the effectiveness, genuineness, validity,
enforceability, collectability or sufficiency of this Credit Agreement, or any
of the other Credit Documents or for any representations, warranties, recitals
or statements made herein or therein or made by the Borrower or any Credit Party
in any written or oral statement or in any financial or other statements,
instruments, reports, certificates or any other documents in connection herewith
or therewith furnished or made by the Agent to the Lenders or by or on behalf of
the Credit Parties to the Agent or any Lender or be required to ascertain or
inquire as to the performance or observance of any of the terms, conditions,
provisions, covenants or agreements contained herein or therein or as to the use
of the proceeds of the Loans or the use of the Letters of Credit or of the
existence or possible existence of any Default or Event of Default or to inspect
the properties, books or records of the Credit Parties or any of their
respective Affiliates.
10.4 RELIANCE ON COMMUNICATIONS.
The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to any of the Credit Parties, independent accountants and
other experts selected by the Agent with reasonable care). The Agent may deem
and treat the Lenders as the owner of their respective interests
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hereunder for all purposes unless a written notice of assignment, negotiation or
transfer thereof shall have been filed with the Agent in accordance with Section
11.3(b) hereof. The Agent shall be fully justified in failing or refusing to
take any action under this Credit Agreement or under any of the other Credit
Documents unless it shall first receive such advice or concurrence of the
Required Lenders as it deems appropriate or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action. The
Agent shall in all cases be fully protected in acting, or in refraining from
acting, hereunder or under any of the other Credit Documents in accordance with
a request of the Required Lenders (or to the extent specifically provided in
Section 11.6, all the Lenders) and such request and any action taken or failure
to act pursuant thereto shall be binding upon all the Lenders (including their
successors and assigns).
10.5 NOTICE OF DEFAULT.
The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default hereunder unless the Agent has
received notice from a Lender or a Credit Party referring to the Credit
Document, describing such Default or Event of Default and stating that such
notice is a "notice of default." In the event that the Agent receives such a
notice, the Agent shall give prompt notice thereof to the Lenders. The Agent
shall take such action with respect to such Default or Event of Default as shall
be reasonably directed by the Required Lenders.
10.6 NON-RELIANCE ON AGENT AND OTHER LENDERS.
Each Lender expressly acknowledges that each of the Agent and its
officers, directors, employees, agents, attorneys-in-fact or affiliates has not
made any representations or warranties to it and that no act by the Agent or any
affiliate thereof hereinafter taken, including any review of the affairs of any
Credit Party or any of their respective Affiliates, shall be deemed to
constitute any representation or warranty by the Agent to any Lender. Each
Lender represents to the Agent that it has, independently and without reliance
upon the Agent or any other Lender, and based on such documents and information
as it has deemed appropriate, made its own appraisal of and investigation into
the business, assets, operations, property, financial and other conditions,
prospects and creditworthiness of the Borrower, the other Credit Parties or
their respective Affiliates and made its own decision to make its Loans
hereunder and enter into this Credit Agreement. Each Lender also represents that
it will, independently and without reliance upon the Agent or any other Lender,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Credit Agreement, and to make such
investigation as it deems necessary to inform itself as to the business, assets,
operations, property, financial and other conditions, prospects and
creditworthiness of the Borrower, the other Credit Parties and their respective
Affiliates. Except for notices, reports and other documents expressly required
to be furnished to the Lenders by the Agent hereunder, the Agent shall not have
any duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, assets, property, financial or
other conditions, prospects or creditworthiness of the Borrower, the other
Credit Parties or any of their respective Affiliates which may come into the
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possession of the Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates.
10.7 INDEMNIFICATION.
The Lenders agree to indemnify the Agent in its capacity as such (to
the extent not reimbursed by the Borrower and without limiting the obligation of
the Borrower to do so), ratably according to their respective Commitments (or if
the Commitments have expired or been terminated, in accordance with the
respective principal amounts of outstanding Loans and Participation Interests of
the Lenders), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever which may at any time (including without limitation at
any time following the final payment of all of the obligations of the Borrower
hereunder and under the other Credit Documents) be imposed on, incurred by or
asserted against the Agent in its capacity as such in any way relating to or
arising out of this Credit Agreement or the other Credit Documents or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent under
or in connection with any of the foregoing; provided that no Lender shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the gross negligence or willful misconduct of the Agent. If any
indemnity furnished to the Agent for any purpose shall, in the opinion of the
Agent, be insufficient or become impaired, the Agent may call for additional
indemnity and cease, or not commence, to do the acts indemnified against until
such additional indemnity is furnished. The agreements in this Section shall
survive the repayment of the Loans, LOC Obligations and other obligations under
the Credit Documents and the termination of the Commitments hereunder.
