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EXHIBIT 10.1
EXECUTION COPY
SECOND AMENDED AND RESTATED LOAN AGREEMENT
DATED AS OF NOVEMBER 1, 2000
AMONG
DAY RUNNER, INC.
DAY RUNNER UK PLC
AND
FILOFAX LIMITED
AS BORROWERS
THE LENDERS HEREIN NAMED
AS LENDERS
AND
WELLS FARGO BANK, NATIONAL ASSOCIATION,
AS ADMINISTRATIVE AGENT
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TABLE OF CONTENTS
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PAGE
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ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS...............................................................2
1.1 DEFINED TERMS..................................................................................2
1.2 USE OF DEFINED TERMS..........................................................................23
1.3 ACCOUNTING TERMS..............................................................................23
1.4 ROUNDING......................................................................................24
1.5 EXHIBITS AND SCHEDULES........................................................................24
1.6 MISCELLANEOUS TERMS...........................................................................24
ARTICLE II. LOANS.........................................................................................24
2.1 REVOLVING LOANS...............................................................................24
2.2 TERM LOANS AND CONVERTIBLE LOANS..............................................................26
2.3 FOREIGN CURRENCY LOANS........................................................................26
2.4 [INTENTIONALLY OMITTED].......................................................................26
2.5 FUNDING OF REVOLVING LOANS....................................................................27
2.6 NOTES.........................................................................................27
2.7 [INTENTIONALLY OMITTED].......................................................................28
2.8 VOLUNTARY REDUCTION OF REVOLVING COMMITMENT...................................................28
2.9 [INTENTIONALLY OMITTED].......................................................................28
2.10 GUARANTY......................................................................................28
2.11 MODIFICATION OF BORROWING BASE AND RESERVES...................................................28
ARTICLE III. PAYMENTS AND FEES.............................................................................29
3.1 INTEREST......................................................................................29
3.2 PRINCIPAL; DEFERRED INTEREST..................................................................30
3.3 COMMITMENT FEE................................................................................32
3.4 AMENDMENT FEE AND ADMINISTRATIVE AGENT'S FEE..................................................33
3.5 [INTENTIONALLY OMITTED].......................................................................33
3.6 INCREASED COMMITMENT COSTS....................................................................33
3.7 [INTENTIONALLY OMITTED].......................................................................33
3.8. FOREIGN CURRENCY COSTS AND RELATED MATTERS....................................................34
3.9 [INTENTIONALLY OMITTED].......................................................................36
3.10 COMPUTATION OF INTEREST AND FEES..............................................................36
3.11 NON-BANKING DAYS..............................................................................36
3.12 MANNER AND TREATMENT OF PAYMENTS..............................................................36
3.13 FUNDING SOURCES...............................................................................37
3.14 FAILURE TO CHARGE NOT SUBSEQUENT WAIVER.......................................................38
3.15 ADMINISTRATIVE AGENT'S RIGHT TO ASSUME PAYMENTS WILL BE MADE..................................38
3.16 FEE DETERMINATION DETAIL......................................................................38
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3.17 SURVIVABILITY.................................................................................38
3.18 APPLICATION OF PAYMENTS.......................................................................38
ARTICLE IV. CONVERSION OF CONVERTIBLE NOTES AND PIK INTEREST NOTES (CONVERTIBLE LOANS)....................39
4.1 RIGHT TO CONVERT..............................................................................39
4.2 EXISTENCE OF CONVERSION RIGHT; ISSUANCE OF COMMON STOCK ON CONVERSION.........................40
4.3 FRACTIONAL SHARES.............................................................................41
4.4 CONVERSION PRICE; MAXIMUM SHARES..............................................................41
4.5 TAXES ON SHARES ISSUED........................................................................42
4.6 REPRESENTATIONS AND COVENANTS.................................................................43
4.7 RESPONSIBILITY OF ADMINISTRATIVE AGENT........................................................45
4.8 SHAREHOLDERS AGREEMENT........................................................................45
4.9 REPRESENTATIONS OF LENDERS....................................................................46
ARTICLE V. REPRESENTATIONS AND WARRANTIES................................................................47
5.1 EXISTENCE AND QUALIFICATION; POWER; COMPLIANCE WITH LAWS......................................47
5.2 AUTHORITY; COMPLIANCE WITH OTHER AGREEMENTS AND INSTRUMENTS AND GOVERNMENT REGULATIONS........47
5.3 GOVERNMENT APPROVALS..........................................................................48
5.4 SUBSIDIARIES..................................................................................48
5.5 FINANCIAL STATEMENTS..........................................................................49
5.6 NO OTHER LIABILITIES; NO MATERIAL ADVERSE CHANGES.............................................49
5.7 TITLE TO PROPERTY.............................................................................49
5.8 INTANGIBLE ASSETS.............................................................................49
5.9 PUBLIC UTILITY HOLDING COMPANY ACT............................................................50
5.10 LITIGATION....................................................................................50
5.11 BINDING OBLIGATIONS...........................................................................50
5.12 NO DEFAULT....................................................................................50
5.13 ERISA.........................................................................................50
5.14 REGULATIONS U AND X; INVESTMENT COMPANY ACT...................................................51
5.15 DISCLOSURE....................................................................................51
5.16 TAX LIABILITY.................................................................................51
5.17 PROJECTIONS...................................................................................51
5.18 ENVIRONMENTAL MATTERS.........................................................................51
5.19 [INTENTIONALLY OMITTED].......................................................................52
5.20 ACCOUNT WARRANTIES............................................................................52
5.21 INVENTORY WARRANTIES..........................................................................53
5.22 ACCOUNTING....................................................................................53
ARTICLE VI. AFFIRMATIVE COVENANTS (OTHER THAN INFORMATION AND REPORTING REQUIREMENTS).....................54
6.1 PAYMENT OF TAXES AND OTHER POTENTIAL LIENS....................................................54
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6.2 PRESERVATION OF EXISTENCE.....................................................................54
6.3 MAINTENANCE OF PROPERTIES.....................................................................54
6.4 MAINTENANCE OF INSURANCE......................................................................54
6.5 COMPLIANCE WITH LAWS..........................................................................54
6.6 INSPECTION RIGHTS.............................................................................55
6.7 KEEPING OF RECORDS AND BOOKS OF ACCOUNT.......................................................55
6.8 COMPLIANCE WITH AGREEMENTS....................................................................55
6.9 USE OF PROCEEDS...............................................................................55
6.10 HAZARDOUS MATERIALS LAWS......................................................................55
6.11 ADDITIONAL MATERIAL SUBSIDIARIES..............................................................56
6.12 [INTENTIONALLY OMITTED].......................................................................56
6.13. FURTHER ASSURANCES............................................................................56
6.14. DEPOSIT ACCOUNTS; CASH CONCENTRATION; CASH FLOW SWEEP.........................................57
6.15 CONVERTIBLE NOTES AND COMMON STOCK............................................................58
6.16 MAJOR ACCOUNTS PAYABLES AGREEMENT.............................................................58
ARTICLE VII. NEGATIVE COVENANTS............................................................................59
7.1 PAYMENT OF SUBORDINATED OBLIGATIONS...........................................................59
7.2 DISPOSITION OF PROPERTY.......................................................................59
7.3 MERGERS.......................................................................................59
7.4 [INTENTIONALLY OMITTED].......................................................................59
7.5 [INTENTIONALLY OMITTED].......................................................................59
7.6 DISTRIBUTIONS.................................................................................59
7.7 ERISA.........................................................................................59
7.8 CHANGE IN NATURE OF BUSINESS..................................................................60
7.9 LIENS.........................................................................................60
7.10 INDEBTEDNESS AND GUARANTY OBLIGATIONS.........................................................60
7.11 TRANSACTIONS WITH AFFILIATES..................................................................61
7.12 FUNDED SENIOR DEBT RATIO......................................................................61
7.13 FIXED CHARGE COVERAGE RATIO...................................................................61
7.14 [INTENTIONALLY OMITTED].......................................................................62
7.15 INVESTMENTS...................................................................................62
7.16 CAPITAL EXPENDITURES..........................................................................63
7.17 PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES...................................................63
7.18 LEASE OBLIGATIONS.............................................................................63
7.19 MINIMUM EBITDA................................................................................63
7.20 CONVERTIBLE NOTES AND COMMON STOCK............................................................64
ARTICLE VIII. INFORMATION AND REPORTING COVENANTS...........................................................64
8.1 FINANCIAL AND BUSINESS INFORMATION............................................................64
8.2 COMPLIANCE CERTIFICATES.......................................................................68
8.3 ACCOUNTS REPORTING............................................................................68
8.4 INVENTORY REPORTING...........................................................................69
8.5 ACCOUNT COVENANTS.............................................................................69
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8.6 INVENTORY COVENANTS...........................................................................69
8.7 EQUIPMENT COVENANTS...........................................................................70
8.8 APPOINTMENT OF THE ADMINISTRATIVE AGENT AS ANY BORROWERS' ATTORNEY-IN-FACT....................70
8.9 CONVERTIBLE NOTES AND COMMON STOCK............................................................71
ARTICLE IX. CONDITIONS....................................................................................71
9.1 EFFECTIVE DATE................................................................................71
9.2 REVOLVING LOANS...............................................................................73
ARTICLE X. EVENTS OF DEFAULT AND REMEDIES UPON EVENT OF DEFAULT..........................................74
10.1 EVENTS OF DEFAULT.............................................................................74
10.2 REMEDIES UPON EVENT OF DEFAULT................................................................76
ARTICLE XI. THE ADMINISTRATIVE AGENT......................................................................77
11.1 APPOINTMENT AND AUTHORIZATION.................................................................77
11.2 ADMINISTRATIVE AGENT AND AFFILIATES...........................................................77
11.3 LENDERS' CREDIT DECISIONS.....................................................................78
11.4 ACTION BY ADMINISTRATIVE AGENT................................................................78
11.5 LIABILITY OF ADMINISTRATIVE AGENT.............................................................79
11.6 INDEMNIFICATION...............................................................................80
11.7 SUCCESSOR ADMINISTRATIVE AGENT................................................................80
11.8 NO OBLIGATIONS OF BORROWERS...................................................................81
ARTICLE XII. MISCELLANEOUS.................................................................................81
12.1 CUMULATIVE REMEDIES; NO WAIVER................................................................81
12.2 AMENDMENTS; CONSENTS..........................................................................82
12.3 COSTS, EXPENSES AND TAXES.....................................................................83
12.4 NATURE OF LENDERS' OBLIGATIONS................................................................84
12.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES....................................................84
12.6 NOTICES.......................................................................................84
12.7 EXECUTION OF LOAN DOCUMENTS...................................................................84
12.8 BINDING EFFECT; ASSIGNMENT....................................................................85
12.9 RIGHT OF SETOFF...............................................................................87
12.10 SHARING OF SETOFFS............................................................................87
12.11 INDEMNITY BY BORROWERS........................................................................88
12.12 NONLIABILITY OF THE LENDERS...................................................................89
12.13 NO THIRD PARTIES BENEFITED....................................................................90
12.14 CONFIDENTIALITY...............................................................................90
12.15 FURTHER ASSURANCES............................................................................90
12.16 INTEGRATION...................................................................................91
12.17 GOVERNING LAW.................................................................................91
12.18 SEVERABILITY OF PROVISIONS....................................................................91
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12.19 HEADINGS......................................................................................91
12.20 TIME OF THE ESSENCE...........................................................................91
12.21 FOREIGN LENDERS AND PARTICIPANTS..............................................................91
12.22 JOINT AND SEVERAL LIABILITY...................................................................92
12.23 REMOVAL OF A LENDER...........................................................................93
12.24 WAIVER OF RIGHT TO TRIAL BY JURY..............................................................93
12.25 PURPORTED ORAL AMENDMENTS.....................................................................94
12.26 ACKNOWLEDGMENT OF LENDERS.....................................................................94
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EXHIBITS
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EXHIBIT NUMBER EXHIBIT NAME
<S> <C>
Exhibit A Form of Assignment and Acceptance
Exhibit B Form of Borrowing Base Certificate
Exhibit C Form of Compliance Certificate
Exhibit D Form of Registration Rights Agreement
Exhibit E Form of Notice of Borrowing
Exhibit F-1 Form of Term Loan A Note
Exhibit F-2 Form of Term Loan B Note
Exhibit F-3 Form of Convertible Note
Exhibit F-4 Form of Revolving Loan Note
Exhibit F-5 Form of PIK Interest Note (TLB)
Exhibit F-6 Form of PIK Interest Note (CL)
Exhibit G Form of Instrument of Joinder to Subsidiary Guaranty
Exhibit H Form of Instrument of Joinder to Subsidiary Guaranty of Revolving Loans
Exhibit I Form of Instrument of Joinder to Subsidiary Guaranty of Term Loans
Exhibit J Form of Subordinated Promissory Note
Exhibit K Form of Global Modification
Exhibit L Form of Release
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SCHEDULES
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SCHEDULE NUMBER SCHEDULE NAME
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Schedule 1.1-A Financial Projections
Schedule 1.1-B Lender Pro Rata Shares
Schedule 2.2 Loan Outstanding on Effective Date
Schedule 4.6(e) Reserved Securities
Schedule 5.1 Borrowers
Schedule 5.4 Subsidiaries
Schedule 5.6 Funded Debt
Schedule 5.7 Liens
Schedule 5.15 Public Disclosures
Schedule 5.18 Environmental Matters
Schedule 6.14(a) Foreign Subsidiary Deposit Accounts
Schedule 6.14(b) Foreign Subsidiary Deposit Account Balances
Schedule 7.10 Existing Indebtedness
Schedule 7.15 Existing Investments
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SECOND AMENDED AND RESTATED
LOAN AGREEMENT
Dated as of November 1, 2000
This SECOND AMENDED AND RESTATED LOAN AGREEMENT dated as of November 1,
2000 is entered into by and among Day Runner, Inc., a Delaware corporation ("DAY
RUNNER"), Day Runner UK plc, a company incorporated with limited liability under
the laws of England and Wales and a wholly-owned indirect subsidiary of Day
Runner ("Bidco"), Filofax Limited, a company incorporated with limited liability
under the laws of England and Wales and a wholly-owned indirect subsidiary of
Bidco ("Filofax"; Day Runner, Bidco and Filofax being referred to herein
collectively as the "BORROWERS", and individually as a "BORROWER"), each lender
whose name is set forth on the signature pages of this Agreement and each lender
which may hereafter become a party to this Agreement pursuant to Section 12.8
(collectively, the "LENDERS," and individually, a "Lender"), and Wells Fargo
Bank, National Association, as Administrative Agent.
