FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark one)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
___
THE SECURITIES EXCHANGE ACT OF 1934.
For Quarter Ended April 4, 1998
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934.
For the transition period from ____________ to ____________
Commission file number 1-9751
CHAMPION ENTERPRISES, INC.
_____________________________________________________
(Exact name of registrant as specified in its charter)
MICHIGAN 38-2743168
_______________________________ __________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2701 University Drive, Suite 300, Auburn Hills, MI 48326
___________________________________________________ _________
Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (248) 340-9090
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
_____ ____
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
47,644,565 shares of the registrant's $1.00 par value Common
Stock were outstanding as of May 1, 1998.
PART I. FINANCIAL INFORMATION
CHAMPION ENTERPRISES, INC.
__________________________
Consolidated Income Statements
(In thousands, except per share amounts)
Three Months Ended
______________________
April 4, March 29,
1998 1997
________ _________
Net sales $463,025 $362,957
Cost of sales 389,364 308,756
_________ _________
Gross margin 73,661 54,201
Selling, general and administrative expenses 43,288 31,617
_________ _________
Operating income 30,373 22,584
Other income (expense):
Interest income 376 416
Interest expense (1,332) (346)
_________ _________
Income from continuing operations
before income taxes 29,417 22,654
Income taxes 11,800 9,000
_________ _________
Income-continuing operations 17,617 13,654
Income-discontinued operations - 185
_________ _________
Net income $ 17,617 $ 13,839
========= =========
Basic earnings per share:
Income-continuing operations $0.37 $0.28
Income-discontinued operations - 0.01
_________ _________
Net income $0.37 $0.29
========= =========
Weighted shares for basic EPS 47,087 48,058
========= =========
Diluted earnings per share:
Income-continuing operations $0.36 $0.27
Income-discontinued operations - 0.01
_________ _________
Net income $0.36 $0.28
========= =========
Weighted shares for diluted EPS 48,645 49,673
========= =========
See accompanying Notes to Consolidated Financial Statements.
CHAMPION ENTERPRISES, INC.
__________________________
Consolidated Balance Sheets
(In thousands, except par value amounts)
April 4, January 3,
1998 1998
__________ __________
ASSETS
CURRENT ASSETS
Cash, cash equivalents and
short-term investments $ 25,884 $ 60,280
Accounts receivable, trade 108,168 49,574
Inventories 182,628 73,291
Deferred taxes and other current assets 46,449 46,373
__________ __________
Total current assets 363,129 229,518
__________ __________
PROPERTY AND EQUIPMENT
Cost 222,627 202,749
Less-accumulated depreciation 63,020 59,230
__________ __________
159,607 143,519
__________ __________
GOODWILL
Cost 316,190 134,865
Less-accumulated amortization 16,861 15,193
__________ __________
299,329 119,672
__________ __________
OTHER ASSETS 16,276 8,541
__________ __________
Total assets $ 838,341 $ 501,250
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable to bank $ 102,000 $ -
Floor plan payable 81,232 1,112
Accounts payable 77,696 24,646
Accrued dealer discounts 33,725 42,927
Accrued warranty obligations 41,546 40,819
Accrued compensation and payroll taxes 27,917 25,014
Other current liabilities 90,691 48,906
__________ __________
Total current liabilities 454,807 183,424
__________ __________
LONG-TERM LIABILITIES
Long-term debt 2,654 1,813
Deferred portion of purchase price 16,600 5,400
Other long-term liabilities 47,183 30,197
__________ __________
66,437 37,410
__________ __________
SHAREHOLDERS' EQUITY
Preferred stock, no par value, 5,000 shares
authorized, none issued - -
Common stock, $1 par value, 120,000 shares
authorized, 47,535 and 46,600 shares issued
and outstanding, respectively 47,535 46,600
Capital in excess of par value 32,443 14,338
Retained earnings 238,359 220,742
Foreign currency translation adjustments (1,240) (1,264)
__________ ___________
Total shareholders' equity 317,097 280,416
__________ ___________
Total liabilities and shareholders' equity $ 838,341 $ 501,250
========== ===========
See accompanying Notes to Consolidated Financial Statements.
CHAMPION ENTERPRISES, INC.
__________________________
Consolidated Statements of Cash Flows
(In thousands)
Three Months Ended
___________________
April 4, March 29,
1998 1997
________ _________
CASH FLOWS FROM OPERATING ACTIVITIES:
Income from continuing operations $ 17,617 $ 13,654
_________ ________
Adjustments to reconcile income from continuing
operations to net cash provided by (used for)
operating activities:
Depreciation and amortization 5,647 4,076
Increase/decrease, net of acquisitions
Accounts receivable (46,563) (37,687)
Inventories (24,161) (8,886)
Accounts payable 44,484 14,480
Accrued liabilities 2,095 (8,902)
Merger reserve - (2,745)
Other, net 4,688 3,494
_________ _________
Total adjustments (13,810) (36,170)
_________ _________
Net cash provided by (used for) operating activities 3,807 (22,516)
_________ _________
CASH FLOWS FROM DISCONTINUED OPERATIONS:
Income from discontinued operations - 185
Proceeds on disposal, net 9,152 -
Decrease in net assets of discontinued operations - 3,308
_________ _________
Net cash provided by discontinued operations 9,152 3,493
_________ _________
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions (143,694) -
Additions to property and equipment (8,720) (8,008)
Proceeds on disposal of property and equipment - 1,795
_________ _________
Net cash used for investing activities (152,414) (6,213)
_________ _________
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in notes payable to bank 102,000 -
Increase in floor plan payable 1,489 -
Repayment of long-term debt (2,588) (135)
Common stock issued, net 2,958 4,014
Tax benefit of stock options 1,200 2,000
_________ _________
Net cash provided by financing activities 105,059 5,879
_________ _________
NET DECREASE IN CASH AND CASH EQUIVALENTS (34,396) (19,357)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 60,280 19,357
_________ _________
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 25,884 $ -
========= =========
ADDITIONAL CASH FLOW INFORMATION:
Cash paid for interest $ 991 $ 215
Cash paid for income taxes $ 270 $ 952
SCHEDULE OF CASH FLOWS FROM ACQUISITIONS:
Cash purchase price $184,450
Less: Deferred portion of purchase price (26,040)
Cash acquired (15,626)
Plus: Acquisition costs 910
_________
$143,694
=========
See accompanying Notes to Consolidated Financial Statements.
CHAMPION ENTERPRISES, INC.
__________________________
Notes to Consolidated Financial Statements
__________________________________________
1. For each of the dates indicated, inventories consisted of the
following (in thousands):
April 4, January 3,
1998 1998
__________ __________
Raw materials and work-in-process $ 53,136 $ 49,745
Manufactured homes 129,492 23,546
_________ __________
$182,628 $ 73,291
========= ==========
2. The difference between income taxes provided for financial reporting
purposes and expected charges at the U.S. federal statutory rate is
due primarily to state tax charges.
The components of the income tax provisions for the three months ended
April 4, 1998 and March 29, 1997 follows (in thousands):
April 4, March 29,
1998 1997
_________ _________
Statutory U.S. tax rate $ 10,300 $ 7,900
Increase in rate resulting from:
State taxes 1,100 900
Other 400 200
_________ _________
Total provision $ 11,800 $ 9,000
========= =========
Effective tax rate 40% 40%
========= =========
3. The per share amounts are calculated under Statement of Financial
Accounting Standards No. 128, "Earnings Per Share."
4. During the first quarter of 1998, Champion acquired six manufactured
housing retail organizations, which resulted in the recording of goodwill
totaling $181 million to be amortized over 25 years. The recorded purchase
price for these acquisitions consisted of cash totaling $158 million, deferred
payments of $26 million and 550,000 shares of Champion common stock valued at
$12.5 million. During the quarter, net cash of $144 million was paid. The
registrant is contingently obligated for additional purchase price payments up
to $95 million over the next five years depending upon the future performance
of the acquired businesses. Recognition of additional purchase price will
result in the recording of a comparable amount of goodwill.
5. Floor plan liabilities are borrowings from various financial
institutions secured principally by retail inventories of manufactured homes.
Interest on these liabilities generally ranges from the prime rate minus 0.5%
to the prime rate plus 1.5%.
6. The sale of the commercial vehicles business for approximately $10
million was completed in February 1998. Related amounts are classified as
discontinued operations.
7. In May 1998 the registrant entered into a five-year revolving credit
agreement which provides a $325 million unsecured line of credit, including
letters of credit. The credit agreement provides for annual reductions in the
line of credit for three years until the line is reduced to $175 million in
September 2001. At the registrant's option borrowings are subject to interest
either at the bank's prime rate or the bank's Eurodollar rate plus from 0.575%
to 1.0%. In addition, the registrant pays a facility fee ranging from 0.15%
to 0.25% of the entire line of credit and a letter of credit fee. The
agreement also contains convenants which, among other things, require
maintenance of certain financial ratios and minimum net worth and limit
additional indebtedness.
8. The Consolidated Financial Statements are unaudited, but in the
opinion of management include all adjustments necessary for a fair
presentation of the results of the interim period. Financial results of the
interim period are not necessarily indicative of results that may be expected
for any other interim period or for the fiscal year.
9. Certain amounts in the prior period's statements have been reclassified
to conform to the current period's presentation.
CHAMPION ENTERPRISES, INC.
__________________________
Management's Discussion and Analysis
____________________________________
of
Financial Condition and Results of Operations
_____________________________________________
Three months ended April 4, 1998 versus three months ended March 29, 1997
Overview
During the second half of 1997, Champion Enterprises, Inc. ("Champion" or
"registrant") announced its strategy to expand its operations by seeking
acquisitions of key manufactured housing retailers in growth areas around the
country. This strategy includes plans to acquire manufactured housing
retailers and rapidly expand their operations in order to have aggregate
annual retail sales of at least $1 billion by the year 2000. Related goals
are to improve the retail buying experience for the home buyer and to enhance
profits through better merchandising techniques, improved efficiencies,
control of costs and improved home installation to reduce service costs. In
1998 through April 30, Champion acquired seven retail operations with 122
sales centers and 1997 sales of approximately $385 million. As of early-May
1998, the registrant operates 150 retail sales centers in 21 states.
Consolidated
(Dollars in millions)
Three Months Ended
____________________
April 4, March 29, %
1998 1997 Change
_________ _________ ______
Net sales:
Manufacturing $424.4 $359.3 18%
Retail 66.6 7.8
Less: intercompany (28.0) (4.1)
Total net sales 463.0 363.0 28%
Gross margin 73.7 54.2 36%
SG&A 43.3 31.6 37%
Operating income $30.4 $22.6 34%
Operating margin 6.6% 6.2%
In the quarter ended April 4, 1998, Champion achieved record first quarter
sales and earnings. Consolidated revenues grew 28% due to higher wholesale
volume and the retail acquisitions, which resulted in selling, general and
administrative expenses ("SG&A") increasing. Total gross margin rose in 1998
due to higher wholesale volume, improved manufacturing margins, and expanded
retail operations. As a percent of sales, gross margin and SG&A increased due
primarily to retail acquisitions and expansions. Prior amounts have been
restated to classify as discontinued operations the commercial vehicles
business, the sale of which was completed in February 1998.
Income from continuing operations increased 29% to $17.6 million, compared to
$13.7 million in the prior year's first quarter. Net income for the quarter
rose 27% to $17.6 million, or $0.36 per diluted share, in 1998 compared to
$13.8 million, or $0.28 per diluted share, in 1997. Prior year includes $0.01
per diluted share of income from discontinued operations.
Manufacturing Operations
Three Months Ended
___________________
April 4, March 29, %
1998 1997 Change
________ _________ ______
Net sales (in millions) $ 424.4 $ 359.3 18%
Wholesale home shipments 16,175 14,247 14%
Wholesale multi-section mix 60% 55%
Wholesale floors sold 26,130 22,223 18%
Average wholesale sales price $26,240 $25,215 4%
Manufacturing revenues increased in the first quarter due to higher volume,
with wholesale home shipments and floors sold up 14% and 18%, respectively,
from a year ago. A floor is a section of a home. A single-section home is
comprised of one floor, while a multi-section home is comprised of two or more
floors. Of the total wholesale shipments, 94% were to independent retailers
and the remaining 6% were to company-operated sales centers. The wholesale
multi-section mix was 60%, compared to 55% in the first quarter of 1997.
Manufacturing margins rose due to improved material costs, production
efficiencies, and higher volume, which lowered fixed costs as a percent of
sales. Prior year's margins were reduced due to start-up costs at three
plants, low levels of unfilled orders, and the restructuring of the product
line at Redman's Indiana facilities.
The registrant's U.S. wholesale shipments of HUD code homes rose 13% from a
year earlier, which resulted in a U.S. market share improvement to 18.3% from
17.1% last year. According to data reported by the National Conference of
States on Building Codes and Standards ("NCSBCS"), industry wholesale
shipments of homes for the quarter increased 5.4% from the first quarter of
1997.
Although dealer orders can be cancelled at anytime without penalty, and
unfilled orders are not necessarily an indication of future business, the
registrant's unfilled orders for wholesale housing at April 4, 1998 totaled
approximately $75 million. This amount is 36% higher than a year ago due to
increased orders taken at industry trade shows and strong order activity
around the country.
Retail Operations
Three Months Ended
____________________
April 4, March 29,
1998 1997
________ _________
Net sales (in millions) $ 66.6 $ 7.8
New retail homes sold 1,484 123
Average retail sales price-new homes $43,520 $62,740
Retail sales substantially increased due to the six retail acquisitions
completed throughout the quarter. Because of the acquisition dates, only 118
stores contributed to first quarter results. Of the new retail homes sold in
the first quarter of 1998, 52% were multi-section and 620 homes, or 42%, were
Champion produced. A current non-Champion supplier of homes to certain
Champion sales centers has decided to discontinue supplying its homes to these
retailers. As a result, these particular company-operated stores are expected
to sell more Champion produced homes over time. The registrant plans to have
sufficient manufacturing capacity to provide homes to its sales centers.
Retail margins were strong as a result of volume and finance related income.
The registrant experienced solid retail traffic and sales nationwide. During
the first quarter of 1998, a non-cash accounting charge of approximately $3.3
million was recorded to eliminate the manufacturing profits in inventories of
Champion produced homes at company-operated sales centers. Similar charges
are expected to be recorded through the end of 1998 to the extent that
pre-acquisition retail inventory is replaced by Champion produced homes.
Other Matters
Interest expense increased in 1998 due to increased amounts outstanding on the
registrant's line of credit, floor plan payable and deferred portions of
retail acquisition purchase prices. Income tax expense in 1998 increased due
to higher pretax income, with a 40% effective tax rate in both quarters.
Manufactured Housing Industry Outlook
According to NCSBCS, first quarter 1998 industry wholesale shipments of HUD
code homes and floors increased 5.4% and 8.5%, respectively, compared to a
year ago. Current industry analysts' estimates for 1998 industry wholesale
home shipments range from 2% to 7% growth over 1997.
The registrant believes that retail demand continues to improve from a year
ago and excess inventories reported in 1997 are declining. Management believes
that moderate changes in interest rates will not have a significant direct
impact on demand for manufactured housing. Long-term industry growth and
short-term sales may be affected by many factors, which are discussed under
Forward Looking Statements in this Form 10-Q.
Liquidity and Capital Resources
Cash balances totaled $26 million at April 4, 1998, a reduction of $34 million
from year end. During the quarter, $4 million of cash was generated from
operations, $9 million was provided from discontinued operations, and $4
million from stock option exercises and related tax benefits. Bank borrowings
increased $102 million during the quarter. Net cash totaling $144 million was
used for retail acquisitions and $9 million for capital improvements. Earnings
before interest, taxes, depreciation and amortization totaled $36 million for
the quarter, up from $27 million a year ago.
Assets and liabilities substantially increased during the quarter due to the
retail acquisitions and higher wholesale revenues in March 1998 as compared to
December 1997. Accrued dealer discounts decreased during 1998 due to payments
made under annual programs. At quarter end debt was 40% of total capital.
The Company has a five-year $325 million unsecured bank line of credit, which
was completed in May 1998 and includes letters of credit. At quarter end the
registrant had $15 million of letters of credit outstanding, generally to
support insurance obligations and licensing and service bonding required by
various states.
Additional borrowings may be necessary during 1998 to fund retail acquisitions
and the opening of 25 new sales centers. Also, total expenditures of up to
$38 million are planned for new construction and expansions of manufacturing
facilities. Production began at a new North Carolina facility in March 1998
and another new plant in that state should be operational during second
quarter. Construction of a new facility in Texas should begin early this
summer, bringing the total number of manufacturing plants to 58.
The Company believes that existing cash balances, cash flow from operations
and additional availability under its line of credit are adequate to meet its
anticipated financing needs, operating requirements, capital expenditures and
acquisitions in the foreseeable future. However, management may explore other
opportunities to raise capital to finance growth. The registrant's long-term
goal is to increase earnings per share at a minimum compound annual growth
rate of 15%. Consistent with its plan to improve shareholder value through
investments in sound operating businesses, the registrant does not plan to pay
cash dividends in the near term.
Forward Looking Statements
Certain statements contained in this report, including industry analysts'
estimates of wholesale industry shipments for 1998, the registrant's plans for
retail expansion, capital expenditures and planned facilities, and its
earnings growth goal, could be construed as forward looking statements within
the meaning of the Securities Exchange Act of 1934. In addition, Champion or
persons acting on its behalf may from time to time publish or communicate
other items which could also be construed to be forward looking statements.
Statements of this sort are or will be based on the registrant's estimates,
assumptions and projections, and are subject to risks and uncertainties,
including those specifically listed below and those contained in Champion's
reports previously filed with the SEC, that could cause actual results to
differ materially from those included in the forward looking statements.
Long term growth in the manufactured housing industry may be affected by: (1)
the relative cost of manufactured housing versus other forms of housing; (2)
general economic trends, including inflation and unemployment rates, consumer
confidence, job growth and interest rates; (3) changes in demographics,
including new household formations and the number of Americans on fixed
income; (4) the availability and cost of financing for manufactured homes; (5)
changes in government regulations and policies, including HUD regulations,
local building codes and zoning regulations; and (6) changes in regional
markets and the U.S. economy as a whole. Short-term sales could be affected
by inclement weather and inventory levels of manufactured housing retailers.
Fluctuations in interest rates may affect the demand for manufactured housing
to the extent that those changes reduce job growth, slow the U.S. economy, or
cause a loss in consumer confidence. The profitability of the registrant may
also be affected by: (1) its ability to efficiently expand operations and to
utilize production capacity; (2) its ability to pass increased raw material
costs, particularly lumber costs, on to its customers; (3) market share
position; (4) growth in the manufactured housing industry as a whole; (5) the
results of its acquisitions; and (6) strength of retail distribution.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
_________________________________
(a) The following exhibits are filed as part of this report:
Exhibit No. Description
__________ ___________
10 Credit Agreement dated May 5, 1998 by and among Champion
Enterprises, Inc.; the guarantors party; the banks party; PNC Bank, National
Association, as Administrative Agent; Comerica Bank, as Documentation Agent;
National City Bank, Harris Trust and Savings Bank, Keybank National
Association, Nationsbank, N.A., and Wachovia Bank and Trust Company, N.A., as
co-Agents.
11 Computation of EPS.
27.1 Financial Data Schedule.
27.2 Restated Financial Data Schedule.
(b) No reports on Form 8-K were filed by the registrant during the
quarter ended April 4, 1998.
SIGNATURES
__________
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CHAMPION ENTERPRISES, INC.
By: JOSEPH H. STEGMAYER
__________________________
Joseph H. Stegmayer
President, Retail Operations
and Chief Financial Officer
(Principal Financial Officer)
And: /S/ RICHARD HEVELHORST
_________________________
Richard Hevelhorst
Controller (Principal
Accounting Officer)
Dated: May 14, 1998
<PAGE>
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description
__________ ___________
10 Credit Agreement dated May 5, 1998 by and among Champion
Enterprises, Inc.; the guarantors party; the banks party; PNC
Bank, National Association, as Administrative Agent; Comerica
Bank, as Documentation Agent; National City Bank, Harris Trust and
Savings Bank, Keybank National Association, Nationsbank, N.A., and
Wachovia Bank and Trust Company, N.A., as co-Agents.
11 Computation of EPS.
27.1 Financial Data Schedule.
27.2 Restated Financial Data Schedule.
$325,000,000 REVOLVING CREDIT FACILITY
CREDIT AGREEMENT
by and among
CHAMPION ENTERPRISES, INC.,
THE GUARANTORS PARTY HERETO,
THE BANKS PARTY HERETO,
PNC BANK, NATIONAL ASSOCIATION, as Administrative Agent,
NBD BANK, as Syndication Agent,
COMERICA BANK, as Documentation Agent
and
NATIONAL CITY BANK,
HARRIS TRUST AND SAVINGS BANK,
KEYBANK NATIONAL ASSOCIATION,
NATIONSBANK, N.A.
and
WACHOVIA BANK, N.A., as Co-Agents
Dated as of May 5, 1998
1. CERTAIN DEFINITIONS
1.1 Certain Definitions.
1.2 Construction.
1.2.1 Number; Inclusion.
1.2.2 Determination.
1.2.3 Agent's Discretion and Consent.
1.2.4 Documents Taken as a Whole.
1.2.5 Headings.
1.2.6 Implied References to This Agreement.
1.2.7 Persons.
1.2.8 Modifications to Documents.
1.2.9 From, To and Through.
1.2.10 Shall; Will.
1.3 Accounting Principles.
2. REVOLVING CREDIT AND SWING LOAN FACILITIES
2.1 Commitments.
2.1.1 Revolving Credit Loan Commitments.
2.1.2 Swing Loan Commitment.
2.2 Natureof Banks' Obligations With Respect to Revolving Credit
Loans.
2.3 Facility Fee.
2.4 Closing Fee.
2.5 Revolving Credit Loan Requests; Swing Loan Requests.
2.5.1 Revolving Credit Loan Requests.
2.5.2 Swing Loan Requests.
2.6 Making Revolving Credit Loans and Swing Loans.
2.6.1 Making Swing Loans.
2.7 Use of Proceeds.
2.8 Borrowings to Repay Swing Loans.
2.9 Letter of Credit Subfacility.
2.9.1 Issuance of Letters of Credit.
2.9.2 Letter of Credit Fees.
2.9.3 Disbursements, Reimbursement.
2.9.4 Repayment of Participation Advances.
2.9.5 Documentation.
2.9.6 Determinations to Honor Drawing Requests.
2.9.7 Nature of participation and Reimbursement Obligations.
2.9.8 Indemnity.
2.9.9 Liability for Acts and Omissions.
2.10 Mandatory Prepayments.
2.10.1 Sale of Assets.
2.10.2 Application Among Interest Rate Options.
2.11 Permanent Reductions of Commitments.
2.11.1 Voluntary Reductions.
2.11.2 Mandatory Reductions.
2.11.3 Effect of Reductions.
3. INTEREST RATES
3.1 Interest Rate Options.
3.1.1 Revolving Credit Interest Rate Options.
3.1.2 Rate Quotations.
3.1.3 Change in Fees or Interest Rates.
3.2 Interest Periods.
3.2.1 Ending Date and Business Day.
3.2.2 Amount of Borrowing Tranche.
3.2.3 Termination Before Expiration Date.
3.2.4 Renewals.
3.3 Interest After Default.
3.3.1 Letter of Credit Fees; Interest Rate.
3.3.2 Other Obligations.
3.3.3 Acknowledgment.
3.4 Euro-Rate Unascertainable; Illegality; Increased Costs;
Deposits Not Available.
3.4.1 Unascertainable.
3.4.2 Illegality; Increased Costs; Deposits Not Available.
3.4.3 Agent's and Bank's Rights.
3.5 Selection of Interest Rate Options.
4. PAYMENTS
4.1 Payments.
4.2 Pro Rata Treatment of the Banks.
4.3 Interest Payment Dates.
4.4
5. REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties.
5.1.1 Organization and Qualification.
5.1.2 Subsidiaries.
5.1.3 Power and Authority.
5.1.4 Validity and Binding Effect.
5.1.5 No Conflict.
5.1.6 Litigation.
5.1.7 Title to Properties.
5.1.8 Financial Statements.
5.1.9 Use of Proceeds; Margin Stock; Section 20 Subsidiaries.
5.1.10 Full Disclosure.
5.1.11 Taxes.
5.1.12 Consents and Approvals.
5.1.13 No Event of Default; Compliance With Instruments.
5.1.14 Patents, Trademarks, Copyrights, Licenses, Etc.
5.1.15 Insurance.
5.1.16 Compliance With Laws.
5.1.17 Material Contracts; Burdensome Restrictions.
5.1.18 Investment Companies; Regulated Entities.
5.1.19 Plans and Benefit Arrangements.
5.1.20 Employment Matters.
5.1.21 Environmental Matters.
5.1.22 Senior Debt Status.
5.1.23 Year 2000 Compliance.
5.2 Continuation of Representations.
6. CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT
6.1 First Loans and Letters of Credit.
6.1.1 Officer's Certificate.
6.1.2 Secretary's Certificate.
6.1.3 Delivery of Guaranty Agreement and Notes.
6.1.4 Opinion of Counsel.
6.1.5 Legal Details.
6.1.6 Payment of Fees.
6.1.7 Consents.
6.1.8 Officer's Certificate Regarding MACs.
6.1.9 No Violation of Laws.
6.1.10 No Actions or Proceedings.
6.1.11 Insurance Policies; Certificates of Insurance; Endorsements.
6.1.12 Payoff of Existing Indebtedness.
6.2 Each Additional Loan or Letter of Credit.
7. COVENANTS
7.1 Affirmative Covenants.
7.1.1 Preservation of Existence, Etc.
7.1.2 Payment of Liabilities, Including Taxes, Etc.
7.1.3 Maintenance of Insurance.
7.1.4 Maintenance of Properties and Leases.
7.1.5 Maintenance of Patents, Trademarks, Etc.
7.1.6 Visitation Rights.
7.1.7 Keeping of Records and Books of Account.
7.1.8 Plans and Benefit Arrangements.
7.1.9 Compliance With Laws and Building Standards.
7.1.10 Use of Proceeds.
7.1.11 Addition of Subsidiaries as Guarantors in Certain
Circumstances.
7.2 Negative Covenants.
7.2.1 Indebtedness.
7.2.2 Liens.
7.2.3 Guaranties.
7.2.4 Loans and Investments.
7.2.5 Liquidations, Mergers, Consolidations, Acquisitions.
7.2.6 Dispositions of Assets or Subsidiaries.
7.2.7 Affiliate Transactions.
7.2.8 Subsidiaries, Partnerships and Joint Ventures.
7.2.9 Continuation of or Change in Business.
7.2.10 Plans and Benefit Arrangements.
7.2.11 Fiscal Year.
7.2.12 Certain Agreements.
7.2.13 Maximum Leverage Ratio.
7.2.14 Minimum Interest Coverage Ratio.
7.2.15 Minimum Net Worth.
7.3 Reporting Requirements.
7.3.1 Quarterly Financial Statements.
7.3.2 Annual Financial Statements.
7.3.3 Certificate of the Borrower.
7.3.4 Notice of Default.
7.3.5 Notice of Litigation.
7.3.6 Sale of Assets.
7.3.7 Budgets, Forecasts, Other Reports and Information.
7.3.8 Notices Regarding Plans and Benefit Arrangements.
8. DEFAULT
8.1 Events of Default.
8.1.1 Payments Under Loan Documents.
8.1.2 Breach of Warranty.
8.1.3 Breach of Negative Covenants or Visitation Rights.
8.1.4 Breach of Other Covenants.
8.1.5 Defaults in Other Agreements or Indebtedness.
8.1.6 Final Judgments or Orders.
8.1.7 Loan Document Unenforceable.
8.1.8 Uninsured Losses; Proceedings Against Assets.
8.1.9 Notice of Lien or Assessment.
8.1.10 Insolvency.
8.1.11 Events Relating to Plans and Benefit Arrangements.
8.1.12 Cessation of Business.
8.1.13 Change of Control.
8.1.14 Involuntary Proceedings.
8.1.15 Voluntary Proceedings.
8.2 Consequences of Event of Default.
8.2.1 Events of Default Other Than Bankruptcy, Insolvency or
Reorganization Proceedings.