10.8 AGENT IN ITS INDIVIDUAL CAPACITY.
The Agent and its affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Borrower, its Subsidiaries
or their respective Affiliates as though the Agent were not the Agent hereunder.
With respect to the Loans made by and all obligations of the Borrower hereunder
and under the other Credit Documents, the Agent shall have the same rights and
powers under this Credit Agreement as any Lender and may exercise the same as
though it were not the Agent, and the terms "Lender" and "Lenders" shall include
the Agent in its individual capacity.
10.9 SUCCESSOR AGENT.
The Agent may, at any time, resign upon 20 days' written notice to the
Lenders. Upon any such resignation, the Required Lenders shall have the right to
appoint a successor Agent. If no successor Agent shall have been so appointed by
the Required Lenders, and shall have accepted such appointment, within 30 days
after the notice of resignation, then the retiring Agent shall select a
successor Agent provided such successor is a Lender hereunder or a commercial
bank organized under the laws of the United States of America or of any State
thereof and has a combined capital and surplus of at least $400,000,000. Upon
the acceptance of any appointment as Agent hereunder
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by a successor, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations as
Agent, as appropriate, under this Credit Agreement and the other Credit
Documents and the provisions of this Section 10.9 shall inure to its benefit as
to any actions taken or omitted to be taken by it while it was Agent under this
Credit Agreement.
SECTION 11
MISCELLANEOUS
-------------
11.1 NOTICES.
Except as otherwise expressly provided herein, all notices and other
communications shall have been duly given and shall be effective (i) when
delivered, (ii) when transmitted via telecopy (or other facsimile device) to the
number set out below, (iii) the day following the day on which the same has been
delivered prepaid to a reputable national overnight air courier service, or (iv)
the third Business Day following the day on which the same is sent by certified
or registered mail, postage prepaid, in each case to the respective parties at
the address, in the case of the Borrower, Guarantors and the Agent, set forth
below, and, in the case of the Lenders, set forth on Schedule 11.1, or at such
other address as such party may specify by written notice to the other parties
hereto:
if to the Borrower or the Guarantors:
PCA INTERNATIONAL, INC.
815 Matthews-Mint Hill Road
Matthews, North Carolina 28105
Attn: John Grosso, President
Telephone: (704) 847-8011
Telecopy: (704) 847-1548
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with a copy to:
Robinson, Bradshaw & Hinson, P.A.
101 North Tryon Street
Suite 1900
Charlotte, North Carolina 28205
Attn: Thomas B. Henson
Telephone: (704) 377-2536
Telecopy: (704) 378-4000
if to the Agent:
NationsBank, N.A.
101 N. Tryon Street
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attn: Agency Services
Telephone: (704) 386-8388
Telecopy: (704) 386-9923
with a copy to:
NationsBank, N.A.
NationsBank Corporate Center
100 North Tryon Street
Charlotte, North Carolina 28202-4003
Attn:
Telephone:
Telecopy:
and
Moore & Van Allen, PLLC
NationsBank Corporate Center
100 North Tryon Street Floor 47
Charlotte, North Carolina 28202-4003
Attn: Molly McGill
Telephone: (704) 331-1092
Telecopy: (704) 331-1159
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11.2 RIGHT OF SET-OFF.