WHEREAS, certain of the Borrowers, Day Runner Canada Inc., an Ontario
corporation formerly known as Ultima Distribution Inc. and a wholly-owned
subsidiary of Day Runner ("DRC"), the Lenders and Wells Fargo Bank, National
Association, as Administrative Agent, entered into that certain Revolving Loan
Agreement dated as of September 23, 1998 (the "ORIGINAL CREDIT AGREEMENT");
WHEREAS, (i) the Borrowers, DRC, the Lenders and the Administrative
Agent amended and restated the Original Credit Agreement in its entirety to give
effect to the terms and provisions set forth in the Amended and Restated Loan
Agreement dated as of October 12, 1999, and (2) said Amended and Restated
Agreement was amended pursuant to a series of seven waivers. Pursuant to the
Seventh Waiver, dated as of August 26, 2000 (the "SEVENTH WAIVER"), Overline
Loans were made available by certain of the Lenders, and payment of certain
interest was deferred (such Amended and Restated Loan Agreement, as so amended
by the seven waivers, as the same was further amended, supplemented or otherwise
modified from time to time, the "EXISTING AGREEMENT");
WHEREAS, the Borrowers, the Lenders and the Administrative Agent desire
to amend and restate the Existing Agreement in its entirety to give effect to
the terms and provisions set forth in this Agreement (the Existing Agreement as
amended and restated by this Second Amended and Restated Loan Agreement, as the
same may be further amended, supplemented or otherwise modified from time to
time, this "AGREEMENT");
WHEREAS, as of the date hereof, (1) Term Loans (as defined in the
Existing Agreement) are outstanding in the aggregate principal amount of
$87,163,875.13 (including L12,420,210.33 of Foreign Currency Loans); (2)
Revolving Loans (as defined in the Existing Agreement) are outstanding in the
aggregate principal amount of $24,961,318.00; and (3) accrued and unpaid
interest, including certain deferred interest on the Term Loans and Revolving
Loans, is outstanding;
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WHEREAS, the Borrowers have requested, that (a) the Term Loans made to
Borrowers under the Existing Agreement be restructured in this Agreement as Term
Loan A in the principal amount of $20,000,000, Term Loan B in the principal
amount of $40,000,000, and a Convertible Loan in the principal amount of
$27,163,875.13 (each as defined in this Agreement), (b) the amount of the
Revolving Commitment under the Existing Credit Agreement be adjusted and limited
by the Available Amount, (c) future borrowings under the Revolving Loans be
limited to Day Runner, and (d) various covenants be revised and adjusted.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto covenant and agree as follows:
ARTICLE I.
DEFINITIONS AND ACCOUNTING TERMS
1.1 DEFINED TERMS. As used in this Agreement, the following terms
shall have the meanings set forth below:
"ACCOUNT WARRANTIES" has the meaning set forth in Section 5.20.
"ACCOUNTS" means any and all right, title and interest of Day Runner to
payment for goods sold or leased or for services rendered, including any such
right evidenced by chattel paper, whether due or to become due, whether or not
it has been earned by performance, and whether now or hereafter acquired or
arising in the future, including any accounts with respect to which any
Affiliate of Day Runner is the account debtor.
"ADMINISTRATIVE AGENT" means Wells Fargo Bank, National Association,
when acting in its capacity as the Administrative Agent under any of the Loan
Documents, or any successor Administrative Agent.
"ADMINISTRATIVE AGENT'S FEE" means the annual administration fee to be
paid by Day Runner to the Administrative Agent described in the fee letter dated
as of November 27, 2000 from the Administrative Agent to, and acknowledged and
accepted by, Day Runner.
"ADMINISTRATIVE AGENT'S OFFICE" means the Administrative Agent's
address as set forth on the signature pages of this Agreement, or such other
address as the Administrative Agent hereafter may designate by written notice to
the Borrowers and the Lenders.
"AFFILIATE" means, as to any Person, any other Person which directly or
indirectly controls, or is under common control with, or is controlled by, such
Person. As used in this definition, "control" (and the correlative terms,
"CONTROLLED BY" and "UNDER COMMON CONTROL WITH") shall mean possession, directly
or indirectly, of power to direct or cause the direction of management or
policies (whether through ownership of securities or partnership or other
ownership interests, by contract or otherwise); PROVIDED that, (a) in any event
and except as provided in clause (b), any Person that owns, directly or
indirectly, 20% or more of the securities having ordinary voting power for the
election of directors or other governing body of a corporation that has more
than 100 record holders of such securities, or 20% or more of the partnership or
other ownership
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interests of any other Person that has more than 100 record holders of such
interests, will be deemed to be an Affiliate of such corporation, partnership
or other Person; and (b) no Lender shall be deemed to be an Affiliate of the
Borrowers or of any Affiliate of the Borrowers for purposes of this Agreement
including, without limitation, Section 7.20(a).
"AGREEMENT" means this Second Amended and Restated Loan Agreement as it
may from time to time be supplemented, modified, amended, restated or extended.
"APPLICABLE COMMITMENT FEE RATE" means 67.5 basis points (0.675%).
"APPLICABLE LENDING OFFICE" means, with respect to each Lender, such
Lender's Domestic Lending Office.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance
substantially in the form of Exhibit A.
"AVAILABLE AMOUNT" shall have the meaning set forth in Section 2.1.
"BANKING DAY" means any Monday, Tuesday, Wednesday, Thursday or Friday,
other than a day on which banks are authorized or required to be closed in
California or New York.
"BORROWER" means each of Day Runner, Bidco and Filofax, and "BORROWERS"
is a collective reference to all of them.
"BORROWER GUARANTIES" means the collective reference to (a) each
Borrower Guaranty, previously executed by the Borrowers (other than Filofax),
(b) the Borrower Guaranty of Revolving Loans, previously executed by Filofax and
(c) the Borrower Guaranty of Term Loans, previously executed by Filofax; in each
case as the same has been previously amended or modified and has been reaffirmed
and amended by the Global Modification, and as it may be amended, supplemented
or otherwise modified, amended, extended or supplanted from time to time; and
each of them is a "Borrower Guaranty". Copies of these documents are attached to
the Global Modification as Exhibits A, B, C and D.
"BORROWING BASE" means an amount equal to (a) eighty percent (80%) of
the amount of Eligible Accounts (the face amount of each Eligible Account less
discounts and credits that may be taken by or granted to account debtors in
connection therewith), plus (b) forty percent (40%) of Eligible Inventory.
"BORROWING BASE CERTIFICATE" means a certificate substantially in the
form of Exhibit B, executed by a Responsible Officer of the relevant Borrower
and delivered to the Administrative Agent.
"CAPITAL EXPENDITURE" means any expenditure by any Borrower or any of
its Subsidiaries for or related to fixed assets or purchased intangibles that is
treated as a capital expenditure under GAAP, including any amount which is
required to be treated as an asset subject to a Capital Lease Obligation.
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"CAPITAL LEASE" means any leasing or similar arrangement which, in
accordance with GAAP, is classified as a capital lease.
"CAPITAL LEASE OBLIGATIONS" means all monetary obligations of a Person
under any Capital Lease.
"CASH" means, when used in connection with any Person, all monetary and
non-monetary items owned by that Person that are treated as cash in accordance
with GAAP, consistently applied.
"CASH EQUIVALENTS" means, when used in connection with any Person, that
Person's Investments in:
(a) Government Securities due within one year after the date
of the making of the Investment;
(b) readily marketable direct obligations of any State of the
United States of America or any political subdivision of any such State or any
public agency or instrumentality thereof given on the date of such Investment a
credit rating of at least AA by Moody's Investors Service, Inc. or AA by
Standard & Poor's Rating Services (a division of McGraw-Hill, Inc.), in each
case due within one year from the making of the Investment;
(c) certificates of deposit issued by, bank deposits in,
eurodollar deposits through, bankers' acceptances of, and repurchase agreements
covering Government Securities executed by any Lender or any bank incorporated
under the Laws of the United States of America, any State thereof or the
District of Columbia and having on the date of such Investment combined capital,
surplus and undivided profits of at least $250,000,000, or total assets of at
least $5,000,000,000, in each case due within one year after the date of the
making of the Investment;
(d) certificates of deposit issued by, bank deposits in,
eurodollar deposits through, bankers' acceptances of, and repurchase agreements
covering Government Securities executed by any Lender or any branch or office
located in the United States of America of a bank incorporated under the Laws of
any jurisdiction outside the United States of America having on the date of such
Investment combined capital, surplus and undivided profits of at least
$500,000,000, or total assets of at least $15,000,000,000, in each case due
within one year after the date of the making of the Investment;
(e) readily marketable commercial paper or other debt
securities issued by corporations doing business in and incorporated under the
Laws of the United States of America or any State thereof or of any corporation
that is the holding company for a bank described in clause (c) or (d) above
given on the date of such Investment a credit rating of at least P-1 by Moody's
Investors Service, Inc. or A-1 by Standard & Poor's Rating Services (a division
of McGraw-Hill, Inc.), in each case due within one year after the date of the
making of the Investment;
(f) a readily redeemable "money market mutual fund" sponsored
by a bank described in clause (c) or (d) hereof, or a broker or dealer
registered under Section 15(b) of the
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Securities Exchange Act of 1934, as amended, having on the date of the
Investment capital of at least $50,000,000, that has and maintains an
investment policy limiting its investments primarily to instruments of the
types described in clauses (a) through (e) hereof and given on the date of
such Investment a credit rating of at least Aa by Moody's Investors Service,
Inc. and AA by Standard & Poor's Rating Services (a division of McGraw-Hill,
Inc.);
(g) corporate notes or bonds having an original term to
maturity of not more than one year issued by a corporation incorporated under
the Laws of the United States of America, or a participation interest therein;
provided that (i) commercial paper issued by such corporation is given on the
date of such Investment a credit rating of at least Aa by Moody's Investors
Service, Inc. and AA by Standard & Poor's Rating Services (a division of
McGraw-Hill, Inc.), (ii) the amount of all such Investments issued by the same
issuer does not exceed $5,000,000 and (iii) the aggregate amount of all such
Investments does not exceed $15,000,000; and
(h) any security denominated in pounds sterling issued by or
on behalf of the government of the United Kingdom or any other unsubordinated
security, investment or instrument which is denominated in pounds sterling, has
a maturity of less than one year, and is given on the date of such Investment a
credit rating of at least P-1 by Moody's Investor's Service, Inc. or A-1 by
Standard & Poor's Ratings Services (a division of McGraw-Hill, Inc.).
"CERTIFICATE" means a certificate signed by a Senior Officer or
Responsible Official (as applicable) of the Person providing the certificate.
"CHANGE IN CONTROL" means any of the following without the advance
written consent of the Agent, (a) any termination of, modification of, or
increase or reduction in the scope or term of engagement by Day Runner of
Crossroads LLC as in effect on the Effective Date, (b) any termination of John
Ausura as chief executive officer of Day Runner with full authority to manage
the day to day affairs of Day Runner and its Subsidiaries as in effect on the
Effective Date, or (c) any alteration, modification, increase or decrease in the
compensation, financial terms or incentives of Crossroads LLC or John Ausura;
(d) any transaction or series of related transactions in which any Person or two
or more Persons acting in concert acquire beneficial ownership (within the
meaning of Rule 13d-3(a)(1) under the Securities Exchange Act of 1934, as
amended), directly or indirectly, of 35% or more of the outstanding Day Runner
Common Stock, (e) Day Runner consolidates with or merges into another Person or
conveys, transfers or leases its properties and assets substantially as an
entirety to any Person, or any Person consolidates with or merges into Day
Runner in a transaction in which the outstanding Day Runner Common Stock is
changed into or exchanged for cash, securities or other property and with the
effect that any Person becomes the beneficial owner, directly or indirectly, of
25% or more of Day Runner Common Stock or that the Persons who were the holders
of Day Runner Common Stock immediately prior to the transaction hold less than
75% of the common stock of the surviving corporation after the transaction, or
(f) during any period of 24 consecutive months, individuals who at the beginning
of such period constituted the board of directors of Day Runner (together with
any new or replacement directors whose election by the board of directors, or
whose nomination for election, was approved by a vote of at least a majority of
the directors then still in office who were either directors at the beginning of
such period or whose election or
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nomination for reelection was previously so approved) cease for any reason to
constitute a majority of the directors then in office. In any event, and
notwithstanding the foregoing, a Change in Control shall not occur upon the
conversion of any or all of the Convertible Notes or if, as the result of any
such conversion, the Lenders hold sufficient shares of Conversion Stock to
elect a majority of Day Runner's board of directors, upon any new election of
directors following such conversion.
"CLOSING DATE" means the first Banking Day on which the conditions set
forth in Section 9.1 are satisfied or waived.
"CODE" means the Internal Revenue Code of 1986, as amended or replaced
and as in effect from time to time.
"COLLATERAL" means all Property and interests in Property now owned or
hereafter acquired by a Borrower or any of its Subsidiaries upon which a Lien is
granted to the Administrative Agent, for the benefit of the Lenders, under any
of the Loan Documents.
"COLLATERAL DOCUMENTS" means each of the Pledge Agreements and Security
Agreements.
"COMMON STOCK" means the common stock of any Borrower or its successor.
"COMPANIES ACT" means the Companies Act 1985 of Great Britain.