8.2.2 Bankruptcy, Insolvency or Reorganization Proceedings.
8.2.3 Set-off.
8.2.4 Suits, Actions, Proceedings.
8.2.5 Application of Proceeds.
8.2.6 Other Rights and Remedies.
9. THE AGENT
9.1 Appointment.
9.2 Delegation of Duties.
9.3 Nature of Duties; Independent Credit Investigation.
9.4 Actions in Discretion of Agent; Instructions From the Banks.
9.5 Reimbursement and Indemnification of the Agent by the Borrower.
9.6 Exculpatory Provisions; Limitation of Liability.
9.7 Reimbursement and Indemnification of the Agent by the Banks.
9.8 Reliance by the Agent.
9.9 Notice of Default.
9.10 Notices.
9.11 Banks in Their Individual Capacities.
9.12 Holders of Notes.
9.13 Equalization of the Banks.
9.14 Successor Agent.
9.15 Agent's Fee.
9.16 Availability of Funds.
9.17 Calculations.
9.18 Beneficiaries.
10. MISCELLANEOUS
10.1 Modifications, Amendments or Waivers.
10.1.1 Increase of Commitment; Extension or Expiration Date.
10.1.2 Extension of Payment; Reduction of Principal Interest or Fees;
Modification of Terms of Payment.
10.1.3 Release of Guarantor.
10.1.4 Miscellaneous
10.2 No Implied Waivers; Cumulative Remedies; Writing Required.
10.3 Reimbursement and Indemnification of the Banks by the Borrower;
Taxes.
10.4 Holidays.
10.5 Funding by Branch, Subsidiary or Affiliate.
10.5.1 Notional Funding.
10.5.2 Actual Funding.
10.6 Notices.
10.7 Severability.
10.8 Governing Law.
10.9 Prior Understanding.
10.10 Duration; Survival.
10.11 Successors and Assigns.
10.12 Confidentiality.
10.12.1 General.
10.12.2 Sharing Information With Affiliates of the Banks.
10.13 Counterparts.
10.14 Agent's or Bank's Consent.
10.15 Exceptions.
10.16 CONSENT TO FORUM; WAIVER OF JURY TRIAL.
10.17 Tax Withholding Clause.
10.18 Joinder of Guarantors.
10.19 Documentation Agent and Co-Agents.
LIST OF SCHEDULES AND EXHIBITS
SCHEDULES
SCHEDULE 1.1(A) - PRICING GRID
SCHEDULE 1.1(B) - COMMITMENTS OF BANKS AND ADDRESSES FOR NOTICES
SCHEDULE 1.1(P)(1) - PERMITTED INVESTMENTS
SCHEDULE 1.1(P)(2) - PERMITTED LIENS
SCHEDULE 1.1(R) - REPURCHASE OBLIGATIONS
SCHEDULE 5.1.2 - SUBSIDIARIES
SCHEDULE 5.1.5 - LITIGATION
SCHEDULE 5.1.12 - CONSENTS AND APPROVALS
SCHEDULE 7.2.1 - PERMITTED INDEBTEDNESS
EXHIBITS
EXHIBIT 1.1(A) - ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT 1.1(G)(1) - GUARANTOR JOINDER
EXHIBIT 1.1(G)(2) - GUARANTY AND SURETYSHIP AGREEMENT
EXHIBIT 1.1(R) - REVOLVING CREDIT NOTE
EXHIBIT 1.1 (S) - SWING LOAN NOTE
EXHIBIT 2.5.1 - LOAN REQUEST
EXHIBIT 2.5.2 - SWING LOAN REQUEST
EXHIBIT 6.1.4 - OPINION OF COUNSEL
EXHIBIT 7.2.5 - ACQUISITION COMPLIANCE CERTIFICATE
EXHIBIT 7.3.3 - QUARTERLY COMPLIANCE CERTIFICATE
PAGE
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is dated as of May 5, 1998 and is made by and among
CHAMPION ENTERPRISES, INC., a Michigan corporation (the "Borrower"), each of
the Guarantors (as hereinafter defined), the BANKS (as hereinafter defined),
PNC BANK, NATIONAL ASSOCIATION, in its capacity as administrative agent for
the Banks under this Agreement (hereinafter referred to in such capacity as
the "Agent"), NBD BANK, as Syndication Agent, COMERICA BANK, as Documentation
Agent and NATIONAL CITY BANK, HARRIS TRUST AND SAVINGS BANK, KEYBANK NATIONAL
ASSOCIATION, NATIONSBANK, N.A. and WACHOVIA BANK, N.A., as Co-Agents.
WITNESSETH:
WHEREAS, the Borrower has requested the Banks to provide a revolving
credit facility to the Borrower in an aggregate principal amount not to exceed
$325,000,000; and
WHEREAS, the revolving credit facility shall be used to refinance certain
indebtedness under the Existing Credit Facilities (as herein defined) and for
general corporate purposes, including Permitted Acquisitions (as herein
defined); and
WHEREAS, the Banks are willing to provide such credit upon the terms and
conditions hereinafter set forth;
NOW, THEREFORE, the parties hereto, in consideration of their mutual
covenants and agreements hereinafter set forth and intending to be legally
bound hereby, covenant and agree as follows:
1. CERTAIN DEFINITIONS
1.1 Certain Definitions.
In addition to words and terms defined elsewhere in this Agreement, the
following words and terms shall have the following meanings, respectively,
unless the context hereof clearly requires otherwise:
Affiliate as to any Person shall mean any other Person (i)which directly
or indirectly controls, is controlled by or is under common control with such
Person, (ii) which beneficially owns or holds 5% or more of any class of the
voting or other equity interests of such Person, or (iii)5% or more of any
class of voting interests or other equity interests of which is beneficially
owned or held, directly or indirectly, by such Person. "Control," as used in
this definition, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise, including the power to elect a majority of the directors or
trustees of a corporation or trust, as the case may be.
Agent shall mean PNC Bank, National Association, and its successors and
assigns.
Agent's Fee shall have the meaning assigned to that term in Section 9.15.
Agent's Letter shall have the meaning assigned to that term in Section
9.15.
Agreement shall mean this Credit Agreement, as the same may be
supplemented or amended from time to time, including all schedules and
exhibits.
Applicable Facility Fee Rate shall mean the percentage rate per annum
based on the Leverage Ratio then in effect according to the pricing grid on
Schedule 1.1(A) below the heading "Facility Fee." The Applicable Facility Fee
Rate shall be computed in accordance with the parameters set forth on Schedule
1.1(A).
Applicable Margin shall mean, as applicable:
(A) the percentage spread to be added to Base Rate under the Base Rate
Option based on the Leverage Ratio then in effect according to the pricing
grid on Schedule 1.1(A) below the heading "Base Rate Spread," or
(B) the percentage spread to be added to Euro-Rate under the Euro-Rate
Option based on the Leverage Ratio then in effect according to the pricing
grid on Schedule 1.1(A) below the heading "Euro-Rate Spread."
The Applicable Margin shall be computed in accordance with the parameters
set forth on Schedule 1.1(A).
Assignment and Assumption Agreement shall mean an Assignment and
Assumption Agreement by and among a Purchasing Bank, a Transferor Bank and the
Agent, as Agent and on behalf of the remaining Banks, substantially in the
form of Exhibit 1.1(A).
Authorized Officer shall mean those individuals, designated by written
notice to the Agent from the Borrower, authorized to execute notices, reports
and other documents on behalf of the Loan Parties required hereunder. The
Borrower may amend such list of individuals from time to time by giving
written notice of such amendment to the Agent.
Banks shall mean the financial institutions named on Schedule 1.1(B) and
their respective successors and assigns as permitted hereunder, each of which
is referred to herein as a Bank.
Base Net Worth shall mean the sum of $224,332,800 plus (i)50% of
consolidated net income of the Borrower and its Subsidiaries for each fiscal
quarter in which net income was earned (as opposed to a net loss) during the
period from January 4, 1998 through the date of determination and (ii)100% of
the proceeds received by the Borrower or any of its Subsidiaries after the
Closing Date resulting from the issuance of capital stock of the Borrower or
any of its Subsidiaries (other than proceeds received from the exercise of
stock options by employees of the Borrower), net of any fees and expenses
incurred by the Borrower or any of its Subsidiaries in connection with such
sale.
Base Rate shall mean the greater of (i)the interest rate per annum
announced from time to time by the Agent at its Principal Office as its then
prime rate, which rate may not be the lowest rate then being charged
commercial borrowers by the Agent, or (ii)the Federal Funds Effective Rate
plus +% per annum.
Base Rate Option shall mean the option of the Borrower to have Revolving
Credit Loans bear interest at the rate and under the terms and conditions set
forth in Section 3.1.1(i).
Benefit Arrangement shall mean at any time an "employee benefit plan,"
within the meaning of Section 3(3) of ERISA, which is neither a Plan nor a
Multi employer Plan and which is maintained, sponsored or otherwise
contributed to by any member of the ERISA Group.
Borrower shall mean Champion Enterprises, Inc., a corporation organized
and existing under the laws of the State of Michigan.
Borrowing Date shall mean, with respect to any Loan, the date for the
making thereof or the renewal or conversion thereof at or to the same or a
different Interest Rate Option, which shall be a Business Day.
Borrowing Tranche shall mean specified portions of Loans outstanding as
follows: (i)any Loans to which the Euro-Rate Option applies which become
subject to the same Interest Rate Option under the same Loan Request by the
Borrower and which have the same Interest Period shall constitute one
Borrowing Tranche, and (ii)all Loans to which the Base Rate Option applies
shall constitute one Borrowing Tranche.
Business Day shall mean any day other than a Saturday or Sunday or a legal
holiday on which commercial banks are authorized or required to be closed for
business in Pittsburgh, Pennsylvania; and if the applicable Business Day
relates to any Loan to which the Euro-Rate Option applies, such day must also
be a day on which dealings are carried on in the London interbank market.
Closing Date shall mean the Business Day on which the first Loan shall be
made, which shall be May 5, 1998.
Closing Fee shall have the meaning assigned to that term in Section 2.4.
Commercial Letter of Credit shall mean any Letter of Credit which is a
commercial letter of credit issued in respect of the purchase of goods or
services by one or more of the Loan Parties in the ordinary course of their
business.
Commitment shall mean as to any Bank its Revolving Credit Commitment and,
in the case of the Agent, its Swing Loan Commitment, and Commitments shall
mean the aggregate of the Revolving Credit Commitments and the Swing Loan
Commitment of all of the Banks.
Consideration shall mean, with respect to any Permitted Acquisition, the
aggregate, without duplication, of (i)the cash paid by any of the Loan
Parties, directly or indirectly, to the seller in connection therewith,
(ii)the Indebtedness incurred or assumed by any of the Loan Parties, whether
in favor of the seller or otherwise and whether fixed or contingent, other
than indebtedness which constitutes Floor-Plan Financing Obligations, (iii)any
Guaranty given or incurred by any Loan Party in connection therewith, (iv)
Earn Out Obligations, (v) any capital stock given by any Loan Party, and
(vi)any other consideration given or obligation incurred by any of the Loan
Parties in connection therewith.
Consolidated Cash Flow From Operations for any period of determination
shall mean (i)the sum of net income, depreciation, amortization, interest
expense and income tax expense minus (ii)noncash credits to net income and
gains on the disposition of assets to the extent included in net income but
not included in operating income, in each case of the Borrower and its
Subsidiaries for such period determined and consolidated in accordance with
GAAP.
Consolidated Debt shall mean, as of any date of determination, the
Indebtedness of the Borrower and its Subsidiaries minus Earn Out Obligations
and Repurchase Obligations, determined and consolidated in accordance with
GAAP.
Consolidated Net Worth shall mean as of any date of determination total
stockholders' equity of the Borrower and its Subsidiaries as of such date
determined and consolidated in accordance with GAAP.
Dollar, Dollars, U.S. Dollars and the symbol $ shall mean lawful money of
the United States of America.
Drawing Date shall have the meaning assigned to that term in Section
2.9.3.2.
EBIT shall mean, for any period of determination, the sum of net income,
interest expense and income tax expense, in each case of the Borrower and its
Subsidiaries for such period determined and consolidated in accordance with
GAAP.
Earn Out Obligations shall mean, as of any date of determination, the
contingent portion of acquisition-related liabilities which are not paid by
the Borrower or its Subsidiaries at the time of the closing of the
acquisitions.
Environmental Complaint shall mean any written complaint setting forth a
cause of action for personal or property damage or natural resource damage or
equitable relief, order, notice of violation, citation or subpoena relating
to, arising out of or issued pursuant to any of the Environmental Laws or any
Environmental Conditions, as the case may be, or request for information or
other written notice of any type issued pursuant to any Environmental Laws by
an Official Body in connection with an alleged violation of Environmental
Laws.
Environmental Conditions shall mean any conditions of the environment,
including the workplace, the ocean, natural resources (including flora or
fauna), soil, surface water, groundwater, any actual or potential drinking
water supply sources, substrata or the ambient air, relating to or arising out
of, or caused by, the use, handling, storage, treatment, recycling,
generation, transportation, release, spilling, leaking, pumping, emptying,
discharging, injecting, escaping, leaching, disposal, dumping, threatened
release or other management or mismanagement of Regulated Substances resulting
from the use of, or operations on, any Property.
Environmental Laws shall mean all federal, state, local and foreign Laws
and regulations, including permits, licenses, authorizations, bonds, orders,
judgments and consent decrees issued, or entered into, pursuant thereto,
relating to pollution or protection of human health or the environment or
employee safety in the workplace.
ERISA shall mean the Employee Retirement Income Security Act of 1974, as
the same may be amended or supplemented from time to time, and any successor
statute of similar import, and the rules and regulations thereunder, as from
time to time in effect.
ERISA Group shall mean, at any time, the Borrower and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control and all other entities which, together with
the Borrower, are treated as a single employer under Section 414 of the
Internal Revenue Code.
Euro-Rate shall mean, with respect to the Loans comprising any Borrowing
Tranche to which the Euro-Rate Option applies for any Interest Period, the
interest rate per annum determined by the Agent by dividing (the resulting
quotient rounded upwards, if necessary, to the nearest 1/100 of 1% per annum)
(i)the rate of interest determined by the Agent in accordance with its usual
procedures (which determination shall be conclusive absent manifest error) to
be the average of the London interbank offered rates for U.S. Dollars quoted
by the British Bankers' Association as set forth on Dow Jones Markets Service
(formerly known as Telerate) display page 3750 (or appropriate successor or,
if the British Bankers' Association or its successor ceases to provide such
quotes, a comparable replacement determined by the Agent) two (2) Business
Days prior to the first day of such Interest Period for an amount comparable
to such Borrowing Tranche and having a borrowing date and a maturity
comparable to such Interest Period by (ii)a number equal to 1.00 minus the
Euro-Rate Reserve Percentage. The Euro-Rate may also be expressed by the
following formula:
Average of London interbank offered rates on Dow Jones
Markets Service display page 3750 as quoted by
Euro-Rate = British Bankers' Association or appropriate successor
1.00 - Euro-Rate Reserve Percentage
The Euro-Rate shall be adjusted with respect to any Euro-Rate Option
outstanding on the effective date of any change in the Euro-Rate Reserve
Percentage as of such effective date. The Agent shall give prompt notice to
the Borrower of the Euro-Rate as determined or adjusted in accordance
herewith, which determination shall be conclusive absent manifest error.
Euro-Rate Option shall mean the option of the Borrower to have Revolving
Credit Loans bear interest at the rate and under the terms and conditions set
forth in Section 3.1.1(ii).
Euro-Rate Reserve Percentage shall mean the maximum percentage (expressed
as a decimal rounded upward to the nearest 1/100 of 1%) as determined by the
Agent which is in effect during any relevant period, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the reserve requirements (including supplemental, marginal and
emergency reserve requirements) with respect to eurocurrency funding
(currently referred to as "Eurocurrency Liabilities") of a member bank in such
System.
Event of Default shall mean any of the events described in Section 8.1 and
referred to therein as an "Event of Default."
Existing Credit Facilities shall mean all obligations and liabilities of
the Borrower and its Subsidiaries pursuant to or arising under that certain
Credit Agreement dated as of September 29, 1995, among the Borrower, Comerica
Bank and the other financial institutions party thereto, as amended from time
to time, and under all loan documents executed and delivered in connection
with such Credit Agreement.
Expiration Date shall mean, with respect to the Revolving Credit
Commitments, May 4, 2003.
Facility Fee shall mean the fees referred to in Section 2.3.
Federal Funds Effective Rate for any day shall mean the rate per annum
(based on a year of 360 days and actual days elapsed and rounded upward to the
nearest 1/100 of 1%) announced by the Federal Reserve Bank of New York (or any
successor) on such day as being the weighted average of the rates on overnight
federal funds transactions arranged by federal funds brokers on the previous
trading day, as computed and announced by such Federal Reserve Bank (or any
successor) in substantially the same manner as such Federal Reserve Bank
computes and announces the weighted average it refers to as the "Federal Funds
Effective Rate" as of the date of this Agreement; provided, if such Federal
Reserve Bank (or its successor) does not announce such rate on any day, the
Federal Funds Effective Rate for such day shall be the Federal Funds Effective
Rate for the last day on which such rate was announced.
Financial Projections shall have the meaning assigned to that term in
Section 5.1.8(ii).
Floor-Plan Financing Obligations shall mean the liabilities of the Loan
Parties and Subsidiaries of the Loan Parties which are in the business of
retail sales of manufactured housing products with respect to inventory
financing provided by third party lenders.
GAAP shall mean generally accepted accounting principles as are in effect
from time to time, subject to the provisions of Section 1.3, and applied on a
consistent basis both as to classification of items and amounts.
Governmental Acts shall have the meaning assigned to that term in Section
2.9.8.
Guarantor shall mean, at any time, each of the Significant Subsidiaries of
the Borrower and the Subsidiaries of the Borrower which join in this Agreement
and execute a Guarantor Joinder pursuant to Section 7.1.11.
Guarantor Joinder shall mean a joinder by a Person as a Guarantor under
this Agreement, the Guaranty Agreement and the other Loan Documents in the
form of Exhibit 1.1(G)(1).
Guaranty of any Person shall mean any obligation of such Person
guaranteeing or in effect guaranteeing any liability or obligation of any
other Person in any manner, whether directly or indirectly, including any
agreement to indemnify or hold harmless any other Person, any performance bond
or other suretyship arrangement and any other form of assurance against loss,
except endorsement of negotiable or other instruments for deposit or
collection in the ordinary course of business.
Guaranty Agreement shall mean the Guaranty and Suretyship Agreement in
substantially the form of Exhibit 1.1(G)(2) executed and delivered by each of
the Guarantors to the Agent for the benefit of the Banks.
Historical Statements shall have the meaning assigned to that term in
Section 5.1.8(i).
Indebtedness shall mean, as to any Person at any time, and without
duplication, any and all indebtedness, obligations or liabilities (whether
matured or unmatured, liquidated or unliquidated, direct or indirect, absolute
or contingent, or joint or several) of such Person for or in respect of:
(i)borrowed money, (ii)amounts raised under or liabilities in respect of any
note purchase or acceptance credit facility, (iii)reimbursement obligations
(contingent or otherwise) under any letter of credit, currency swap agreement,
interest rate swap, cap, collar or floor agreement or other interest rate
management device, (iv)any other transaction (including forward sale or
purchase agreements, capitalized leases, conditional sales agreements and
other purchase agreements with deferred or contingent consideration) having
the commercial effect of a borrowing of money entered into by such Person to
finance its operations or capital requirements (but not including trade
payables and accrued expenses incurred in the ordinary course of business
which are not represented by a promissory note or other evidence of
indebtedness and which are not more than thirty (30) days past due),(v)
Repurchase Obligations, Earn Out Obligations and Floor-Plan Financing
Obligations, or (vi)any Guaranty of Indebtedness for borrowed money.
Ineligible Security shall mean any security which may not be underwritten
or dealt in by member banks of the Federal Reserve System under Section 16 of
the Banking Act of 1933 (12 U.S.C. Section 24, Seventh), as amended.
Insolvency Proceeding shall mean, with respect to any Person, (a)a case,
action or proceeding with respect to such Person (i)before any court or any
other Official Body under any bankruptcy, insolvency, reorganization or other
similar Law now or hereafter in effect, or (ii)for the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator or
conservator (or similar official) of any Loan Party or otherwise relating to
the liquidation, dissolution, winding-up or relief of such Person; or (b)any
general assignment for the benefit of creditors, composition, marshaling of
assets for creditors or other similar arrangement in respect of such Person's
creditors generally or any substantial portion of its creditors undertaken
under any Law.
Interest Period shall have the meaning assigned to such term in Section
3.2.
Interest Rate Option shall mean any Euro-Rate Option or Base Rate Option.
Internal Revenue Code shall mean the Internal Revenue Code of 1986, as the
same may be amended or supplemented from time to time, and any successor
statute of similar import, and the rules and regulations thereunder, as from
time to time in effect.
Issuing Bank shall mean, with respect to a Letter of Credit, including any
replacements therefor or extensions thereof, any Bank selected by the Borrower
to issue such Letter of Credit.
Labor Contracts shall mean all employment agreements, employment
contracts, collective bargaining agreements and other agreements among any
Loan Party or Subsidiary of a Loan Party and its employees.
Law shall mean any law (including common law), constitution, statute,
treaty, regulation, rule, ordinance, opinion, release, ruling, order,
injunction, writ, decree or award of any Official Body.
Letter of Credit shall have the meaning assigned to that term in Section
2.9.1.
Letter of Credit Borrowing shall mean an extension of credit resulting
from a drawing under any Letter of Credit which shall not have been reimbursed
on the date when made and shall not have been converted into a Revolving
Credit Loan under Section 2.9.3.2.
Letter of Credit Fee shall mean the per annum Letter of Credit Fee based
on the Leverage Ratio then in effect according to the pricing grid on Schedule
1.1(A) below the heading "Letter of Credit Fee," computed in accordance with
the parameters set forth on Schedule 1.1(A).
Letters of Credit Outstanding shall mean at any time the sum of (i)the
aggregate undrawn face amount of outstanding Letters of Credit and (ii)the
aggregate amount of all unpaid and outstanding Reimbursement Obligations.
Leverage Ratio shall mean, as of the end of each fiscal quarter on or
after June 30, 1998, the ratio of Consolidated Debt on such date to
Consolidated Cash Flow From Operations for the four (4) fiscal quarters ending
on such date.
Lien shall mean any mortgage, deed of trust, pledge, lien, security
interest, charge or other encumbrance or security arrangement of any nature
whatsoever, whether voluntarily or involuntarily given, including any
conditional sale or title retention arrangement, and any assignment, deposit
arrangement or lease intended as, or having the effect of, security and any
filed financing statement or other notice of any of the foregoing (whether or
not a lien or other encumbrance is created or exists at the time of the
filing).
LLC Interests shall have the meaning given to such term in Section 5.1.2.
Loan Documents shall mean this Agreement, the Agent's Letter, the Guaranty
Agreement, the Notes and any other instruments, certificates or documents
delivered or contemplated to be delivered hereunder or thereunder or in
connection herewith or therewith, as the same may be supplemented or amended
from time to time in accordance herewith or therewith, and Loan Document shall
mean any of the Loan Documents.
Loan Parties shall mean the Borrower and the Significant Subsidiaries.
Loan Request shall have the meaning given to such term in Section 2.5.1.
Loans shall mean collectively and Loan shall mean separately all Revolving
Credit Loans and Swing Loans or any Revolving Credit Loan or Swing Loan.
Material Adverse Change shall mean any set of circumstances or events
which (a)has or could reasonably be expected to have any material adverse
effect whatsoever upon the validity or enforceability of this Agreement or any
other Loan Document, (b)is or could reasonably be expected to be material and
adverse to the business, properties, assets, financial condition, results of
operations or prospects of the Loan Parties taken as a whole , (c)impairs
materially or could reasonably be expected to impair materially the ability of
the Loan Parties taken as a whole to duly and punctually pay or perform their
Indebtedness, or (d)impairs materially or could reasonably be expected to
impair materially the ability of the Agent or any of the Banks, to the extent
permitted, to enforce its legal remedies pursuant to this Agreement or any
other Loan Document.
Month, with respect to an Interest Period under the Euro-Rate Option,
shall mean the interval between the days in consecutive calendar months
numerically corresponding to the first day of such Interest Period. If any
Euro-Rate Interest Period begins on a day of a calendar month for which there
is no numerically corresponding day in the month in which such Interest Period
is to end, the final month of such Interest Period shall be deemed to end on
the last Business Day of such final month.
Multi employer Plan shall mean any employee benefit plan which is a "Multi
employer plan" within the meaning of Section 4001(a)(3) of ERISA and to which
the Borrower or any member of the ERISA Group is then making or accruing an
obligation to make contributions or, within the preceding five plan years, has
made or had an obligation to make such contributions.
Multiple Employer Plan shall mean a Plan which has two or more
contributing sponsors (including the Borrower or any member of the ERISA
Group) at least two of whom are not under common control, as such a plan is
described in Sections 4063 and 4064 of ERISA.
Notes shall mean the Revolving Credit Notes and the Swing Note, if any.
Notices shall have the meaning assigned to that term in Section 10.6.
Obligation shall mean any obligation or liability of any of the Loan
Parties to the Agent or any of the Banks, howsoever created, arising or
evidenced, whether direct or indirect, absolute or contingent, now or
hereafter existing, or due or to become due, under or in connection with this
Agreement, any Notes, the Letters of Credit, the Agent's Letter or any other
Loan Document.
Official Body shall mean any national, federal, state, local or other
government or political subdivision, or any agency, authority, bureau, central
bank, commission, department or instrumentality of either, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign or domestic.
Participation Advance shall mean, with respect to any Bank, such Bank's
payment in respect of its participation in a Letter of Credit Borrowing
according to its Ratable Share pursuant to Section 2.9.4.
Partnership Interests shall have the meaning given to such term in Section
5.1.2.
PBGC shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA, or any successor.
Permitted Acquisition shall have the meaning assigned to such term in
Section 7.2.5.
Permitted Investments shall mean:
(i) direct obligations of the United States of America or any agency or
instrumentality thereof or obligations backed by the full faith and credit of
the United States of America maturing in twelve (12) months or less from the
date of acquisition;
(ii) commercial paper maturing in 180 days or less and rated not lower
than A-1 by Standard & Poor's or P-1 by Moody's Investors Service, Inc. on the
date of acquisition;
(iii) demand deposits, time deposits or certificates of deposit maturing
within one year in commercial banks whose obligations are rated A-1, A or the
equivalent or better by Standard & Poor's on the date of acquisition;
(iv) investments described on Schedule 1.1(P)(1); and
(v) other short-term investments acceptable to the Agent.
Permitted Liens shall mean:
(i) Liens for taxes, assessments or similar charges incurred in the
ordinary course of business and which are not yet due and payable;
(ii) Pledges or deposits made in the ordinary course of business to
secure payment of workmen's compensation, or to participate in any fund in
connection with workmen's compensation, unemployment insurance, old-age
pensions or other social security programs;
(iii) Liens of mechanics, materialmen, warehousemen or carriers, or other
like Liens, securing obligations incurred in the ordinary course of business
that are not yet due and payable and Liens of landlords securing obligations
to pay lease payments that are not yet due and payable or in default;
(iv) Good-faith pledges or deposits made in the ordinary course of
business to secure performance of bids, tenders, contracts (other than for the
repayment of borrowed money) or leases, not in excess of the aggregate amount
due thereunder, or to secure statutory obligations, or surety, appeal,
indemnity, performance or other similar bonds required in the ordinary course
of business;
(v) Encumbrances consisting of zoning restrictions, easements or other
restrictions on the use of real property, none of which materially impairs the
use of such property or the value thereof, and none of which is violated in
any material respect by existing or proposed structures or land use;
(vi) Liens, security interests and mortgages in favor of the Agent for
the benefit of the Banks;
(vii) Liens on property leased by any Loan Party or Subsidiary of a Loan
Party under capital and operating leases (in either case, as the nature of
such Lease is determined in accordance with GAAP) securing obligations of such
Loan Party or Subsidiary to the lessor under such leases;
(viii)Purchase Money Security Interests provided that (a) Purchase Money
Security Interests securing Indebtedness other than Floor-Plan Financing
Obligations shall not exceed the limitations set forth in Section 7.2.1(iv),
and (b) Purchase Money Security Interests securing Indebtedness for Floor-Plan
Financing Obligations shall not exceed the limitations set forth in Section
7.2.1(iii); notwithstanding the foregoing clause(b), if a Purchase Money
Security Interest securing Indebtedness for Floor-Plan Financing Obligations
extends to property of a Loan Party or a Subsidiary of a Loan Party other than
property acquired with the proceeds of such Indebtedness ("Other Property"),
such Loan Party or Subsidiary shall have six (6) months from the Closing Date
or, with respect to Subsidiaries of the Borrower acquired after the Closing
Date, six (6) months from the date of such acquisition, to cause any Liens on
such Other Property to be terminated;
(ix) Mortgage Liens on real property securing Indebtedness to any Loan
Party or Subsidiary of a Loan Party or deferred payments by such Loan Party or
Subsidiary for the purchase of such real property, provided that the
Indebtedness secured by such Lien shall not exceed the limitations set forth
in Section 7.2.1(iv) and the Lien shall be limited to the property acquired
with the proceeds of such Indebtedness;
(x) any Lien existing on the date of this Agreement and described on
Schedule 1.1(P)(2), provided that the principal amount secured thereby is not
hereafter increased, and no additional assets become subject to such Lien; and
(xi) The following, (A)if the validity or amount thereof is being
contested in good faith by appropriate and lawful proceedings diligently
conducted, so long as levy and execution thereon have been stayed and continue
to be stayed, or (B)if a final judgment is entered and such judgment is
discharged within thirty (30) days of entry, and they do not in the aggregate
materially impair the ability of any Loan Party to perform its Obligations
hereunder or under the other Loan Documents:
(1) Claims or Liens for taxes, assessments or charges due and
payable and subject to interest or penalty, provided that the applicable Loan
Party maintains such reserves or other appropriate provisions as shall be
required by GAAP and pays all such taxes, assessments or charges forthwith
upon the commencement of proceedings to foreclose any such Lien;
(2) Claims, Liens or encumbrances upon, and defects of title to,
real or personal property, including any attachment of personal or real
property or other legal process prior to adjudication of a dispute on the
merits;
(3) Claims or Liens of mechanics, materialmen, warehousemen or
carriers, or other statutory non consensual Liens; or
(4) Liens resulting from final judgments or orders described in
Section 8.1.6.