In addition to any rights now or hereafter granted under applicable law
or otherwise, and not by way of limitation of any such rights, upon the
occurrence of an Event of Default, each Lender is authorized at any time and
from time to time, without presentment, demand, protest or other notice of any
kind (all of which rights being hereby expressly waived), to set-off and to
appropriate and apply any and all deposits (general or special) and any other
indebtedness at any time held or owing by such Lender (including, without
limitation branches, agencies or Affiliates of such Lender wherever located) to
or for the credit or the account of any Credit Party against obligations and
liabilities of such Person to such Lender hereunder, under the Notes, the other
Credit Documents or otherwise, irrespective of whether such Lender shall have
made any demand hereunder and although such obligations, liabilities or claims,
or any of them, may be contingent or unmatured, and any such set-off shall be
deemed to have been made immediately upon the occurrence of an Event of Default
even though such charge is made or entered on the books of such Lender
subsequent thereto. Any Person purchasing a participation in the Loans and
Commitments hereunder pursuant to Section 3.13 or Section 11.3(d) may exercise
all rights of set-off with respect to its participation interest as fully as if
such Person were a Lender hereunder. Following the exercise of its rights under
this Section 11.2, such Lender shall make reasonable efforts to notify the
Borrower and/or the relevant Credit Party.
11.3 BENEFIT OF AGREEMENT.
(a) Generally. This Credit Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective successors
and assigns of the parties hereto; provided that none of the Credit
Parties may assign or transfer any of its interests without prior
written consent of the Lenders; provided further that the rights of
each Lender to transfer, assign or grant participations in its rights
and/or obligations hereunder shall be limited as set forth in this
Section 11.3, provided however that nothing herein shall prevent or
prohibit any Lender from (i) pledging its Loans hereunder to a Federal
Reserve Bank in support of borrowings made by such Lender from such
Federal Reserve Bank, or (ii) granting assignments or selling
participations in such Lender's Loans and/or Commitments hereunder to
its parent company and/or to any Affiliate or Subsidiary of such
Lender.
(b) Assignments. Each Lender may assign all or a portion of
its rights and obligations hereunder, pursuant to an assignment
agreement substantially in the form of Schedule 11.3(b), to (i) any
Lender or any Affiliate or Subsidiary of a Lender, or (ii) any other
commercial bank, financial institution or "accredited investor" (as
defined in Regulation D of the Securities and Exchange Commission)
reasonably acceptable to the Agent and, so long as no Default or Event
of Default has occurred and is continuing, the Borrower; provided that
(i) any such assignment (other than any assignment to an existing
Lender) shall be in a minimum aggregate amount of $5,000,000 (or, if
less, the remaining amount of the Commitment being assigned by such
Lender) of the Commitments and in integral multiples of $1,000,000
above such amount and (ii) each such assignment shall be
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of a constant, not varying, percentage of all such Lender's rights and
obligations under this Credit Agreement. Any assignment hereunder shall
be effective upon delivery to the Agent of written notice of the
assignment together with a transfer fee of $3,500 payable to the Agent
for its own account from and after the later of (i) the effective date
specified in the applicable assignment agreement and (ii) the date of
recording of such assignment in the Register pursuant to the terms of
subsection (c) below. The assigning Lender will give prompt notice to
the Agent and the Borrower of any such assignment. Upon the
effectiveness of any such assignment (and after notice to, and (to the
extent required pursuant to the terms hereof), with the consent of, the
Borrower as provided herein), the assignee shall become a "Lender" for
all purposes of this Credit Agreement and the other Credit Documents
and, to the extent of such assignment, the assigning Lender shall be
relieved of its obligations hereunder to the extent of the Loans and
Commitment components being assigned. Along such lines the Borrower
agrees that upon notice of any such assignment and surrender of the
appropriate Note or Notes, it will promptly provide to the assigning
Lender and to the assignee separate promissory notes in the amount of
their respective interests substantially in the form of the original
Note (but with notation thereon that it is given in substitution for
and replacement of the original Note or any replacement notes thereof).