"COMPLIANCE CERTIFICATE" means a certificate in the form of Exhibit C,
properly completed and signed by a Senior Officer of Day Runner.
"CONCENTRATION ACCOUNT" has the meaning set forth in Section 6.14.
"CONTRACTUAL OBLIGATION" means, as to any Person, any provision of any
outstanding security issued by that Person or of any material agreement,
instrument or undertaking to which that Person is a party or by which it or any
of its Property is bound.
"CONVERSION PRICE" has the meaning set forth in Section 4.4.
"CONVERSION STOCK" has the meaning set forth in Section 4.1(b).
"CONVERTIBLE LOAN" has the meaning set forth in Section 2.2(d), and
shall include any interest on such Loan paid in PIK Interest Notes as provided
in Section 3.1.
"CONVERTIBLE LOAN RATE" means, for any day, a rate per annum equal to
the Prime Rate in effect on such day plus four percent (4%).
"CONVERTIBLE NOTE" means a Note evidencing a Convertible Loan issued in
accordance with Section 2.6(a)(iii).
"DAY RUNNER COMMON STOCK" means the one class of Common Stock of Day
Runner authorized on the Effective Date.
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"DAY RUNNER 10-K" means the 10-K filed by Day Runner on September 27,
2000.
"DEBTOR RELIEF LAWS" means the Bankruptcy Code of the United States of
America, as amended from time to time, and all other applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization, or similar debtor relief Laws from time to time in
effect affecting the rights of creditors generally.
"DEFAULT" means any event that, with the giving of any applicable
notice or passage of time specified in Section 10.1, or both, would be an Event
of Default.
"DEFAULT RATE" means the interest rate prescribed in Section 3.1(e).
"DEFERRED INTEREST" means the total amount of interest as to which
payment was deferred pursuant to the Seventh Waiver, in the amount of $
2,257,677.43.
"DESIGNATED CAPITAL EXPENDITURES" means Capital Expenditures that are
either (a) financed directly or indirectly with the proceeds of a Loan or (b)
not financed by the relevant Borrower by any third party financing source.
"DISPOSITION" means the sale, transfer or other disposition in any
single transaction or series of related transactions of any asset, or group of
related assets, of any Borrower or any of its Subsidiaries, including, without
limitation, any sale of substantially all of the operating assets of Filofax, or
any sale of stock of any Person which owns, directly or indirectly, any of the
equity interests in Filofax, other than (a) Inventory or Cash Equivalents sold
or otherwise disposed of in the ordinary course of business of such Borrower or
such Subsidiary and (b) Equipment sold or otherwise disposed of where such
equipment is obsolete or no longer useful in the ordinary course of business of
such Borrower or such Subsidiary, and the aggregate value of assets so disposed
does not exceed $1,000,000 in any Fiscal Year.
"DISQUALIFIED STOCK" means any capital stock, warrants, options or
other rights to acquire capital stock (but excluding any debt security which is
convertible, or exchangeable, for capital stock), which, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the option of the holder thereof, in whole or in part, on or prior to the
Maturity Date.
"DISTRIBUTION" means, with respect to any shares of capital stock or
any warrant or option to purchase an equity security or other equity security
issued by a Person, (a) any Stock Repurchase by such Person and (b) the
declaration or (without duplication) payment by such Person of any dividend or
other distribution in Cash or in Property (except for Property constituting
capital stock of such Person that is not Disqualified Stock) on or with respect
to any such security.
"DOLLARS" or "$" means United States of America dollars.
"DOMESTIC LENDING OFFICE" means, with respect to any Lender, the office
of such Lender specified as its "Domestic Lending Office" next to its signature
hereto, or such other office of
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such Lender as such Lender may from time to time specify to the Borrowers and
to the Administrative Agent.
"DRC" means Day Runner Canada Inc., an Ontario corporation formerly
known as Ultima Distribution Inc. and a wholly-owned subsidiary of Day Runner.
"DRC LOANS" has the meaning set forth in the preamble to this
Agreement.
"DRI INTERNATIONAL" means DRI International Holdings, Inc., a Delaware
corporation and a wholly-owned Subsidiary of Day Runner.
"DR-UK HOLDINGS" means DR UK Holdings Limited, a company incorporated
with limited liability under the laws of England and Wales and a Subsidiary of
DRI International.
"DTC" means The Depository Trust Company.
"EBITDA" means, with respect to any period, the sum of (a) Net Income
for that period, plus (b) any extraordinary loss, any asset write-down included
in such Net Income and, if approved by the Administrative Agent in writing,
severance expenses and other restructuring expenses and charges (provided, that,
in the case of cash severance expenses and other cash restructuring expenses and
charges, the aggregate amount approved by the Administrative Agent shall not
exceed the amount scheduled therefor in the Projections as of the Effective Date
by more than 10% of such amount), minus (c) any extraordinary gain included in
such Net Income, plus (d) Interest Expense of Day Runner and its Subsidiaries
for that period, plus (e) the aggregate amount of taxes on or measured by income
of Day Runner and its Subsidiaries for that period (whether or not payable
during that period), plus (f) without duplication of any amount included in
clause (b) of this definition, depreciation, amortization and all other non-cash
expenses of Day Runner and its Subsidiaries for that period.
"EFFECTIVE DATE" means November 1, 2000, but the Effective Date shall
not occur unless and until the Closing Date occurs.
"ELIGIBLE ACCOUNTS" means at any time, the aggregate of Day Runner's
Accounts excluding, however, (a) all Accounts in respect of which full payment
has not been received within sixty (60) days of the due date; (b) all Accounts
not evidenced by an invoice (dated no later than the date of shipment and having
customary payment terms); (c) all Accounts as to which the account debtor or any
other Person obligated to make payment thereon has asserted any defense, offset,
counterclaim or other right to avoid or reduce the liability represented by such
Accounts, but only to the extent of such defense, offset, counterclaim or other
right; (d) all Accounts containing special return rights or other terms and
conditions which are not consistent with Day Runner's standard business
practices; (e) all Accounts as to which the account debtor or other Person
obligated to make payment thereon is insolvent, subject to any Debtor Relief Law
or whose credit standing is unacceptable to the Administrative Agent and the
Administrative Agent has so notified Day Runner; (f) all Accounts in which any
Borrower or an Affiliate of any Borrower is the account debtor; (g) all Accounts
owed by account debtors who are not residents of the United States; and (h) in
the event thirty percent (30%) or more of the Accounts of any
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account debtor shall be deemed ineligible under clause (a) above, all
Accounts of such account debtor. For purposes of calculating the Borrowing
Base, Accounts within clauses (a) through (c) and (e) through (h) shall be
Eligible Accounts if they are backed by a letter of credit issued or
confirmed by a financial institution or a branch or agency of such financial
institution that is rated "A" or higher by Standard & Poor's Rating Services
or such analogous rating by Moody's Investors Service, Inc.
"ELIGIBLE INVENTORY" means Inventory of Day Runner that (a) is located
at locations and on premises within the United States or Canada satisfactory to
the Administrative Agent, and, in the case of Inventory located in Canada, is
either of de minimus value or is subject to the Lien of the Administrative
Agent, (b) is not obsolete or unduly dated, (c) is in good condition, free from
latent and patent defects and of merchantable quality, (d) is finished goods,
work in process or raw materials currently usable or salable in the ordinary
course of Day Runner's business, and (e) is not in the possession of any Person
other than Day Runner, except (i) goods held in storage solely for the account
of Day Runner (subject to the Lien of the Administrative Agent), if the Person
in possession has acknowledged in writing the Administrative Agent's Lien
thereon and has not issued a negotiable document of title as to the goods
(except if such document of title is in the possession of the Administrative
Agent), and (ii) Inventory that has been shipped to Day Runner, fully insured
(except for customary deductibles) and fully paid, with respect to which the
Administrative Agent has possession of all documents of title and import,
insurance and other documents necessary to claim and take delivery of the
Inventory, or any insurance proceeds relating thereto, in the United States.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
any regulations issued pursuant thereto, as amended or replaced and as in effect
from time to time.
"ERISA AFFILIATE" means each Person (whether or not incorporated) which
is required to be aggregated with Borrower pursuant to Section 414 of the Code.
"EVENT OF DEFAULT" has the meaning set forth in Section 10.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXISTING AGREEMENT" has the meaning set forth in the preamble to this
Agreement.
"FEDERAL FUNDS RATE" means, as of any date of determination, the rate
set forth in the daily statistical release designated as the Composite 3:30 P.M.
Quotations for U.S. Government Securities, or any successor publication,
published by the Federal Reserve Bank of New York (including any such successor,
the "Composite 3:30 P.M. Quotation") for such date under the caption "Federal
Funds Effective Rate". If on any relevant date the appropriate rate for such
date is not yet published in the Composite 3:30 P.M. Quotations, the rate for
such date will be the arithmetic mean of the rates for the last transaction in
overnight Federal funds arranged prior to 9:00 A.M. (New York City time) on that
date by each of three leading brokers of Federal funds transactions in New York
City selected by the Administrative Agent.
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"FILOFAX GROUP" means Filofax Group Limited, a company incorporated
with limited liability under the laws of England and Wales and a wholly-owned
direct subsidiary of Bidco.
"FILOFAX WORKING CAPITAL GUARANTIES" means the collective reference to
(a) the Borrower Guaranty of Revolving Loans, previously executed by Filofax and
(b) the Subsidiary Guaranty of Revolving Loans, as previously executed by
Filofax Group; in each case as the same has been previously amended or modified
and has been reaffirmed and amended by the Global Modification, and as it may be
supplemented, modified, amended, extended or supplanted from time to time.
Copies of these documents are attached to the Global Modification as Exhibits C
and E..
"FISCAL QUARTER" means the fiscal quarter of Borrowers ending on each
March 31, June 30, September 30 and December 31.
"FISCAL YEAR" means the fiscal year of Borrowers ending on each June
30.
"FIXED CHARGE COVERAGE RATIO" means, as of the last day of any month,
the ratio of (a) EBITDA for the trailing twelve (12) months ending on the last
day of such month, MINUS Designated Capital Expenditures made by Day Runner and
its Subsidiaries during such fiscal period, minus cash payments for federal,
state, local and foreign taxes actually paid during such period by Day Runner
and its Subsidiaries, plus tax refunds received in cash during such period with
respect to any federal, state, local, or foreign taxes, to (b) the sum of (i)(A)
Interest Expense of Day Runner and its Subsidiaries for such fiscal period MINUS
(B) Interest Income of Day Runner and its Subsidiaries for such fiscal period
PLUS (ii) the principal portion of Capital Lease Obligations of Day Runner and
its Subsidiaries during such fiscal period actually paid or required to be paid
(without duplication) during such fiscal period PLUS (iii) any required
principal repayments of Indebtedness of Day Runner and its Subsidiaries during
such fiscal period including required principal payments with respect to the
Obligations (except in respect to (x) Intercompany Indebtedness and (y) any
principal payment required by Section 3.2(a)(ii), (iii), (iv) and (v)), provided
that, for purposes of this calculation, the amount of any required principal
repayments of Indebtedness with respect to Revolving Loans shall be equal to the
excess, if any, of the Available Amount at the beginning of such period over the
Available Amount at the end of such period, MINUS (iv) the principal amount of
any Indebtedness incurred by Day Runner and its Subsidiaries during such fiscal
period (excluding any Intercompany Indebtedness) the proceeds of which are used
during such period to refinance existing Indebtedness of Day Runner and its
Subsidiaries during such period.
"FOREIGN CURRENCY" means, with respect to a Foreign Currency Loan, the
foreign currency applicable to that Foreign Currency Loan.
"FOREIGN CURRENCY BANKING DAY" means any Banking Day on which dealings
in deposits in the applicable Foreign Currency are conducted by and among banks
in the Designated Foreign Currency Market.
"FOREIGN CURRENCY EQUIVALENT" means, as of any date of determination,
the equivalent amount in Dollars of a Foreign Currency Loan using the currency
exchange rate for such date for
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the applicable Foreign Currency in the New York City wholesale foreign
currency exchange market in trading among banks in amounts of $1,000,000 or
more, set at 11:00 A.M. London Time two (2) Foreign Currency Banking Days
prior to the date of determination, or, if not so set for such date, as
otherwise reasonably determined by the Administrative Agent.
"FOREIGN CURRENCY LOAN" means that Term Loan made under the Existing
Agreement in pounds sterling in the outstanding principal amount of L
12,420,210.33 as of the Effective Date, the interest period of which ends
December 29, 2000 and which, after the Effective Date, will be a portion of Term
Loan B.
"FOREIGN SUBSIDIARY" means a Subsidiary of any Borrower that (a) is
organized under the Laws of a jurisdiction other than the United States of
America, any State thereof or the District of Columbia and (b) conducts all or
substantially all of its business outside the United States of America.
"FUNDED DEBT" means, as to any Person (without duplication), (a)
Indebtedness of such Person for borrowed money or for the deferred purchase
price of Property (excluding trade and other accounts payable in the ordinary
course of business in accordance with ordinary trade terms), including any
Guaranty Obligation for any such indebtedness, (b) all Indebtedness of such
Person evidenced by notes, bonds, debentures, debentures or other similar
instruments, (c) Indebtedness of such Person that is non-recourse to such Person
but is secured by assets of such Person, to the extent of the fair market value
of such assets as determined in good faith by such Person, (d) the principal
portion of Capital Lease Obligations of such Person required under GAAP to be
shown on the balance sheet of such Person, (e) Indebtedness of such Person
arising under bankers' acceptance facilities or under facilities for the
discount of accounts receivable of such Person, and (f) any direct or contingent
obligations of such Person under letters of credit issued for the account of
such Person.
"FUNDED SENIOR DEBT RATIO" means, as of the last day of any month, the
ratio of (a) the outstanding principal amount of all Funded Debt of Day Runner
and its Subsidiaries on that date to (b) EBITDA for the trailing twelve (12)
months ending on the last day of such month.