Person shall mean any individual, corporation, partnership, limited
liability company, association, joint-stock company, trust, unincorporated
organization, joint venture, government or political subdivision or agency
thereof, or any other entity.
Plan shall mean at any time an employee pension benefit plan (including a
Multiple Employer Plan, but not a Multi employer Plan) which is covered by
Title IV of ERISA or is subject to the minimum funding standards under Section
412 of the Internal Revenue Code, and either (i)is maintained by any member of
the ERISA Group for employees of any member of the ERISA Group or (ii)has at
any time within the preceding five years been maintained by any entity which
was at such time a member of the ERISA Group for employees of any entity which
was at such time a member of the ERISA Group.
PNC Bank shall mean PNC Bank, National Association, its successors and
assigns.
Potential Default shall mean any event or condition which, with notice,
passage of time or both, would constitute an Event of Default.
Principal Office shall mean the main banking office of the Agent in
Pittsburgh, Pennsylvania.
Prohibited Transaction shall mean any prohibited transaction as defined in
Section 4975 of the Internal Revenue Code or Section 406 of ERISA for which
neither an individual nor a class exemption has been issued by the United
States Department of Labor.
Property shall mean all real property, both owned and leased, of any Loan
Party or Subsidiary of a Loan Party.
Purchase Money Security Interests shall mean Liens upon tangible personal
property securing loans to any Loan Party or Subsidiary of a Loan Party or
deferred payments by such Loan Party or Subsidiary for the purchase of such
tangible personal property.
Purchasing Bank shall mean a Bank which becomes a party to this Agreement
by executing an Assignment and Assumption Agreement.
Ratable Share shall mean the proportion that a Bank's Commitment
(excluding the Swing Loan Commitment) bears to the Commitments (excluding the
Swing Loan Commitments) of all of the Banks.
Regulated Substances shall mean any substance, including any solid,
liquid, semisolid, gaseous, thermal, thoriated or radioactive material,
refuse, garbage, wastes, chemicals, petroleum products, byproducts,
coproducts, impurities, dust, scrap and heavy metals, defined as a "hazardous
substance," "pollutant," "pollution," "contaminant," "hazardous or toxic
substance," "extremely hazardous substance," "toxic chemical," "toxic waste,"
"hazardous waste," "industrial waste," "residual waste," "solid waste,"
"municipal waste," "mixed waste," "infectious waste," "chemotherapeutic
waste," "medical waste" or "regulated substance" or any related materials,
substances or wastes as now or hereafter defined pursuant to any Environmental
Laws, ordinances, rules, regulations or other directives of any Official Body,
the generation, manufacture, extraction, processing, distribution, treatment,
storage, disposal, transport, recycling, reclamation, use, reuse, spilling,
leaking, dumping, injection, pumping, leaching, emptying, discharge, escape,
release or other management or mismanagement of which is regulated by the
Environmental Laws.
Regulation U shall mean Regulation U, T, G or X as promulgated by the
Board of Governors of the Federal Reserve System, as amended from time to
time.
Reimbursement Obligation shall have the meaning assigned to such term in
Section 2.9.3.2.
Reportable Event shall mean a reportable event described in Section 4043
of ERISA and regulations thereunder with respect to a Plan or Multi employer
Plan.
Repurchase Obligations shall mean the repurchase arrangements described in
Schedule 1.1(R) and such additional repurchase arrangements as the Borrower
and its Subsidiaries shall enter into from time to time.
Required Banks shall mean any Bank or group of Banks if the aggregate sum
of the Loans (excluding the Swing Loans), Reimbursement Obligations and Letter
of Credit Borrowings of such Banks then outstanding aggregates at least 51% of
the total principal amount of all of the Loans (excluding the Swing Loans),
Reimbursement Obligations and Letter of Credit Borrowings then outstanding.
If there are no Loans, Reimbursement Obligations or Letter of Credit
Borrowings outstanding, then Required Banks shall mean Banks whose Commitments
(excluding the Swing Loan Commitments) aggregate at least 51% of the
Commitments of all of the Banks.
Reimbursement Obligations and Letter of Credit Borrowings shall be deemed, for
purposes of this definition, to be in favor of the Agent and not a
participating Bank if such Bank has not made its Participation Advance in
respect thereof and shall be deemed to be in favor of such Bank to the extent
of its Participation Advance if it has made its Participation Advance in
respect thereof.
Required Share shall have the meaning assigned to such term in Section
4.7.
Retail Finance Companies shall mean collectively, and Retail Finance
Company shall mean separately, a Person, other than an individual, primarily
engaged in the business of making loans to retail purchasers of manufactured
housing products.
Revolving Credit Commitment shall mean, as to any Bank at any time, the
amount initially set forth opposite its name on Schedule 1.1(B) in the column
labeled "Amount of Commitment for Revolving Credit Loans," and thereafter on
Schedule I to the most recent Assignment and Assumption Agreement, and
Revolving Credit Commitments shall mean the aggregate Revolving Credit
Commitments of all of the Banks.
Revolving Credit Loans shall mean collectively and Revolving Credit Loan
shall mean separately all Revolving Credit Loans or any Revolving Credit Loan
made by the Banks or one of the Banks to the Borrower pursuant to Section 2.1
or 2.9.3.
Revolving Credit Note shall mean any Revolving Credit Note of the Borrower
in the form of Exhibit 1.1(R) issued by the Borrower at the request of a Bank
pursuant to Section 4.6 evidencing the Revolving Credit Loans to such Bank,
together with all amendments, extensions, renewals, replacements, refinancings
or refundings thereof in whole or in part.
Revolving Facility Usage shall mean at any time the sum of the Loans
outstanding and the Letters of Credit Outstanding.
SEC shall mean the Securities and Exchange Commission or any governmental
agencies substituted therefor.
Section 20 Subsidiary shall mean the Subsidiary of the bank holding
company controlling any Bank, which Subsidiary has been granted authority by
the Federal Reserve Board to underwrite and deal in certain Ineligible
Securities.
Settlement Date shall mean each Business Day on which the Agent elects to
effect settlement pursuant to Section 4.7.
Shares shall have the meaning assigned to that term in Section 5.1.2.
Significant Subsidiary shall mean any Subsidiary of the Borrower which at
the time (i)has gross revenues equal to or in excess of ten percent (10%) of
the consolidated gross revenues of the Borrower and its Subsidiaries, (ii)has
total assets equal to or in excess of five percent (5%) of the consolidated
total assets of the Borrower and its Subsidiaries, in either case as
determined and consolidated in accordance with GAAP, or (iii) has any material
trademarks or other intellectual property related to the business of the
Borrower and its Subsidiaries.
Standard & Poor's shall mean Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc., and its successors.
Standby Letter of Credit shall mean a Letter of Credit issued to support
obligations of one or more of the Loan Parties, contingent or otherwise, which
finance the working capital and business needs of the Loan Parties incurred in
the ordinary course of business.
Subsidiary of any Person at any time shall mean (i)any corporation or
trust of which 50% or more (by number of shares or number of votes) of the
outstanding capital stock or shares of beneficial interest normally entitled
to vote for the election of one or more directors or trustees (regardless of
any contingency which does or may suspend or dilute the voting rights) is at
such time owned directly or indirectly by such Person or one or more of such
Person's Subsidiaries, (ii)any partnership of which such Person is a general
partner or of which 50% or more of the partnership interests is at the time
directly or indirectly owned by such Person or one or more of such Person's
Subsidiaries, (iii)any limited liability company of which such Person is a
member or of which 50% or more of the limited liability company interests is
at the time directly or indirectly owned by such Person or one or more of such
Person's Subsidiaries, or (iv)any corporation, trust, partnership, limited
liability company or other entity which is controlled or capable of being
controlled by such Person or one or more of such Person's Subsidiaries.
Subsidiary Shares shall have the meaning assigned to that term in Section
5.1.2.
Swing Loan Commitment shall mean PNC Bank's commitment to make Swing Loans
to the Borrower pursuant to Section 2.1.2 hereof in an aggregate principal
amount up to $10,000,000.
Swing Loan Note shall mean the Swing Loan Note of the Borrower in the form
of Exhibit 1.1(S) issued by the Borrower at the request of PNC Bank evidencing
the Swing Loans to PNC Bank, together with all amendments, extensions,
renewals, replacements, refinancings or refundings thereof in whole or in
part.
Swing Loan Request shall mean a request for a Swing Loan made in
accordance with Section 2.5.2 hereof.
Swing Loans shall mean collectively and Swing Loan shall mean separately
all Swing Loans or any Swing Loan made by PNC Bank to the Borrower pursuant to
Section 2.1.2 hereof.
Transferor Bank shall mean the selling Bank pursuant to an Assignment and
Assumption Agreement.
1.2 Construction.
Unless the context of this Agreement otherwise clearly requires, the
following rules of construction shall apply to this Agreement and each of the
other Loan Documents:
1.2.1 Number; Inclusion.
References to the plural include the singular, the plural, the part and
the whole; "or" has the inclusive meaning represented by the phrase "and/or";
and "including" has the meaning represented by the phrase "including without
limitation";
1.2.2 Determination.
References to "determination" of or by the Agent or the Banks shall be
deemed to include good-faith estimates by the Agent or the Banks (in the case
of quantitative determinations) and good-faith beliefs by the Agent or the
Banks (in the case of qualitative determinations), and any such determination
shall be conclusive absent manifest error;
1.2.3 Agent's Discretion and Consent.
Whenever the Agent or the Banks are granted the right herein to act in its
or their sole discretion or to grant or withhold consent, such right shall be
exercised in good faith;
1.2.4 Documents Taken as a Whole.
The words "hereof," "herein," "hereunder," "hereto" and similar terms in
this Agreement or any other Loan Document refer to this Agreement or such
other Loan Document as a whole and not to any particular provision of this
Agreement or such other Loan Document;
1.2.5 Headings.
The section and other headings contained in this Agreement or such other
Loan Document and the table of contents (if any) preceding this Agreement or
such other Loan Document are for reference purposes only and shall not control
or affect the construction of this Agreement or such other Loan Document or
the interpretation thereof in any respect;
1.2.6 Implied References to This Agreement.
Article, section, subsection, clause, schedule and exhibit references are
to this Agreement or other Loan Document, as the case may be, unless otherwise
specified;
1.2.7 Persons.
Reference to any Person includes such Person's successors and assigns,
but, if applicable, only if such successors and assigns are permitted by this
Agreement or such other Loan Document, as the case may be, and reference to a
Person in a particular capacity excludes such Person in any other capacity;
1.2.8 Modifications to Documents.
Reference to any agreement (including this Agreement and any other
Loan Document together with the schedules and exhibits hereto or thereto),
document or instrument means such agreement, document or instrument as
amended, modified, replaced, substituted for, superseded or restated;
1.2.9 From, To and Through.
Relative to the determination of any period of time, "from" means
"from and including"; "to" means "to but excluding"; and "through" means
"through and including"; and
1.2.19 Shall; Will.
References to "shall" and "will" are intended to have the same
meaning.
1.3 Accounting Principles.
Except as otherwise provided in this Agreement, all computations and
determinations as to accounting or financial matters and all financial
statements to be delivered pursuant to this Agreement shall be made and
prepared in accordance with GAAP and consistent with the past practices of
the Borrower and its Subsidiaries (including principles of consolidation where
appropriate), and all accounting or financial terms shall have the meanings
ascribed to such terms by GAAP; provided, however, that all accounting terms
used in Section 7.1.11 [Negative Covenants] (and all defined terms used in the
definition of any accounting term used in Section 7.1.11) shall have the
meaning given to such terms (and defined terms) under GAAP as in effect on the
date hereof applied on a basis consistent with those used in preparing the
Historical Statements referred to in Section 5.1.8(i) [Historical Statements].
In the event of any change after the date hereof in GAAP, and if such change
would result in the inability to determine compliance with the financial
covenants set forth in Section 7.1.11 based upon the Borrower's regularly
prepared financial statements by reason of the preceding sentence, then the
parties hereto agree to endeavor, in good faith, to agree upon an amendment to
this Agreement that would adjust such financial covenants in a manner that
would not affect the substance thereof, but would allow compliance therewith
to be determined in accordance with the Borrower's financial statements at
that time.
2. REVOLVING CREDIT AND SWING LOAN FACILITIES
2.1 Commitments.
2.1.1 Revolving Credit Loan Commitments.
Subject to the terms and conditions hereof and relying upon the
representations and warranties herein set forth, each Bank severally agrees to
make Revolving Credit Loans to the Borrower at any time or from time to time
on or after the date hereof to the Expiration Date, provided that after giving
effect to such Loan, the aggregate amount of Loans from such Bank shall not
exceed such Bank's Revolving Credit Commitment minus such Bank's Ratable Share
of the Letters of Credit Outstanding. Within such limits of time and amount
and subject to the other provisions of this Agreement, the Borrower may
borrow, repay and reborrow pursuant to this Section 2.1.1. The Revolving
Credit Loans shall be payable in four (4) installments in the aggregate amount
and on the dates set forth below:
Payment Date Aggregate Amount
September 30, 1999 $50,000,000
September 29, 2000 $75,000,000
September 28, 2001 $25,000,000
Expiration Date All outstanding Loans
Notwithstanding the foregoing, each scheduled principal installment is payable
only to the extent the Revolving Facility Usage exceeds the Revolving Credit
Commitments immediately after the permanent reduction of the Revolving Credit
Commitments pursuant to Section 2.11.2
2.1.2 Swing Loan Commitment.
Subject to the terms and conditions hereof and relying upon the
representations and warranties herein set forth, and in order to facilitate
loans and repayments between Settlement Dates, PNC Bank agrees to make swing
loans (the "Swing Loans") to the Borrower, at any time or from time to time
after the date hereof to, but not including, the Expiration Date, in an
aggregate principal amount up to but not in excess of $10,000,000 (the "Swing
Loan Commitment"), provided that the aggregate principal amount of PNC Bank's
Swing Loans and the Revolving Credit Loans of all the Banks at any one time
outstanding shall not exceed the Revolving Credit Commitments of all the
Banks. Within such limits of time and amount and subject to the other
provisions of this Agreement, the Borrower may borrow, repay and reborrow
pursuant to this Section 2.1.2.
2.2 Nature of Banks' Obligations With Respect to Revolving Credit
Loans.
Each Bank shall be obligated to participate in each request for Revolving
Credit Loans pursuant to Section 2.5 [Revolving Credit Loan Requests, Etc.] in
accordance with its Ratable Share. The aggregate of each Bank's Revolving
Credit Loans outstanding hereunder to the Borrower at any time shall never
exceed its Revolving Credit Commitment minus its Ratable Share of the Letters
of Credit Outstanding. The obligations of each Bank hereunder are several.
The failure of any Bank to perform its obligations hereunder shall not affect
the Obligations of the Borrower to any other party, nor shall any other party
be liable for the failure of such Bank to perform its obligations hereunder.
The Banks shall have no obligation to make Revolving Credit Loans hereunder on
or after the Expiration Date.
2.3 Facility Fee.
Accruing from the date hereof until the Expiration Date, the Borrower
agrees to pay to the Agent for the account of each Bank, as consideration for
such Bank's Revolving Credit Commitment hereunder, a nonrefundable facility
fee (the "Facility Fee") equal to the Applicable Facility Fee Rate (computed
on the basis of a year of 365 or 366 days, as the case may be, and actual days
elapsed) on each Bank's Revolving Credit Commitment as the same may be
constituted from time to time. The Facility Fee shall be payable in arrears
on the first Business Day of each July, October, January and April after the
date hereof and on the Expiration Date or upon acceleration of the Loan.
2.4 Closing Fee.
The Borrower agrees to pay to the Agent, for the account of each Bank, as
consideration for such Bank's Revolving Credit Commitment, a nonrefundable
closing fee as set forth in the Agent's Letter.
2.5 Revolving Credit Loan Requests; Swing Loan Requests.
2.5.1 Revolving Credit Loan Requests.
Except as otherwise provided herein, the Borrower may from time to
time prior to the Expiration Date request the Banks to make Revolving Credit
Loans, or renew or convert the Interest Rate Option applicable to existing
Revolving Credit Loans pursuant to Section 3.2 [Interest Periods], by
delivering to the Agent, not later than 10:00 a.m., Pittsburgh time, (i)three
(3) Business Days prior to the proposed Borrowing Date with respect to the
making of Revolving Credit Loans to which the Euro-Rate Option applies or the
conversion to or the renewal of the Euro-Rate Option for any Loans, and
(ii)one (1) Business Day prior to either the proposed Borrowing Date with
respect to the making of a Revolving Credit Loan to which the Base Rate Option
applies or the last day of the preceding Interest Period with respect to the
conversion to the Base Rate Option for any Loan, a duly completed request
therefor substantially in the form of Exhibit 2.5.1 or a request by telephone
immediately confirmed in writing by letter, facsimile or telex in such form
(each, a "Loan Request"), it being understood that the Agent may rely on the
authority of any individual making such a telephonic request without the
necessity of receipt of such written confirmation. Each Loan Request shall be
irrevocable and shall specify (i)the proposed Borrowing Date; (ii)the
aggregate amount of the proposed Loans comprising each Borrowing Tranche,
which shall be in integral multiples of $1,000,000 and not less than
$5,000,000 for each Borrowing Tranche to which the Euro-Rate Option applies
and not less than the lesser of $1,000,000 or the maximum amount available for
Borrowing Tranches to which the Base Rate Option applies; (iii)whether the
Euro-Rate Option or Base Rate Option shall apply to the proposed Loans
comprising the applicable Borrowing Tranche; and (iv)in the case of a
Borrowing Tranche to which the Euro-Rate Option applies, an appropriate
Interest Period for the Loans comprising such Borrowing Tranche.
2.5.2 Swing Loan Requests.
Except as otherwise provided herein, the Borrower may from time to time
prior to the Expiration Date request PNC Bank to make Swing Loans by delivery
to PNC Bank not later than noon, Pittsburgh time, on the proposed Borrowing
Date of a duly completed request therefor substantially in the form of Exhibit
2.5.2 hereto or a request by telephone immediately confirmed in writing by
letter, facsimile or telex (each, a "Swing Loan Request"), it being understood
that the Agent may rely on the authority of any individual making such a
telephonic request without the necessity of receipt of such written
confirmation. Each Swing Loan Request shall be irrevocable and shall specify
the proposed Borrowing Date and the principal amount of such Swing Loan, which
shall be not less than $1,000,000.
2.6 Making Revolving Credit Loans and Swing Loans.
The Agent shall, promptly after receipt by it of a Loan Request pursuant
to Section 2.5 [Revolving Credit Loan Requests, Etc.], notify the Banks of its
receipt of such Loan Request, specifying: (i)the proposed Borrowing Date and
the time and method of disbursement of the Revolving Credit Loans requested
thereby; (ii)the amount and type of each such Revolving Credit Loan and the
applicable Interest Period (if any); and (iii)the apportionment among the
Banks of such Revolving Credit Loans as determined by the Agent in accordance
with Section 2.2 [Nature of Banks' Obligations With Respect to Revolving
Credit Loans]. Each Bank shall remit the principal amount of each Revolving
Credit Loan to the Agent such that the Agent is able to, and the Agent shall,
to the extent the Banks have made funds available to it for such purpose and
subject to Section 6.2 [Each Additional Loan or Letter of Credit], fund such
Revolving Credit Loans to the Borrower in U.S. Dollars and immediately
available funds at the Principal Office prior to 2:00 p.m., Pittsburgh time,
on the applicable Borrowing Date; provided that if any Bank fails to remit
such funds to the Agent in a timely manner, the Agent may elect in its sole
discretion to fund with its own funds the Revolving Credit Loans of such Bank
on such Borrowing Date, and such Bank shall be subject to the repayment
obligation in Section 9.16 [Availability of Funds].
2.6.1 Making Swing Loans.
So long as PNC Bank elects to make Swing Loans, PNC Bank shall,
after receipt by it of a Swing Loan Request pursuant to Section 2.5.2, fund
such Swing Loan to the Borrower in U.S. Dollars and immediately available
funds at the Principal Office prior to 3:00 p.m., Pittsburgh time, on the
Borrowing Date.
2.7 Use of Proceeds.
The proceeds of the Revolving Credit Loans shall be used to refinance the
Existing Credit Facilities and for general corporate purposes and in
accordance with Section 7.1.10 [Use of Proceeds].
2.8 Borrowings to Repay Swing Loans.
PNC Bank may, at its option, exercisable at any time for any reason
whatsoever, demand repayment of the Swing Loans, and each Bank shall make a
Revolving Credit Loan in an amount equal to such Bank's Ratable Share of the
aggregate principal amount of the outstanding Swing Loans, plus, if PNC Bank
so requests, accrued interest thereon, provided that no Bank shall be
obligated in any event to make Revolving Credit Loans in excess of its
Revolving Credit Commitment. Revolving Credit Loans made pursuant to the
preceding sentence shall bear interest at the Base Rate Option and shall be
deemed to have been properly requested in accordance with Section 2.5.1
without regard to any of the requirements of that provision. PNC Bank shall
provide notice to the Banks (which may be telephonic or written notice by
letter, facsimile or telex) that such Revolving Credit Loans are to be made
under this Section 2.8 and of the apportionment among the Banks, and the Banks
shall be unconditionally obligated to fund such Revolving Credit Loans
(whether or not the conditions specified in Section 2.5.1 are then satisfied)
by the time PNC Bank so requests, which shall not be earlier than 3:00 p.m.,
Pittsburgh time, on the Business Day next after the date the Banks receive
such notice from PNC Bank.
2.9 Letter of Credit Subfacility.
2.9.1 Issuance of Letters of Credit.
The Borrower may request the issuance of a letter of credit (each,
a "Letter of Credit") on behalf of itself or another Loan Party by delivering
to the Issuing Bank selected by the Borrower (with a copy to the Agent) a
completed application and agreement for letters of credit in such form as the
Issuing Bank may specify from time to time by no later than 10:00 a.m.,
Pittsburgh time, at least five (5) Business Days, or such shorter period as
may be agreed to by the Issuing Bank, in advance of the proposed date of
issuance. Each Letter of Credit shall be either a Standby Letter of Credit or
a Commercial Letter of Credit. Subject to the terms and conditions hereof and
in reliance on the agreements of the other Banks set forth in this Section
2.9, the Issuing Bank will issue a Letter of Credit provided that each Letter
of Credit shall (A)have a maximum maturity of twelve (12) months from the date
of issuance and (B)in no event expire later than ten (10) Business Days prior
to the Expiration Date and providing that in no event shall (i)the Letters of
Credit Outstanding exceed, at any one time, $20,000,000 or (ii)the Revolving
Facility Usage exceed, at any one time, the Revolving Credit Commitments.
2.9.2 Letter of Credit Fees.
The Borrower shall pay (i)to the Agent for the ratable account of
the Banks a fee equal to the Letter of Credit Fee and (ii)to the Issuing Bank
for its own account a fronting fee agreed upon between the Issuing Bank and
the Borrower (such fee computed on the basis of a year of 360 days and actual
days elapsed), which fees shall be computed on the daily average Letters of
Credit Outstanding and shall be payable quarterly in arrears commencing with
the first Business Day of each July, October, January and April following
issuance of each Letter of Credit and on the Expiration Date. Subject to the
terms and conditions of this Agreement, any Issuing Bank selected by the
Borrower shall issue the requested Letter of Credit. The Borrower shall also
pay to the Issuing Bank for the Issuing Bank's sole account the Issuing Bank's
then-in-effect reasonable and customary fees and administrative expenses
payable with respect to the Letters of Credit as the Issuing Bank may
generally charge or incur from time to time in connection with the issuance,
maintenance, modification (if any), assignment or transfer (if any),
negotiation and administration of Letters of Credit.
2.9.3 Disbursements, Reimbursement.
2.9.3.1 Immediately upon the Issuance of each Letter of
Credit, each Bank shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the Issuing Bank a participation in
such Letter of Credit and each drawing thereunder in an amount equal to such
Bank's Ratable Share of the maximum amount available to be drawn under such
Letter of Credit and the amount of such drawing, respectively.
2.9.3.2 In the event of any request for a drawing under a
Letter of Credit by the beneficiary or transferee thereof, the Issuing Bank
will promptly notify the Borrower and the Agent. Provided that it shall have
received such notice, the Borrower shall reimburse (such obligation to
reimburse the Issuing Bank shall sometimes be referred to as a "Reimbursement
Obligation") the Agent on behalf of the Issuing Bank prior to 12:00 noon,
Pittsburgh time, on each date that an amount is paid by the Issuing Bank under
any Letter of Credit (each such date, a "Drawing Date") in an amount equal to
the amount so paid by the Issuing Bank. In the event the Borrower fails to
reimburse the Agent on behalf of the Issuing Bank for the full amount of any
drawing under any Letter of Credit by 12:00 noon, Pittsburgh time, on the
Drawing Date, the Issuing Bank will promptly notify the Agent and each Bank
thereof, and the Borrower shall be deemed to have requested that Revolving
Credit Loans be made by the Banks under the Base Rate Option to be disbursed
on the Drawing Date under such Letter of Credit, subject to the amount of the
unutilized portion of the Revolving Credit Commitment and subject to the
conditions set forth in Section 6.2 [Each Additional Loan or Letter of Credit]
other than any notice requirements. Any notice given by the Issuing Bank
pursuant to this Section 2.9.3.2 may be oral if immediately confirmed in
writing, provided that the lack of such an immediate confirmation shall not
affect the conclusiveness or binding effect of such notice.
2.9.3.3 Each Bank shall upon any notice pursuant to
Section 2.9.3.2 make available to the Agent, on behalf of the Issuing Bank, an
amount in immediately available funds equal to its Ratable Share of the amount
of the drawing, whereupon the participating Banks shall (subject to Section
2.9.3.4) each be deemed to have made a Revolving Credit Loan under the Base
Rate Option to the Borrower in that amount. If any Bank so notified fails to
make available to the Agent for the account of the Issuing Bank the amount of
such Bank's Ratable Share of such amount by no later than 2:00 p.m.,
Pittsburgh time, on the Drawing Date, then interest shall accrue on such
Bank's obligation to make such payment from the Drawing Date to the date on
which such Bank makes such payment (i) at a rate per annum equal to the
Federal Funds Effective Rate during the first three days following the Drawing
Date and (ii) at a rate per annum equal to the rate applicable to Loans under
the Revolving Credit Base Rate Option on and after the fourth day following
the Drawing Date. The Issuing Bank will promptly give notice to the Agent and
each other Bank of the occurrence of the Drawing Date, but failure of the
Issuing Bank to give any such notice on the Drawing Date or in sufficient time
to enable any Bank to effect such payment on such date shall not relieve such
Bank from its obligation under this Section 2.9.3.3.
2.9.3.4 With respect to any unreimbursed drawing that is
not converted into Revolving Credit Loans under the Base Rate Option to the
Borrower in whole or in part as contemplated by Section 2.9.3.2, because of
the Borrower's failure to satisfy the conditions set forth in Section 6.2
[Each Additional Loan or Letter of Credit] other than any notice requirements
or for any other reason, the Borrower shall be deemed to have incurred from
the Issuing Bank a Letter of Credit Borrowing in the amount of such drawing.
Such Letter of Credit Borrowing shall be due and payable on demand (together
with interest) and shall bear interest at the rate per annum applicable to the
Revolving Credit Loans under the Base Rate Option. Each Bank's payment to the
Agent on behalf of the Issuing Bank pursuant to Section 2.9.3.3 shall be
deemed to be a payment in respect of its participation in such Letter of
Credit Borrowing and shall constitute a "Participation Advance" from such Bank
in satisfaction of its participation obligation under this Section 2.9.3.