By executing and delivering an assignment agreement in accordance with
this Section 11.3(b), the assigning Lender thereunder and the assignee
thereunder shall be deemed to confirm to and agree with each other and
the other parties hereto as follows: (i) such assigning Lender warrants
that it is the legal and beneficial owner of the interest being
assigned thereby free and clear of any adverse claim; (ii) except as
set forth in clause (i) above, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in
connection with this Credit Agreement, any of the other Credit
Documents or any other instrument or document furnished pursuant hereto
or thereto, or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Credit Agreement, any of the
other Credit Documents or any other instrument or document furnished
pursuant hereto or thereto or the financial condition of any Credit
Party or any of their respective Affiliates or the performance or
observance by any Credit Party of any of its obligations under this
Credit Agreement, any of the other Credit Documents or any other
instrument or document furnished pursuant hereto or thereto; (iii) such
assignee represents and warrants that it is legally authorized to enter
into such assignment agreement; (iv) such assignee confirms that it has
received a copy of this Credit Agreement, the other Credit Documents
and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into such
assignment agreement; (v) such assignee will independently and without
reliance upon the Agent, such assigning Lender or any other Lender, and
based on such documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking or not
taking action under this Credit Agreement and the other Credit
Documents; (vi) such assignee appoints and authorizes the Agent to take
such action on its behalf and to exercise such powers under this Credit
Agreement or any other Credit Document as are delegated to the Agent by
the terms hereof or thereof, together with such powers as are
reasonably incidental thereto; and (vii) such assignee agrees that it
will perform in accordance with their terms all the obligations which
by the terms of this Credit Agreement and the other Credit Documents
are required to be performed by it as a Lender.
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(c) Maintenance of Register. The Agent shall maintain at one
of its offices in Charlotte, North Carolina a copy of each Lender
assignment agreement delivered to it in accordance with the terms of
subsection (b) above and a register for the recordation of the identity
of the principal amount and type of each Loan outstanding hereunder,
the names, addresses and the Commitments of the Lenders pursuant to the
terms hereof from time to time (the "Register"). The Agent will make
reasonable efforts to maintain the accuracy of the Register and to
promptly update the Register from time to time, as necessary. The
entries in the Register shall be conclusive in the absence of manifest
error and the Borrower, the Agent and the Lenders may treat each Person
whose name is recorded in the Register pursuant to the terms hereof as
a Lender hereunder for all purposes of this Credit Agreement. The
Register shall be available for inspection by the Borrower and each
Lender, at any reasonable time and from time to time upon reasonable
prior notice.
(d) Participations. Each Lender may sell, transfer, grant or
assign participations in all or any part of such Lender's interests and
obligations hereunder; provided that (i) such selling Lender shall
remain a "Lender" for all purposes under this Credit Agreement (such
selling Lender's obligations under the Credit Documents remaining
unchanged) and the participant shall not constitute a Lender hereunder,
(ii) no such participant shall have, or be granted, rights to approve
any amendment or waiver relating to this Credit Agreement or the other
Credit Documents except to the extent any such amendment or waiver
would (A) reduce the principal of or rate of interest on or Fees in
respect of any Loans in which the participant is participating, (B)
postpone the date fixed for any payment of principal (including
extension of the Termination Date or the date of any mandatory
prepayment), interest or Fees in which the participant is
participating, or (C) release all or substantially all of the
Collateral, and (iii) sub-participations by the participant (except to
an affiliate, parent company or affiliate of a parent company of the
participant) shall be prohibited. In the case of any such
participation, the participant shall not have any rights under this
Credit Agreement or the other Credit Documents (the participant's
rights against the selling Lender in respect of such participation to
be those set forth in the participation agreement with such Lender
creating such participation) and all amounts payable by the Borrower
hereunder shall be determined as if such Lender had not sold such
participation, provided, however, that such participant shall be
entitled to receive additional amounts under Sections 3.6, 3.9 and 3.10
the same basis as if it were a Lender.
11.4 NO WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of the Agent or any Lender in
exercising any right, power or privilege hereunder or under any other Credit
Document and no course of dealing between the Agent or any Lender and any of the
Credit Parties shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege hereunder or under any other
Credit Document preclude any other or further exercise thereof or the exercise
of any other right, power or privilege hereunder or thereunder. The rights and
remedies provided herein are cumulative and not
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exclusive of any rights or remedies which the Agent or any Lender would
otherwise have. No notice to or demand on any Credit Party in any case shall
entitle the Borrower or any other Credit Party to any other or further notice or
demand in similar or other circumstances or constitute a waiver of the rights of
the Agent or the Lenders to any other or further action in any circumstances
without notice or demand.