"GAAP" means, as of any date of determination, accounting principles
(a) set forth as generally accepted in then currently effective Opinions of the
Accounting Principles Board of the American Institute of Certified Public
Accountants, (b) set forth as generally accepted in then currently effective
Statements of the Financial Accounting Standards Board or (c) that are then
approved by such other entity as may be approved by a significant segment of the
accounting profession in the United States of America. The term "consistently
applied," as used in connection therewith, means that the accounting principles
applied are consistent in all material respects with those applied at prior
dates or for prior periods.
"GLOBAL MODIFICATION" has the meaning set forth in Section 9.1(a)(4).
"GOVERNMENT SECURITIES" means readily marketable (a) direct full faith
and credit obligations of the United States of America or obligations guaranteed
by the full faith and credit of the United States of America and (b) obligations
of an agency or instrumentality of, or
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corporation owned, controlled or sponsored by, the United States of America
that are generally considered in the securities industry to be implicit
obligations of the United States of America.
"GOVERNMENTAL AGENCY" means (a) any international, foreign, federal,
state, county or municipal government, or political subdivision thereof, (b) any
governmental or quasi-governmental agency, authority, board, bureau, central
bank, commission, department, instrumentality or public body or (c) any court or
administrative tribunal of competent jurisdiction.
"GUARANTY OBLIGATION" means, as to any Person, any (a) guarantee by
that Person of Indebtedness of, or other obligation performable by, any other
Person or (b) assurance given by that Person to an obligee of any other Person
with respect to the performance of an obligation by, or the financial condition
of, such other Person, whether direct, indirect or contingent, including any
purchase or repurchase agreement covering such obligation or any collateral
security therefor, any agreement to provide funds (by means of loans, capital
contributions or otherwise) to such other Person, any agreement to support the
solvency or level of any balance sheet item of such other Person or any
"keep-well" or other arrangement of whatever nature given for the purpose of
assuring or holding harmless such Person against loss with respect to any
obligation of such other Person; PROVIDED, HOWEVER, that the term Guaranty
Obligation shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of any Guaranty
Obligation in respect of Indebtedness shall be deemed to be an amount equal to
the maximum reasonably anticipated liability in respect thereof as determined by
the Person in good faith. The amount of any other Guaranty Obligation shall be
deemed to be zero unless and until the amount thereof has been (or in accordance
with Financial Accounting Standards Board Statement No. 5 should be) quantified
and reflected or disclosed in the consolidated financial statements (or notes
thereto) of the applicable Borrower or Subsidiary of any Borrower.
"HAZARDOUS MATERIALS" means substances defined as "hazardous
substances" pursuant to the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, 42 U.S.C. Section 9601 et seq., or as "hazardous",
"toxic" or "pollutant" substances or as "solid waste" pursuant to the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or as "friable
asbestos" pursuant to the Toxic Substances Control Act, 15 U.S.C. Section 2601
et seq. or any other applicable Hazardous Materials Law, in each case as such
Laws are amended from time to time.
"HAZARDOUS MATERIALS LAWS" means all Laws governing the treatment,
transportation or disposal of Hazardous Materials applicable to any of the Real
Property.
"INDEBTEDNESS" means, as to any Person (without duplication), (a) any
Funded Debt of such Person, (b) all obligations of such Person to purchase,
redeem, retire, defease or otherwise make any payment in respect of (i) any
capital stock of or other ownership or profit interest in such Person or any
other Person or (ii) any warrants, rights or options to acquire such capital
stock, (c) all Indebtedness of others referred to in clauses (a) and (b) above
guaranteed directly or indirectly in any manner by such Person, or in effect
guaranteed directly or indirectly by such Person through an agreement (i) to pay
or purchase such Indebtedness or to advance or supply
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funds for the payment or purchase of such Indebtedness, (ii) to purchase,
sell or lease (as lessee or lessor) property, or to purchase or sell
services, primarily for the purpose of enabling the debtor to make payment of
such Indebtedness or to assure the holder of such Indebtedness against loss,
(iii) to supply funds to or in any other manner invest in the debtor
(including any agreement to pay for property or services irrespective of
whether such property is received or such services are rendered) or (iv)
otherwise to assure a creditor against loss, and (d) all Indebtedness
referred to in clauses (a) through (c) above secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise,
to be secured by) any Lien on property (including, without limitation,
accounts and contract rights) owned by such Person, even though such Person
has not assumed or become liable for the payment of such Indebtedness.
"INTANGIBLE ASSETS" means assets that are considered intangible assets
under GAAP, including customer lists, goodwill, covenants not to compete,
copyrights, trade names, trademarks and patents.
"INTERCOMPANY INDEBTEDNESS" means any Indebtedness owed (a) by Day
Runner to any of its Subsidiaries, (b) by any Subsidiary of Day Runner to Day
Runner, or (c) by any Subsidiary of Day Runner to any other Subsidiary of Day
Runner.
"INTEREST EXPENSE" means, with respect to Day Runner and its
Subsidiaries as of the last day of any fiscal period, determined on a
consolidated basis, the sum of (a) all interest, fees, charges and related
expenses for that fiscal period in connection with borrowed money (including any
obligations for fees, charges and related expenses payable to the issuer of any
letter of credit, but excluding (x) Fees (other than the Administrative Agent's
Fee) required to be paid by the Borrowers to the Lenders or the Administrative
Agent in connection with this Agreement, (y) amortization or write-off of
capitalized fees paid in connection with the execution and delivery of the
Original Credit Agreement and the Existing Credit Agreement, and (z) any
interest which may be paid in PIK Interest Notes pursuant to the provisions of
this Agreement) or the deferred purchase price of assets that in each case are
considered "interest expense" under GAAP, plus (b) the portion of rent paid or
payable (without duplication) for that fiscal period by that Person under
Capital Lease Obligations that should be treated as interest in accordance with
Financial Accounting Standards Board Statement No. 13.
"INTEREST PAYMENT DATE" means the last Banking Day of each month.
"INTEREST RATE PROTECTION AGREEMENT" means a written agreement between
any Borrower and one or more financial institutions providing for "swap", "cap",
"collar" or other interest rate protection with respect to any Indebtedness.
"INVENTORY" has the meaning set forth in the California Uniform
Commercial Code.
"INVENTORY WARRANTIES" has the meaning set forth in Section 5.21.
"INVESTMENT" means, when used in connection with any Person, any
investment by or of that Person, whether by means of purchase or other
acquisition of stock or other securities of, or all or any substantial portion
of the assets of (or comprising a division or business unit of), any
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other Person or by means of a loan, advance creating a debt, capital
contribution, guaranty or other debt or equity participation or interest in
any other Person, including any partnership and joint venture interests of
such Person. The amount of any Investment shall be the amount actually
invested (minus any return of capital with respect to such Investment which
has actually been received in Cash or has been converted into Cash or a Cash
Equivalent), without adjustment for subsequent increases or decreases in the
value of such Investment.
"LAWS" means, collectively, all international, foreign, federal, state
and local statutes, treaties, rules, regulations, ordinances, codes and
administrative or judicial precedents.
"LENDER" means each lender whose name is set forth in the signature
pages of this Agreement and each lender which may hereafter become a party to
this Agreement pursuant to Section 12.8.
"LIEN" means any mortgage, deed of trust, pledge, hypothecation,
assignment for security, security interest, encumbrance, lien or charge of any
kind, whether voluntarily incurred or arising by operation of Law or otherwise,
affecting any Property, including any conditional sale or other title retention
agreement, and any lease in the nature of a security interest.
"LOAN" means a Revolving Loan, a Term Loan, or a Convertible Loan and
"Loans" includes all of the foregoing.
"LOAN DOCUMENTS" means, collectively, this Agreement, the Notes, the
Borrower Guaranties, the Subsidiary Guaranties, the Collateral Documents, the
Global Reaffirmation and Amendment Agreement, the Release, the Registration
Rights Agreement, and any other agreements of any type or nature hereafter
executed and delivered by any Borrower or any of their respective Subsidiaries
to the Administrative Agent or to any Lender in any way relating to or in
furtherance of this Agreement or the Existing Agreement, in each case either as
originally executed or as the same may from time to time be supplemented,
modified, amended, restated, extended or supplanted.
"LOCKBOX" has the meaning set forth in Section 6.14.
"MARGIN STOCK" means "margin stock" as such term is defined in
Regulation U.
"MATERIAL ADVERSE EFFECT" means any circumstance or event, or series of
circumstances or events, which (a) has had or could reasonably be expected to
have any material adverse effect whatsoever upon the validity or enforceability
of any Loan Document, (b) has been or could reasonably be expected to be
material and adverse to the business, condition (financial or otherwise),
operations, performance, Properties or prospects of Day Runner or Day Runner and
its Subsidiaries, taken as a whole or (c) has materially impaired or could
reasonably be expected to materially impair the ability of any Borrower to
perform the Obligations.
"MATERIAL SUBSIDIARY" means a Subsidiary of Day Runner either (a)
owning at least five percent (5%) of the consolidated assets of Day Runner and
its Subsidiaries as of the end of the immediately prior Fiscal Quarter or (b) as
of the last day of any Fiscal Quarter, generating at least
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five percent (5%) of the consolidated net sales of Day Runner and its
Subsidiaries for the fiscal period consisting of the four (4) Fiscal Quarters
ended on that date.
"MATURITY DATE" means the earlier of (a) July 31, 2002, and (b) the
date payment of the Loans becomes immediately due and payable pursuant to
Section 10.2.
"MONTHLY PAYMENT DATE" means the last Banking Day of each month.
"MONTHLY REPORTS" has the meaning set forth in Section 8.1(s).
"MULTIEMPLOYER PLAN" means any employee benefit plan of the type
described in Section 4001(a)(3) of ERISA to which any Borrower or any of its
ERISA Affiliates contributes or is obligated to contribute.
"NASD" means the National Association of Securities Dealers, Inc.
"NASDAQ NATIONAL MARKET" means the Nasdaq Stock Market, Inc.'s Nasdaq
National Market.
"NET CASH ISSUANCE PROCEEDS" means, with respect to the issuance of any
debt security or equity security by a Borrower or any of its Subsidiaries, the
Cash proceeds received by or for the account of a Borrower or such Subsidiary in
consideration of such issuance net of (a) underwriting discounts and commissions
actually paid to any Person not an Affiliate of any Borrower and (b) reasonable
professional fees and disbursements actually paid in connection therewith.
"NET CASH SALES PROCEEDS" means, with respect to any Disposition, the
sum of (a) the Cash proceeds received by or for the account of the Borrowers and
their respective Subsidiaries from such Disposition plus (b) the amount of Cash
received by or for the account of the Borrowers and their respective
Subsidiaries upon the sale, collection or other liquidation of any proceeds that
are not Cash from such Disposition, in each case net of (i) any amount required
to be paid to any Person owning an interest in the assets disposed of, (ii) any
amount applied to the repayment of Indebtedness secured by a Lien permitted
under Section 7.9 on the asset disposed of, (iii) any transfer, income or other
taxes payable as a result of such Disposition, (iv) reasonable professional fees
and expenses, fees due to any Governmental Agency, broker's commissions and
other out-of-pocket costs of sale actually paid to any Person that is not an
Affiliate of any Borrower attributable to such Disposition and (v) any Cash
required to be held in escrow or in a holdback account in accordance with the
terms of agreements covering the Disposition.
"NET INCOME" means, with respect to any period, the consolidated net
income of Day Runner and its Subsidiaries for that period, determined in
accordance with GAAP, consistently applied.
"NOTE" and "NOTES" have the meanings set forth in Sections 2.6 and
3.1(d) and each reference herein to a "Note" or "Notes" shall be deemed to refer
to and include any or all of such Revolving Loan Notes, Term Loan Notes,
Convertible Notes, and PIK Interest Notes, as the context may require.
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"NOTEHOLDER" means the respective payee of any Note.
"NOTICE OF BORROWING" has the meaning set forth in Section 2.1(d).
"OBLIGATIONS" means all present and future obligations of every kind or
nature of the Borrowers or any of their respective Subsidiaries at any time and
from time to time owed to the Administrative Agent or the Lenders or any one or
more of them, under any one or more of the Loan Documents, whether due or to
become due, matured or unmatured, liquidated or unliquidated, or contingent or
noncontingent, including obligations of performance as well as obligations of
payment, and including interest that accrues after the commencement of any
proceeding under any Debtor Relief Law by or against any Borrower or any of its
Subsidiaries.
"ORIGINAL CREDIT AGREEMENT" has the meaning set forth in the preamble
to this Agreement.
"OVERLINE LENDERS" means each of the Lenders with the exception of
Credit Agricole Indosuez.
"OVERLINE LOANS" means those Loans representing principal amounts
borrowed under the Revolving Commitment in excess of $19,500,000, and made by
the Overline Lenders as Overline Loans pursuant to the Seventh Waiver.
"PARTY" means any Person other than the Administrative Agent and the
Lenders, which now or hereafter is a party to any of the Loan Documents.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereof established under ERISA.
"PENSION PLAN" means any "employee pension benefit plan" (as such term
is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, which is
subject to Title IV of ERISA and is maintained by any Borrower or to which any
Borrower contributes or has an obligation to contribute.