2.9.4 Repayment of Participation Advances.
2.9.4.1 Upon (and only upon) receipt by the Agent for the
account of the Issuing Bank of immediately available funds from the Borrower
(i)in reimbursement of any payment made by the Issuing Bank under the Letter
of Credit with respect to which any Bank has made a Participation Advance to
the Agent, or (ii)in payment of interest on such a payment made by the Issuing
Bank under such a Letter of Credit, the Agent on behalf of the Issuing Bank
will pay to each Bank, in the same funds as those received by the Agent on
behalf of the Issuing Bank, the amount of such Bank's Ratable Share of such
funds, except the Agent shall retain the amount of the Ratable Share of such
funds of any Bank that did not make a Participation Advance in respect of such
payment by Issuing Bank.
2.9.4.2 If any Issuing Bank (or the Agent on behalf of any
Issuing Bank) is required at any time to return to any Loan Party, or to a
trustee, receiver, liquidator, custodian or any official in any Insolvency
Proceeding, any portion of the payments made by any Loan Party to the Issuing
Bank or to the Agent on behalf of any Issuing Bank pursuant to Section 2.9.3.2
in reimbursement of a payment made under the Letter of Credit or interest or
fee thereon, each Bank shall, on demand of the Agent, on behalf of the Issuing
Bank, forthwith return to the Agent, on behalf of the Issuing Bank, the amount
of its Ratable Share of any amounts so returned by the Issuing Bank or by the
Agent on behalf of the Issuing Bank plus interest thereon from the date such
demand is made to the date such amounts are returned by such Bank to the
Issuing Bank or to the Agent on behalf of the Issuing Bank, at a rate per
annum equal to the Federal Funds Effective Rate in effect from time to time.
2.9.5 Documentation.
Each Loan Party agrees to be bound by the terms of the Issuing
Bank's application and agreement for letters of credit and the Issuing Bank's
written regulations and customary practices relating to letters of credit,
though such interpretation may be different from such Loan Party's own. In
the event of a conflict between such application or agreement and this
Agreement, this Agreement shall govern. It is understood and agreed that,
except in the case of gross negligence or willful misconduct, neither the
Agent nor any Issuing Bank shall be liable for any error, negligence and/or
mistakes, whether of omission or commission, in following any Loan Party's
instructions or those contained in the Letters of Credit or any modifications,
amendments or supplements thereto.
2.9.6 Determinations to Honor Drawing Requests.
In determining whether to honor any request for drawing under any
Letter of Credit by the beneficiary thereof, the Issuing Bank shall be
responsible to determine only that the documents and certificates required to
be delivered under such Letter of Credit have been delivered and that they
comply on their face with the requirements of such Letter of Credit.
2.9.7 Nature of Participation and Reimbursement Obligations.
Each Bank's obligation in accordance with this Agreement to make
the Revolving Credit Loans or Participation Advances, as contemplated by
Section 2.9.3, as a result of a drawing under a Letter of Credit, and the
Obligation of the Borrower to reimburse the Issuing Bank upon a draw under a
Letter of Credit, shall be absolute, unconditional and irrevocable, and shall
be performed strictly in accordance with the terms of this Section 2.9 under
all circumstances, including the following circumstances:
(i) any set-off, counterclaim, recoupment,
defense or other right which such Bank may have against the Issuing Bank, the
Agent, the Borrower or any other Person for any reason whatsoever;
(ii) the failure of any Loan Party or any other
Person to comply, in connection with a Letter of Credit Borrowing, with the
conditions set forth in Section 2.1 [Revolving Credit Commitments], 2.5
[Revolving Credit Loan Requests, Etc.], 2.6 [Making Revolving Credit Loans and
Swing Loans] or 6.2 [Each Additional Loan or Letter of Credit] or as otherwise
set forth in this Agreement for the making of a Revolving Credit Loan, it
being acknowledged that such conditions are not required for the making of a
Letter of Credit Borrowing and the obligation of the Banks to make
Participation Advances under Section 2.9.3;
(iii) any lack of validity or enforceability of
any Letter of Credit;
(iv) the existence of any claim, set-off, defense
or other right which any Loan Party or any Bank may have at any time against a
beneficiary or any transferee of any Letter of Credit (or any Persons for whom
any such transferee may be acting), the Agent, any Issuing Bank, or any Bank
or any other Person or, whether in connection with this
Agreement, the transactions contemplated herein or any unrelated transaction
(including any underlying transaction between any Loan Party or Subsidiaries
of a Loan Party and the beneficiary for which any Letter of Credit was
procured);
(v) any draft, demand, certificate or other
document presented under any Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect, even if the Issuing Bank has been
notified thereof;
(vi) payment by the Issuing Bank under any Letter
of Credit against presentation of a demand, draft, certificate or other
document which does not comply with the terms of such Letter of Credit;
(vii) any adverse change in the business,
operations, properties, assets, condition (financial or otherwise) or
prospects of any Loan Party or Subsidiaries of a Loan Party;
(viii)any breach of this Agreement or any other
Loan Document by any party thereto;
(ix) the occurrence or continuance of an
Insolvency Proceeding with respect to any Loan Party;
(x) the fact that an Event of Default or a
Potential Default shall have occurred and be continuing;
(xi) the fact that the Expiration Date shall have
passed or this Agreement or the Commitments hereunder shall have been
terminated; and
(xii) any other circumstance or happening
whatsoever, whether or not similar to any of the foregoing.
Nothing in the preceding sentence shall relieve the Agent from
liability pursuant to Section 2.9.9 [Liability for Acts and Omissions] for the
Agent's gross negligence or willful misconduct in connection with actions or
omissions described in such clauses (i) through (xii) of such sentence.
2.9.8 Indemnity.
In addition to amounts payable as provided in Section 9.5
[Reimbursement and Indemnification of Agent by the Borrower], the Borrower
hereby agrees to protect, indemnify, pay and save harmless the Agent and each
Issuing Bank from and against any and all claims, demands, liabilities,
damages, losses, costs, charges and expenses (including reasonable fees,
expenses and disbursements of counsel and allocated costs of internal counsel)
which the Agent or any Issuing Bank may incur or be subject to as a
consequence, direct or indirect, of (i)the issuance of any Letter of Credit,
other than as a result of (A)the gross negligence or willful misconduct of any
Agent or an Issuing Bank as determined by a final judgment of a court of
competent jurisdiction or, (B)subject to the following clause (ii), the
wrongful dishonor by an Issuing Bank of a proper demand for payment made under
any Letter of Credit, or (ii)the failure of an Issuing Bank to honor a drawing
under any such 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
"Governmental Acts").
2.9.9 Liability for Acts and Omissions.
As between any Loan Party, each Issuing Bank and the Agent, such
Loan Party assumes all risks of the acts and omissions of, or misuse of the
Letters of Credit by, the respective beneficiaries of such Letters of Credit.
In furtherance and not in limitation of the foregoing, neither any Agent nor
any Issuing Bank shall be responsible for: (i)the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document submitted
by any party in connection with the application for an issuance of any such
Letter of Credit, even if it should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged (even if the Issuing
Bank shall have been notified thereof); (ii)the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign any
such Letter of Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, which may prove to be invalid or ineffective for
any reason; (iii)the failure of the beneficiary of any such Letter of Credit,
or any other party to which such Letter of Credit may be transferred, to
comply fully with any conditions required in order to draw upon such Letter of
Credit, or any other claim of any Loan Party against any beneficiary of such
Letter of Credit or any such transferee, or any dispute between or among any
Loan Party and any beneficiary of any Letter of Credit or any such transferee;
(iv)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; (v)errors in interpretation of technical terms; (vi)any
loss or delay in the transmission or otherwise of any document required in
order to make a drawing under any such Letter of Credit or of the proceeds
thereof; (vii)the misapplication by the beneficiary of any such Letter of
Credit of the proceeds of any drawing under such Letter of Credit; or
(viii)any consequences arising from causes beyond the control of any Issuing
Bank or any Agent, including any Governmental Acts, and none of the above
shall affect or impair, or prevent the vesting of, any of the Agent's rights
or powers hereunder or of any of the rights or powers hereunder of any Issuing
Bank. Nothing in the preceding sentence shall: (x) relieve the Agent from
liability for the Agent's gross negligence or willful misconduct in connection
with actions or omissions described in such clauses (i) through (viii) of such
sentence, or (y)relieve any Issuing Bank from liability for such Issuing
Bank's gross negligence or willful misconduct in connection with actions or
omissions described in such clauses (i) through (viii) of such sentence.
In furtherance and extension, and not in limitation, of the
specific provisions set forth above, any action taken or omitted by the Agent
or any Issuing Bank under or in connection with the Letters of Credit issued
by it or any documents and certificates delivered thereunder, if taken or
omitted in good faith, shall not put the Agent or any Issuing Bank under any
resulting liability to the Borrower or any other Bank.
2.10 Mandatory Prepayments.
2.10.1 Sale of Assets.
Within five (5) Business Days of any sale of assets authorized by
Section 7.2.6(iii) [Disposition of Assets or Subsidiaries], the Borrower shall
make a mandatory prepayment of principal of the Revolving Credit Loans equal
to the gross proceeds (after deducting fees and expenses incurred in
connection with such sale) paid by the buyer or buyers in connection with such
sale, together with accrued interest on such principal amount.
Notwithstanding the foregoing, each mandatory prepayment required by this
Section 2.10.1 is payable only to the extent the Revolving Facility Usage
exceeds the Revolving Credit Commitments after giving effect to the permanent
reduction of the Revolving Credit Commitments pursuant to Section 2.11.2(ii),
provided any accrued interest on such amount shall nonetheless be payable in
cash on the date of any mandatory prepayment required under this Section
2.10.1.
2.10.2 Application Among Interest Rate Options.
All actual cash prepayments required pursuant to this Section 2.10
shall first be applied among the Interest Rate Options to the principal amount
of the Loans subject to the Base Rate Option and then to the Loans subject to
the Euro-Rate Option. In accordance with Section 4.5.2 [Indemnity], the
Borrower shall indemnify the Banks for any loss or expense, including loss of
margin, incurred with respect to any such prepayments applied against Loans
subject to the Euro-Rate Option on any day other than the last day of the
applicable Interest Period.
2.11 Permanent Reductions of Commitments.
2.11.1 Voluntary Reductions.
The Borrower shall be permitted, without premium or penalty, at any
time upon five (5) Business Days' notice to the Agent, to reduce permanently
the Revolving Credit Commitments in an aggregate amount of not less than
$5,000,000 and in integral multiples of $1,000,000 for amounts in excess of
$5,000,000, and each Bank's Revolving Credit Commitment shall be reduced in
accordance with its Ratable Share; provided, however, the principal amount of
all Loans outstanding at any time shall not be permitted to exceed the
Revolving Credit Commitments of all the Banks at such time.
2.11.2 Mandatory Reductions.
The Revolving Credit Commitments shall be permanently reduced (i)on
each date on which a scheduled installment of principal is due, as set forth
in Section 2.1.1, by an amount equal to such scheduled installment, and (ii)on
the date of any mandatory prepayment required pursuant to Section 2.10.1 by an
amount equal to the gross proceeds (after deducting fees and expenses incurred
in connection with such sale) paid by the buyer or buyers in connection with
such asset securitization or other receivables sale
transaction, and in each case, each Bank's Revolving Credit Commitment shall
be reduced in accordance with its Ratable Share.
2.11.3 Effect of Reductions.
After each such reduction, the Facility Fee shall be calculated
upon the Revolving Credit Commitments of the Banks as so reduced, and the
amount of the reduction of the Revolving Credit Commitments shall not be
reinstated.
3. INTEREST RATES
3.1 Interest Rate Options.
The Borrower shall pay interest in respect of the outstanding unpaid
principal amount of the Loans as selected by it from the Base Rate Option or
Euro-Rate Option set forth below applicable to the Loans, it being understood
that, subject to the provisions of this Agreement, the Borrower may select
different Interest Rate Options and different Interest Periods to apply
simultaneously to the Loans comprising different Borrowing Tranches and may
convert to or renew one or more Interest Rate Options with respect to all or
any portion of the Loans comprising any Borrowing Tranche, provided that there
shall not be at any one time outstanding more than seven (7) Borrowing
Tranches in the aggregate among all of the Loans, and provided further that
only the Base Rate Option shall apply to the Swing Loans. If at any time the
designated rate applicable to any Loan made by any Bank exceeds such Bank's
highest lawful rate, the rate of interest on such Bank's Loan shall be limited
to such Bank's highest lawful rate.
3.1.1 Revolving Credit Interest Rate Options.
The Borrower shall have the right to select from the following
Interest Rate Options applicable to the Revolving Credit Loans (subject to the
provisions above regarding Swing Loans):
(i) Revolving Credit Base Rate Option: A
fluctuating rate per annum (computed on the basis of a year of 365 or 366
days, as the case may be, and actual days elapsed) equal to the Base Rate plus
the Applicable Margin, such interest rate to change automatically from time to
time effective as of the effective date of each change in the Base Rate; or
(ii) Revolving Credit Euro-Rate Option: A rate
per annum (computed on the basis of a year of 360 days and actual days
elapsed) equal to the Euro-Rate plus the Applicable Margin.
3.1.2 Rate Quotations.
The Borrower may call the Agent on or before the date on which a
Loan Request is to be delivered to receive an indication of the rates then in
effect, but it is acknowledged that such projection shall not be binding on
the Agent or the Banks nor affect the rate of interest which thereafter is
actually in effect when the election is made.
3.1.3 Change in Fees or Interest Rates.
If the Applicable Margin or Applicable Facility Fee Rate is
increased or reduced with respect to any period for which the Borrower has
already paid interest or Facility Fees, the Agent shall recalculate the
additional interest or Facility Fees due from the Borrower and shall, within
fifteen (15) Business Days after the Borrower notifies the Agent of such
increase or decrease, give the Borrower and the Banks notice of such
recalculation.
3.1.3.1 Any additional interest or Facility Fee due from
the Borrower shall be paid to the Agent for the account of the Banks on the
next date on which an interest or fee payment is due; provided, however, that
if there are no Loans outstanding or if the Loans are due and payable, such
additional interest or Facility Fee shall be paid promptly after receipt of
written request for payment from the Agent.
3.1.3.2 Any interest or Facility Fee refund due to the
Borrower shall be credited against payments otherwise due from the Borrower on
the next interest or fee payment due date or, if the Loans have been repaid
and the Banks are no longer committed to lend under this Agreement, the Banks
shall pay the Agent for the account of the Borrower such interest or Facility
Fee refund not later than five Business Days after written notice from the
Agent to the Banks.
3.2 Interest Periods.
At any time when the Borrower shall select, convert to or renew a
Euro-Rate Option, the Borrower shall notify the Agent thereof at least three
(3) Business Days prior to the effective date of such Euro-Rate Option by
delivering a Loan Request. The notice shall specify an interest period (the
"Interest Period") during which such Interest Rate Option shall apply, such
Interest Period to be one, two, three or six Months. Notwithstanding the
preceding sentence, the following provisions shall apply to any selection of,
renewal of or conversion to a Euro-Rate Option:
3.2.1 Ending Date and Business Day.
Any Interest Period which would otherwise end on a date which is
not a Business Day shall be extended to the next succeeding Business Day,
unless such Business Day falls in the next calendar month, in which case such
Interest Period shall end on the next preceding Business Day;
3.2.2 Amount of Borrowing Tranche.
Each Borrowing Tranche of Euro-Rate Loans shall be in integral
multiples of $1,000,000 and not less than $5,000,000;
3.2.3 Termination Before Expiration Date.
The Borrower shall not select, convert to or renew an Interest
Period for any portion of the Loans that would end after the Expiration Date;
and
3.2.4. Renewals.
In the case of the renewal of a Euro-Rate Option at the end of an
Interest Period, the first day of the new Interest Period shall be the last
day of the preceding Interest Period, without duplication in payment of
interest for such day.
3.3 Interest After Default.
To the extent permitted by Law, upon the occurrence of an Event of Default
and until such time such Event of Default shall have been cured or waived:
3.3.1 Letter of Credit Fees; Interest Rate.
The Letter of Credit Fees and the rate of interest for each Loan
otherwise applicable pursuant to Section 2.9.2 [Letter of Credit Fees] or
Section 3.1 [Interest Rate Options], respectively, shall be increased by 2.0%
per annum; and
3.3.2 Other Obligations.
Each other Obligation hereunder, if not paid when due, shall bear
interest at a rate per annum equal to the sum of the rate of interest
applicable under the Revolving Credit Base Rate Option plus an additional 2%
per annum from the time such Obligation becomes due and payable until it is
paid in full.
3.3.3 Acknowledgment.
The Borrower acknowledges that the increase in rates referred to in
this Section 3.3 reflects, among other things, the fact that such Loans or
other amounts have become a substantially greater risk given their default
status and that the Banks are entitled to additional compensation for such
risk; and all such interest shall be payable by Borrower upon demand by Agent.
3.4 Euro-Rate Unascertainable; Illegality; Increased Costs; Deposits
Not Available.
3.4.1 Unascertainable.
If on any date on which a Euro-Rate would otherwise be determined,
the Agent shall have determined that:
(i) adequate and reasonable means do not exist
for ascertaining such Euro-Rate, or
(ii) a contingency has occurred which materially
and adversely affects the London interbank eurodollar market relating to the
Euro-Rate,
then the Agent shall have the rights specified in Section 3.4.3.
3.4.2 Illegality; Increased Costs; Deposits Not Available.
If at any time any Bank shall have determined that:
(i) the making, maintenance or funding of any
Loan to which a Euro-Rate Option applies has been made impracticable or
unlawful by compliance by such Bank in good faith with any Law or any
interpretation or application thereof by any Official Body or with any request
or directive of any such Official Body (whether or not having the force of
Law), or
(ii) such Euro-Rate Option will not adequately
and fairly reflect the cost to such Bank of the establishment or maintenance
of any such Loan, or
(iii) after making all reasonable efforts,
deposits of the relevant amount in Dollars for the relevant Interest Period
for a Loan to which a Euro-Rate Option applies, respectively, are not
available to such Bank with respect to such Loan in the London interbank
market,
then the Agent shall have the rights specified in Section 3.4.3.
3.4.3 Agent's and Bank's Rights.
In the case of any event specified in Section 3.4.1 above, the
Agent shall promptly so notify the Banks and the Borrower thereof, and in the
case of an event specified in Section 3.4.2 above, such Bank shall promptly so
notify the Agent and endorse a certificate to such notice as to the specific
circumstances of such notice, and the Agent shall promptly send copies of such
notice and certificate to the other Banks and the Borrower. Upon such date as
shall be specified in such notice (which shall not be earlier than the date
such notice is given), the obligation of (A)the Banks, in the case of such
notice given by the Agent, or (B)such Bank, in the case of such notice given
by such Bank, to allow the Borrower to select, convert to or renew a Euro-Rate
Option shall be suspended until the Agent shall have later notified the
Borrower, or such Bank shall have later notified the Agent, of the Agent's or
such Bank's, as the case may be, determination that the circumstances giving
rise to such previous determination no longer exist. If at any time the Agent
makes a determination under Section 3.4.1 and the Borrower has previously
notified the Agent of its selection of, conversion to or renewal of a
Euro-Rate Option and such Interest Rate Option has not yet gone into effect,
such notification shall be deemed to provide for selection of, conversion to
or renewal of the Base Rate Option otherwise available with respect to such
Loans. If any Bank notifies the Agent of a determination under Section 3.4.2,
the Borrower shall, subject to the Borrower's indemnification Obligations
under Section 4.5.2 [Indemnity], as to any Loan of the Bank to which a
Euro-Rate Option applies, on the date specified in such notice either convert
such Loan to the Base Rate Option otherwise available with respect to such
Loan or
prepay such Loan in accordance with Section 4.4 [Voluntary Prepayments].
Absent due notice from the Borrower of conversion or prepayment, such Loan
shall automatically be converted to the Base Rate Option otherwise available
with respect to such Loan upon such specified date.
3.5 Selection of Interest Rate Options.
If the Borrower fails to select a new Interest Period to apply to any
Borrowing Tranche of Loans under the Euro-Rate Option at the expiration of an
existing Interest Period applicable to such Borrowing Tranche in accordance
with the provisions of Section 3.2 [Interest Periods], the Borrower shall be
deemed to have converted such Borrowing Tranche to the Base Rate Option,
commencing upon the last day of the existing Interest Period.
4. PAYMENTS
4.1 Payments.
All payments and prepayments to be made in respect of principal, interest,
Facility Fees, Letter of Credit Fees, the Agent's Fee or other fees or amounts
due from the Borrower hereunder shall be payable prior to noon, Pittsburgh
time, on the date when due without presentment, demand, protest or notice of
any kind, all of which are hereby expressly waived by the Borrower, and
without set-off, counterclaim or other deduction of any nature, and an action
therefor shall immediately accrue. Such payments shall be made to the Agent
at the Principal Office for the account of PNC Bank with respect to the Swing
Loans and for the ratable accounts of the Banks with respect to the Revolving
Credit Loans in U.S. Dollars and in immediately available funds, and the Agent
shall promptly distribute such amounts to the Banks in immediately available
funds; provided that in the event payments are received by noon, Pittsburgh
time, by the Agent with respect to the Loans and such payments are not
distributed to the Banks on the same day received by the Agent, the Agent
shall pay the Banks the Federal Funds Effective Rate with respect to the
amount of such payments for each day held by the Agent and not distributed to
the Banks. The Agent's and each Bank's statement of account, ledger or other
relevant record shall, in the absence of manifest error, be conclusive as the
statement of the amount of principal of and interest on the Loans and other
amounts owing under this Agreement and shall be deemed an "account stated."
4.2 Pro Rata Treatment of the Banks.
Each borrowing shall be allocated to each Bank according to its Ratable
Share, and each selection of, conversion to or renewal of any Interest Rate
Option and each payment or prepayment by the Borrower with respect to
principal, interest, Facility Fees, Letter of Credit Fees or other fees
(except for the Agent's Fee) or amounts due from the Borrower hereunder to the
Banks with respect to the Loans shall (except as provided in Section 3.4.3
[Agent's and Bank's Rights] in the case of an event specified in Section 3.4
[Euro-Rate Unascertainable, Etc.], 4.4.2 [Replacement of a Bank] or 4.5
[Additional Compensation in Certain Circumstances]) be made in proportion to
the applicable Loans outstanding from each Bank and, if no such Loans are then
outstanding, in proportion to the Ratable Share of each Bank. Notwithstanding
any of the foregoing, each borrowing or payment or prepayment by the Borrower
of principal, interest, fees or other amounts from the Borrower with respect
to Swing Loans shall be made by or to PNC Bank according to Article 2.
4.3 Interest Payment Dates.
Interest on Loans to which the Base Rate Option applies shall be due and
payable in arrears on the first Business Day of each July, October, January
and April after the date hereof and on the Expiration Date or upon
acceleration of the Loan. Interest on Loans to which the Euro-Rate Option
applies shall be due and payable on the last day of each Interest Period for
those Loans and, if such Interest Period is longer than three (3) Months, also
on the 90th day of such Interest Period. Interest on mandatory prepayments of
principal under Section 2.10 [Mandatory Prepayments] shall be due on the date
such mandatory prepayment is due. Interest on the principal amount of each
Loan or other monetary Obligation shall be due and payable on demand after
such principal amount or other monetary Obligation becomes due and payable
(whether on the stated maturity date, upon acceleration or otherwise).
4.4 Voluntary Prepayments.
4.4.1 Right to Prepay.
The Borrower shall have the right at its option from time to time
to prepay the Loans in whole or part without premium or penalty (except as
provided in Section 4.4.2 below or in Section 4.5 [Additional Compensation in
Certain Circumstances]):
(i) at any time with respect to any Loan to
which the Base Rate Option applies,
(ii) on the last day of the applicable Interest
Period with respect to Loans to which a Euro-Rate Option applies, and
(iii) on the date specified in a notice by any
Bank pursuant to Section 3.4 [Euro-Rate Unascertainable, Etc.] with respect to
any Loan to which a Euro-Rate Option applies.
Whenever the Borrower desires to prepay any part of the Loans, it
shall provide a prepayment notice to the Agent by 1:00 p.m., Pittsburgh time,
at least one (1) Business Day prior to the date of prepayment of the Revolving
Credit Loans or no later than 11:00a.m., Pittsburgh time, on the date of
prepayment of Swing Loans, setting forth the following information:
(x) the date, which shall be a Business Day, on which the
proposed prepayment is to be made;
(y) a statement indicating the application of the prepayment
between the Swing Loans, Revolving Credit Loans; and
(z) the total principal amount of such prepayment, which shall
not be less than $100,000 for any Swing Loan or $1,000,000 for any Revolving
Credit Loan.
All prepayment notices shall be irrevocable. The principal amount
of the Loans for which a prepayment notice is given, together with interest on
such principal amount except with respect to Loans to which the Base Rate
Option applies, shall be due and payable on the date specified in such
prepayment notice as the date on which the proposed prepayment is to be made.
Except as provided in Section 3.4.3 [Agent's and the Bank's Rights], if the
Borrower prepays a Loan but fails to specify the applicable Borrowing Tranche
which the Borrower is prepaying, the prepayment shall be applied first to
Loans to which the Base Rate Option applies, then to Loans to which the
Euro-Rate Option applies. Any prepayment hereunder shall be subject to the
Borrower's Obligation to indemnify the Banks under Section 4.5.2 [Indemnity].
4.4.2 Replacement of a Bank.
In the event any Bank (i)gives notice under Section 3.4 [Euro-Rate
Unascertainable, Etc.] or Section 4.5.1 [Increased Costs, Etc.], (ii)does not
fund Revolving Credit Loans because the making of such Loans would contravene
any Law applicable to such Bank, (iii)does not approve any action as to which
consent of the Required Banks is requested by the Borrower and obtained
hereunder, or (iv)becomes subject to the control of an Official Body (other
than normal and customary supervision), then the Borrower shall have the right
at its option, with the consent of the Agent, which shall not be unreasonably
withheld, to prepay the Loans of such Bank in whole, together with all
interest accrued thereon, and terminate such Bank's Commitment within ninety
(90) days after (w)receipt of such Bank's notice under Section 3.4 [Euro-Rate
Unascertainable, Etc.] or 4.5.1 [Increased Costs, Etc.], (x)the date such Bank
has failed to fund Revolving Credit Loans because the making of such Loans
would contravene Law applicable to such Bank, (y)the date of obtaining the
consent which such Bank has not approved, or (z)the date such Bank became
subject to the control of an Official Body, as applicable; provided that (A)
the Borrower shall also pay to such Bank at the time of such prepayment any
amounts required under Section 4.5 [Additional Compensation in Certain
Circumstances] and any accrued interest due on such amount and any related
fees; (B) the Borrower shall also prepay the Loans, together with all interest
accrued thereon, and terminate the Commitment of all other Banks that are
similarly situated pursuant to Section 4.4.2 (i)-(iii); (C) unless the
Borrower exercises its right to permanently reduce the Commitments by the
amount of such Bank's Commitment (upon such notice and in such amounts as set
forth in Section 2.11.1 [Voluntary Reductions]),the Commitment of such Bank
shall be provided by one or more of the remaining Banks or a replacement bank
acceptable to the Agent, which consent shall not be unreasonably withheld;,
and (D) the remaining Banks shall have no obligation hereunder to increase
their Commitments. Notwithstanding the foregoing, the Agent may only be
replaced subject to the requirements of Section9.14 [Successor Agent] and an
Issuing Bank may only be replaced if all Letters of Credit issued by such
Issuing Bank have expired or been terminated or replaced.
4.4.3 Change of Lending Office.
Each Bank agrees that upon the occurrence of any event giving rise
to increased costs or other special payments under Section 3.4.2 [Illegality,
Etc.] or 4.5.1 [Increased Costs, Etc.] with respect to such Bank, it will, if
requested by the Borrower, use reasonable efforts (subject to overall policy
considerations of such Bank) to designate another lending office for any Loans
or Letters of Credit affected by such event, provided that such designation is
made on such terms that such Bank and its lending office suffer no economic,
legal or regulatory disadvantage, with the object of avoiding the consequence
of the event giving rise to the operation of such Section. Nothing is this
Section 4.4.3 shall affect or postpone any of the Obligations of the Borrower
or any other Loan Party or the rights of the Agent or any Bank provided in
this Agreement.
4.5 Additional Compensation in Certain Circumstances.
4.5.1 Increased Costs or Reduced Return Resulting From Taxes,
Reserves, Capital Adequacy Requirements, Expenses, Etc.