11.5 PAYMENT OF EXPENSES, ETC.
The Borrower agrees to: (i) pay all reasonable out-of-pocket costs and
expenses (A) of the Agent in connection with the negotiation, preparation,
execution and delivery and administration of this Credit Agreement and the other
Credit Documents and the documents and instruments referred to therein
(including, without limitation, the reasonable fees and expenses of Moore & Van
Allen, PLLC, special counsel to the Agent) and any amendment, waiver or consent
relating hereto and thereto including, but not limited to, any such amendments,
waivers or consents resulting from or related to any work-out, renegotiation or
restructure relating to the performance by the Credit Parties under this Credit
Agreement and (B) of the Agent and the Lenders in connection with enforcement of
the Credit Documents and the documents and instruments referred to therein as a
result of the occurrence of a Default or Event of Default (including, without
limitation, in connection with any such enforcement, the reasonable fees and
disbursements of counsel for the Agent and each of the Lenders); (ii) pay and
hold the Agent harmless from and against all reasonable fees, costs and expenses
(including reasonable fees of employees of the Agent or its Affiliates) of
"field audits" of inventory conducted as provided in Section 7.7(b) at any time
a Default or Event of Default then exists; (iii) pay and hold each of the
Lenders harmless from and against any and all present and future stamp and other
similar taxes with respect to the foregoing matters and save each of the Lenders
harmless from and against any and all liabilities with respect to or resulting
from any delay or omission (other than to the extent attributable to such
Lender) to pay such taxes; and (iv) indemnify each Lender, its officers,
directors, employees, representatives and agents from and hold each of them
harmless against any and all losses, liabilities, claims, damages or expenses
incurred by any of them as a result of, or arising out of, or in any way related
to, or by reason of (A) any investigation, litigation or other proceeding
(whether or not any Lender is a party thereto) related to the entering into
and/or performance of any Credit Document or the use of proceeds of any Loans
(including other extensions of credit) hereunder or the consummation of any
other transactions (including without limitation the Tender Offer and the
Merger) contemplated in any Credit Document, including, without limitation, the
reasonable fees and disbursements of counsel incurred in connection with any
such investigation, litigation or other proceeding or (B) the presence or
Release of any Materials of Environmental Concern at, under or from any Property
owned, operated or leased by the Borrower or any of its Subsidiaries, or the
failure by the Borrower or any of its Subsidiaries to comply with any
Environmental Law (but excluding, in the case of either of clause (A) or (B)
above, any such losses, liabilities, claims, damages or expenses to the extent
incurred by reason of gross negligence or willful misconduct on the part of the
Person to be indemnified).
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11.6 AMENDMENTS, WAIVERS AND CONSENTS.
Neither this Credit Agreement nor any other Credit Document nor any of
the terms hereof or thereof may be amended, changed, waived, discharged or
terminated unless such amendment, change, waiver, discharge or termination is in
writing entered into by, or approved in writing by, the Required Lenders and the
Borrower, provided, however, that:
(a) no such amendment, change, waiver, discharge or
termination shall, without the consent of each Lender directly affected
thereby, (i) reduce the rate or extend the time of payment of interest
(other than as a result of waiving the applicability of any
post-default increase in interest rates) on any Loan or fees hereunder,
(ii) extend (A) the termination date of the Commitments of such Lender,
(B) the final maturity of any Loan, or any portion thereof, or (C) the
time of payment of any reimbursement obligation, or any portion
thereof, arising from drawings under Letters of Credit, or (iii) reduce
the principal amount on any Loan;
(b) no such amendment, change, waiver, discharge or
termination shall, without the consent of each Lender affected thereby,
(i) increase the Commitment of such Lender over the amount thereof in
effect (it being understood and agreed that a waiver of any Default or
Event of Default or of a mandatory reduction in the total commitments
shall not constitute a change in the terms of any Commitment of any
Lender), (ii) release all or substantially all of the collateral
pledged to secure the Obligations hereunder or release all or
substantially all of the Guarantors from the guaranty obligations
hereunder, (iii) amend, modify or waive any provision of this Section
11.6 or Section 3.6, 3.10, 3.12, 3.13, 9.1(a), 11.2, 11.3, 11.5 or
11.9, (iv) reduce any percentage specified in, or otherwise modify, the
definition of "Required Lenders," or (v) consent to the assignment or
transfer by the Borrower of any of its rights and obligations under (or
in respect of) the Credit Documents to which it is a party; and
(c) no provision of Section 2.2 may be amended without the
consent of the Issuing Lender and no provision of Section 10 may be
amended without the consent of the Agent.