"PERMITTED ENCUMBRANCES" means:
(a) Inchoate Liens incident to construction on or maintenance
of Property; or Liens incident to construction on or maintenance of Property now
or hereafter filed of record for which adequate reserves have been set aside (or
deposits made pursuant to applicable Law) and which are being contested in good
faith by appropriate proceedings and have not proceeded to judgment, provided
that, by reason of nonpayment of the obligations secured by such Liens, no such
Property is subject to a material impending risk of loss or forfeiture;
(b) Liens for taxes and assessments on Property which are not
yet delinquent; or Liens for taxes and assessments on Property for which
adequate reserves have been set aside and are being contested in good faith by
appropriate proceedings, provided that, by reason of nonpayment of the
obligations secured by such Liens, no such Property is subject to a material
impending risk of loss or forfeiture;
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<PAGE>
(c) defects and irregularities in title to any Property which
in the aggregate do not materially impair the fair market value or use of the
Property for the purposes for which it is or may reasonably be expected to be
held;
(d) easements, exceptions, reservations, or other agreements
for the purpose of pipelines, conduits, cables, wire communication lines, power
lines and substations, streets, trails, walkways, drainage, irrigation, water,
and sewerage purposes, dikes, canals, ditches, the removal of oil, gas, coal, or
other minerals, and other like purposes affecting Property which in the
aggregate do not materially burden or impair the fair market value or use of
such Property for the purposes for which it is or may reasonably be expected to
be held;
(e) easements, exceptions, reservations, or other agreements
for the purpose of facilitating the joint or common use of Property in or
adjacent to a shopping center or similar project affecting Property which in the
aggregate do not materially burden or impair the fair market value or use of
such Property for the purposes for which it is or may reasonably be expected to
be held;
(f) rights reserved to or vested in any Governmental Agency to
control or regulate, or obligations or duties to any Governmental Agency with
respect to, the use of any Property;
(g) rights reserved to or vested in any Governmental Agency to
control or regulate, or obligations or duties to any Governmental Agency with
respect to, any right, power, franchise, grant, license, or permit;
(h) present or future zoning laws and ordinances or other laws
and ordinances restricting the occupancy, use, or enjoyment of Property;
(i) statutory Liens, other than those described in clauses (a)
or (b) above, arising in the ordinary course of business with respect to
obligations which are not delinquent or are being contested in good faith,
provided that, if delinquent, adequate reserves have been set aside with respect
thereto and, by reason of nonpayment, no Property is subject to a material
impending risk of loss or forfeiture;
(j) covenants, conditions, and restrictions affecting the use
of Property which in the aggregate do not materially impair the fair market
value or use of the Property for the purposes for which it is or may reasonably
be expected to be held;
(k) rights of tenants under leases and rental agreements
covering Property entered into in the ordinary course of business of the Person
owning such Property;
(l) Liens consisting of pledges or deposits to secure
obligations under workers' compensation laws or similar legislation, including
Liens of judgments thereunder which are not currently dischargeable;
(m) Liens consisting of pledges or deposits of Property to
secure performance in connection with operating leases made in the ordinary
course of business, PROVIDED the
17
<PAGE>
aggregate value of all such pledges and deposits in connection with any such
lease does not at any time exceed 20% of the annual fixed rentals payable
under such lease;
(n) Liens consisting of deposits of Property to secure bids
made with respect to, or performance of, contracts (other than contracts
creating or evidencing an extension of credit to the depositor);
(o) Liens consisting of any right of offset, or statutory
bankers' lien, on bank deposit accounts maintained in the ordinary course of
business so long as such bank deposit accounts are not established or maintained
for the purpose of providing such right of offset or bankers' lien;
(p) Liens consisting of deposits of Property to secure
statutory obligations of a Borrower; and
(q) Liens consisting of deposits of Property to secure (or in
lieu of) surety, appeal or customs bonds.
"PERSON" means any individual or entity, including a trustee,
corporation, limited liability company, general partnership, limited
partnership, joint stock company, trust, estate, unincorporated organization,
business association, firm, joint venture, Governmental Agency, or other entity.
"PIK INTEREST" means any interest payable in the form of a PIK Note as
provided for in Section 3.1(c) and (d).
"PIK INTEREST NOTE" means a Note evidencing the obligation to pay PIK
Interest issued in accordance with Section 3.1(d).
"PLEDGE AGREEMENTS" means the collective reference to (a) the Pledge
Agreement, executed and previously delivered by Day Runner, or by any
Subsidiary, and (b) each Mortgage of Shares, executed and previously delivered
by each of DRI International, DR-UK Holdings, Bidco, Filofax Group and Filofax,
and (c) each Pledge Agreement or Mortgage of Shares, each as previously executed
and delivered, or to be executed hereafter by any Subsidiary pursuant to Section
6.13; in each case as the same has been previously amended or modified and has
been reaffirmed and amended by the Global Modification, and as it may be
supplemented, modified, amended, extended or supplanted from time to time, and
each of them is a "PLEDGE AGREEMENT". The Pledge Agreements and Mortgages of
Shares previously executed are attached to the Global Modification as Exhibits
J, P, Q, R, and S.
"PRIME RATE" means the rate of interest announced from time to time by
the Administrative Agent in San Francisco, California (or other headquarters
city of the Administrative Agent), as its "prime rate." The "prime rate" is one
of several base rates used by the Administrative Agent and serves as the basis
upon which effective rates of interest are calculated for loans and other
credits making reference thereto, and is not necessarily the lowest or best rate
of interest. The "prime rate" is evidenced by the recording thereof after its
announcement in such internal publication or publications as the Administrative
Agent may
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<PAGE>
designate. Any change in the Prime Rate shall take effect at the opening of
business on the day such change is internally announced within the offices of
the Administrative Agent.
"PROJECTIONS" means (a) the projected financial information dated
August 17, 2000 prepared by Day Runner and attached as Schedule 1.1-A, as the
same may be revised from time to time by delivery of updated information to the
Agent and (b) any budget and projection delivered by Day Runner pursuant to
Section 8.1(o).
"PROPERTY" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"PRO RATA SHARE" means, with respect to each Lender, (a) with respect
to Revolving Loans other than Overline Loans, the percentage of the Revolving
Commitment up to $19,500,000 set forth opposite the name of that Lender on
Schedule 1.1-B, as such percentage may be increased or decreased pursuant to an
Assignment and Acceptance executed in accordance with Section 12.8(b), (b) with
respect to the Overline Loans, the percentage set forth opposite the name of
that Lender on Schedule 1.1-B, and (c) with respect to Term Loan A and Term Loan
B, and the Convertible Loan, the percentage of the Term Loans and Convertible
Loan set forth opposite the name of that Lender on Schedule 1.1-B, as such
percentage may be increased or decreased pursuant to an Assignment and
Acceptance executed in accordance with Section 12.8.
"QUARTERLY PAYMENT DATE" means the last Banking Day of each March,
June, September and December.
"REAL PROPERTY" means, as of any date of determination, all real
property then or theretofore owned, leased or occupied by any of the Borrowers
or their respective Subsidiaries.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, in substantially the form of Exhibit D, executed on or prior to the
Effective Date by Day Runner, as it may from time to time be supplemented,
modified, amended, extended or supplanted.
"REGULATION D" means Regulation D, as at any time amended, of the Board
of Governors of the Federal Reserve System, or any other regulation in substance
substituted therefor.
"REGULATION U" means Regulation U, as at any time amended, of the Board
of Governors of the Federal Reserve System, or any other regulations in
substance substituted therefor.
"RELEASE" has the meaning set forth in Section 9.1(a)(8).
"REQUIREMENT OF LAW" means, as to any Person, the articles or
certificate of incorporation and by-laws or other organizational or governing
documents of such Person, and any Law, or judgment, award, decree, writ or
determination of a Governmental Agency, in each case applicable to or binding
upon such Person or any of its Property or to which such Person or any of its
Property is subject.
"REQUISITE LENDERS" means (a) as of any date of determination if the
Revolving Commitment is then in effect, Lenders constituting 50% or more in
number and having in the
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<PAGE>
aggregate more than 50% of the sum of (i) the Revolving Commitment
(including, without limitation, the portion thereof in respect of the
Overline Loans) then in effect and (ii) the aggregate principal amount of
Term Loan A, Term Loan B, and the Convertible Loan outstanding on such date
and (b) as of any date of determination if the Revolving Commitment has then
been suspended or terminated and there is then any principal amount of any
Loan outstanding on such date, Lenders constituting 50% or more in number and
having Loans representing more than 50% of the sum of (i) the aggregate
principal amount of the Revolving Loans (including, without limitation, the
Overline Loans) outstanding on such date and (ii) the aggregate principal
amount of the Term Loan A, Term Loan B, and the Convertible Loan outstanding
on such date.
"RESPONSIBLE OFFICIAL" means (a) any Senior Officer of Day Runner and
(b) any other responsible official of any Borrower so designated in a written
notice thereof from a Senior Officer to the Administrative Agent. The Lenders
shall be entitled to conclusively rely upon any document or certificate that is
signed or executed by a Responsible Official of a Borrower or any of its
Subsidiaries as having been authorized by all necessary corporate, partnership
and/or other action on the part of such Borrower or such Subsidiary.
"REVOLVING COMMITMENT" means a maximum of (a) Twenty-Five Million
Dollars ($25,000,000), to and including December 8, 2000; (b) Nineteen Million
Five Hundred Thousand Dollars ($19,500,000) from and including December 9, 2000
to and including December 31, 2000; (c) Fifteen Million Dollars ($15,000,000)
from and after January 1, 2001 to and including March 31, 2002; and (d) zero
($0) from and after April 1, 2002.
"REVOLVING LOAN" means (a) a Loan outstanding on the Effective Date
pursuant to the Existing Agreement as a revolving loan, or (b) a Loan made after
the Effective Date pursuant to Section 2.1(c), and includes an Overline Loan.
"REVOLVING LOAN NOTE" means a Note evidencing a Revolving Loan issued
in accordance with Section 2.6(b).
"REVOLVING LOAN RATE" means, for any day, a rate per annum equal to the
Prime Rate in effect on such day plus two percent (2%).
"SEC" means the Securities and Exchange Commission.
"SEC DOCUMENT" means any document, exhibit, report, form or other
document filed by any Borrower or required to be filed by any Borrower with the
Securities and Exchange Commission, including without limitation annual reports
on Form 10-K and quarterly reports on Form 10-Q.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITY AGREEMENTS" means the collective reference to (a) each
security agreement, previously executed and delivered by Day Runner or a
domestic Subsidiary of Day Runner in connection with the Existing Agreement, or
pursuant to Section 6.13, and (b) the Security Document, as previously executed
and delivered by Filofax or Topps; in each case as the same
20
<PAGE>
has been previously amended or modified and has been reaffirmed and amended
by the Global Modification, and as it may be supplemented modified, amended,
extended or supplanted from time to time, and each of them is a "Security
Agreement". Copies of these documents are attached to the Global Modification
as Exhibits I, K, L, M, N, and O.
"SENIOR OFFICER" means (a) with respect to any Person, if, at any
relevant time, such office exists and any person is then incumbent in such
office, (i) the chairman, (ii) the chief executive officer, (iii) the president,
(iv) any executive vice president, (v) the chief operating officer, (vi) the
general counsel, (vii) the chief financial officer, (viii) the treasurer, or
(ix) the controller of such Person and, in each case, if such office does not
exist or no person is then incumbent in such office, any individual with
comparable executive, management or financial responsibilities or functions and
(b) with respect to each Subsidiary of Day Runner not organized under the laws
of the United States of America, any other senior executive officer.
"SHAREHOLDERS AGREEMENT" has the meaning set forth in Section 4.8.
"STOCK REPURCHASE" means, with respect to any Person, the retirement,
redemption, purchase or other acquisition for Cash or for Property (except for
Property constituting capital stock of such Person that is not Disqualified
Stock) by such Person of any shares of capital stock or any warrant or option to
purchase an equity security or other equity security issued by such Person.
"STOCKHOLDERS' EQUITY" means, as of any date of determination and with
respect to any Person, the consolidated stockholders' equity of the Person as of
that date determined in accordance with GAAP; provided that there shall be
excluded from Stockholders' Equity any amount attributable to Disqualified
Stock.
"SUBORDINATED OBLIGATIONS" means any Indebtedness of Day Runner that
(a) does not have any scheduled principal payment, mandatory principal
prepayment or sinking fund payment due prior to the Maturity Date, (b) is not
secured by any Lien on any Property of Day Runner or any of its Subsidiaries,
(c) is not guarantied by any Subsidiary of Day Runner, (d) is subordinated by
its terms in right of payment to the Obligations on terms, and in form and
substance, satisfactory to the Administrative Agent and the Requisite Lenders,
(e) is subject to financial performance and other covenants and events of
default and other default provisions satisfactory to the Administrative Agent
and the Requisite Lenders, (f) is subject to payment blockage and delayed
acceleration provisions satisfactory to the Administrative Agent and the
Requisite Lenders, and (g) has other terms, and is otherwise in form and
substance, satisfactory to the Administrative Agent and the Requisite Lenders,
in each case in their sole and absolute discretion.
"SUBSIDIARY" means, as of any date of determination and with respect to
any Person, any corporation, limited liability company or partnership (whether
or not, in any case, characterized as such or as a "joint venture"), whether now
existing or hereafter organized or acquired: (a) any Person which is required to
be treated as a "consolidated subsidiary" under GAAP, or (b) any Person (i) in
the case of a corporation or limited liability company, of which a majority of
the securities having ordinary voting power for the election of directors or
other governing body (other than securities having such power only by reason of
the happening of a contingency) are at
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the time beneficially owned by such Person and/or one or more Subsidiaries of
such Person, or (ii) in the case of a partnership, of which a majority of the
partnership or other ownership interests are at the time beneficially owned
by such Person and/or one or more of its Subsidiaries.
"SUBSIDIARY GUARANTORS" means all Subsidiaries of any Borrower that are
or become parties to a Subsidiary Guaranty.
"SUBSIDIARY GUARANTIES" means the collective reference to (a) the
Subsidiary Guaranty, previously executed and delivered by each of DRI
International and DR-UK Holdings, and each other Subsidiary Guarantor, (b) the
Subsidiary Guaranty of Revolving Loans, previously executed and delivered on or
prior to the Effective Date by Filofax Group, and (c) the Subsidiary Guaranty of
Term Loans, as previously executed and delivered on or prior to the Effective
Date by Filofax Group; in each case as the same has been previously amended and
modified and has been reaffirmed and amended by the Global Modification, and as
it may be supplemented, modified, amended, extended or supplanted from time to
time; and each of them is a "Subsidiary Guaranty." Copies of these documents are
attached to the Global Modification as Exhibits E, F, G, and H.
"SUPERMAJORITY LENDERS" means Lenders having at least Seventy-Six
Percent (76%) of the sum of (a)(i) and (ii) or (b)(i) and (ii), as applicable,
under the definition of Requisite Lenders.