If any Law, guideline or interpretation, or any change in any Law,
guideline or interpretation or application thereof by any Official Body
charged with the interpretation or administration thereof, or compliance with
any request or directive (whether or not having the force of Law) of any
central bank or other Official Body:
(i) subjects any Bank to any tax or changes the
basis of taxation with respect to this Agreement, the Loans or payments by the
Borrower of principal, interest, Facility Fees or other amounts due from the
Borrower hereunder (except for taxes on the overall net income of such Bank),
(ii) imposes, modifies or deems applicable any
reserve, special deposit or similar requirement against credits or commitments
to extend credit extended by, or assets (funded or contingent) of, deposits
with or for the account of or other acquisitions of funds by, any Bank, or
(iii) imposes, modifies or deems applicable any
capital adequacy or similar requirement (A)against assets (funded or
contingent) of, or letters of credit, other credits or commitments to extend
credit extended by, any Bank, or (B)otherwise applicable to the obligations of
any Bank under this Agreement,
and the result of any of the foregoing is to increase the cost to, reduce the
income receivable by or impose any expense (including loss of margin) upon any
Bank with respect to this Agreement, or the making, maintenance or funding of
any part of the Loans (or, in the case of any capital adequacy or similar
requirement, to have the effect of reducing the rate of return on any Bank's
capital, taking into consideration such Bank's customary policies with respect
to capital adequacy) by an amount which such Bank in its sole discretion deems
to be material, such Bank shall from time to time notify the Borrower and the
Agent of the amount determined in good faith (using any averaging and
attribution methods employed in good faith) by such Bank to be necessary to
compensate such Bank for such increase in cost, reduction of income,
additional expense or reduced rate of return. Such notice shall set forth in
reasonable detail the basis for such determination. Such amount shall be due
and payable by the Borrower to such Bank ten (10) Business Days after such
notice is given.
4.5.2 Indemnity.
In addition to the compensation required by Section 4.5.1
[Increased Costs, Etc.], the Borrower shall indemnify each Bank against all
liabilities, losses or expenses (including loss of margin, any loss or expense
incurred in liquidating or employing deposits from third parties and any loss
or expense incurred in connection with funds acquired by a Bank to fund or
maintain Loans subject to a Euro-Rate Option) which such Bank sustains or
incurs as a consequence of any:
(i) payment, prepayment, conversion or renewal
of any Loan to which a Euro-Rate Option applies on a day other than the last
day of the corresponding Interest Period (whether or not such payment or
prepayment is mandatory, voluntary or automatic and whether or not such
payment or prepayment is then due),
(ii) attempt by the Borrower to revoke
(expressly, by later inconsistent notices or otherwise) in whole or part any
Loan Request under Section 2.5 [Revolving Credit Loan Requests, Etc.] or
Section 3.2 [Interest Periods] or notice relating to prepayments under Section
4.4 [Voluntary Prepayments], or
(iii) default by the Borrower in the performance
or observance of any covenant or condition contained in this Agreement or any
other Loan Document, including any failure of the Borrower to pay when due (by
acceleration or otherwise) any principal, interest, Facility Fee or any other
amount due hereunder.
If any Bank sustains or incurs any such loss or expense, it shall
from time to time notify the Borrower of the amount determined in good faith
by such Bank (which determination may include such assumptions, allocations of
costs and expenses and averaging or attribution methods as such Bank shall
deem reasonable) to be necessary to indemnify such Bank for such loss or
expense. Such notice shall set forth in reasonable detail the basis for such
determination. Such amount shall be due and payable by the Borrower to such
Bank ten (10) Business Days after such notice is given.
4.6 Notes.
Upon the request of any Bank, the Revolving Credit Loans made by such Bank
may be evidenced by a Revolving Credit Note in the form of Exhibit1.1(R).
4.7 Settlement Date Procedures.
In order to minimize the transfer of funds between the Banks and the
Agent, the Borrower may borrow, repay and reborrow Swing Loans, and PNC Bank
may make Swing Loans, as provided in Section 2.1.2 hereof during the period
between Settlement Dates. Not later than 10:00 a.m., Pittsburgh time, on each
Settlement Date, the Agent shall notify each Bank of its Ratable Share of the
total of the Revolving Credit Loans and the Swing Loans (each, a "Required
Share"). Prior to 3:00 p.m., Pittsburgh time, on such Settlement Date, each
Bank shall pay to the Agent the amount equal to the difference between its
Required Share and its Revolving Credit Loans, and the Agent shall pay to each
Bank its Ratable Share of all payments made by the Borrower to the Agent with
respect to the Revolving Credit Loans. The Agent shall also effect settlement
in accordance with the foregoing sentence on the proposed Borrowing Dates for
Revolving Credit Loans and on Mandatory Prepayment Dates and may at its option
effect settlement on any other Business Day. These settlement procedures are
established solely as a matter of administrative convenience, and nothing
contained in this Section 4.7 shall relieve the Banks of their obligation to
fund Revolving Credit Loans on dates other than a Settlement Date pursuant to
Section 2.8 [Borrowings to Repay Swing Loans]. The Agent may at any time at
its option for any reason whatsoever require each Bank to pay immediately to
the Agent such Bank's Ratable Share of the outstanding Revolving Credit Loans,
and each Bank may at any time require the Agent to pay immediately to such
Bank its Ratable Share of all payments made by the Borrower to the Agent with
respect to the Revolving Credit Loans.
5. REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties.
The Loan Parties, jointly and severally, make the following
representations and warranties with respect to the Loan Parties, and further,
to the best of their knowledge and belief, make the following representations
and warranties with respect to the Subsidiaries of the Borrower which are not
Loan Parties:
5.1.1 Organization and Qualification.
Each Loan Party is a corporation, partnership or limited liability
company duly organized, validly existing and in good standing under the laws
of its jurisdiction of organization. Each Subsidiary of each Loan Party is a
corporation, partnership or limited liability company duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, except where the failure to be in good standing would not have
a Material Adverse Change. Each Loan Party and each Subsidiary of each Loan
Party has the lawful power to own or lease its properties and to engage in the
business it presently conducts or proposes to conduct. Each Loan Party and
each Subsidiary of each Loan Party is duly licensed or qualified and in good
standing in each jurisdiction where the property owned or leased by it or the
nature of the business transacted by it or both make such licensing or
qualification necessary, except where the failure to be so licensed or
qualified would not have a Material Adverse Change.
5.1.2 Subsidiaries.
Schedule 5.1.2 states the name of each of the Borrower's
Subsidiaries, its jurisdiction of incorporation, its authorized capital stock,
the issued and outstanding shares (referred to herein as the "Subsidiary
Shares") and the owners thereof if it is a corporation, its outstanding
partnership interests (the "Partnership Interests") if it is a partnership and
its outstanding limited liability company interests, interests assigned to
managers thereof and the voting rights associated therewith (the "LLC
Interests") if it is a limited liability company, all the foregoing as in
effect on the Closing Date. The Borrower and each Subsidiary of the Borrower
have good and marketable title to all of the respective Subsidiary Shares,
Partnership Interests and LLC Interests they purport to own, free and clear in
each case of any Lien. All Subsidiary Shares, Partnership Interests and LLC
Interests have been validly issued, and all Subsidiary Shares are fully paid
and nonassessable. All capital contributions and other consideration required
to be made or paid in connection with the issuance of the Partnership
Interests and LLC Interests have been made or paid, as the case may be. There
are no options, warrants or other rights outstanding to purchase any such
Subsidiary Shares, Partnership Interests or LLC Interests except as indicated
on Schedule5.1.2.
5.1.3 Power and Authority.
Each Loan Party has full power to enter into, execute, deliver and
carry out this Agreement and the other Loan Documents to which it is a party,
to incur the Indebtedness contemplated by the Loan Documents and to perform
its Obligations under the Loan Documents to which it is a party, and all such
actions have been duly authorized by all necessary proceedings on its part.
5.1.4 Validity and Binding Effect.
This Agreement has been duly and validly executed and delivered by
each Loan Party, and each other Loan Document which any Loan Party is required
to execute and deliver on or after the date hereof will have been duly
executed and delivered by such Loan Party on the required date of delivery of
such Loan Document. This Agreement and each other Loan Document constitutes
or will constitute, legal, valid and binding obligations of each Loan Party
which is or will be a party thereto on and after the respective dates of
delivery thereof, enforceable against such Loan Party in accordance with their
respective terms, except to the extent that enforceability of any of such Loan
Document may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the enforceability of creditors' rights
generally or limiting the right of specific performance.
5.1.5 No Conflict.
Neither the execution and delivery of this Agreement or the other
Loan Documents by any Loan Party nor the consummation of the transactions
herein or therein contemplated or compliance with the terms and provisions
hereof or thereof by any of them will conflict with, constitute a default
under or result in any breach of (i)the terms and conditions of the
certificate of incorporation, bylaws, certificate of limited partnership,
partnership agreement, certificate of formation, limited liability company
agreement or other organizational documents of any Loan Party or (ii)any Law
or any material agreement or instrument or order, writ, judgment, injunction
or decree to which any Loan Party or any of its Subsidiaries is a party or by
which it or any of its Subsidiaries is bound or to which it is subject, or
result in the creation or enforcement of any Lien, charge or encumbrance
whatsoever upon any property (now or hereafter acquired) of any Loan Party or
any of its Subsidiaries (other than Liens granted under the Loan Documents).
5.1.6 Litigation.
Except as set forth on Schedule 5.1.5, there are no actions, suits,
proceedings or investigations pending or, to the knowledge of any Loan Party,
threatened against such Loan Party or any Subsidiary of such Loan Party at law
or equity before any Official Body which individually or in the aggregate
could reasonably be expected to result in any Material Adverse Change. None
of the Loan Parties or any Subsidiaries of any Loan Party is in violation of
any order, writ, injunction or decree of any Official Body which may result in
any Material Adverse Change.
5.1.7 Title to Properties.
Each Loan Party and each Subsidiary of each Loan Party has good and
marketable title to or valid leasehold interest in all material properties,
assets and other rights which it purports to own or lease or which are
reflected as owned purchase or carry or leased on its books and records, free
and clear of all Liens and encumbrances except Permitted Liens, and subject to
the terms and conditions of the applicable leases. All material leases of
property are in full force and effect without the necessity for any consent
which has not previously been obtained upon consummation of the transactions
contemplated hereby.
5.1.8 Financial Statements.
(i) Historical Statements. The Borrower has
delivered to the Agent copies of its audited consolidated year-end financial
statements for and as of the end of the 1997 fiscal year ended January 3, 1998
(the "Historical Statements"). The Historical Statements were compiled from
the books and records maintained by the Borrower's management, are correct and
complete and fairly represent the consolidated financial condition of the
Borrower and its Subsidiaries as of their dates and the results of operations
for the fiscal periods then ended and have been prepared in accordance with
GAAP consistently applied.
(ii) Financial Projections. The Borrower has
delivered to the Agent financial projections of the Borrower and its
Subsidiaries for the period covering the five fiscal years ending December 31,
2002 derived from various assumptions of the Borrower's management (the
"Financial Projections"). The Financial Projections represent a reasonable
range of possible results in light of the history of the business, present and
foreseeable conditions and the intentions of the Borrower's management.
(iii) Accuracy of Financial Statements. Neither
the Borrower nor any Subsidiary of the Borrower has any material liabilities,
contingent or otherwise, or forward or long-term commitments that are not
disclosed in the Historical Statements or in the notes thereto, and except as
disclosed therein, there are no unrealized or anticipated losses from any
commitments of the Borrower or any Subsidiary of the Borrower which may cause
a Material Adverse Change. Since January 3, 1998, no Material Adverse Change
has occurred.
5.1.9 Use of Proceeds; Margin Stock; Section 20 Subsidiaries.
5.1.9.1 General.
The Loan Parties intend to use the proceeds of the Loans in
accordance with Sections2.7 [Use of Proceeds] and 7.1.10 [Use of Proceeds].
5.1.9.2 Margin Stock.
None of the Loan Parties or any Subsidiary of any Loan
Party engages or intends to engage principally, or as one of its important
activities, in the business of extending credit for the purpose, immediately,
incidentally or ultimately, of purchasing or carrying margin stock (within the
meaning of Regulation U). No part of the proceeds of any Loan has been or
will be used, immediately, incidentally or ultimately, to any margin stock or
to extend credit to others for the purpose of purchasing or carrying any
margin stock or to refund Indebtedness originally incurred for such purpose,
or for any purpose which entails a violation of or which is inconsistent with
the provisions of the regulations of the Board of Governors of the Federal
Reserve System. None of the Loan Parties or any Subsidiary of any Loan Party
holds or intends to hold margin stock in such amounts that more than 25% of
the reasonable value of the assets of any Loan Party or Subsidiary of any Loan
Party are or will be represented by margin stock.
5.1.9.3 Section 20 Subsidiaries.
The Loan Parties do not intend to use and shall not
knowingly use any portion of the proceeds of the Loans, directly or
indirectly, to purchase during the underwriting period, or for 30 days
thereafter, Ineligible Securities being underwritten by a Section 20
Subsidiary.
5.1.10 Full Disclosure.
Neither this Agreement nor any other Loan Document, nor any
certificate, statement, agreement or other document furnished to the Agent or
any Bank in connection herewith or therewith, contains any untrue statement of
a material fact or omits to state a material fact necessary in order to make
the statements contained herein and therein, in light of the circumstances
under which they were made, not misleading. There is no fact known to any
Loan Party as of the Closing Date which materially adversely affects the
business, property, assets, financial condition, results of operations or
prospects of any Loan Party or Subsidiary of any Loan Party which has not been
set forth in this Agreement or in the certificates, statements, agreements or
other documents furnished in writing to the Agent and the Banks prior to or at
the date hereof in connection with the transactions contemplated hereby.
5.1.11 Taxes.
All federal, state, local and other tax returns required to have
been filed with respect to each Loan Party have been filed and all federal,
state, local and other tax returns required to have been filed with respect to
each Subsidiary of each Loan Party after the date of creation of such
Subsidiary or the acquisition of such Subsidiary by any Loan Party have been
filed, and payment or adequate provision therefor has been made of all taxes,
fees, assessments and other governmental charges which have or may become due
pursuant to said returns or to assessments received, except to the extent that
such taxes, fees, assessments and other charges are being contested in good
faith by appropriate proceedings diligently conducted and for which such
reserves or other appropriate provisions, if any, as shall be required by GAAP
shall have been made. Except as disclosed in writing to the Agent, there are
no agreements or waivers extending the statutory period of limitations
applicable to any federal income tax return of any Loan Party or Subsidiary of
any Loan Party for any period.
5.1.12 Consents and Approvals.
No consent, approval, exemption, order or authorization of, or a
registration or filing with, any Official Body or any other Person is required
by any Law or any agreement in connection with the execution, delivery and
carrying out of this Agreement and the other Loan Documents by any Loan Party,
except as listed on Schedule 5.1.12, all of which shall have been obtained or
made on or prior to the Closing Date except as otherwise indicated on Schedule
5.1.12.
5.1.13 No Event of Default; Compliance With Instruments.
No event has occurred and is continuing, and no condition exists or
will exist after giving effect to the borrowings or other extensions of credit
to be made on the Closing Date under or pursuant to the Loan Documents, which
constitutes an Event of Default or Potential Default. None of the Loan
Parties or any Subsidiary of any Loan Party is in violation of (i)any term of
its certificate of incorporation, bylaws, certificate of limited partnership,
partnership agreement, certificate of formation, limited liability company
agreement or other organizational documents or (ii)any material agreement or
instrument to which it is a party or by which it or any of its properties may
be subject or bound where such violation would constitute a Material Adverse
Change.
5.1.14 Patents, Trademarks, Copyrights, Licenses, Etc.
Each Loan Party and each Subsidiary of each Loan Party owns or
possesses all the material patents, trademarks, service marks, trade names,
copyrights, licenses, registrations, franchises, permits and rights necessary
to own and operate its properties and to carry on its business as presently
conducted and planned to be conducted by such Loan Party or Subsidiary,
without known, possible, alleged or actual conflict with the rights of others.
5.1.15 Insurance.
No notice has been received by the Borrower or any Subsidiary, and
no grounds exist, to cancel or avoid any insurance policies or bonds or to
reduce the coverage provided thereby. Such policies and bonds provide
adequate coverage from reputable and financially sound insurers in amounts
sufficient to insure the assets and risks of each Loan Party and each
Subsidiary of each Loan Party in accordance with prudent business practice in
the industry of the Loan Parties and their Subsidiaries.
5.1.16 Compliance With Laws.
The Loan Parties and their Subsidiaries are in compliance in all
material respects with all applicable Laws in all jurisdictions in which any
Loan Party or Subsidiary of any Loan Party is presently or will be doing
business, except where the failure to do so would not constitute a Material
Adverse Change.
5.1.17 Material Contracts; Burdensome Restrictions.
All material contracts relating to the business operations of each
Loan Party and each Subsidiary of any Loan Party, including all employee
benefit plans and Labor Contracts, are valid, binding and enforceable upon
such Loan Party or Subsidiary and each of the other parties thereto in
accordance with their respective terms, and there is no default thereunder, to
the Loan Parties' knowledge, with respect to parties other than such Loan
Party or Subsidiary. None of the Loan Parties or their Subsidiaries is bound
by any contractual obligation, or subject to any restriction in any
organization document or any requirement of Law, which could result in a
Material Adverse Change.
5.1.18 Investment Companies; Regulated Entities.
None of the Loan Parties or any Subsidiary of any Loan Party is an
"investment company" registered or required to be registered under the
Investment Company Act of 1940 or under the "control" of an "investment
company" as such terms are defined in the Investment Company Act of 1940 and
shall not become such an "investment company" or under such "control." None
of the Loan Parties or any Subsidiary of any Loan Party is subject to any
other federal or state statute or regulation limiting its ability to incur
Indebtedness for borrowed money.
5.1.19 Plans and Benefit Arrangements.
(i) The Borrower and each other member of the
ERISA Group are in compliance in all material respects with any applicable
provisions of ERISA with respect to all Benefit Arrangements, Plans and
Multiemployer Plans. There has been no Prohibited Transaction with respect to
any Benefit Arrangement or any Plan or, to the best knowledge of the Borrower,
with respect to any Multiemployer Plan or Multiple Employer Plan, which could
result in any material liability of the Borrower or any other member of the
ERISA Group. The Borrower and all other members of the ERISA Group have made,
when due, any and all payments required to be made under any agreement
relating to a Multiemployer Plan or a Multiple Employer Plan or any Law
pertaining thereto. With respect to each Plan and Multiemployer Plan, the
Borrower and each other member of the ERISA Group (i)have fulfilled in all
material respects their obligations under the minimum funding standards of
ERISA, (ii)have not incurred any liability to the PBGC, and (iii)have not had
asserted against them any penalty for failure to fulfill the minimum funding
requirements of ERISA. All Plans, Benefit Arrangements and Multiemployer
Plans have been administered in accordance with their terms and applicable
Law.
(ii) No event requiring notice to the PBGC under
Section 302(f)(4)(A) of ERISA has occurred or is reasonably expected to occur
with respect to any Plan, and no amendment with respect to which security is
required under Section 307 of ERISA has been made or is reasonably expected to
be made to any Plan.
(iii) Neither the Borrower nor any other member of
the ERISA Group has incurred or reasonably expects to incur any material
withdrawal liability under ERISA to any Multiemployer Plan or Multiple
Employer Plan. Neither the Borrower nor any other member of the ERISA Group
has been notified by any Multiemployer Plan or Multiple Employer Plan that
such Multiemployer Plan or Multiple Employer Plan has been terminated within
the meaning of Title IV of ERISA and, to the best knowledge of the Borrower,
no Multiemployer Plan or Multiple Employer Plan is reasonably expected to be
reorganized or terminated within the meaning of Title IV of ERISA.
5.1.20 Employment Matters.
Each of the Loan Parties and each of their Subsidiaries is in
compliance with the Labor Contracts and all applicable federal, state and
local labor and employment Laws, including those related to equal employment
opportunity and affirmative action, labor relations, minimum wage, overtime,
child labor, medical insurance continuation, worker adjustment and relocation
notices, immigration controls and workers' and unemployment compensation,
where the failure to comply would constitute a Material Adverse Change. There
are no outstanding grievances, arbitration awards or appeals therefrom arising
out of the Labor Contracts or current or threatened strikes, picketing,
handbilling or other work stoppages or slowdowns at facilities of any of the
Loan Parties or any of their Subsidiaries which in any case would constitute a
Material Adverse Change. The Borrower has delivered to the Agent true and
correct copies of each of the collective bargaining agreements to which the
Borrower and the Subsidiaries are a party as of the Closing Date and, upon the
request of the Agent, the Borrower will provide a copy to the Agent of any
collective bargaining agreements entered into by the Borrower or any
Subsidiary of the Borrower after the Closing Date.
5.1.21 Environmental Matters.
Except as set forth in the Borrower's Annual Report on Form 10-K
for the fiscal year ending January 3, 1998, none of the Loan Parties or any
Subsidiary of any Loan Party has received any Environmental Complaint from any
Official Body or private Person alleging that such Loan Party or Subsidiary,
or any prior or subsequent owner of any of the Property, is a potentially
responsible party under the Comprehensive Environmental Response, Cleanup and
Liability Act, 42 U.S.C. 9601 et seq., and none of the Loan Parties has any
reason to believe that such an Environmental Complaint might be received.
There are no pending or, to any Loan Party's knowledge, threatened material
Environmental Complaints relating to any Loan Party or Subsidiary of any Loan
Party or, to any Loan Party's knowledge, any prior or subsequent owner of any
of the Property pertaining to, or arising out of, any Environmental
Conditions.
5.1.22 Senior Debt Status.
The Obligations of each Loan Party under this Agreement, the
Guaranty Agreement and each of the other Loan Documents to which it is a party
currently rank and will rank at least pari passu in priority of payment with
all other Indebtedness of such Loan Party, except Indebtedness of such Loan
Party to the extent secured by Permitted Liens. There is no Lien upon or with
respect to any of the properties or income of any Loan Party or Subsidiary of
any Loan Party which secures indebtedness or other obligations of any Person,
except for Permitted Liens.
5.1.23 Year 2000 Compliance.
Borrower has conducted a comprehensive review and assessment of its
computer applications to evaluate the risk that its computer applications will
not be able to properly perform date-sensitive functions after December31,
1999 (the "Year 2000 Problem") and has used reasonable efforts to prevent the
Year 2000 Problem from resulting in a Material Adverse Change.
5.2 Continuation of Representations.
The Loan Parties make the representations and warranties in this
Article5 on the date hereof and on the Closing Date and each date thereafter
on which a Loan is made or a Letter of Credit is issued as provided in and
subject to Section 6.2.
6. CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT
The obligation of each Bank to make Loans and of the Issuing Banks to
issue Letters of Credit hereunder is subject to the performance by each of the
Loan Parties of its Obligations to be performed hereunder at or prior to the
making of any such Loans or issuance of such Letters of Credit and to the
satisfaction of the following further conditions:
6.1 First Loans and Letters of Credit.
On the Closing Date:
6.1.1 Officer's Certificate.
The representations and warranties of each of the Loan Parties
contained in Section 5.1 and in each of the other Loan Documents shall be true
and accurate on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date (except
representations and warranties which relate solely to an earlier date or time,
which representations and warranties shall be true and correct on and as of
the specific dates or times referred to therein), and each of the Loan Parties
shall have performed and complied with all covenants and conditions hereof and
thereof, no Event of Default or Potential Default shall have occurred and be
continuing or shall exist; and there shall be delivered to the Agent for the
benefit of each Bank a certificate of each of the Loan Parties, dated the
Closing Date and signed by the Chief Executive Officer, President or Chief
Financial Officer of each of the Loan Parties, to each such effect.
6.1.2 Secretary's Certificate.
There shall be delivered to the Agent for the benefit of each Bank
a certificate dated the Closing Date and signed by the Secretary or an
Assistant Secretary of each of the Loan Parties, certifying as appropriate as
to:
(i) all action taken by each Loan Party in
connection with this Agreement and the other Loan Documents;
(ii) the names of the officer or officers
authorized to sign this Agreement and the other Loan Documents and the true
signatures of such officer or officers and specifying the Authorized Officers
permitted to act on behalf of each Loan Party for purposes of this Agreement
and the true signatures of such officers, on which the Agent and each Bank may
conclusively rely; and
(iii) copies of its organizational documents,
including its certificate of incorporation, bylaws, certificate of limited
partnership, partnership agreement, certificate of formation, and limited
liability company agreement as in effect on the Closing Date certified by the
appropriate state official where such documents are filed in a state office,
together with certificates from the appropriate state officials as to the
continued existence and good standing of each Loan Party in each state where
organized or qualified to do business and a bring-down certificate by
facsimile dated the Closing Date.
6.1.3 Delivery of Guaranty Agreement and Notes.
The Guaranty Agreement and the Notes, if any, shall have been duly
executed and delivered to the Agent for the benefit of the Banks.
6.1.4 Opinion of Counsel.
There shall be delivered to the Agent for the benefit of each Bank
a written opinion of Miller, Canfield, Paddock and Stone, counsel for the Loan
Parties (who may rely on the opinions of such other counsel as may be
acceptable to the Agent), dated the Closing Date and in form and substance
satisfactory to the Agent and its counsel:
(i) as to the matters set forth in Exhibit
6.1.4; and
(ii) as to such other matters incident to the
transactions contemplated herein as the Agent may reasonably request.
6.1.5 Legal Details.
All legal details and proceedings in connection with the
transactions contemplated by this Agreement and the other Loan Documents shall
be in form and substance satisfactory to the Agent and counsel for the Agent,
and the Agent shall have received all such other counterpart originals or
certified or other copies of such documents and proceedings in connection with
such transactions, in form and substance satisfactory to the Agent and said
counsel, as the Agent or said counsel may reasonably request.
6.1.6 Payment of Fees.
The Borrower shall have paid or caused to be paid to the Agent for
itself and for the account of the Banks, to the extent not previously paid,
all fees accrued through the Closing Date and the costs and expenses for
which the Agent, the Syndication Agent and the Banks are entitled to be
reimbursed.
6.1.7 Consents.
All material consents required to effectuate the transactions
contemplated hereby as set forth on Schedule5.1.12 shall have been obtained.
6.1.8 Officer's Certificate Regarding MACs.
Since January 3, 1998, no Material Adverse Change shall have
occurred; prior to the Closing Date, there shall have been no material adverse
change in the management of any Loan Party or Subsidiary of any Loan Party;
and there shall have been delivered to the Agent for the benefit of each Bank
a certificate dated the Closing Date and signed by the Chief Executive
Officer, President or Chief Financial Officer of each Loan Party to each such
effect.
6.1.9 No Violation of Laws.
The making of the Loans and the issuance of the Letters of Credit
shall not contravene any Law applicable to any Loan Party or any of the Banks.
6.1.10 No Actions or Proceedings.
No action, proceeding, investigation, regulation or legislation
shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain or prohibit, or to
obtain damages in respect of, this Agreement, the other Loan Documents or the
consummation of the transactions contemplated hereby or thereby or which, in
the Agent's sole discretion, would make it inadvisable to consummate the
transactions contemplated by this Agreement or any of the other Loan
Documents.
6.1.11 Insurance Policies; Certificates of Insurance;
Endorsements.
The Loan Parties shall have delivered certificates of insurance as
evidence acceptable to the Agent that adequate insurance in compliance with
Section 7.1.3 [Maintenance of Insurance] is in full force and effect and that
all premiums then due thereon have been paid, and upon request of the Agent,
shall provide to the Agent a certified copy of each Loan Party's casualty
insurance policy or policies evidencing coverage satisfactory to the Agent.
6.1.12 Payoff of Existing Indebtedness.
On or before the Closing Date, the Borrower shall have: (x)repaid
all Indebtedness, obligations, fees, interest, principal, and all other
amounts owing under the Existing Credit Facilities, (y)obtained releases and
shall have terminated of record all Liens with respect to the Existing Credit
Facilities, and (z)terminated the Existing Credit Facilities and all
commitments to make loans or issue Letters of Credit thereunder, and the
Borrower shall have provided evidence of all of the foregoing to the Required
Banks to the satisfaction of the Required Banks in their sole discretion.
6.2 Each Additional Loan or Letter of Credit.
At the time of making any Loans or issuing any Letters of Credit other
than Loans made or Letters of Credit issued on the Closing Date and after
giving effect to the proposed extensions of credit: the representations and
warranties of the Loan Parties contained in Section 5.1 and in the other Loan
Documents shall be true on and as of the date of such additional Loan or
Letter of Credit with the same effect as though such representations and
warranties had been made on and as of such date (except representations and
warranties which expressly relate solely to an earlier date or time, which
representations and warranties shall be true and correct on and as of the
specific dates or times referred to therein), and the Loan Parties shall have
performed and complied with all covenants and conditions hereof; no Event of
Default or Potential Default shall have occurred and be continuing or shall
exist; the making of the Loans or issuance of such Letter of Credit shall not
contravene any Law applicable to any Loan Party or Subsidiary of any Loan
Party or any of the Banks; and the Borrower shall have delivered to the Agent
(and the Issuing Bank, in the case of a request for a Letter of Credit) a duly
executed and completed Loan Request or application for a Letter of Credit as
the case may be.