11.7 COUNTERPARTS.
This Credit Agreement may be executed in any number of counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall constitute one and the same instrument. It shall not be necessary in
making proof of this Credit Agreement to produce or account for more than one
such counterpart.
11.8 HEADINGS.
The headings of the sections and subsections hereof are provided for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Credit Agreement.
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11.9 SURVIVAL.
All indemnities set forth herein, including, without limitation, in
Section 2.2(i), 3.9, 10.7 or 11.5 shall survive the execution and delivery of
this Credit Agreement, the making of the Loans, the issuance of the Letters of
Credit, the repayment of the Loans, LOC Obligations and other obligations under
the Credit Documents and the termination of the Commitments hereunder, and all
representations and warranties made by the Credit Parties herein shall survive
delivery of the Notes and the making of the Loans hereunder.
11.10 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE.
(a) THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH
CAROLINA. Any legal action or proceeding with respect to this Credit Agreement
or any other Credit Document may be brought in the courts of the State of North
Carolina in Mecklenburg County, or of the United States for the Western District
of North Carolina, and, by execution and delivery of this Credit Agreement, each
of the Credit Parties hereby irrevocably accepts for itself and in respect of
its property, generally and unconditionally, the nonexclusive jurisdiction of
such courts. Each of the Credit Parties further irrevocably consents to the
service of process out of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to it at the address set out for notices pursuant to Section
11.1, such service to become effective three (3) days after such mailing.
Nothing herein shall affect the right of the Agent to serve process in any other
manner permitted by law or to commence legal proceedings or to otherwise proceed
against any Credit Party in any other jurisdiction.
(b) Each of the Credit Parties hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with this
Credit Agreement or any other Credit Document brought in the courts referred to
in subsection (a) hereof and hereby further irrevocably waives and agrees not to
plead or claim in any such court that any such action or proceeding brought in
any such court has been brought in an inconvenient forum.
(c) TO THE EXTENT PERMITTED BY LAW, EACH OF THE AGENT, THE LENDERS, THE
BORROWER AND THE CREDIT PARTIES HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS CREDIT AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
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11.11 SEVERABILITY.
If any provision of any of the Credit Documents is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
11.12 ENTIRETY.
This Credit Agreement together with the other Credit Documents
represent the entire agreement of the parties hereto and thereto, and supersede
all prior agreements and understandings, oral or written, if any, including any
commitment letters or correspondence relating to the Credit Documents or the
transactions contemplated herein and therein.
11.13 BINDING EFFECT; TERMINATION.
(a) This Credit Agreement shall become effective at such time on or
after the Closing Date when it shall have been executed by the Borrower, the
Guarantors and the Agent, and the Agent shall have received copies hereof
(telefaxed or otherwise) which, when taken together, bear the signatures of each
Lender, and thereafter this Credit Agreement shall be binding upon and inure to
the benefit of the Borrower, the Guarantors, the Agent and each Lender and their
respective successors and assigns.
(b) The term of this Credit Agreement shall be until no Loans, LOC
Obligations or any other amounts payable hereunder or under any of the other
Credit Documents shall remain outstanding and until all of the Commitments
hereunder shall have expired or been terminated.
11.14 CONFIDENTIALITY.
The Agent and the Lenders agree to keep confidential (and to cause
their respective affiliates, officers, directors, employees, agents and
representatives to keep confidential) all information, materials and documents
furnished to the Agent or any such Lender by or on behalf of any Credit Party
(whether before or after the Closing Date) which relates to the Borrower or any
of its Subsidiaries (the "Information"). Notwithstanding the foregoing, the
Agent and each Lender shall be permitted to disclose Information (i) to its
affiliates, officers, directors, employees, agents and representatives in
connection with its participation in any of the transactions evidenced by this
Credit Agreement or any other Credit Documents or the administration of this
Credit Agreement or any other Credit Documents; (ii) to the extent required by
applicable laws and regulations or by any subpoena or similar legal process, or
requested by any Governmental Authority; (iii) to the extent such Information
(A) becomes publicly available other than as a result of a breach of this Credit
Agreement or any agreement entered into pursuant to clause (iv) below, (B)
becomes available to the Agent or such Lender on a non-confidential basis from a
source other than a Credit Party or (C) was available to the Agent or such
Lender on a non-confidential basis prior to its disclosure to the Agent or such
Lender by a Credit Party; (iv) to any assignee or participant (or prospective
assignee or participant) so long as such assignee or participant (or prospective
assignee or participant) first
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specifically agrees in a writing furnished to and for the benefit of the Credit
Parties to be bound by the terms of this Section 11.14; or (v) to the extent
that the Borrower shall have consented in writing to such disclosure. Nothing
set forth in this Section 11.14 shall obligate the Agent or any Lender to return
any materials furnished by the Credit Parties.