"TENDER OFFER NOTES" means unsecured promissory notes made by Bidco and
guaranteed, by an unsecured guaranty, by Day Runner, issued to the former
holders of the share capital of Filofax Group who elected to receive such notes
instead of all or part of the cash consideration to which such holders otherwise
were entitled under the tender offer described in the Existing Agreement.
"TERM LOAN" means Term Loan A or Term Loan B, and "Term Loans" includes
all of the foregoing.
"TERM LOAN A" means the Loan outstanding hereunder pursuant to Section
2.2(b).
"TERM LOAN A RATE" means, for any day, a rate per annum equal to the
Prime Rate in effect on such day plus two percent (2%).
"TERM LOAN AMOUNT" has the meaning set forth in Section 2.2(a).
"TERM LOAN B" means the Loan outstanding hereunder pursuant to Section
2.2(c), and shall include any interest on such Loan paid in PIK Interest Notes
as provided in Section 3.1.
"TERM LOAN B RATE" means, for any day (a) prior to June 30, 2001, a
rate per annum equal to the Prime Rate in effect on such day plus four percent
(4%) (except for cash interest paid on all Foreign Currency Loans), and (b) on
and following June 30, 2001 and for cash interest paid on Foreign Currency
Loans, a rate per annum equal to the Prime Rate in effect on such day plus two
percent (2%).
"TERM LOAN INTEREST RESERVE ACCOUNT" has the meaning set forth in
Section 6.14.
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"TERM LOAN NOTE" means a Note evidencing a Term Loan issued in
accordance with Section 2.6(a), and shall include a Term Loan A Note and a Term
Loan B Note.
"TO THE BEST KNOWLEDGE OF" means, when modifying a representation,
warranty or other statement of any Person, that the fact or situation described
therein is known by the Person (or, in the case of a Person other than a natural
Person, known by any Senior Officer of that Person) making the representation,
warranty or other statement, or with the exercise of reasonable due diligence
under the circumstances (in accordance with the standard of what a reasonable
Person in similar circumstances would have done) would have been known by the
Person (or, in the case of a Person other than a natural Person, would have been
known by a Senior Officer of that Person).
"TOPPS" means Topps of England Limited, a company incorporated with
limited liability under the laws of England and Wales and a Subsidiary of
Filofax Group.
"WHOLLY-OWNED SUBSIDIARY" means a Subsidiary of any Borrower, 100% of
the capital stock or other equity interest of which is owned, directly or
indirectly, by any Borrower, except for director's qualifying shares required by
applicable Laws.
1.2 USE OF DEFINED TERMS. Any defined term used in the plural shall
refer to all members of the relevant class, and any defined term used in the
singular shall refer to any one or more of the members of the relevant class.
1.3 ACCOUNTING TERMS. All accounting terms not specifically defined
in this Agreement shall be construed in conformity with, and all financial data
required by this Agreement to be submitted by the Borrowers, or any of them, to
the Administrative Agent or the Lenders, shall be prepared in conformity with,
GAAP applied on a consistent basis, except as otherwise specifically prescribed
herein. In the event that GAAP changes during the term of this Agreement such
that the covenants contained in Sections 7.12, 7.13 and 7.19, inclusive, would
then be calculated in a different manner, (a) the Borrowers and the Lenders
agree to negotiate in good faith to amend this Agreement in such respects as are
necessary to conform those covenants as criteria for evaluating the Borrowers'
financial condition to substantially the same criteria as were effective prior
to such change in GAAP and (b) the Borrowers shall be deemed to be in compliance
with the covenants contained in the aforesaid Sections if and to the extent that
the Borrowers would have been in compliance therewith under GAAP as in effect
immediately prior to such change, but shall have the obligation to deliver each
officer's certificate set forth in Section 8.1 to the Administrative Agent and
the Lenders, on the dates therein specified, with an attached detailed
reconciliation demonstrating such compliance and setting forth the differences
in calculation of such covenants under GAAP as amended as compared with GAAP as
in effect immediately prior to such change.
1.4 ROUNDING. Any financial ratios required to be maintained by
the Borrowers pursuant to this Agreement shall be calculated by dividing the
appropriate component by the other component, carrying the result to one
place more than the number of places by which such ratio is expressed in this
Agreement and rounding the result up or down to the nearest number
23
<PAGE>
(with a round-up if there is no nearest number) to the number of places by
which such ratio is expressed in this Agreement.
1.5 EXHIBITS AND SCHEDULES. All Exhibits and Schedules to this
Agreement, either as originally existing or as the same may from time to time be
supplemented, modified or amended, are incorporated herein by this reference.
1.6 MISCELLANEOUS TERMS. The term "or" is disjunctive; the term
"and" is conjunctive. The term "shall" is mandatory; the term "may" is
permissive. Masculine terms also apply to females; feminine terms also apply
to males. The term "including" is by way of example and not limitation.
ARTICLE II.
LOANS
2.1 REVOLVING LOANS.
(a) EXISTING AGREEMENT; MAXIMUM AMOUNT. As of the Effective
Date hereof, the amount of the Revolving Commitment is $25,000,000, and the
outstanding principal amount of the revolving loans under the Existing
Agreement is $24, 961, 318.00 (including the Overline Loans). Such principal
amount shall continue to be Revolving Loans under this Agreement. Except as
provided in paragraph (c), Borrowers may not reborrow any funds repaid on the
Revolving Loans. From and after the Effective Date, the outstanding principal
amount of the Revolving Loans shall not, at any time, exceed the lowest of
(i) the Revolving Commitment as reduced from time to time, (ii) the Available
Amount (as hereafter defined), and (iii) on or after February 1, 2001, the
Borrowing Base as set forth in the most recent Borrowing Base Certificate, as
adjusted in accordance with Section 2.11. From and after April 1, 2002, the
principal balance of the Revolving Loans shall be zero (0).
(b) AVAILABLE AMOUNT. The "Available Amount" shall be the
maximum principal amount which may be outstanding as Revolving Loans
(including, without limitation, the Overline Loans) from time to time under
the Revolving Commitment. The Available Amount shall be as follows for the
following periods to and including the last day of such period:
24
<PAGE>
<TABLE>
<S> <C>
----------------------------------------------------------------- -------------------------
October 1, 2000 - December 8, 2000 $25,000,000
----------------------------------------------------------------- -------------------------
December 9, 2000 - December 31, 2000 $19,500,000
----------------------------------------------------------------- -------------------------
January 1, 2001 - February 28, 2001 $12,000,000
----------------------------------------------------------------- -------------------------
March 1, 2001 - April 30, 2001 $ 8,000,000
----------------------------------------------------------------- -------------------------
May 1, 2001 - June 30, 2001 $10,000,000
----------------------------------------------------------------- -------------------------
July 1, 2001 - December 31, 2001 $15,000,000
----------------------------------------------------------------- -------------------------
January 1, 2002 - March 31, 2002 $10,000,000
----------------------------------------------------------------- -------------------------
April 1, 2002 - July 31, 2002 0
----------------------------------------------------------------- -------------------------
July 31, 2002 Maturity Date
----------------------------------------------------------------- -------------------------
</TABLE>
(c) ADDITIONAL BORROWING. Borrowers may not borrow any amounts
under the Revolving Commitment which are not outstanding as of the Effective
Date, or reborrow any amounts repaid on Revolving Loans, prior to February 1,
2001 or after March 30, 2002. On and after February 1, 2001 and up to and
including March 30, 2002, each Lender shall, pro rata according to and limited
by that Lender's Pro Rata Share of the Revolving Commitment then in effect, make
Revolving Loans to Day Runner (but to no other Borrower) in such amounts as Day
Runner may request; PROVIDED THAT, after giving effect to any repayments of
Revolving Loans made on the same Banking Day (or for which provision has been
made for payment on the same Banking Day that is satisfactory to the
Administrative Agent in its sole and absolute discretion), such Revolving Loans
shall not cause the aggregate outstanding principal amount of the Revolving
Loans to exceed the lowest of (i) the Revolving Commitment as reduced from time
to time, (ii) the Available Amount and (iii) from and after February 1, 2001,
the Borrowing Base as set forth in the most recent Borrowing Base Certificate,
as adjusted in accordance with Section 2.11. Subject to the limitations set
forth herein, Day Runner may borrow, repay and reborrow under the Revolving
Commitment without premium or penalty. Revolving Loans hereunder shall only be
made to Day Runner.
(d) NOTICE OF BORROWING FOR REVOLVING LOANS. Day Runner shall
give the Administrative Agent a notice in the form set forth hereto as Exhibit E
(a "NOTICE OF BORROWING") not later than 11:00 A.M. (California time) on the
date (which must be a Banking Day) which is at least two Banking Days prior to
the date of each Revolving Loan. A Notice of Borrowing which is effective after
11:00 a.m. (California time) shall be considered to be effective on the next
Banking Day. Such Notice of Borrowing shall specify (i) the requested date of
such Revolving Loan, which shall be a Banking Day, and shall be at least two (2)
Banking Days after the date of the Notice of Borrowing is effective, (ii) the
amount of such Loan, and (iii) in reasonable detail satisfactory to the
Administrative Agent, the anticipated use of proceeds
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of such Revolving Loan. A Notice of Borrowing shall be irrevocable upon the
Administrative Agent's receipt thereof.
(e) MINIMUM AMOUNTS WITH RESPECT TO REVOLVING LOANS. Each
Revolving Loan shall be in a principal amount not less than One Million Dollars
($1,000,000) and in a multiple of $100,000.
2.2 TERM LOANS AND CONVERTIBLE LOANS.
(a) OUTSTANDING LOANS. Prior to the Effective Date, the
Lenders, on one or more occasions, made term loans to Borrowers pursuant to the
Existing Agreement, in the aggregate principal amount of $87,163,875.13
(including L 12,420,210.33 of Foreign Currency Loans), all of which continues to
be outstanding on the date hereof (the "TERM LOAN AMOUNT"). Borrowers'
Obligations on Term Loans outstanding under the Existing Agreement are hereby
reaffirmed and restructured as (i) Term Loans made to the Borrowers, as further
described in this Section 2.2(b) and (c), and (ii) a Convertible Loan made to
the Borrowers as described in this Section 2.2(d). Such Term Loans and the
Convertible Loan shall continue to be outstanding under this Agreement, and
shall continue to be Obligations of Borrowers. The principal amount of the Term
Loans owing to each Lender, and the principal amount of the restructured loans
as Term Loan A, Term Loan B, and the Convertible Loan, in each case as of the
Effective Date, is set forth on Schedule 2.2 hereto. The Borrowers may repay or
prepay the Term Loans or the Convertible Loan without premium or penalty, and
amounts so repaid or prepaid may not be reborrowed.
(b) TERM LOAN A. $20,000,000 of the Term Loan Amount is hereby
restructured as Term Loan A.
(c) TERM LOAN B. $40,000,000 of the Term Loan Amount (including
the Foreign Currency Loan in the outstanding principal amount of L
12,420,210.33 referred to in Section 2.2(a)) is hereby restructured as Term
Loan B.
(d) CONVERTIBLE LOAN. The amount by which the Term Loan Amount
exceeds the sum of (i) Term Loan A plus (ii) Term Loan B, in the amount of
$27,163,875.13, is hereby restructured as the Convertible Loan.
2.3 FOREIGN CURRENCY LOANS. On the Effective Date, the unpaid
principal balance of those term loans which are Foreign Currency Loans
outstanding under the Existing Agreement of L 12,420,210.33, in an amount
equal to the then effective Foreign Currency Equivalent, shall be included in
the principal amount of Term Loan B, but will retain their character as
Foreign Currency Loans and shall be repaid with interest in the Foreign
Currency. The interest on such Foreign Currency Loans shall accrue at the
Term Loan B Rate.
2.4 [INTENTIONALLY OMITTED]
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2.5 FUNDING OF REVOLVING LOANS.
(a) Promptly following receipt of a Notice of Borrowing, the
Administrative Agent shall notify each Lender participating in such Loan by
telephone or telecopier (and if by telephone, promptly confirmed by telecopier)
of the date of the Revolving Loan, and that Lender's share of the Revolving
Loan.
(b) Not later than 11:00 A.M., California time, on the date
specified for any Loan (which must be a Banking Day), each Lender participating
therein shall make available its share of such Revolving Loan, in immediately
available funds available to the Administrative Agent at the Administrative
Agent's Office. Upon satisfaction or waiver of the applicable conditions set
forth in Article IX, the Administrative Agent shall credit such funds to the
Concentration Account or disburse such funds as may be directed by Day Runner.
(c) Unless the Administrative Agent shall have been notified by
any Lender no later than 11:00 A.M. on the Banking Day of the proposed
funding by the Administrative Agent of any Revolving Loan that such Lender does
not intend to make available to the Administrative Agent such Lender's portion
of the total amount of such Loan, the Administrative Agent may assume that such
Lender has made such amount available to the Administrative Agent on the date of
the Loan and the Administrative Agent may, in reliance upon such assumption,
make available to Day Runner a corresponding amount. If the Administrative Agent
has made funds available to Day Runner based on such assumption and such
corresponding amount is not in fact made available to the Administrative Agent
by such Lender, the Administrative Agent shall be entitled to recover such
corresponding amount on demand from such Lender. If such Lender does not pay
such corresponding amount forthwith upon the Administrative Agent's demand
therefor, the Administrative Agent may notify Day Runner and demand that Day
Runner shall pay such corresponding amount to the Administrative Agent. The
Administrative Agent also shall be entitled to recover from such Lender interest
on such corresponding amount in respect of each day from the date such
corresponding amount was made available by the Administrative Agent to Day
Runner to the date such corresponding amount is recovered by the Administrative
Agent, at a rate per annum equal to the daily Federal Funds Rate. Nothing herein
shall be deemed to relieve any Lender from its obligation to fulfill its share
of the Revolving Commitment or to prejudice any rights which the Administrative
Agent or Day Runner may have against any Lender as a result of any default by
such Lender hereunder.