7. COVENANTS
7.1 Affirmative Covenants.
The Loan Parties, jointly and severally, covenant and agree that until
payment in full of the Loans, Reimbursement Obligations and Letter of Credit
Borrowings, and interest thereon, expiration or termination of all Letters of
Credit, satisfaction of all of the Loan Parties' other Obligations under the
Loan Documents and termination of the Commitments, the Loan Parties shall
comply at all times with the following affirmative covenants:
7.1.1 Preservation of Existence, Etc.
Each Loan Party shall, and shall cause each of its Subsidiaries to,
maintain its legal existence as a corporation, limited partnership or limited
liability company and its license or qualification and good standing in each
jurisdiction in which its ownership or lease of property or the nature of its
business makes such license or qualification necessary, except where the
failure to do so would not result in a Material Adverse Change or except as
otherwise expressly permitted in Section 7.2.5 [Liquidations, Mergers, Etc.].
7.1.2 Payment of Liabilities, Including Taxes, Etc.
Each Loan Party shall, and shall cause each of its Subsidiaries to,
duly pay and discharge all liabilities to which it is subject or which are
asserted against it, promptly as and when the same shall become due and
payable, including all taxes, assessments and governmental charges upon it or
any of its properties, assets, income or profits, prior to the date on which
penalties attach thereto, except to the extent that such liabilities,
including taxes, assessments or charges, are being contested in good faith and
by appropriate and lawful proceedings diligently conducted and for which such
reserve or other appropriate provisions, if any, as shall be required by GAAP
shall have been made, but only to the extent that failure to discharge any
such liabilities would not result in any additional liability which would
adversely affect to a material extent the financial condition of any Loan
Party or Subsidiary of any Loan Party, provided that the Loan Parties and
their Subsidiaries will pay all such liabilities forthwith upon the
commencement of proceedings to foreclose any Lien which may have attached as
security therefor.
7.1.3 Maintenance of Insurance.
Each Loan Party shall, and shall cause each of its Subsidiaries to,
insure its properties and assets against loss or damage by fire and such other
insurable hazards as such assets are commonly insured (including fire,
extended coverage, property damage, workers' compensation, public liability
and business interruption insurance) and against other risks (including errors
and omissions) in such amounts as similar properties and assets are insured by
prudent companies in similar circumstances carrying on similar businesses, and
with reputable and financially sound insurers, including self-insurance to the
extent customary, all as reasonably acceptable to the Agent.
7.1.4 Maintenance of Properties and Leases.
Each Loan Party shall, and shall cause each of its Subsidiaries to,
maintain in good repair, working order and condition (ordinary wear and tear
excepted) in accordance with the general practice of other businesses of
similar character and size, all of those properties which are useful or
necessary to its business, and from time to time, such Loan Party will make or
cause to be made all appropriate repairs, renewals or replacements thereof,
except where the failure so maintain such properties would not result in a
Material Adverse Change.
7.1.5 Maintenance of Patents, Trademarks, Etc.
Each Loan Party shall, and shall cause each of its Subsidiaries to,
maintain in full force and effect all patents, trademarks, service marks,
trade names, copyrights, licenses, franchises, permits and other
authorizations necessary for the ownership and operation of its properties and
business if the failure so to maintain the same would constitute a Material
Adverse Change.
7.1.6 Visitation Rights.
Each Loan Party shall, and shall cause each of its Subsidiaries to,
permit any of the officers or authorized employees or representatives of the
Agent or any of the Banks to visit and inspect any of its properties and to
examine and make excerpts from its books and records and discuss its business
affairs, finances and accounts with its officers, all in such detail and at
such times and as often as any of the Banks may reasonably request, provided
that each Bank shall provide the Borrower and the Agent with reasonable notice
prior to any visit or inspection. In the event any Bank desires to conduct a
visit to or inspection of any of the properties of any Loan Party, such Bank
shall make a reasonable effort to conduct such visits and inspections
contemporaneously with any visits and inspections to be performed by the
Agent.
7.1.7 Keeping of Records and Books of Account.
The Borrower shall, and shall cause each Subsidiary of the Borrower
to, maintain and keep proper books of record and account which enable the
Borrower and its Subsidiaries to issue financial statements in accordance with
GAAP and as otherwise required by applicable Laws of any Official Body having
jurisdiction over the Borrower or any Subsidiary of the Borrower, and in which
full, true and correct entries shall be made in all material respects of all
its dealings and business and financial affairs.
7.1.8 Plans and Benefit Arrangements.
The Borrower shall, and shall cause each other member of the ERISA
Group to, comply with ERISA, the Internal Revenue Code and other applicable
Laws applicable to Plans and Benefit Arrangements except where such failure,
alone or in conjunction with any other failure, would not result in a Material
Adverse Change. Without limiting the generality of the foregoing, the
Borrower shall cause all of its Plans and all Plans maintained by any member
of the ERISA Group to be funded in accordance with the minimum funding
requirements of ERISA and shall make, and cause each member of the ERISA Group
to make, in a timely manner, all contributions due to Plans, Benefit
Arrangements and Multiemployer Plans.
7.1.9 Compliance With Laws and Building Standards.
Each Loan Party shall, and shall cause each of its Subsidiaries to,
comply with all applicable Laws, including all Environmental Laws and consumer
lending laws, and all applicable building standards, including the National
Manufactured Home Construction and Safety Standards promulgated by the U.S.
Department of Housing and Urban Development and any other local building
codes, in all respects, provided that it shall not be deemed to be a violation
of this Section 7.1.9 if any failure to comply with any Law or building
standard would not result in fines, penalties, remediation costs, other
similar liabilities or injunctive relief which, in the aggregate, would
constitute a Material Adverse Change.
7.1.10 Use of Proceeds.
The Loan Parties will use the Letters of Credit and the proceeds of
the Loans only for (i)general corporate purposes and for working capital,
(ii)to finance Permitted Acquisitions, or (iii)to repay and terminate
Indebtedness outstanding under the Existing Credit Facilities. The Loan
Parties shall not use the Letters of Credit or the proceeds of the Loans for
any purpose which contravenes any applicable Law or any provision hereof.
7.1.11 Addition of Subsidiaries as Guarantors in Certain
Circumstances.
In the event that the Subsidiaries of the Borrower which are not
Guarantors have aggregate gross revenues in excess of fifteen percent (15%)
of the consolidated gross revenues of the Borrower and its Subsidiaries in any
fiscal year of the Borrower (based upon the Borrower's consolidated financial
statements delivered pursuant to Section 7.3.2), then the Borrower shall cause
additional Subsidiaries to join in this Agreement as Guarantors pursuant to
Section 10.18 until the aggregate gross revenues and aggregate assets of the
Subsidiaries which are not Guarantors is reduced below the gross revenue
restriction set forth above.
7.2 Negative Covenants.
The Loan Parties, jointly and severally, covenant and agree that until
payment in full of the Loans, Reimbursement Obligations and Letter of Credit
Borrowings and interest thereon, expiration or termination of all Letters of
Credit, satisfaction of all of the Loan Parties' other Obligations hereunder
and termination of the Commitments, the Loan Parties shall comply with the
following negative covenants:
7.2.1 Indebtedness.
Each of the Loan Parties shall not, and shall not permit any of its
Subsidiaries to, at any time, create, incur, assume or suffer to exist any
Indebtedness, except:
(i) Indebtedness under the Loan Documents;
(ii) Indebtedness of a Loan Party to another Loan
Party;
(iii) Indebtedness of a Loan Party or Subsidiary
of a Loan Party for Floor-Plan Financing Obligations which are unsecured or
secured by Purchase Money Security Interests as described in clause(viii) of
the definition of Permitted Liens, provided that the aggregate amount of all
such Indebtedness permitted under this Section 7.2.1 (iii) at any one time
outstanding shall not exceed the amounts set forth below for the periods set
forth below:
Period Amount
Closing Date ( Dec. 31, 1998 $200,000,000
Jan. 1, 1999 ( Dec. 31, 1999 $250,000,000
Jan. 1, 2000 ( Dec. 31, 2000 $350,000,000
Jan. 1, 2001 ( Dec. 31, 2001 $425,000,000
Jan. 1, 2002 ( and thereafter $500,000,000;
(iv) Indebtedness of the Loan Parties and their
Subsidiaries for financing, the proceeds of which are used for capital
expenditures or in connection with capital leases made in the ordinary course
of business, which Indebtedness is secured by Purchase Money Security
Interests or mortgage Liens, provided that the aggregate amount of all such
Indebtedness at any one time outstanding shall not exceed the amount of
$20,000,000.
(v) Unsecured Indebtedness of a Loan Party or a
Subsidiary of a Loan Party comprising Earn Out Obligations not in excess of
$250,000,000 in the aggregate at any one time outstanding;
(vi) Repurchase Obligations, provided that any
material amount of such Repurchase Obligations shall have terms no more
burdensome to the Loan Parties and their Subsidiaries than terms standard in
the manufactured housing industry at the time such Repurchase Obligations are
incurred;
(vii) Existing Indebtedness set forth on Schedule
7.2.1, provided that there is no increase in the amount thereof or other
significant change in the terms thereof unless otherwise specified on Schedule
7.2.1; and
(viii)Indebtedness (other than as set forth above)
of the Borrower and its Subsidiaries in an amount not to exceed five percent
(5%) of the Consolidated Net Worth in the aggregate at any one time
outstanding.
7.2.2 Liens.
Each of the Loan Parties shall not, and shall not permit any of its
Subsidiaries to, at any time, create, incur, assume or suffer to exist any
Lien on any of its property or assets, tangible or intangible, now owned or
hereafter acquired, or agree or become liable to do so, except Permitted
Liens.
7.2.3 Guaranties.
Each of the Loan Parties shall not, and shall not permit any of its
Subsidiaries to, at any time, directly or indirectly, become or be liable in
respect of any Guaranty, or assume, guarantee, become surety for, endorse or
otherwise agree, become or remain directly or contingently liable upon or with
respect to any obligation or liability of any other Person, except for (i)
Guaranties of the Loan Parties and their Subsidiaries in favor of governmental
authorities in connection with required permitting of the Loan Parties and
their Subsidiaries by such authorities, (ii) Guaranties which in the aggregate
do not exceed $5,000,000 of Indebtedness at any one time outstanding or (iii)
Guaranties of Indebtedness permitted under Section 7.2.1(v).
7.2.4 Loans and Investments.
Each of the Loan Parties shall not, and shall not permit any of its
Subsidiaries to, at any time, make or suffer to remain outstanding any loan or
advance to, or purchase, acquire or own any stock, bonds, notes or securities
of, or any partnership interest (whether general or limited) or limited
liability company interest in, or any other investment or interest in, or make
any capital contribution to, any other Person, or agree, become or remain
liable to do any of the foregoing, except:
(i) trade credit extended on usual and customary
terms in the ordinary course of business;
(ii) advances to employees to meet expenses
incurred by such employees in the ordinary course of business;
(iii) Permitted Investments;
(iv) loans, advances and investments in
wholly-owned Subsidiaries of the Borrower; provided, however, that loans,
advances or investments in Subsidiaries which constitute Retail Finance
Companies shall not exceed 7-1/2% of Consolidated Net Worth in the aggregate
at any one time outstanding;
(v) loans, advances and investments in
Subsidiaries of the Borrower which are not wholly-owned Subsidiaries;
provided, however, that the aggregate of all such loans, advances or
investments at any one time outstanding shall not exceed fifteen percent (15%)
of Consolidated Net Worth;
(vi) loans, advances and investments in
Affiliates which are not Subsidiaries and which are permitted under Section
7.2.8; provided, however, that the aggregate of all such loans, advances and
investments shall not exceed at any one time outstanding seven and one-half
percent (7-1/2%) of Consolidated Net Worth; and
(vii) loans, advances and investments in retail
dealers of manufactured homes or other Persons doing business with any Loan
Party or Subsidiary of any Loan Party not to exceed $10,000,000 in the
aggregate at any one time.
7.2.5 Liquidations, Mergers, Consolidations, Acquisitions.
Each of the Loan Parties shall not, and shall not permit any of its
Subsidiaries to, at any time, dissolve, liquidate or wind-up its affairs, or
become a party to any merger or consolidation, or acquire by purchase, lease
or otherwise, all or substantially all of the assets or capital stock of any
other Person, provided that:
(1) any Subsidiary of the Borrower may consolidate or merge any
other Subsidiary of the Borrower, and
(2) The Borrower or any Subsidiary of the Borrower may acquire,
whether by purchase or by merger, (A)all of the ownership interests of another
Person or (B)substantially all of assets of another Person or of a business or
division of another Person (each an "Permitted Acquisition"), provided that
each of the following requirements is met:
(i) the Subsidiary, such Person and its owners,
as applicable, shall comply with Section 10.18 [Joinder of Guarantors] on or
before the date of such Permitted Acquisition;
(ii) the board of directors or other equivalent
governing body of such Person shall have approved such Permitted Acquisition;
(iii) the business acquired, or the business
conducted by the Person whose ownership interests are being acquired, as
applicable, shall be substantially the same as one or more line or lines of
business conducted by the Loan Parties and shall comply with Section 7.2.9
[Continuation of or Change in Business];
(iv) no Potential Default or Event of Default
shall exist immediately prior to and after giving effect to such Permitted
Acquisition;
(v) any Indebtedness incurred in connection with
such Permitted Acquisition shall be unsecured Indebtedness unless the Liens
are otherwise permitted in accordance with the terms of this Agreement; and
(vi) for any individual acquisition in which the
Consideration is $5,000,000 or more, the Borrower shall certify, and for any
individual acquisition in which the Consideration is $50,000,000 or more, the
Borrower shall demonstrate, that it shall be in compliance with the covenants
contained in Sections7.2.13, 7.2.14 and 7.2.15 after giving effect to such
Permitted Acquisition (including, in such computation, Indebtedness or other
liabilities assumed or incurred in connection with such Permitted Acquisition,
and income earned or expenses incurred by the Person, business or assets to be
acquired prior to the date of such Permitted Acquisition) by delivering, at
least five (5) Business Days prior to such Permitted Acquisition, a
certificate in the form of Exhibit7.2.5 certifying or demonstrating, as
applicable, such compliance.
7.2.6. Dispositions of Assets or Subsidiaries.
Each of the Loan Parties shall not, and shall not permit any of its
Subsidiaries to, at any time, sell, sell and lease back, convey, assign,
lease, abandon or otherwise transfer or dispose of, voluntarily or
involuntarily, any of its properties or assets, tangible or intangible
(including sale, assignment, discount or other disposition of accounts,
contract rights, chattel paper, equipment or general intangibles with or
without recourse or of capital stock, shares of beneficial interest,
partnership interests or limited liability company interests of a Subsidiary
of such Loan Party), except:
(i) transactions involving the sale of inventory
in the ordinary course of business;
(ii) any sale, transfer or lease of assets by any
wholly owned Subsidiary of such Loan Party to another Loan Party;
(iii) any sale, transfer or lease of assets, other
than those specifically excepted pursuant to clauses (i) and (ii) in
connection with a securitization or other receivables sale transaction, so
long as such transaction is nonrecourse to any of the Loan Parties (except for
customary recourse provisions) and (a) the proceeds of such securitization
transaction are applied as a mandatory prepayment of the Loans in accordance
with Section 2.10.1 and (b) the Commitments are reduced in accordance with
Section 2.11.2; or
(iv) any sale, transfer or lease of assets, other
than those specifically excepted pursuant to clauses (i) through (iii) above,
provided that (i)at the time of any disposition, no Event of Default shall
exist or shall result from such disposition, and (ii)the aggregate value of
all assets so sold by the Loan Parties and their Subsidiaries shall not exceed
5% of Consolidated Net Worth in any fiscal year.
7.2.7 Affiliate Transactions.
Each of the Loan Parties shall not, and shall not permit any of its
Subsidiaries to, at any time, enter into or carry out any transaction with any
Affiliate (including purchasing property or services from or selling property
or services to any Affiliate of any Loan Party or other Person) unless such
transaction is not otherwise prohibited by this Agreement, is entered into in
the ordinary course of business upon fair and reasonable arm's-length terms
and conditions and is in accordance with all applicable Law.
7.2.8 Subsidiaries, Partnerships and Joint Ventures.
The Borrower shall not, and shall not permit any of its
Subsidiaries to own or create directly or indirectly any Subsidiaries other
than (i)any Significant Subsidiary which has joined this Agreement as
Guarantor on the Closing Date; (ii)any Significant Subsidiary formed or
acquired after the Closing Date which becomes a Guarantor in accordance with
Section 10.18 [Joinder of Guarantors]; (iii)any Subsidiary which after the
Closing Date becomes a Significant Subsidiary and which upon becoming a
Significant Subsidiary becomes a Guarantor in accordance with Section 10.18
[Joinder of Guarantors] and (iv)any Subsidiary which is not a Significant
Subsidiary. The Borrower shall cause any of its Subsidiaries which at any
time becomes a Significant Subsidiary to become a Guarantor in accordance with
Section 10.18 [Joinder of Guarantors]. Neither the Borrower nor any
Subsidiary of the Borrower shall become or agree to become a general or
limited partner in any general or limited partnership or become a member or
manager of, or hold a limited liability company interest in, a limited
liability company, except that (i) the Borrower or any Subsidiary may become a
general or limited partner or member or manager of, or hold a limited
liability company interest in, other Loan Parties, and (ii) the Borrower or
any Subsidiary may become a general or limited partner or a member or manager
of, or hold a limited liability company interest in, an Affiliate, provided
that the liability of the Borrower or such Subsidiary is limited to its
investment in such Affiliate and the aggregate of all such investments does
not violate Section 7.2.4(v).
7.2.9 Continuation of or Change in Business.
Each of the Loan Parties shall not, and shall not permit any of its
Subsidiaries to, at any time, engage in any business other than the business,
operated by any Loan Party or Subsidiary during the present fiscal year, and
such Loan Party or Subsidiary shall not permit any material change in such
business.
7.2.10 Plans and Benefit Arrangements.
Each of the Loan Parties shall not, and shall not permit any of its
Subsidiaries to, at any time, engage in a Prohibited Transaction with any
Plan, Benefit Arrangement or Multiemployer Plan which, alone or in conjunction
with any other circumstances or set of circumstances resulting in liability
under ERISA or otherwise violate ERISA.
7.2.11 Fiscal Year.
The Borrower shall not, and shall not permit any Subsidiary of the
Borrower to, change its fiscal year from the twelve-month period ending on the
Saturday which is nearest to December 31 of each year.
7.2.12 Certain Agreements.
The Borrower has previously provided to the Agent each material
contract in effect as of Closing Date to which the Borrower or any Subsidiary
is a party relating to (i)the purchase of retail dealers with provisions
containing Earn Out Obligations, (ii)Floor-Plan Financing Obligations by any
Subsidiaries and (iii)any support agreement (whether containing Repurchase
Obligations or otherwise) with third party floor-plan financers.
7.2.13 Maximum Leverage Ratio.
The Loan Parties shall not at any time permit the Leverage Ratio to
exceed 3.0 to 1.0.
7.2.14 Minimum Interest Coverage Ratio.
The Loan Parties shall not permit the ratio of EBIT to consolidated
interest expense of the Borrower and its Subsidiaries, calculated as of the
end of each fiscal quarter for the four (4) fiscal quarters then ended, to be
less than 3.0 to 1.0.
7.2.15 Minimum Net Worth.
The Borrower shall not at any time permit Consolidated Net Worth to
be less than Base Net Worth.
7.3 Reporting Requirements.
The Loan Parties, jointly and severally, covenant and agree that until
payment in full of the Loans, Reimbursement Obligations and Letter of Credit
Borrowings and interest thereon, expiration or termination of all Letters of
Credit, satisfaction of all of the Loan Parties' other Obligations hereunder
and under the other Loan Documents and termination of the Commitments, the
Loan Parties will furnish or cause to be furnished to the Agent and each of
the Banks:
7.3.1 Quarterly Financial Statements.
As soon as available and in any event within forty-five (45)
calendar days after the end of each of the first three fiscal quarters in each
fiscal year, financial statements of the Borrower, consisting of a
consolidated balance sheet as of the end of such fiscal quarter and related
consolidated statements of income, stockholders' equity and cash flows for the
fiscal quarter then ended and the fiscal year through that date, all in
reasonable detail and certified (subject to normal year-end audit adjustments)
by the Chief Executive Officer, President or Chief Financial Officer of the
Borrower as having been prepared in accordance with GAAP, consistently
applied, and setting forth in comparative form the respective financial
statements for the corresponding date and period in the previous fiscal year.
The Loan Parties will be deemed to have complied with the delivery
requirements of this Section 7.3.1 if within forty-five (45) days after the
end of their fiscal quarter, the Borrower delivers to the Agent and each of
the Banks a copy of its Form10-Q as filed with the SEC and the financial
statements contained therein meet the requirements described in this Section
7.3.1.
7.3.2 Annual Financial Statements.
As soon as available and in any event within ninety (90) days after
the end of each fiscal year of the Borrower, financial statements of the
Borrower consisting of a consolidated balance sheet as of the end of such
fiscal year, and related consolidated statements of income, stockholders'
equity and cash flows for the fiscal year then ended, all in reasonable detail
and setting forth in comparative form the financial statements as of the end
of and for the preceding fiscal year, and certified by independent certified
public accountants of nationally recognized standing satisfactory to the
Agent. The certificate or report of accountants shall be free of
qualifications (other than any consistency qualification that may result from
a change in the method used to prepare the financial statements as to which
such accountants concur) and shall not indicate the occurrence or existence of
any event, condition or contingency which would materially impair the prospect
of payment or performance of any covenant, agreement or duty of any Loan Party
under any of the Loan Documents. The Loan Parties will be deemed to have
complied with the delivery requirements of this Section 7.3.2 if within ninety
(90) days after the end of their fiscal year, the Borrower delivers to the
Agent and each of the Banks a copy of its Annual Report and Form10-K as filed
with the SEC and the financial statements and certification of public
accountants contained therein meet the requirements described in this Section
7.3.2.
7.3.3 Certificate of the Borrower.
Concurrently with the financial statements of the Borrower
furnished to the Agent and to the Banks pursuant to Sections7.3.1 [Quarterly
Financial Statements] and 7.3.2 [Annual Financial Statements], a certificate
of the Borrower signed by the Chief Executive Officer, President or Chief
Financial Officer of the Borrower, in the form of Exhibit 7.3.3, to the effect
that, except as described pursuant to Section 7.3.4 [Notice of Default],
(i)the representations and warranties of the Borrower contained in Section 5.1
and in the other Loan Documents are true on and as of the date of such
certificate with the same effect as though such representations and warranties
had been made on and as of such date (except representations and warranties
which expressly relate solely to an earlier date or time), and the Loan
Parties have performed and complied with all covenants and conditions hereof,
(ii)no Event of Default or Potential Default exists and is continuing on the
date of such certificate, and (iii)containing calculations in sufficient
detail to demonstrate compliance as of the date of such financial statements
with all financial covenants contained in Section 7.1.11 [Negative Covenants].
7.3.4 Notice of Default.
Promptly after any officer of any Loan Party has learned of the
occurrence of an Event of Default or Potential Default, a certificate signed
by the Chief Executive Officer, President or Chief Financial Officer of such
Loan Party setting forth the details of such Event of Default or Potential
Default and the action which such Loan Party proposes to take with respect
thereto.
7.3.5 Notice of Litigation.
Promptly after the commencement thereof, notice of all actions,
suits, proceedings or investigations before or by any Official Body or any
other Person against any Loan Party or Subsidiary of any Loan Party, involve a
claim or series of claims in excess of $10,000,000 or which if adversely
determined would constitute a Material Adverse Change.
7.3.6 Sale of Assets.
At least five (5) calendar days prior thereto, with respect to any
proposed sale or transfer of assets pursuant to Section 7.2.6(iii).
7.3.7 Budgets, Forecasts, Other Reports and Information.
Promptly upon their becoming available to the Borrower:
(i) any reports, including management letters,
submitted to the Borrower or its board of directors by independent accountants
in connection with any annual, interim or special audit;
(ii) any reports, notices or proxy statements
generally distributed by the Borrower to its stockholders on a date no later
than the date supplied to such stockholders;
(iii) regular or periodic reports, including Forms
10-K, 10-Q and 8-K, registration statements and prospectuses, filed by the
Borrower with the SEC; or
(iv) such other reports and information as any of
the Banks may from time to time reasonably request. The Borrower shall also
notify the Banks promptly upon becoming aware of the enactment or adoption of
any Law which may result in a Material Adverse Change.
7.3.8 Notices Regarding Plans and Benefit Arrangements.
7.3.8.1 Certain Events.
Promptly upon becoming aware of the occurrence thereof,
notice (including the nature of the event and, when known, any action taken or
threatened by the Internal Revenue Service or the PBGC with respect thereto)
of:
(i) any Reportable Event with respect to the
Borrower or any other member of the ERISA Group (regardless of whether the
obligation to report said Reportable Event to the PBGC has been waived);
(ii) any Prohibited Transaction which could
subject the Borrower or any other member of the ERISA Group to a civil penalty
assessed pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975
of the Internal Revenue Code in connection with any Plan, any Benefit
Arrangement or any trust created thereunder;
(iii) any assertion of material withdrawal
liability with respect to any Multiemployer Plan;
(iv) any partial or complete withdrawal from a
Multiemployer Plan by the Borrower or any other member of the ERISA Group
under Title IV of ERISA (or assertion thereof), where such withdrawal is
likely to result in material withdrawal liability;
(v) any cessation of operations (by the Borrower
or any other member of the ERISA Group) at a facility in the circumstances
described in Section 4062(e) of ERISA;
(vi) withdrawal by the Borrower or any other
member of the ERISA Group from a Multiple Employer Plan;
(vii) a failure by the Borrower or any other
member of the ERISA Group to make a payment to a Plan required to avoid
imposition of a Lien under Section 302(f) of ERISA;
(viii)the adoption of an amendment to a Plan
requiring the provision of security to such Plan pursuant to Section 307 of
ERISA; or
(ix) any change in the actuarial assumptions or
funding methods used for any Plan, where the effect of such change is to
materially increase or materially reduce the unfunded benefit liability or
obligation to make periodic contributions.
7.3.8.2 Notices of Involuntary Termination and Annual
Reports.
Promptly after receipt thereof, copies of (a)all notices
received by the Borrower or any other member of the ERISA Group of the PBGC's
intent to terminate any Plan administered or maintained by the Borrower or any
member of the ERISA Group, or to have a trustee appointed to administer any
such Plan; and (b)at the request of the Agent or any Bank each annual report
(IRS Form 5500 series) and all accompanying schedules, the most recent
actuarial reports, the most recent financial information concerning the
financial status of each Plan administered or maintained by the Borrower or
any other member of the ERISA Group, and schedules showing the amounts
contributed to each such Plan by or on behalf of the Borrower or any other
member of the ERISA Group in which any of their personnel participate or from
which such personnel may derive a benefit, and each Schedule B (Actuarial
Information) to the annual report filed by the Borrower or any other member of
the ERISA Group with the Internal Revenue Service with respect to each such
Plan.
7.3.8.3 Notice of Voluntary Termination.
Promptly upon the filing thereof, copies of any Form 5310,
or any successor or equivalent form to Form 5310, filed with the PBGC in
connection with the termination of any Plan.