11.15 SOURCE OF FUNDS.
Each of the Lenders hereby represents and warrants to the Borrower that
at least one of the following statements is an accurate representation as to the
source of funds to be used by such Lender in connection with the financing
hereunder:
(a) no part of such funds constitutes assets allocated to any
separate account maintained by such Lender in which any employee
benefit plan (or its related trust) has any interest;
(b) to the extent that any part of such funds constitutes
assets allocated to any separate account maintained by such Lender,
such Lender has disclosed to the Borrower the name of each employee
benefit plan whose assets in such account exceed 10% of the total
assets of such account as of the date of such purchase (and, for
purposes of this subsection (b), all employee benefit plans maintained
by the same employer or employee organization are deemed to be a single
plan);
(c) to the extent that any part of such funds constitutes
assets of an insurance company's general account, such insurance
company has complied with all of the requirements of the regulations
issued under Section 401(c)(1)(A) of ERISA; or
(d) such funds constitute assets of one or more specific
benefit plans which such Lender has identified in writing to the
Borrower.
As used in this Section 11.15, the terms "employee benefit plan" and "separate
account" shall have the respective meanings assigned to such terms in Section 3
of ERISA.
11.16 CONFLICT.
To the extent that there is a conflict or inconsistency between any
provision hereof, on the one hand, and any provision of any Credit Document, on
the other hand, this Credit Agreement shall control.
[Signature Page to Follow]
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IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Credit Agreement to be duly executed and delivered as of the date first
above written.
BORROWER: PCA INTERNATIONAL, INC.,
a North Carolina corporation
By: /s/ John Grosso
-------------------------
Name: John Grosso
Title: President
GUARANTORS: PCA PHOTO CORPORATION OF
CANADA, INC.,
a North Carolina corporation
By: /s/ John Grosso
-------------------------
Name: John Grosso
Title: President
PCA SPECIALTY RETAIL PHOTO
CORPORATION, INC.,
a North Carolina corporation
By: /s/ John Grosso
-------------------------
Name: John Grosso
Title: President
PHOTO CORPORATION OF AMERICA,
a North Carolina corporation
By: /s/ John Grosso
-------------------------
Name: John Grosso
Title: President
PCA NATIONAL, INC.,
a North Carolina corporation
By: /s/ John Grosso
-------------------------
Name: John Grosso
Title: President
ASI ACQUISITION CORP.,
a North Carolina corporation
By: /s/ John Grosso
-------------------------
Name: John Grosso
Title: President
1
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AGENT: NATIONSBANK, N.A.,
as Agent
By: /s/ Mark D. Halmrast
-------------------------
Name: Mark D. Halmrast
Title: Vice President
2
<PAGE> 1
EXHIBIT 99(c)(11)
AMENDMENT
TO THE
AGREEMENT AND PLAN OF MERGER
AMENDMENT dated as of January 27, 1997, to the Agreement and Plan of
Merger, dated as of December 17, 1996 (the "Agreement"), by and among PCA
International, Inc., a North Carolina corporation ("Parent"), ASI Acquisition
Corp., a North Carolina corporation and a wholly owned subsidiary of Parent (the
"Purchaser") and American Studios, Inc., a North Carolina (the "Company").