2.6 NOTES.
(a) Pursuant to the Existing Agreement, the Term Loans have
been evidenced by the Term Loan Notes. The Term Loan Notes shall be amended and
restated in their entirety as follows: Each Borrower's obligation to repay (i)
the Term Loan A of each Lender shall be evidenced by a single note, in
substantially the form of Exhibit F-1 hereto, payable to the order of such
Lender (each such Note, a "TERM LOAN A NOTE"), (ii) the Term Loan B of each
Lender shall be evidenced by a single note, in substantially the form of Exhibit
F-2 hereto, payable to the order of such Lender (each such Note, a "TERM LOAN B
NOTE"), and (iii) the Convertible Loan of each Lender shall be evidenced by a
single note, in substantially the form of Exhibit F-3 hereto, payable to the
order of such Lender (each such Note, a "CONVERTIBLE NOTE").
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(b) Pursuant to the Existing Agreement, the Revolving Loans
have been evidenced by the Revolving Loan Notes. Such Revolving Loan Notes are
hereby amended and Restated in their entirety, as follows: the Revolving Loan of
each Lender shall be evidenced by a single note, in substantially the form of
Exhibit F-4, payable to the order of such Lender (each such Note, a "Revolving
Loan Note").
2.7 [INTENTIONALLY OMITTED]
2.8 VOLUNTARY REDUCTION OF REVOLVING COMMITMENT. The Borrowers shall
have the right, at any time and from time to time, without premium or penalty,
upon at least five (5) Banking Days' prior written notice by a Responsible
Official of Day Runner to the Administrative Agent, voluntarily to reduce,
permanently and irrevocably, in aggregate principal amounts in an integral
multiple of $1,000,000 but not less than $5,000,000, a portion of the then
undisbursed portion of the Revolving Commitment, or to terminate the Revolving
Commitment, provided that the Revolving Commitment shall not be terminated while
any Revolving Loans remain outstanding. The Administrative Agent shall promptly
notify the Lenders of any reduction or termination of the Revolving Commitment
under this Section.
2.9 [INTENTIONALLY OMITTED]
2.10 GUARANTY. The Obligations shall be guaranteed pursuant to the
Subsidiary Guaranties and the Borrower Guaranties.
2.11 MODIFICATION OF BORROWING BASE AND RESERVES.
(a) Each Borrower agrees that the Administrative Agent shall
have the right, regardless of cause, condition or circumstance, from time to
time, in its sole and absolute discretion, (i) to reduce or otherwise modify the
Borrowing Base by reducing any of the advance rates, adding additional
restrictions so as to exclude particular types of Accounts and Inventory from
Eligible Accounts and Eligible Inventory or otherwise, and (ii) to establish
Borrowing Base Reserves and Eligibility Reserves (collectively "RESERVES"),
increase the amount of the Reserves or add additional types of Reserves; and
these rights may be exercised by the Administrative Agent without any
restriction whatsoever without regard to whether the particular reductions,
restrictions or Reserves are similar or dissimilar to those set forth in this
Agreement or established at some earlier time or might have been established at
some earlier time, without regard to what any Borrower or other lenders may
consider reasonable or appropriate, and without any requirement of prior or
written notice. Any such modification may be changed or altered by vote of the
Requisite Lenders.
(b) Each Borrower expressly acknowledges that (i) any
determination or modification of the Borrowing Base under this Section may have
the effect of reducing the credit available under this Agreement substantially
below the then effective Available Amount or Revolving Commitment, and (ii) the
advance rates set forth in this Agreement would be lower absent the flexibility
provided in this Section.
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ARTICLE III.
PAYMENTS AND FEES
3.1 INTEREST.
(a) ACCRUAL.
(i) Interest will accrue on each Revolving Loan (and
each other Obligation not paid when due) at the Revolving Loan Rate in effect
from time to time;
(ii) Interest will accrue on each Term Loan A at the
Term Loan A Rate in effect from time to time;
(iii) Interest will accrue on each Term Loan B at the
Term Loan B Rate in effect from time to time, including Interest on the
outstanding Foreign Currency Loans after the expiration of the current interest
period on December 29, 2000; and
(iv) Interest will accrue on each Convertible Loan at
the Convertible Loan Rate in effect from time to time.
(b) PERIOD. Interest shall be payable on the unpaid principal
amount of each Loan or other Obligation from the date such Loan is made or such
other Obligation is due and payable, as the case may be, until payment in full
is made, and shall accrue and be payable at the rates set forth or provided for
herein before and after Default, before and after maturity, before and after
judgment, and before and after the commencement of any proceeding under any
Debtor Relief Law.
(c) WHEN PAYABLE; PIK INTEREST.
(i) Interest accrued on each Revolving Loan shall be
due and payable on (A) each Monthly Payment Date and (B) the Maturity Date;
(ii) Interest accrued on Term Loan A shall be due and
payable on (A) each Monthly Payment Date and (B) the Maturity Date;
(iii) Interest accrued on Term Loan B shall be due
and payable on (A) each Monthly Payment Date and (B) the Maturity Date. Through
and including June 30, 2001, interest accrued on Term Loan B may be paid in the
form of PIK Interest Notes (TLB) as provided in Section 3.1(d), and on all
Monthly Payment dates after June 30, 2001, interest payable on Term Loan B shall
be paid in cash, provided, that interest shall not be paid in PIK Interest Notes
(TLB) on that portion of Term Loan B which is a Foreign Currency Loan, but shall
be paid in cash in the Foreign Currency. The amount of PIK Interest due under
the PIK Interest Notes (TLB) shall be treated as principal amounts owing under
Term Loan B; and
(iv) Interest accrued on the Convertible Loans shall
be due and payable on (A) each Monthly Payment Date and (B) the Maturity Date.
Until the Maturity Date, interest
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on the Convertible Loans may be paid, at the option of Borrowers, in PIK
Interest Notes (CL), as provided in Section 3.1(d). The amount of PIK
Interest due under the PIK Interest Notes (CL) shall be treated as principal
amounts owing under the Convertible Loan.
(d) PIK INTEREST PAYMENTS. With respect to interest payments
due in connection with Term Loan B (except that portion which is Foreign
Currency Loan) and the Convertible Loan, the Borrowers may, subject to Section
3.1(c)(iii) and (iv) above, in lieu of tendering such payments in cash, execute
and deliver to the Administrative Agent a Note in favor of each Lender for such
Lender's Pro Rata share of such interest payments in the form of Exhibit F-5 for
Term Loan B through June 30, 2001 after which time interest shall be paid in
cash ("PIK INTEREST NOTES (TLB)") and Exhibit F-6 for the Convertible Loans
("PIK INTEREST NOTES (CL)"). Upon delivery to the Administrative Agent, such
executed PIK Interest Notes shall reflect an initial balance of zero dollars
($0.00) and, upon delivery to the Administrative Agent of a written notice of a
Senior Officer, on a form satisfactory to the Administrative Agent in the
Administrative Agent's sole discretion to the effect that a specified interest
payment is tendered in accordance with this Section 3.1(d), a notation may be
made by each Lender on the schedule attached to each such PIK Interest Note
reflecting the applicable amount due and owing. Such PIK Interest Notes shall
bear interest at the same rate as either the Term Loan B or the Convertible
Loans, as applicable, and shall make provision for the Lenders to keep a record
of the amount outstanding on such PIK Notes from time to time. Borrowers shall
have no right to pay interest by issuing PIK Interest Notes pursuant to Sections
3.1(c)(iii) and (iv), and 3.1(d), and such right shall terminate automatically,
upon the occurrence of an Event of Default.
(e) DEFAULT INTEREST. Notwithstanding the rates of interest
specified in this Section 3.1, effective immediately upon the occurrence of an
Event of Default, and for as long thereafter as such Event of Default shall be
continuing, the principal balance of all Loans, and the amount of all other
Obligations, shall bear interest at a rate which is four percent (4%) per annum
in excess of the rate of interest otherwise applicable hereunder to such Loans
or other Obligations from time to time, to the fullest extent permitted by
applicable Laws. Accrued and unpaid interest on past due amounts (including,
without limitation, interest on past due interest) shall be compounded monthly,
on the last day of each calendar month, to the fullest extent permitted by
applicable Laws, and shall be payable upon demand.
(f) DEFERRED INTEREST. On the Effective Date, Borrowers are
liable for Deferred Interest in the amount of $ 2,257,677.43 which amount shall
be paid in accordance with Section 3.2(e).
3.2 PRINCIPAL; DEFERRED INTEREST.
(a) REQUIRED PAYMENTS. If not sooner paid, the outstanding
principal amount of the Revolving Loans shall be payable as follows:
(i) The amount, if any, by which the outstanding
principal amount of Revolving Loans at any time exceeds the lowest of (A) the
then applicable Revolving Commitment, (B) the then applicable Available Amount,
and (C) after February 1, 2001, the Borrowing Base as set forth in the most
recent Borrowing Base Certificate, as adjusted in
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accordance with Section 2.11, shall be payable immediately and without notice
or demand. This includes all payments required to reduce the amount of the
outstanding Revolving Loans in accordance with Section 2.1, and to reduce the
principal balance of the Revolving Loans to zero (0) on or before April 1,
2002.
(ii) In the event and on each occasion that any
Borrower or any Subsidiary of a Borrower issues any equity security or incurs
any Indebtedness after the date hereof (other than Indebtedness permitted
pursuant to Section 7.10(a)(as to refinancings), (b), (c), (d), and (e),
including without limitation any Subordinated Obligations, the Borrowers shall
substantially concurrently with (in any, event not later than the third Banking
Day next following) the issuance of such securities or the incurrence of such
Indebtedness, prepay the Loans in an aggregate amount equal to 100% of the Net
Cash Issuance Proceeds therefrom to prepay the outstanding Loans in accordance
with Section 3.2(c).
(iii) The Borrowers shall make a prepayment of the
Loans in an amount equal to One Hundred Percent (100%) of the Net Cash Sale
Proceeds of any Disposition (other than any Disposition permitted under Section
7.2(a), (b) or (d)), immediately on the closing of the Disposition.
(iv) On or before January 31, 2001, the Borrowers
shall make a mandatory prepayment of Term Loan B of Thirty Million Dollars
($30,000,000) less any amount prepaid on Term Loan B under Section 3.2(a)(iii).
(v) The principal of all Loans then outstanding shall
in any event be payable on the Maturity Date, and on such Date the Revolving
Commitment shall terminate.
(b) PREPAYMENTS. The principal of the Loans, or any of them,
may, at any time and from time to time, voluntarily be paid or prepaid, in whole
or in part, without premium or penalty. With respect to each prepayment of Loans
pursuant to this Section 3.2(b), such prepayments shall be applied in accordance
with Section 3.2(c).
(c) APPLICATION. All payments or amounts received on account
of the Loans from any source whatsoever whether voluntary or involuntary, and
whether denominated as prepayments or regular payments, or as principal or
interest, and whether paid by Borrowers, received on account of the Obligations,
or obtained in connection with the liquidation or foreclosure of Liens on the
Collateral, shall first be applied to pay all interest on and then principal of
the Overline Loans in that order, and second to pay all Deferred Interest. The
preceding sentence shall not apply to the Interest to be paid on the Loans on
the Monthly Payment Date for November, 2000, which shall be applied in
accordance with Section 3.1. Thereafter, payments shall be applied as follows:
(i) Payments under Section 3.2(a)(i) and payments on
the Revolving Loans from current operations and not covered by Section 3.2(a)
(ii), (iii), (iv), and (v), shall be applied to reduce the Revolving Loans,
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(ii) Payments under Section 3.2(a)(ii) shall be
applied first to reduce Term Loan B, second to reduce the Convertible Loan (if
outstanding), third to reduce Term Loan A, and fourth to reduce the Revolving
Loan.
(iii) Except as provided in (iv) hereafter, payments
under Section 3.2(a)(iii) shall be applied on a cumulative basis as follows:
first, interest on that portion of Term Loan B which is a Foreign Currency Loan
(payable in the Foreign Currency); second, $30,000,000 to reduce Term Loan B
(with the first payments being applied to principal and PIK Interest on all
Foreign Currency Loans); third, all amounts exceeding $30,000,000 to reduce the
Convertible Loan (if outstanding); fourth, to reduce any remaining balance on
Term Loan B; fifth, to reduce Term Loan A; and sixth, to reduce the Revolving
Loan.
(iv) Payments in respect of the sale of the Burgess
Hill warehouse shall be applied in accordance with the Consent to Collateral
Release, dated as of October 31, 2000.
(v) Payments in respect of interest on the Loans
shall be applied in accordance with the preamble of Section 3.2(c) and, after
payment of the Overline Loans and the Deferred Interest (other than interest due
on the Monthly Payment Date for November, 2000), shall be applied to interest in
accordance with Section 3.1.
(vi) Payments not otherwise provided for herein
shall, after being applied in accordance with the preamble of Section 3.2(c), be
applied first to pay accrued and unpaid interest on the Loans, second, to the
principal amount of Term Loan A, Term Loan B, the Convertible Loan, and the
Revolving Loan in the order stated, and third, to any other Obligations in the
discretion of the Administrative Agent.
(d) OVERLINE LOANS. The interest on and principal of all
Overline Loans shall be paid in full on or before December 8, 2000.
(e) DEFERRED INTEREST. The Deferred Interest shall be paid in
full on or before December 29, 2000.
(f) Any payment under Section 3.2(c) (ii), (iii) or (vi) which
has been applied to reduce the Revolving Loans shall permanently reduce each
amount set forth in the definition of the Revolving Commitment and Available
Amount by the amount of such payment as so applied.
3.3 COMMITMENT FEE. From the Effective Date through the Maturity
Date, the Borrowers shall pay to the Administrative Agent, for the ratable
accounts of the Lenders pro rata according to their Pro Rata Share of the
Revolving Commitment, a commitment fee equal to the sum of the daily
Applicable Commitment Fee Rate per annum times the average daily amount by
which the Available Amount exceeds the average daily principal amount of
outstanding Revolving Loans. The commitment fee shall be payable quarterly in
arrears on each Quarterly Payment Date and on the Maturity Date.