8. DEFAULT
8.1 Events of Default.
An Event of Default shall mean the occurrence or existence of any one or
more of the following events or conditions (whatever the reason therefor and
whether voluntary, involuntary or effected by operation of Law):
8.1.1 Payments Under Loan Documents.
The Borrower shall fail to pay any principal of any Loan (including
scheduled installments, mandatory prepayments or the payment due at maturity),
Reimbursement Obligation or Letter of Credit Borrowing when such principal is
due hereunder or shall fail to pay any interest on any Loan, Reimbursement
Obligation or Letter of Credit Borrowing or any other amount owing hereunder
or under the other Loan Documents after such principal, interest or other
amount becomes due in accordance with the terms hereof or thereof;
8.1.2 Breach of Warranty.
Any representation or warranty made at any time by any of the Loan
Parties herein or by any of the Loan Parties in any other Loan Document, or in
any certificate, other instrument or statement furnished pursuant to the
provisions hereof or thereof, shall prove to have been false or misleading in
any material respect as of the time it was made or furnished;
8.1.3 Breach of Negative Covenants or Visitation Rights.
Any of the Loan Parties shall default in the observance or
performance of any covenant contained in Section 7.1.6 [Visitation Rights] or
Section 7.2 [Negative Covenants];
8.1.4 Breach of Other Covenants.
Any of the Loan Parties shall default in the observance or
performance of any other covenant, condition or provision hereof or of any
other Loan Document, and such default shall continue unremedied for a period
of ten (10) Business Days after any officer of any Loan Party becomes aware of
the occurrence thereof (such grace period to be applicable only in the event
such default can be remedied by corrective action of the Loan Parties as
determined by the Agent in its sole discretion);
8.1.5 Defaults in Other Agreements or Indebtedness.
A default or event of default shall occur at any time under the
terms of any other agreement involving borrowed money or the extension of
credit or any other Indebtedness under which any Loan Party or Subsidiary of
any Loan Party may be obligated as a borrower or guarantor in excess of
$10,000,000 in the aggregate, and such breach, default or event of default
consists of the failure to pay (beyond any grace period permitted with respect
thereto, whether waived or not) any indebtedness when due (whether at stated
maturity, by acceleration or otherwise) or if such breach or default permits
or causes the acceleration of any indebtedness (whether or not such right
shall have been waived) or the termination of any commitment to lend;
8.1.6 Final Judgments or Orders.
Any final judgments or orders for the payment of money in excess of
$5,000,000 in the aggregate shall be entered against any Loan Party by a court
having jurisdiction in the premises, which judgment is not discharged,
vacated, bonded or stayed pending appeal within a period of thirty (30) days
from the date of entry;
8.1.7 Loan Document Unenforceable.
Any of the Loan Documents shall cease to be legal, valid and
binding agreements enforceable against the party executing the same or such
party's successors and assigns (as permitted under the Loan Documents) in
accordance with the respective terms thereof or shall in any way be terminated
(except in accordance with its terms) or become or be declared ineffective or
inoperative or shall in any way be challenged or contested or cease to give or
provide the respective rights, titles, interests, remedies, powers or
privileges intended to be created thereby;
8.1.8 Uninsured Losses; Proceedings Against Assets.
Any of the Loan Parties' or any of their Subsidiaries' assets are
attached, seized, levied upon or subjected to a writ or distress warrant for
liabilities which aggregate in excess of $5,000,000; or such come within the
possession of any receiver, trustee, custodian or assignee for the benefit of
creditors and the same is not cured within thirty (30) days thereafter;
8.1.9 Notice of Lien or Assessment.
A notices of Liens or assessments in excess of $5,000,000 in the
aggregate which are not Permitted Liens are filed of record with respect to
all or any part of any of the Loan Parties' or any of their Subsidiaries'
assets by the United States, or any department, agency or instrumentality
thereof, or by any state, county, municipal or other governmental agency,
including the PBGC, or any taxes or debts owing at any time or times hereafter
to any one of these becomes payable and the same is not paid within thirty
(30) days after the same becomes payable;
8.1.10 Insolvency.
The Borrower or any Guarantor ceases to be solvent or admits in
writing its inability to pay its debts as they mature;
8.1.11 Events Relating to Plans and Benefit Arrangements.
Any of the following occurs: (i)any Reportable Event, which the
Agent determines in good faith constitutes grounds for the termination of any
Plan by the PBGC or the appointment of a trustee to administer or liquidate
any Plan, shall have occurred and be continuing; (ii)proceedings shall have
been instituted or other action taken to terminate any Plan, or a termination
notice shall have been filed with respect to any Plan; (iii)a trustee shall be
appointed to administer or liquidate any Plan; (iv)the PBGC shall give notice
of its intent to institute proceedings to terminate any Plan or Plans or to
appoint a trustee to administer or liquidate any Plan; and, in the case of the
occurrence of (i), (ii), (iii) or (iv) above, the Agent determines in good
faith that the amount of the Borrower's liability is likely to exceed 10% of
its Consolidated Tangible Net Worth; (v)the Borrower or any member of the
ERISA Group shall fail to make any contributions when due to a Plan or a
Multiemployer Plan; (vi)the Borrower or any other member of the ERISA Group
shall make any amendment to a Plan with respect to which security is required
under Section 307 of ERISA; (vii)the Borrower or any other member of the ERISA
Group shall withdraw completely or partially from a Multiemployer Plan;
(viii)the Borrower or any other member of the ERISA Group shall withdraw (or
shall be deemed under Section 4062(e) of ERISA to withdraw) from a Multiple
Employer Plan; or (ix)any applicable Law is adopted, changed or interpreted by
any Official Body with respect to or otherwise affecting one or more Plans,
Multiemployer Plans or Benefit Arrangements and, with respect to any of the
events specified in (v), (vi), (vii), (viii) or (ix), the Agent determines in
good faith that any such occurrence would be reasonably likely to materially
and adversely affect the total enterprise represented by the Borrower and the
other members of the ERISA Group;
8.1.12 Cessation of Business.
Any Borrower or Guarantor ceases to conduct its business as
contemplated, except as expressly permitted under Section 7.2.5 [Liquidations,
Mergers, Etc.] or 7.2.6 [Dispositions of Assets or Subsidiaries], or any
Borrower or Guarantor is enjoined, restrained or in any way prevented by court
order from conducting all or any material part of its business and such
injunction, restraint or other preventive order is not dismissed within thirty
(30) days after the entry thereof;
8.1.13 Change of Control.
(i) Any person or group of persons (within the
meaning of Sections13(d) or 14(a) of the Securities Exchange Act of 1934, as
amended) shall have acquired beneficial ownership of (within the meaning of
Rule 13d-3 promulgated by the SEC under said Act) 30% or more of the voting
capital stock of the Borrower; or (ii)within a period of twelve (12)
consecutive calendar months, individuals who were directors of the Borrower on
the first day of such period shall cease to constitute a majority of the board
of directors of the Borrower other than as a result of voluntary resignation
or retirement;
8.1.14 Involuntary Proceedings.
A proceeding shall have been instituted in a court having
jurisdiction in the premises seeking a decree or order for relief in respect
of the Borrower or any Guarantor in an involuntary case under any applicable
bankruptcy, insolvency, reorganization or other similar law now or hereafter
in effect, or for the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator, conservator (or similar official) of the
Borrower or any Guarantor for any substantial part of its property, or for the
winding-up or liquidation of its affairs, and such proceeding shall remain
undismissed or unstayed and in effect for a period of sixty (60) consecutive
days or such court shall enter a decree or order granting any of the relief
sought in such proceeding; or
8.1.15 Voluntary Proceedings.
The Borrower or any Guarantor shall commence a voluntary case under
any applicable bankruptcy, insolvency, reorganization or other similar law now
or hereafter in effect, shall consent to the entry of an order for relief in
an involuntary case under any such law, or shall consent to the appointment or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator, conservator (or other similar official) of itself or for any
substantial part of its property or shall make a general assignment for the
benefit of creditors, or shall fail generally to pay its debts as they become
due, or shall take any action in furtherance of any of the foregoing.
8.2 Consequences of Event of Default.
8.2.1 Events of Default Other Than Bankruptcy, Insolvency or
Reorganization Proceedings.
If an Event of Default specified under Sections8.1.1 through 8.1.13
shall occur and be continuing, the Banks and the Agent shall be under no
further obligation to make Loans or issue Letters of Credit, as the case may
be, and the Agent may, and upon the request of the Required Banks, shall (i)by
written notice to the Borrower, declare the unpaid principal amount of the
Loans then outstanding and all interest accrued thereon, any unpaid fees and
all other Indebtedness of the Borrower to the Agent and the Banks hereunder
and thereunder to be forthwith due and payable, and the same shall thereupon
become and be immediately due and payable to the Agent for the benefit of each
Bank without presentment, demand, protest or any other notice of any kind, all
of which are hereby expressly waived, and (ii)require the Borrower to, and the
Borrower shall thereupon, deposit in a noninterest-bearing account with the
Agent, as cash collateral for its Obligations under the Loan Documents, an
amount equal to the maximum amount currently or at any time thereafter
available to be drawn on all outstanding Letters of Credit, and the Borrower
hereby pledges to the Agent and the Banks, and grants to the Agent and the
Banks a security interest in, all such cash as security for such Obligations.
Upon the curing of all existing Events of Default to the
satisfaction of the Required Banks, the Agent shall return such cash
collateral to the Borrower; and
8.2.2 Bankruptcy, Insolvency or Reorganization Proceedings.
If an Event of Default specified under Section8.1.14 [Involuntary Proceedings]
or 8.1.15 [Voluntary Proceedings] shall occur, the Banks and the Agent shall
be under no further obligations to make Loans hereunder or issue Letters of
Credit, as the case may me, and the unpaid principal amount of the Loans then
outstanding and all interest accrued thereon, any unpaid fees and all other
Indebtedness of the Borrower to the Agent and the Banks hereunder and
thereunder shall be immediately due and payable, without presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived; and
8.2.3 Set-off.
If an Event of Default shall occur and be continuing, any Bank to
whom any Obligation is owed by any Loan Party hereunder or under any other
Loan Document or any participant of such Bank which has agreed in writing to
be bound by the provisions of Section9.13 [Equalization of Banks] and any
branch, Subsidiary or Affiliate of such Bank or participant anywhere in the
world shall have the right, in addition to all other rights and remedies
available to it, without notice to such Loan Party, to set off against and
apply to the then-unpaid balance of all the Loans and all other Obligations of
the Borrower and the other Loan Parties hereunder or under any other Loan
Document any debt owing to, and any other funds held in any manner for the
account of, the Borrower or such other Loan Party by such Bank or participant
or by such branch, Subsidiary or Affiliate, including all funds in all deposit
accounts (whether time or demand, general or special, provisionally credited
or finally credited, or otherwise) now or hereafter maintained by the Borrower
or such other Loan Party for its own account (but not including funds held in
custodian or trust accounts) with such Bank or participant or such branch,
Subsidiary or Affiliate. Such right shall exist whether or not any Bank or
the Agent shall have made any demand under this Agreement or any other Loan
Document, whether or not such debt owing to or funds held for the account of
the Borrower or such other Loan Party is or are matured or unmatured and
regardless of the existence or adequacy of any Guaranty or any other security,
right or remedy available to any Bank or the Agent; and
8.2.4 Suits, Actions, Proceedings.
If an Event of Default shall occur and be continuing, and whether
or not the Agent shall have accelerated the maturity of Loans pursuant to any
of the foregoing provisions of this Section8.2, the Agent or any Bank, if owed
any amount with respect to the Loans, may proceed to protect and enforce its
rights by suit in equity, action at law and/or other appropriate proceeding,
whether for the specific performance of any covenant or agreement contained in
this Agreement or the other Loan Documents, including as permitted by
applicable Law the obtaining of the ex parte appointment of a receiver, and,
if such amount shall have become due, by declaration or otherwise, proceed to
enforce the payment thereof or any other legal or equitable right of the Agent
or such Bank; and
8.2.5 Application of Proceeds.
From and after the date on which the Agent has taken any action
pursuant to this Section8.2 and until all Obligations of the Loan Parties have
been paid in full, any and all proceeds received by the Agent from the
exercise of any remedy by the Agent shall be applied as follows:
(i) first, to reimburse the Agent and the Banks
for out-of-pocket costs, expenses and disbursements, including reasonable
attorneys' and paralegals' fees and legal expenses, incurred by the Agent or
the Banks in connection with collection of any Obligations of any of the Loan
Parties under any of the Loan Documents;
(ii) second, to the repayment of all Indebtedness
then due and unpaid of the Loan Parties to the Banks incurred under this
Agreement or any of the other Loan Documents, whether of principal, interest,
fees, expenses or otherwise, in such manner as the Agent may determine in its
discretion; and
(iii) the balance, if any, as required by Law.
8.2.6 Other Rights and Remedies.
In addition to all of the rights and remedies contained in this
Agreement or in any of the other Loan Documents, the Agent shall have all of
the rights and remedies under applicable Law, all of which rights and remedies
shall be cumulative and nonexclusive, to the extent permitted by Law. The
Agent may, and upon the request of the Required Banks shall, exercise all
post-default rights granted to the Agent and the Banks under the Loan
Documents or applicable Law.
9. THE AGENT
9.1 Appointment.
Each Bank hereby irrevocably designates, appoints and authorizes PNC Bank
to act as Agent for such Bank under this Agreement and to execute and deliver
or accept on behalf of each of the Banks the other Loan Documents. Each Bank
hereby irrevocably authorizes the Agent to take such action on its behalf
under the provisions of this Agreement and the other Loan Documents and any
other instruments and agreements referred to herein, and to exercise such
powers and to perform such duties hereunder as are specifically delegated to
or required of the Agent by the terms hereof, together with such powers as are
reasonably incidental thereto. PNC Bank agrees to act as the Agent on behalf
of the Banks to the extent provided in this Agreement.
9.2 Delegation of Duties.
The Agent may perform any of its duties hereunder by or through agents or
employees (provided such delegation does not constitute a relinquishment of
its duties as Agent) and, subject to Sections9.5 [Reimbursement of Agent by
Borrower, Etc.] and 9.6 [Exculpatory Provisions; Limitation of Liability],
shall be entitled to engage and pay for the advice or services of any
attorneys, accountants or other experts concerning all matters pertaining to
its duties hereunder and to rely upon any advice so obtained.
9.3 Nature of Duties; Independent Credit Investigation.
The Agent shall have no duties or responsibilities except those expressly
set forth in this Agreement, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or otherwise exist. The duties of the Agent shall be mechanical and
administrative in nature; the Agent shall not have by reason of this Agreement
a fiduciary or trust relationship in respect of any Bank; and nothing in this
Agreement, expressed or implied, is intended to or shall be so construed as to
impose upon the Agent any obligations in respect of this Agreement except as
expressly set forth herein. Without limiting the generality of the foregoing,
the use of the term "agent" in this Agreement with reference to the Agent is
not intended to connote any fiduciary or other implied (or express)
obligations arising under agency doctrine of any applicable Law. Instead,
such term is used merely as a matter of market custom, and is intended to
create or reflect only an administrative relationship between independent
contracting parties. Each Bank expressly acknowledges (i)that the Agent has
not made any representations or warranties to it and that no act by the Agent
hereafter taken, including any review of the affairs of any of the Loan
Parties, shall be deemed to constitute any representation or warranty by the
Agent to any Bank; (ii)that it has made and will continue to make, without
reliance upon the Agent, its own independent investigation of the financial
condition and affairs and its own appraisal of the creditworthiness of each of
the Loan Parties in connection with this Agreement and the making and
continuance of the Loans hereunder; and (iii)except as expressly provided
herein, that the Agent shall have no duty or responsibility, either initially
or on a continuing basis, to provide any Bank with any credit or other
information with respect thereto, whether coming into its possession before
the making of any Loan or at any time or times thereafter.
9.4 Actions in Discretion of Agent; Instructions From the Banks.
The Agent agrees, upon the written request of the Required Banks, to take or
refrain from taking any action of the type specified as being within the
Agent's rights, powers or discretion herein, provided that the Agent shall not
be required to take any action which exposes the Agent to personal liability
or which is contrary to this Agreement or any other Loan Document or
applicable Law. In the absence of a request by the Required Banks, the Agent
shall have authority, in its sole discretion, to take or not to take any such
action, unless this Agreement specifically requires the consent of the
Required Banks or all of the Banks. Any action taken or failure to act
pursuant to such instructions or discretion shall be binding on the Banks,
subject to Section9.6 [Exculpatory Provisions, Etc.]. Subject to the
provisions of Section9.6, no Bank shall have any right of action whatsoever
against the Agent as a result of the Agent acting or refraining from acting
hereunder in accordance with the instructions of the Required Banks, or in the
absence of such instructions, in the absolute discretion of the Agent.
9.5 Reimbursement and Indemnification of the Agent by the Borrower.
The Borrower unconditionally agrees to pay or reimburse the Agent and hold
the Agent harmless against (a)liability for the payment of all reasonable
out-of-pocket costs, expenses and disbursements, including fees and expenses
of counsel (including the allocated costs of staff counsel), appraisers and
environmental consultants, incurred by the Agent (i)in connection with the
development, negotiation, preparation, printing, execution, administration,
syndication, interpretation and performance of this Agreement and the other
Loan Documents, (ii)relating to any requested amendments, waivers or consents
pursuant to the provisions hereof, (iii)in connection with the enforcement of
this Agreement or any other Loan Document or collection of amounts due
hereunder or thereunder or the proof and allowability of any claim arising
under this Agreement or any other Loan Document, whether in bankruptcy or
receivership proceedings or otherwise, and (iv)in any workout or restructuring
or in connection with the protection, preservation, exercise or enforcement of
any of the terms hereof or of any rights hereunder or under any other Loan
Document or in connection with any foreclosure, collection or bankruptcy
proceedings, and (b)all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against the
Agent, in its capacity as such, in any way relating to or arising out of this
Agreement or any other Loan Documents or any action taken or omitted by the
Agent hereunder or thereunder, provided that the Borrower shall not be liable
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements if the same
results from the Agent's gross negligence or willful misconduct, or if the
Borrower was not given notice of the subject claim and the opportunity to
participate in the defense thereof, at its expense (except that the Borrower
shall remain liable to the extent such failure to give notice does not result
in a loss to the Borrower), or if the same results from a compromise or
settlement agreement entered into without the consent of the Borrower, which
shall not be unreasonably withheld. In addition, the Borrower agrees to
reimburse and pay all reasonable out-of-pocket expenses of the Agent's regular
employees and agents engaged periodically to perform audits of the Loan
Parties' books, records and business properties. The Borrower agrees to pay
or reimburse the Syndication Agent for the payment of all reasonable
out-of-pocket costs, expenses and disbursements in connection with the
development, negotiation and syndication of this Agreement and the other Loan
Documents,
9.6 Exculpatory Provisions; Limitation of Liability.
Neither the Agent nor any of its directors, officers, employees, agents,
attorneys or Affiliates shall (a)be liable to any Bank for any action taken or
omitted to be taken by it or them hereunder, or in connection herewith,
including pursuant to any Loan Document, unless caused by its or their own
gross negligence or willful misconduct, (b)be responsible in any manner to any
of the Banks for the effectiveness, enforceability, genuineness, validity or
the due execution of this Agreement or any other Loan Documents or for any
recital, representation, warranty, document, certificate, report or statement
herein or made or furnished under or in connection with this Agreement or any
other Loan Documents, or (c)be under any obligation to any of the Banks to
ascertain or to inquire as to the performance or observance of any of the
terms, covenants or conditions hereof or thereof on the part of the Loan
Parties, or the financial condition of the Loan Parties, or the existence or
possible existence of any Event of Default or Potential Default. No claim may
be made by any of the Loan Parties, any Bank, the Agent or any of their
respective Subsidiaries against the Agent, any Bank or any of their respective
directors, officers, employees, agents, attorneys or Affiliates, or any of
them, for any special, indirect or consequential damages or, to the fullest
extent permitted by Law, for any punitive damages in respect of any claim or
cause of action (whether based on contract, tort, statutory liability or any
other ground) based on, arising out of or related to any Loan Document or the
transactions contemplated hereby or any act, omission or event occurring in
connection therewith, including the negotiation, documentation, administration
or collection of the Loans, and each of the Loan Parties (for itself and on
behalf of each of its Subsidiaries), the Agent and each Bank hereby waive,
release and agree never to sue upon any claim for any such damages, whether
such claim now exists or hereafter arises and whether or not it is now known
or suspected to exist in its favor. Each Bank agrees that, except for
notices, reports and other documents expressly required to be furnished to the
Banks by the Agent hereunder or given to the Agent for the account of or with
copies for the Banks, the Agent and each of its directors, officers,
employees, agents, attorneys or Affiliates shall not have any duty or
responsibility to provide any Bank with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Loan Parties which may come
into the possession of the Agent or any of its directors, officers, employees,
agents, attorneys or Affiliates.
9.7 Reimbursement and Indemnification of the Agent by the Banks.
Each Bank agrees to reimburse and indemnify the Agent (to the extent not
reimbursed by the Borrower and without limiting the Obligation of the Borrower
to do so) in proportion to its Ratable Share from and against all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements, including attorneys' fees and disbursements
(including the allocated costs of staff counsel), and costs of appraisers and
environmental consultants, of any kind or nature whatsoever which may 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 Agreement or any other
Loan Documents or any action taken or omitted by the Agent hereunder or
thereunder, provided that no Bank shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements (a)if the same results from the
Agent's gross negligence or willful misconduct, or (b)if such Bank was not
given notice of the subject claim and the opportunity to participate in the
defense thereof, at its expense (except that such Bank shall remain liable to
the extent such failure to give notice does not result in a loss to the Bank),
or (c)if the same results from a compromise and settlement agreement entered
into without the consent of such Bank, which shall not be unreasonably
withheld. In addition, each Bank agrees promptly upon demand to reimburse the
Agent (to the extent not reimbursed by the Borrower and without limiting the
Obligation of the Borrower to do so) in proportion to its Ratable Share for
all amounts due and payable by the Borrower to the Agent in connection with
the Agent's periodic audit of the Loan Parties' books, records and business
properties.
9.8 Reliance by the Agent.
The Agent shall be entitled to rely upon any writing, telegram, telex or
teletype message, resolution, notice, consent, certificate, letter, cablegram,
statement, order or other document or conversation by telephone or otherwise
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons, and upon the advice and opinions of counsel
and other professional advisers selected by the Agent. The Agent shall be
fully justified in failing or refusing to take any action hereunder unless it
shall first be indemnified to its satisfaction by the Banks against any and
all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action.
9.9 Notice of Default.
The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Potential Default or Event of Default unless the Agent has
received written notice from a Bank or the Borrower referring to this
Agreement, describing such Potential Default or Event of Default and stating
that such notice is a "notice of default."
9.10 Notices.
The Agent shall promptly send to each Bank a copy of all notices received
from the Borrower pursuant to the provisions of this Agreement or the other
Loan Documents promptly upon receipt thereof. The Agent shall promptly notify
the Borrower and the other Banks of each change in the Base Rate and the
effective date thereof.
9.11 Banks in Their Individual Capacities.
With respect to its Revolving Credit Commitment and the Revolving Credit
Loans made by it and any other rights and powers given to it as a Bank
hereunder or under any of the other Loan Documents, the Agent shall have the
same rights and powers hereunder as any other Bank and may exercise the same
as though it were not the Agent, and the term "Banks" shall, unless the
context otherwise indicates, include the Agent in its individual capacity.
PNC Bank and its Affiliates and each of the Banks and their respective
Affiliates may, without liability to account, except as prohibited herein,
make loans to, accept deposits from, discount drafts for, act as trustee under
indentures of, and generally engage in any kind of banking or trust business
with, the Loan Parties and their Affiliates, in the case of the Agent, as
though it were not acting as Agent hereunder and in the case of each Bank, as
though such Bank were not a Bank hereunder. The Banks acknowledge that,
pursuant to such activities, the Agent or its Affiliates may (i)receive
information regarding the Loan Parties (including information that may be
subject to confidentiality obligations in favor of the Loan Parties) and
acknowledge that the Agent shall be under no obligation to provide such
information to them, and (ii)accept fees and other consideration from the Loan
Parties for services in connection with this Agreement and otherwise without
having to account for the same to the Banks.
9.12 Holders of Notes.
The Agent may deem and treat any payee of any Note as the owner thereof
for all purposes hereof unless and until written notice of the assignment or
transfer thereof shall have been filed with the Agent. Any request, authority
or consent of any Person who at the time of making such request or giving such
authority or consent is the holder of any Note shall be conclusive and binding
on any subsequent holder, transferee or assignee of such Note or of any Note
or Notes issued in exchange therefor.
9.13 Equalization of the Banks.
The Banks and the holders of any participations in any Commitments or
Loans or other rights or obligations of a Bank hereunder agree among
themselves that, with respect to all amounts received by any Bank or any such
holder for application on any Obligation hereunder or under any such
participation, whether received by voluntary payment, by realization upon
security, by the exercise of the right of set-off or banker's lien, by
counterclaim or by any other non-pro rata source, equitable adjustment will be
made in the manner stated in the following sentence so that, in effect, all
such excess amounts will be shared ratably among the Banks and such holders in
proportion to their interests in payments on the Loans, except as otherwise
provided in Section 3.4.3 [Agent's and Bank's Rights], 4.4.2 [Replacement of a
Bank] or 4.5 [Additional Compensation in Certain Circumstances]. The Banks or
any such holder receiving any such amount shall purchase for cash from each of
the other Banks an interest in such Bank's Loans in such amount as shall
result in a ratable participation by the Banks and each such holder in the
aggregate unpaid amount of the Loans, provided that if all or any portion of
such excess amount is thereafter recovered from the Bank or the holder making
such purchase, such purchase shall be rescinded and the purchase price
restored to the extent of such recovery, together with interest or other
amounts, if any, required by law (including court order) to be paid by the
Bank or the holder making such purchase.
9.14 Successor Agent.
The Agent (i)may resign as Agent, or (ii)shall resign if such resignation
is requested by the Required Banks (if the Agent is a Bank, the Agent's Loans
and its Commitment shall be considered in determining whether the Required
Banks have requested such resignation) or required by Section 4.4.2
[Replacement of a Bank], in either case of (i) or (ii) by giving not less than
thirty (30) days' prior written notice to the Borrower. If the Agent shall
resign under this Agreement, then either (a)the Required Banks shall appoint
from among the Banks a successor agent for the Banks, subject to the consent
of the Borrower, such consent not to be unreasonably withheld, or (b)if a
successor agent shall not be so appointed and approved within the thirty (30)
day period following the Agent's notice to the Banks of its resignation, then
the Agent shall appoint, with the consent of the Borrower, such consent not to
be unreasonably withheld, a successor agent who shall serve as Agent until
such time as the Required Banks appoint and the Borrower consents to the
appointment of, a successor agent. Upon its appointment pursuant to either
clause (a) or (b) above, such successor agent shall succeed to the rights,
powers and duties of the Agent, and the term "Agent" shall mean such successor
agent, effective upon its appointment, and the former Agent's
rights, powers and duties as Agent shall be terminated without any other or
further act or deed on the part of such former Agent or any of the parties to
this Agreement. After the resignation of any Agent hereunder, the provisions
of this Article9 shall inure to the benefit of such former Agent, and such
former Agent shall not by reason of such resignation be deemed to be released
from liability for any actions taken or not taken by it while it was an Agent
under this Agreement.
9.15 Agent's Fee.
The Borrower shall pay to the Agent a nonrefundable fee (the "Agent's
Fee"), the annual administration fee and, for Letters of Credit with PNC Bank,
National Association as the Issuing Bank, the Letter of Credit fronting fees
under the terms of letters both dated March27, 1998 (collectively, the
"Agent's Letter") between the Borrower and Agent, as amended from time to
time.
9.16 Availability of Funds.
The Agent may assume that each Bank has made or will make the proceeds of
a Loan available to the Agent unless the Agent shall have been notified by
such Bank on or before the later of (1)the close of Business on the Business
Day preceding the Borrowing Date with respect to such Loan or two (2) hours
before the time on which the Agent actually funds the proceeds of such Loan to
the Borrower (whether using its own funds pursuant to this Section9.16 or
using proceeds deposited with the Agent by the Banks and whether such funding
occurs before or after the time on which Banks are required to deposit the
proceeds of such Loan with the Agent). The Agent may, in reliance upon such
assumption (but shall not be required to), make available to the Borrower a
corresponding amount. If such corresponding amount is not in fact made
available to the Agent by such Bank, the Agent shall be entitled to recover
such amount on demand from such Bank (or, if such Bank fails to pay such
amount forthwith upon such demand, then from the Borrower) together with
interest thereon, in respect of each day during the period commencing on the
date such amount was made available to the Borrower and ending on the date the
Agent recovers such amount, at a rate per annum equal to (i) the Federal Funds
Effective Rate during the first three (3) days after such interest shall begin
to accrue, and (ii) the applicable interest rate in respect of such Loan after
the end of such three-day period.
9.17 Calculations.
In the absence of gross negligence or willful misconduct, the Agent shall
not be liable for any error in computing the amount payable to any Bank
whether in respect of the Loans, fees or any other amounts due to the Banks
under this Agreement. In the event an error in computing any amount payable
to any Bank is made, the Agent, the Borrower and each affected Bank shall,
forthwith upon discovery of such error, make such adjustments as shall be
required to correct such error, and any compensation therefor will be
calculated at the Federal Funds Effective Rate.
9.18 Beneficiaries.
Except as expressly provided herein, the provisions of this Article 9 are
solely for the benefit of the Agent and the Banks, and the Loan Parties shall
not have any rights to rely on or enforce any of the provisions hereof. In
performing its functions and duties under this Agreement, the Agent shall act
solely as agent of the Banks and does not assume and shall not be deemed to
have assumed any obligation toward or relationship of agency or trust with or
for any of the Loan Parties.