WHEREAS, Parent, the Purchaser and the Company desire to amend Section 1.4
and Section 2.5(a) of the Agreement, all on the and terms and conditions
hereinafter set forth; and
WHEREAS, all capitalized terms used herein without definition shall have
their respective meanings in the Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
1. Section 1.4 of the Agreement is hereby amended to read in its entirety
as follows:
Section 1.4 The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined in Section 1.5 hereof), the Company
and the Purchaser shall consummate a merger (the "Merger") pursuant to which (a)
the Company shall be merged with and into the Purchaser and the separate
corporate existence of the Company shall thereupon cease, (b) the Purchaser
shall be the successor or surviving corporation in the Merger (sometimes
hereinafter referred to as the "Surviving Corporation")
<PAGE> 2
and shall continue to be governed by the laws of the State of North Carolina,
and (c) the separate corporate existence of the Purchaser with all its rights,
privileges, immunities, powers and franchises shall continue unaffected by the
Merger, except as set forth in this Section 1.4. Pursuant to the Merger, (x) the
Articles of Incorporation of the Purchaser, as in effect immediately prior to
the Effective Time, shall be the articles of incorporation of the Surviving
Corporation until thereafter amended as provided by law and such Articles of
Incorporation, and (y) the Bylaws, as in effect immediately prior to the
Effective Time, shall be the bylaws of the Surviving Corporation until
thereafter amended as provided by law, such Articles of Incorporation and such
Bylaws. The Merger shall have the effects specified in the NCBCA.
<PAGE> 3
2. Section 2.5(a) of the Agreement is hereby amended to read in its
entirety as follows:
Section 2.5 Company Plans.
(a) The Company shall, effective as of the earlier of (i) the
Effective Time or (ii) the day immediately following the expiration date of
the Offer (if at such time the Shares tendered and not withdrawn pursuant
to the Offer equal 80% or more) (such earlier date referred to herein as
the "Acceleration Time"), cause each outstanding employee stock option to
purchase Shares (an "Employee Option") granted under the Company's 1992
Stock Option Plan and the Company's Equity Compensation Plan (the "Employee
Option Plans") and each outstanding non-employee director option to
purchase Shares ("Director Options" and, collectively with Employee
Options, "Options") granted under the Company's Stock Option Plan for
Non-Employee Directors (together with the Employee Option Plans, the
"Option Plans"), to optionees who hold (A) only Options having an exercise
price less than the Offer Price or (B) Options having an exercise price
less than the Offer Price and Options having an exercise price equal to or
in excess of the Offer Price, whether or not then exercisable or vested, to
become fully exercisable and vested.
(b) The Company shall, effective as of the Effective Time, cause each
outstanding Option, held by optionees who hold only Options having an
exercise price equal to or in excess of the Offer Price ("Specified
Options"), whether or not then exercisable or vested, to become fully
exercisable and vested.
(c) Concurrently with the execution hereof, the Company has evidenced
to the Purchaser the agreement of each optionee under the Option Plans to
the cancellation of all outstanding Options as of the Acceleration Time
(or, in the case of Specified Options at the Effective
<PAGE> 4
Time), in consideration for which (except to the extent that Parent or the
Purchaser and the holder of any such Option otherwise agree), at the
Acceleration Time, Parent will cause the Company (or, at Parent's option,
the Purchaser and, in the event the Company is unable to do so, the
Purchaser (which obligation of the Purchaser Parent agrees to fund on a
timely basis)) to pay to such holders of Options an amount in respect
thereof equal to the product of (A) the excess, if any, of the Offer Price
over the exercise price of each such Option and (B) the number of Shares
previously subject to the Option immediately prior to its cancellation
(such payment to be net of withholding taxes). The Company shall at the
Effective Time cancel any Specified Options and pay to the holders of such
Specified Options an amount not in excess of $100 per optionee.
<PAGE> 5
3. The Agreement, as amended hereby, is in all respects ratified and
confirmed, and shall continue to be in full force and effect.
4. This Amendment shall be governed by and construed in accordance
with the laws of the State of North Carolina without giving effect to the
principles of conflicts of law thereof.
5. This Amendment may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
<PAGE> 6
IN WITNESS WHEREOF, Parent, the Purchaser and the Company have caused
this Amendment to be signed by their representative officers thereunto duly
authorized as of the date first written above.
PCA INTERNATIONAL, INC.
By: /s/ John Grosso
Name: John Grosso
Title: President
ASI ACQUISITION CORP.
By: /s/ John Grosso
Name: John Grosso
Title: President
AMERICAN STUDIOS, INC.
By: /s/ J. Robert Wren, Jr.
Name: J. Robert Wren, Jr.
Title: CEO and President