10. MISCELLANEOUS
10.1 Modifications, Amendments or Waivers.
With the written consent of the Required Banks, the Agent, acting on
behalf of all the Banks, and the Borrower, on behalf of the Loan Parties, may
from time to time enter into written agreements amending or changing any
provision of this Agreement or any other Loan Document or the rights of the
Banks or the Loan Parties hereunder or thereunder, or may grant written
waivers or consents to a departure from the due performance of the Obligations
of the Loan Parties hereunder or thereunder. Any such agreement, waiver or
consent made with such written consent shall be effective to bind all the
Banks and the Loan Parties; provided, that, without the written consent of all
the Banks, no such agreement, waiver or consent may be made which will:
10.1.1 Increase of Commitment; Extension or Expiration Date.
Increase the amount of the Revolving Credit Commitment of any Bank hereunder
or extend the Expiration Date;
10.1.2 Extension of Payment; Reduction of Principal Interest or
Fees; Modification of Terms of Payment.
Whether or not any Loans are outstanding, extend the time for
payment of principal or interest of any Loan, the Facility Fee or any other
fee payable to any Bank, or reduce the principal amount of or the rate of
interest borne by any Loan or reduce the Facility Fee or any other fee payable
to any Bank, or otherwise affect the terms of payment of the principal of or
interest of any Loan, the Facility Fee or any other fee payable to any Bank;
10.1.3 Release of Guarantor.
Release any Guarantor from its Obligations under the Guaranty
Agreement or any other security for any of the Loan Parties' Obligations; or
10.1.4 Miscellaneous
Amend Section 4.2 [Pro Rata Treatment of the Banks], 9.6
[Exculpatory Provisions, Etc.] or 9.13 [Equalization of the Banks] or this
Section 10.1, alter any provision regarding the pro rata treatment of the
Banks, change the definition of Required Banks, or change any requirement
providing for the Banks or the Required Banks to authorize the taking of any
action hereunder; provided, further, that no agreement, waiver or consent
which would modify the interests, rights or obligations of the Agent in its
capacity as Agent shall be effective without the written consent of the Agent
and no agreement, waiver or consent which would modify the interests, rights
or obligations of any Issuing Bank as the issuer of Letters of Credit shall be
effective without the written consent of such Issuing Bank.
10.2 No Implied Waivers; Cumulative Remedies; Writing Required.
No course of dealing and no delay or failure of the Agent or any Bank in
exercising any right, power, remedy or privilege under this Agreement or any
other Loan Document shall affect any other or future exercise thereof or
operate as a waiver thereof, nor shall any single or partial exercise thereof
or any abandonment or discontinuance of steps to enforce such a right, power,
remedy or privilege preclude any further exercise thereof or of any other
right, power, remedy or privilege. The rights and remedies of the Agent and
the Banks under this Agreement and any other Loan Documents are cumulative and
not exclusive of any rights or remedies which they would otherwise have. Any
waiver, permit, consent or approval of any kind or character on the part of
any Bank of any breach or default under this Agreement or any such waiver of
any provision or condition of this Agreement must be in writing and shall be
effective only to the extent specifically set forth in such writing.
10.3 Reimbursement and Indemnification of the Banks by the Borrower;
Taxes.
The Borrower agrees unconditionally upon demand to pay or reimburse to
each Bank (other than the Agent, as to which the Borrower's Obligations are
set forth in Section9.5 [Reimbursement and Indemnification of the Agent by the
Borrower]) and to save such Bank harmless against (i)liability for the payment
of all reasonable out-of-pocket costs, expenses and disbursements (including
fees and expenses of counsel (including allocated costs of staff counsel) for
each Bank except with respect to (a) and (b) below), incurred by such Bank
(a)in connection with the administration and interpretation of this Agreement,
and other instruments and documents to be delivered hereunder, (b)relating to
any amendments, waivers or consents pursuant to the provisions hereof, (c)in
connection with the enforcement of this Agreement or any other Loan Document,
or collection of amounts due hereunder or thereunder or the proof and
allowability of any claim arising under this Agreement or any other Loan
Document, whether in bankruptcy or receivership proceedings or otherwise, and
(d)in any workout or restructuring or in connection with the protection,
preservation, exercise or enforcement of any of the terms hereof or of any
rights hereunder or under any other Loan Document or in connection with any
foreclosure, collection or bankruptcy proceedings, or (ii)all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by or asserted against such Bank, in its capacity as
such, in any way relating to or arising out of this Agreement or any other
Loan Documents or any action taken or omitted by such Bank hereunder or
thereunder, provided that the Borrower shall not be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements (A)if the same results from such
Bank's gross negligence or willful misconduct, or (B)if the Borrower was not
given notice of the subject claim and the opportunity to participate in the
defense thereof, at its expense (except that the Borrower shall remain liable
to the extent such failure to give notice does not result in a loss to the
Borrower), or (C)if the same results from a compromise or settlement agreement
entered into without the consent of the Borrower, which shall not be
unreasonably withheld. The Banks will attempt to minimize the fees and
expenses of legal counsel for the Banks which are subject to reimbursement by
the Borrower hereunder by considering the usage of one law firm to represent
the Banks and the Agent if appropriate under the circumstances. The Borrower
agrees unconditionally to pay all stamp, document, transfer, recording or
filing taxes or fees and similar impositions now or hereafter determined by
the Agent or any Bank to be payable in connection with this Agreement or any
other Loan Document, and the Borrower agrees unconditionally to save the Agent
and the Banks harmless from and against any and all present or future claims,
liabilities or losses with respect to or resulting from any omission to pay or
delay in paying any such taxes, fees or impositions.
10.4 Holidays.
Whenever payment of a Loan to be made or taken hereunder shall be due on a
day which is not a Business Day, such payment shall be due on the next
Business Day, and such extension of time shall be included in computing
interest and fees, except that the Loans shall be due on the Business Day
preceding the Expiration Date if the Expiration Date is not a Business Day.
Whenever any payment or action to be made or taken hereunder (other than
payment of the Loans) shall be stated to be due on a day which is not a
Business Day, such payment or action shall be made or taken on the next
following Business Day (except as provided in Section 3.2 [Interest Periods]
with respect to Interest Periods under the Euro-Rate Option), and such
extension of time shall not be included in computing interest or fees, if any,
in connection with such payment or action.
10.5 Funding by Branch, Subsidiary or Affiliate.
10.5.1 Notional Funding.
Each Bank shall have the right from time to time, without notice to
the Borrower, to deem any branch, Subsidiary or Affiliate (which for the
purposes of this Section 10.5 shall mean any corporation or association which
is directly or indirectly controlled by or is under direct or indirect common
control with any corporation or association which directly or indirectly
controls such Bank) of such Bank to have made, maintained or funded any Loan
to which the Euro-Rate Option applies at any time, provided that immediately
following (on the assumption that a payment were then due from the Borrower to
such other office), and as a result of such change, the Borrower would not be
under any greater financial obligation pursuant to Section 4.5 [Additional
Compensation in Certain Circumstances] than it would have been in the absence
of such change. Notional funding offices may be selected by each Bank without
regard to such Bank's actual methods of making, maintaining or funding the
Loans or any sources of funding actually used by or available to such Bank.
10.5.2 Actual Funding.
Each Bank shall have the right from time to time to make or
maintain any Loan by arranging for a branch, Subsidiary or Affiliate of such
Bank to make or maintain such Loan subject to the last sentence of this
Section 10.5.2. If any Bank causes a branch, Subsidiary or Affiliate to make
or maintain any part of the Loans hereunder, all terms and conditions of this
Agreement shall, except where the context clearly requires otherwise, be
applicable to such part of the Loans to the same extent as if such Loans were
made or maintained by such Bank, but in no event shall any Bank's use of such
a branch, Subsidiary or Affiliate to make or maintain any part of the Loans
hereunder cause such Bank or such branch, Subsidiary or Affiliate to incur any
cost or expenses payable by the Borrower hereunder or require the Borrower to
pay any other compensation to any Bank (including any expenses incurred or
payable pursuant to Section 4.5 [Additional Compensation in Certain
Circumstances]) which would otherwise not be incurred.
10.6 Notices.
All notices, requests, demands, directions and other communications (as
used in this Section 10.6, collectively referred to as "notices") given to or
made upon any party hereto under the provisions of this Agreement shall be by
telephone or in writing (including telex or facsimile communication) unless
otherwise expressly permitted hereunder and shall be delivered or sent by
telex or facsimile to the respective parties at the addresses and numbers set
forth under their respective names on Schedule 1.1(B) hereof or in accordance
with any subsequent unrevoked written direction from any party to the others.
All notices shall, except as otherwise expressly herein provided, be effective
(a)in the case of telex or facsimile, when received, (b)in the case of
hand-delivered notice, when hand-delivered, (c)in the case of telephone, when
telephoned, provided, however, that in order to be effective, telephonic
notices must be confirmed in writing no later than the next day by letter,
facsimile or telex, (d)if given by mail, four (4) days after such
communication is deposited in the mail with first-class postage prepaid,
return receipt requested, and (e)if given by any other means (including by air
courier), when delivered; provided, that notices to the Agent shall not be
effective until received. Any Bank giving any notice to any Loan Party shall
simultaneously send a copy thereof to the Agent, and the Agent shall promptly
notify the other Banks of the receipt by it of any such notice.
10.7 Severability.
The provisions of this Agreement are intended to be severable. If any
provision of this Agreement shall be held invalid or unenforceable in whole or
in part in any jurisdiction, such provision shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without in
any manner affecting the validity or enforceability thereof in any other
jurisdiction or the remaining provisions hereof in any jurisdiction.
10.8 Governing Law.
Each Letter of Credit and Section 2.9 [Letter of Credit Subfacility] shall
be subject to the Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication No. 500, as the same
may be revised or amended from time to time, and to the extent not
inconsistent therewith, the internal laws of the Commonwealth of Pennsylvania
without regard to its conflict of laws principles, and the balance of this
Agreement shall be deemed to be a contract under the Laws of the Commonwealth
of Pennsylvania and for all purposes shall be governed by and construed and
enforced in accordance with the internal laws of the Commonwealth of
Pennsylvania without regard to its conflict of laws principles.
10.9 Prior Understanding.
This Agreement and the other Loan Documents supersede all prior
understandings and agreements, whether written or oral, between the parties
hereto and thereto relating to the transactions provided for herein and
therein, including any prior confidentiality agreements and commitments, but
do not supersede the Agent's Letter.
10.10 Duration; Survival.
All representations and warranties of the Loan Parties contained herein
or made in connection herewith shall survive the making of Loans and issuance
of Letters of Credit and shall not be waived by the execution and delivery of
this Agreement, any investigation by the Agent or the Banks, the making of
Loans, issuance of Letters of Credit or payment in full of the Loans. All
covenants and agreements of the Loan Parties contained in Sections7.1
[Affirmative Covenants], 7.2[Negative Covenants] and 7.3 [Reporting
Requirements] herein shall continue in full force and effect from and after
the date hereof so long as the Borrower may borrow or request Letters of
Credit hereunder and until termination of the Commitments and payment in full
of the Loans and expiration or termination of all Letters of Credit. All
covenants and agreements of the Borrower contained herein relating to the
payment of principal, interest, premiums, additional compensation or expenses
and indemnification, including those set forth in Article4 [Payments] and
Sections9.5 [Reimbursement and Indemnification of the Agent by the Borrower],
9.7 [Reimbursement and Indemnification of the Agent by the Banks] and 10.3
[Reimbursement and Indemnification of the Banks by the Borrower], shall
survive payment in full of the Loans, expiration or termination of the Letters
of Credit and termination of the Commitments.
10.11 Successors and Assigns.
(i) This Agreement shall be binding upon and
shall inure to the benefit of the Banks, the Agent, the Issuing Banks, the
Loan Parties and their respective successors and assigns, except that none of
the Loan Parties may assign or transfer any of its rights and Obligations
hereunder or any interest herein. Each Bank may, at its own cost, make
assignments of or sell participations in all or any part of its Commitments or
the Loans made by it to one or more banks or other entities, subject to the
consent of the Borrower and the Agent with respect to any assignee, such
consent not to be unreasonably withheld, provided that (1)no consent of the
Borrower shall be required (A) if an Event of Default exists and is
continuing, or (B) in the case of an assignment by a Bank to an Affiliate of
such Bank, and (2)any assignment by a Bank to a Person other than an Affiliate
of such Bank may not be made in amounts less than the lesser of $5,000,000 or
the amount of the assigning Bank's Commitment. In the case of an assignment,
upon receipt by the Agent of the Assignment and Assumption Agreement, the
assignee shall have, to the extent of such assignment (unless otherwise
provided therein), the same rights, benefits and obligations as it would have
if it had been a signatory Bank hereunder, the Commitments shall be adjusted
accordingly, and upon surrender of any Note subject to such assignment, the
Borrower shall execute and deliver a new Note to the assignee, if such
assignee requests such a Note in an amount equal to the amount of the
Revolving Credit Commitment assumed by it and a new Revolving Credit Note to
the assigning Bank, if the assigning Bank requests such a Note, in an amount
equal to the Revolving Credit Commitment retained by it hereunder. Any Bank
which assigns any or all of its Commitment or Loans to a Person other than an
Affiliate of such Bank shall pay to the Agent a service fee in the amount of
$2,500 for each assignment. In the case of a participation, the participant
shall only have the rights specified in Section8.2.3 [Set off] (the
participant's rights against such Bank in respect of such participation to be
those set forth in the agreement executed by such Bank in favor of the
participant relating thereto and not to include any voting rights except with
respect to changes of the type referenced in Section 10.1.1 [Increase of
Commitment, Etc.], 10.1.2 [Extension of Payment, Etc.] or 10.1.3 [Release of
Guarantor]), all of such Bank's obligations under this Agreement or any other
Loan Document shall remain unchanged, and all amounts payable by any Loan
Party hereunder or thereunder shall be determined as if such Bank had not sold
such participation.
(ii) Any assignee or participant which is not
incorporated under the Laws of the United States of America or a state thereof
shall deliver to the Borrower and the Agent the form of certificate described
in Section 10.17 [Tax Withholding Clause] relating to federal income tax
withholding. Each Bank may furnish any publicly available information
concerning any Loan Party or its Subsidiaries and any other information
concerning any Loan Party or its Subsidiaries in the possession of such Bank
from time to time to assignees and participants (including prospective
assignees or participants), provided that such assignees and participants
agree to be bound by the provisions of Section 10.12 [Confidentiality].
(iii) Notwithstanding any other provision in this
Agreement, any Bank may at any time pledge or grant a security interest in all
or any portion of its rights under this Agreement, its Note (if any) and the
other Loan Documents to any Federal Reserve Bank in accordance with Regulation
A of the FRB or U.S. Treasury Regulation 31 CFR Section 203.14 without notice
to or consent of the Borrower or the Agent. No such pledge or grant of a
security interest shall release the transferor Bank of its obligations
hereunder or under any other Loan Document.
10.12 Confidentiality.
10.12.1 General.
The Agent and the Banks each agree to keep confidential all
information obtained from any Loan Party or its Subsidiaries which is
nonpublic and confidential or proprietary in nature (including any information
the Borrower specifically designates as confidential), except as provided
below, and to use such information only in connection with their respective
capacities under this Agreement and for the purposes contemplated hereby. The
Agent and the Banks shall be permitted to disclose such information (i)to
outside legal counsel, accountants and other professional advisors who need to
know such information in connection with the administration and enforcement of
this Agreement, subject to agreement of such Persons to maintain the
confidentiality, (ii)to assignees and participants as contemplated by Section
10.11, (iii)to the extent requested by any bank regulatory authority or, with
notice to the Borrower, as otherwise required by applicable Law or by any
subpoena or similar legal process, or in connection with any investigation or
proceeding arising out of the transactions contemplated by this Agreement,
(iv)if it becomes publicly available other than as a result of a breach of
this Agreement or becomes available from a source not subject to
confidentiality restrictions, or (v)if the Borrower shall have consented to
such disclosure.
10.12.2 Sharing Information With Affiliates of the Banks.
Each Loan Party acknowledges that from time to time financial
advisory, investment banking and other services may be offered or provided to
the Borrower or one or more of its Affiliates (in connection with this
Agreement or otherwise) by any Bank or by one or more Subsidiaries or
Affiliates of such Bank, and each of the Loan Parties hereby authorizes each
Bank to share any information delivered to such Bank by such Loan Party and
its Subsidiaries pursuant to this Agreement, or in connection with the
decision of such Bank to enter into this Agreement, to any such Subsidiary or
Affiliate of such Bank, it being understood that any such Subsidiary or
Affiliate of any Bank receiving such information shall be bound by the
provisions of Section 10.12.1 as if it were a Bank hereunder. Such
authorization shall survive the repayment of the Loans and other Obligations
and the termination of the Commitments.
10.13 Counterparts.
This Agreement may be executed by different parties hereto on any number
of separate counterparts, each of which, when so executed and delivered, shall
be an original, and all such counterparts shall together constitute one and
the same instrument.
10.14 Agent's or Bank's Consent.
Whenever the Agent's or any Bank's consent is required to be obtained
under this Agreement or any of the other Loan Documents as a condition to any
action, inaction, condition or event, the Agent and each Bank shall be
authorized to give or withhold such consent in its sole and absolute
discretion and to condition its consent upon the giving of additional
collateral, the payment of money or any other matter.
10.15 Exceptions.
The representations, warranties and covenants contained herein shall be
independent of each other, and no exception to any representation, warranty or
covenant shall be deemed to be an exception to any other representation,
warranty or covenant contained herein unless expressly provided, nor shall any
such exceptions be deemed to permit any action or omission that would be in
contravention of applicable Law.
10.16 CONSENT TO FORUM; WAIVER OF JURY TRIAL.
EACH LOAN PARTY HEREBY IRREVOCABLY CONSENTS TO THE NONEXCLUSIVE
JURISDICTION OF THE COURT OF COMMON PLEAS OF ALLEGHENY COUNTY AND THE UNITED
STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA, AND WAIVES
PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH
SERVICE OF PROCESS BE MADE BY CERTIFIED OR REGISTERED MAIL DIRECTED TO SUCH
LOAN PARTY AT THE ADDRESSES PROVIDED FOR AND SERVICE SO MADE SHALL BE DEEMED
TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF. EACH LOAN PARTY WAIVES ANY
OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED AGAINST IT AS
PROVIDED HEREIN AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON LACK OF
JURISDICTION OR VENUE. EACH LOAN PARTY, THE AGENT AND THE BANKS HEREBY WAIVE
TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND
ARISING OUT OF OR RELATED TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE
COLLATERAL TO THE FULL EXTENT PERMITTED BY LAW.
10.17 Tax Withholding Clause.
Each Bank or assignee or participant of a Bank that is not incorporated
under the Laws of the United States of America or a state thereof agrees that
it will deliver to each of the Borrower and the Agent two (2) duly completed
copies of the following: (i)Internal Revenue Service Form W-9, 4224 or 1001,
or other applicable form prescribed by the Internal Revenue Service,
certifying that such Bank, assignee or participant is entitled to receive
payments under this Agreement and the other Loan Documents without deduction
or withholding of any United States federal income taxes, or is subject to
such tax at a reduced rate under an applicable tax treaty, or (ii)Internal
Revenue Service Form W-8 or other applicable form or a certificate of such
Bank, assignee or participant indicating that no such exemption or reduced
rate is allowable with respect to such payments. Each Bank, assignee or
participant required to deliver to the Borrower and the Agent a form or
certificate pursuant to the preceding sentence shall deliver such form or
certificate as follows: (A)each Bank which is a party hereto on the Closing
Date shall deliver such form or certificate at least five (5) Business Days
prior to the first date on which any interest or fees are payable by the
Borrower hereunder for the account of such Bank; (B)each assignee or
participant shall deliver such form or certificate at least five (5) Business
Days before the effective date of such assignment or participation (unless the
Agent in its sole discretion shall permit such assignee or participant to
deliver such form or certificate less than five (5) Business Days before such
date in which case it shall be due on the date specified by the Agent). Each
Bank, assignee or participant which so delivers a Form W-8, W-9, 4224 or 1001
further undertakes to deliver to each of the Borrower and the Agent two (2)
additional copies of such form (or a successor form) on or before the date
that such form expires or becomes obsolete or after the occurrence of any
event requiring a change in the most recent form so delivered by it, and such
amendments thereto or extensions or renewals thereof as may be reasonably
requested by the Borrower or the Agent, either certifying that such Bank,
assignee or participant is entitled to receive payments under this Agreement
and the other Loan Documents without deduction or withholding of any United
States federal income taxes or is subject to such tax at a reduced rate under
an applicable tax treaty or stating that no such exemption or reduced rate is
allowable. The Agent shall be entitled to withhold United States federal
income taxes at the full withholding rate unless the Bank, assignee or
participant establishes an exemption or that it is subject to a reduced rate
as established pursuant to the above provisions.
10.18 Joinder of Guarantors.
Any Significant Subsidiary of the Borrower which is required to join this
Agreement as a Guarantor pursuant to Section 7.2.8 [Subsidiaries, Partnerships
and Joint Ventures] or any other Subsidiary of the Borrower which is required
to join this Agreement as a Guarantor pursuant to Section 7.1.11 [Addition of
Subsidiaries as Guarantors in Certain Circumstances] shall execute and deliver
to the Agent (i)a Guarantor Joinder in substantially the form attached hereto
as Exhibit 1.1(G)(1) pursuant to which it shall join as a Guarantor each of
the documents to which the Guarantors are parties; and (ii)documents in the
forms described in Section 6.1 [First Loans and Letters of Credit] modified as
appropriate to relate to such Subsidiary. The Borrower shall deliver such
Guarantor Joinder and related documents to the Agent within five (5) Business
Days after any Subsidiary of the Borrower becomes a Significant Subsidiary.
10.19 Syndication Agent, Documentation Agent and Co-Agents.
Except for those fees paid to the Syndication Agent on or before the
Closing Date, the Syndication Agent, the Documentation Agent and the Co-Agents
shall have no duties, obligations or liabilities in their respective
capacities as Syndication Agent, Documentation Agent or Co-Agents and shall
not be entitled to any fees in respect of their status as Syndication Agent,
Documentation Agent or Co-Agents.
[SIGNATURE PAGES FOLLOW]
[SIGNATURE PAGE 1 OF 6 OF CREDIT AGREEMENT]
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly
authorized, have executed this Agreement as of the day and year first above
written.
ATTEST: CHAMPION ENTERPRISES, INC.
By:
Name:
Title:
[Seal]
ATTEST: CHAMPION HOME BUILDERS CO.
By:
Name:
Title:
[Seal]
ATTEST: REDMAN HOMES, INC.
By:
Name:
Title:
[Seal]
ATTEST: DUTCH HOUSING, INC.
By:
Name:
Title:
[Seal]
ATTEST: ACCENT MOBILE HOMES, INC.
By:
Name:
Title:
[Seal]
[SIGNATURE PAGE 2 OF 6 OF CREDIT AGREEMENT]
ATTEST: SOUTHERN SHOWCASE HOUSING, INC.
By:
Name:
Title:
[Seal]
ATTEST: AUBURN CHAMP, INC.
By:
Name:
Title:
[Seal]
ATTEST: REDMAN BUSINESS TRUST
By:
Name:
Title:
[Seal]
ATTEST: CHANDELEUR HOMES, INC.
By:
Name:
Title:
[Seal]
ATTEST: HOMES OF LEGEND, INC.
By:
Name:
Title:
[Seal]
[SIGNATURE PAGE 3 OF 6 OF CREDIT AGREEMENT]
ATTEST: GRAND MANOR, INC.
By:
Name:
Title:
[Seal]
ATTEST: CREST RIDGE HOMES, INC.
By:
Name:
Title:
[Seal]
ATTEST: LAMPLIGHTER HOMES,INC., a
Washington corporation
By:
Name:
Title:
[Seal]
ATTEST: LAMPLIGHTER HOMES, INC., an
Oregon corporation
By:
Name:
Title:
[Seal]
[SIGNATURE PAGE 4 OF 6 OF CREDIT AGREEMENT]
PNC BANK, NATIONAL ASSOCIATION,
individually and as Administrative Agent
By:
Name: Peter F. Stack
Title: Assistant Vice President
NBD BANK, individually and as Syndication
Agent
By:
Name: Teresa A. Kalil
Title: Vice President
COMERICA BANK, individually and as
Documentation Agent
By:
Name: Robert Porterfield
Title: Vice President
NATIONAL CITY BANK, individually and as
Co-Agent
By:
Name: Timothy J. Lathe
Title: Executive Vice President
HARRIS TRUST AND SAVINGS BANK,
individually and as Co-Agent
By:
Name: Kirby M. Law
Title: Vice President
[SIGNATURE PAGE 5 OF 6 OF CREDIT AGREEMENT]
KEYBANK NATIONAL ASSOCIATION,
individually and as Co-Agent
By:
Name: Thomas Crandell
Title: Vice President
NATIONSBANK, N.A., individually and as
Co-Agent
By:
Name:
Title:
WACHOVIA BANK, N.A., individually and
as Co-Agent
By:
Name: Debra L. Coheley
Title: Senior Vice President
STANDARD FEDERAL BANK
By:
Name: Scott A. Wickens
Title: Vice President
THE BANK OF TOKYO-MITSUBISHI, LTD.,
CHICAGO BRANCH
By:
Name: Hajime Watanabe
Title: Deputy General Manager
[SIGNATURE PAGE 6 OF 6 OF CREDIT AGREEMENT]
MICHIGAN NATIONAL BANK
By:
Name: Neran Shaya
Title: Relationship Manager
THE BANK OF NOVA SCOTIA
By:
Name: M.D. Smith
Title: Agent - Operations
BANK ONE, N.A.
By:
Name: Jefferson M. Green
Title: Vice President
HIBERNIA NATIONAL BANK
By:
Name: Jeffrey E. Peck
Title: Vice President
CREDIT SUISSE FIRST BOSTON
By:
Name: David Kratovil
Title: Director
By:
Name: Robert Hetu
Title: Associate
(in 000's, except per share amounts)
First Quarter Ended
April 4, 1998 March 27, 1997
Weighted average
shares outstanding 47,087 48,058
Effect of dilutive
securities 1,558 1,615
------------- --------------
Shares for
Diluted EPS 48,645 49,673
============= ==============
Income from
continuing operations $17,617 $13,654
============= ==============
Per share amounts:
Basic $0.37 $0.28
============= ==============
Diluted $0.36 $0.27
============= ==============
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM THE
COMPANY'S UNAUDITED FINANCIAL STATEMENTS
AS OF AND FOR THE PERIOD ENDING APRIL 4,
1998, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> JAN-2-1999
<PERIOD-END> APR-4-1998
<PERIOD-TYPE> 3-MOS
<CASH> 25,884
<SECURITIES> 0
<RECEIVABLES> 108,678
<ALLOWANCES> 510
<INVENTORY> 182,628
<CURRENT-ASSETS> 363,129
<PP&E> 222,627
<DEPRECIATION> 63,020
<TOTAL-ASSETS> 838,341
<CURRENT-LIABILITIES> 454,807
<BONDS> 2,654
0
0
<COMMON> 47,535
<OTHER-SE> 269,562
<TOTAL-LIABILITY-AND-EQUITY> 838,341
<SALES> 463,025
<TOTAL-REVENUES> 463,025
<CGS> 389,364
<TOTAL-COSTS> 389,364
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,332
<INCOME-PRETAX> 29,417
<INCOME-TAX> 11,800
<INCOME-CONTINUING> 17,617
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,617
<EPS-PRIMARY> 0.37
<EPS-DILUTED> 0.36
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM THE
COMPANY'S UNAUDITED FINANCIAL STATEMENTS
AS OF AND FOR THE PERIOD ENDING MARCH 29,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> JAN-3-1998
<PERIOD-END> MAR-29-1997
<PERIOD-TYPE> 3-MOS
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 103,881
<ALLOWANCES> 500
<INVENTORY> 74,922
<CURRENT-ASSETS> 226,415
<PP&E> 175,401
<DEPRECIATION> 51,956
<TOTAL-ASSETS> 484,316
<CURRENT-LIABILITIES> 186,428
<BONDS> 1,109
0
0
<COMMON> 48,377
<OTHER-SE> 199,108
<TOTAL-LIABILITY-AND-EQUITY> 484,316
<SALES> 362,957
<TOTAL-REVENUES> 362,957
<CGS> 308,756
<TOTAL-COSTS> 308,756
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 346
<INCOME-PRETAX> 22,654
<INCOME-TAX> 9,000
<INCOME-CONTINUING> 13,654
<DISCONTINUED> 185
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,839
<EPS-PRIMARY> 0.29
<EPS-DILUTED> 0.28
</TABLE>