3.4 AMENDMENT FEE AND ADMINISTRATIVE AGENT'S FEE. In consideration
of the agreements of the Lenders contained in this Agreement, Day Runner
agrees to pay to the
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Administrative Agent, for the account of each Lender executing this
Agreement, on the Effective Date, an amendment fee (the "Amendment Fee") in
an amount equal to 0.50% of the sum of (x) such Lender's Term Loan and (y)
such Lender's Pro Rata Share of the Revolving Commitment as in effect on the
Effective Date, after giving effect to this Agreement. In addition, Day
Runner agrees to pay to the Administrative Agent on the Effective Date the
Administrative Agent's Fee and other advisory fees described in the fee
letter dated as of November 21, 2000 from the Administrative Agent to, and
acknowledged and accepted by, Day Runner (such fees, together with the
Amendment Fees and the Administrative Agent's Fee, the "Fees"). The Fees
shall be payable in immediately available funds and, once paid, shall not be
refundable.
3.5 [INTENTIONALLY OMITTED]
3.6 INCREASED COMMITMENT COSTS. If any Lender shall determine in
good faith that the introduction after the Closing Date of any applicable
law, rule, regulation or guideline regarding capital adequacy, or any change
therein or any change in the interpretation or administration thereof by any
central bank or other Governmental Agency charged with the interpretation or
administration thereof, or compliance by such Lender or any corporation
controlling such Lender, with any request, guideline or directive regarding
capital adequacy (whether or not having the force of Law) of any such central
bank or other authority not imposed as a result of such Lender's or such
corporation's failure to comply with any other Laws, affects or would affect
the amount of capital required or expected to be maintained by such Lender or
any corporation controlling such Lender and (taking into consideration such
Lender's or such corporation's policies with respect to capital adequacy and
such Lender's desired return on capital) determines in good faith that the
amount of such capital is increased, or the rate of return on capital is
reduced, in an amount deemed material by such Lender in its sole discretion,
as a consequence of its obligations under this Agreement, then, within five
(5) Banking Days after demand of such Lender, the Borrowers shall pay to such
Lender, from time to time as specified in good faith by such Lender,
additional amounts sufficient to compensate such Lender in light of such
circumstances, to the extent reasonably allocable to such obligations under
this Agreement; provided that, before making any such demand, each Lender
agrees to use reasonable efforts (consistent with its internal policy and
legal and regulatory restrictions) to designate a different Applicable
Lending Office if the making of such designation would avoid the need for, or
materially reduce the amount of, such increased cost and would not, in the
reasonable judgment of such Lender, be otherwise disadvantageous to such
Lender, provided that such Borrower shall not be obligated to pay any such
amount which arose prior to the date which is one hundred and eighty (180)
days preceding the date of such demand or is attributable to periods prior to
the date which is one hundred and eighty (180) days preceding the date of
such demand. Each Lender's determination of such amounts shall be conclusive
in the absence of manifest error.
3.7 [INTENTIONALLY OMITTED]
3.8 FOREIGN CURRENCY COSTS AND RELATED MATTERS.
(a) In the event that any Governmental Agency imposes on any
Lender any reserve or comparable requirement with respect to the Foreign
Currency Loans hereunder of that Lender, the Borrowers shall pay that Lender
within five (5) Banking Days after demand all
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amounts necessary to compensate such Lender in respect of the imposition of
such requirements. The Lender's determination of such amount shall be
conclusive in the absence of manifest error.
(b) If, after the date hereof, the adoption of any Law or any
change in the interpretation of administration of any Law (including, without
limitation, the imposition of any currency exchange control or restriction):
(1) shall subject any Lender or its Applicable
Lending Office to any tax, duty or other charge or cost with respect to any
Foreign Currency Loan, any of its Notes evidencing Foreign Currency Loans or its
obligation to make Foreign Currency Loans, or shall change the basis of taxation
of payments to any Lender attributable to the principal of or interest on any
Foreign Currency Loan or any other amounts due under this Agreement in respect
of any Foreign Currency Loan, any of its Notes evidencing Foreign Currency Loans
or its obligation to make Foreign Currency Loans;
(2) shall impose on any Lender or its Applicable
Lending Office or the Designated Foreign Currency Market any other condition
affecting any Foreign Currency Loan, any of its Notes evidencing Foreign
Currency Loans, or its obligation to make Foreign Currency Loans or this
Agreement, or shall otherwise affect any of the same; and the result of any of
the foregoing, as determined in good faith by such Lender, increases the cost to
such Lender or its Applicable Lending Office, in an amount deemed by it to be
material, of making or maintaining any Foreign Currency Loan or in respect of
any Foreign Currency Loan, any of its Notes evidencing Foreign Currency Loans or
its obligation to make Foreign Currency Loans or reduces the amount of any sum
received or receivable by such Lender or its Applicable Lending Office with
respect to any Foreign Currency Loan, any of its Notes evidencing Foreign
Currency Loans or its obligation to make Foreign Currency Loans, then, within
five (5) Banking Days after demand by such Lender (with a copy to the
Administrative Agent), the applicable Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender for such increased
cost or reduction; PROVIDED that the applicable Borrower shall not be obligated
to pay any such amount which arose prior to the date which is one hundred and
eighty (180) days preceding the date of such demand or is attributable to
periods prior to the date which is one hundred and eighty (180) days preceding
the date of such demand. A statement of any Lender claiming compensation under
this subsection shall be conclusive in the absence of manifest error.
(c) If, after the date hereof, the adoption of any Law or any
change in the interpretation of administration of any Law (including, without
limitation, the imposition of any currency exchange control or restriction)
shall, in the good faith opinion of any Lender, make it unlawful or
impracticable for such Lender or its Applicable Lending Office to make,
maintain or fund its portion of any Foreign Currency Loan, or materially
restrict the authority of such Lender to purchase or sell, or to take
deposits of, the relevant Foreign Currency in the relevant market, or to
determine or charge interest rates based upon the Foreign Currency Rate, and
such Lender shall so notify the Administrative Agent, then such Lender's
obligation to make Foreign Currency Loans shall be suspended for the duration
of such illegality or impracticability and the Administrative Agent forthwith
shall give notice thereof to the other Lenders and the Borrowers. Upon
receipt of such notice, the outstanding principal amount of such Lender's
Foreign Currency Loans shall be repaid, together with accrued interest
thereon, on either (1) December 29, 2000 if
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such Lender may lawfully continue to maintain and fund such Loans to such
day(s) or (2) immediately if such Lender may not lawfully continue to fund
and maintain such Loans to such day(s). Each Lender agrees to endeavor
promptly to notify the applicable Borrower of any event of which it has
actual knowledge, occurring after the Closing Date, which will cause that
Lender to notify the Administrative Agent under this Section, and agrees to
designate a different Applicable Lending Office if such designation will
avoid the need for such notice and will not, in the good faith judgment of
such Lender, otherwise be disadvantageous to such Lender. In the event that
any Lender is unable, for the reasons set forth above, to make, maintain or
fund its portion of any Foreign Currency Loan, such Lender shall fund such
amount at Term Loan B Rate for the same period of time, and such amount shall
be treated in all respects as Term Loan B Loan. Any Lender whose obligation
to make Foreign Currency Loans has been suspended under this Section shall
promptly notify the Administrative Agent and the Borrowers of the cessation
of the circumstance which gave rise to such suspension.
(d) [Intentionally Omitted]
(e) Upon payment of any Foreign Currency Loan (including as
the result of a conversion required under Section 3.8(c)) on a day other than
the last day in the applicable interest period (whether voluntarily,
involuntarily, by reason of acceleration, or otherwise), such Borrower shall pay
to the appropriate Lender within five (5) Banking Days after demand a fee equal
to the sum of:
(1) the excess, if any, of (i) the additional
interest on the amount prepaid at the Term Loan B Rate that would have accrued
if the amount had remained outstanding through the last day of the applicable
interest period over (ii) the interest that would have accrued on the amount
prepaid at the Federal Funds Rate for the period from the date of prepayment
through the last date of the applicable interest period; plus
(2) all out-of-pocket expenses incurred by the Lender
reasonably attributable to such payment or prepayment.
Each Lender's determination of the amount of any
prepayment fee payable under this Section shall be conclusive in the absence of
manifest error.
(f) Each Lender agrees to endeavor promptly to notify the Borrowers
of any event of which it has actual knowledge, occurring after the Effective
Date, which will entitle such Lender to compensation pursuant to clause (a)
or clause (b) of this Section, and agrees to designate a different Applicable
Lending Office if such designation will avoid the need for or reduce the
amount of such compensation and will not, in the good faith judgment of such
Lender, otherwise be disadvantageous to such Lender. Any request for
compensation by a Lender under this Section shall set forth the basis upon
which it has been determined that such an amount is due from the applicable
Borrower, a calculation of the amount due, and a certification that the
corresponding costs have been incurred by the Lender.
3.9 [INTENTIONALLY OMITTED]
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3.10 COMPUTATION OF INTEREST AND FEES.
(a) All interest and fees shall be computed on the basis of a
year of 360 days and paid for the actual number of days elapsed. Interest shall
accrue on each Loan for the day on which the Loan is made; interest shall not
accrue on a Loan, or any portion thereof, for the day on which the Loan or such
portion is paid. Any Loan that is repaid on the same day on which it is made
shall bear interest for one day. Notwithstanding anything in this Agreement to
the contrary, interest in excess of the maximum amount permitted by applicable
laws shall not accrue or be payable hereunder or under the Notes, and any amount
paid as interest hereunder or under the Notes which would otherwise be in excess
of such maximum permitted amount shall instead be treated as a payment of
principal.
(b) The Administrative Agent shall determine each interest
rate applicable to the Loans hereunder and each Commitment Fee Rate applicable
hereunder. The Administrative Agent shall give prompt notice to Day Runner and
the relevant Lenders of each interest rate and Commitment Fee Rate so
determined, and its determination thereof shall be conclusive in the absence of
manifest error.
3.11 NON-BANKING DAYS. If any payment to be made by a Borrower or any
other Party under any Loan Document shall come due on a day other than a Banking
Day, payment shall instead be considered due on the next succeeding Banking Day
and the extension of time shall be reflected in computing interest and fees.
3.12 MANNER AND TREATMENT OF PAYMENTS.
(a) Each payment hereunder (except payments pursuant to
Sections 3.6, 12.3, 12.11 and 12.22) or on the Notes or under any other Loan
Document shall be made to the Administrative Agent at the Administrative Agent's
Office for the account of each of the Lenders or the Administrative Agent, as
the case may be, in immediately available funds not later than 11:00 A.M.
California time, on the day of payment (which must be a Banking Day). All
payments received after such time, on any Banking Day, shall be deemed received
on the next succeeding Banking Day. The amount of all payments received by the
Administrative Agent for the account of each Lender shall be immediately paid by
the Administrative Agent to the applicable Lender in immediately available funds
and, if such payment was received by the Administrative Agent by 11:00 A.M.,
California time, on a Banking Day and not so made available to the account of a
Lender on that Banking Day, the Administrative Agent shall reimburse that Lender
for the cost to such Lender of funding the amount of such payment at the Federal
Funds Rate. All payments shall be made in lawful money of the United States of
America, except that payments of principal and interest on Foreign Currency
Loans shall be made in the Foreign Currency of that Foreign Currency Loan.
(b) Day Runner hereby authorizes the Administrative Agent to
debit (i) the Concentration Account as of the date any payment of (A) principal
or interest with respect to the Revolving Loans, (B) commitment fee or (C) other
amount payable by Day Runner under this Agreement is due in an amount equal to
such payment and/or (ii) the Term Loan Interest Reserve Account as of the date
of any payment of principal or interest or other amount payable with
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respect to the Term Loans is due in an amount equal to such payment. Day
Runner hereby agrees to take such steps as are necessary to assure that the
Concentration Account and/or the Term Loan Interest Reserve Account, as the
case may be, will, on each such date, have a credit balance in immediately
available funds at least equal to the amount of such payment.
(c) Each payment or prepayment on account of any Loan shall be
applied pro rata according to the outstanding Loans made by each Lender
comprising such Loan, but in the order described in Section 3.2(c).
(d) Each Lender shall use its best efforts to keep a record
(in writing or by an electronic data entry system) of Loans made by it and
payments received by it with respect to each of its Notes and such record shall,
as against the Borrowers, be presumptive evidence of the amounts owing.
Notwithstanding the foregoing sentence, the failure by any Lender to keep such a
record shall not affect Borrower's obligation to pay the Obligations.
(e) Each payment of any amount payable by any Borrower or any
other Party under this Agreement or any other Loan Document shall be made free
and clear of, and without reduction by reason of, any taxes, assessments or
other charges imposed by any Governmental Agency, central bank or comparable
authority, excluding (i) taxes imposed on or measured in whole or in part by its
overall net income, net worth or the like by any jurisdiction (or political
subdivision thereof) in which it is organized or maintains its principal office
and (ii) any withholding taxes imposed by the United States of America for any
period with respect to which it has failed to provide the Borrowers with the
appropriate form or forms required by Section 11.21, to the extent such forms
are then required by applicable Laws (all such non-excluded taxes, assessments
or other charges being hereinafter referred to as "Taxes"). To the extent that a
Borrower is obligated by applicable Laws to make any deduction or withholding on
account of Taxes from any amount payable to any Lender under this Agreement,
such Borrower shall (i) make such deduction or withholding and pay the same to
the relevant Governmental Agency and (ii) pay such additional amount to that
Lender as is necessary to result in that Lender's receiving a net after-Tax
amount equal to the amount to which that Lender would have been entitled under
this Agreement absent such deduction or withholding. If and when receipt of such
payment results in an excess payment or credit to that Lender on account of such
Taxes, that Lender shall promptly refund such excess to the applicable Borrower.
3.13 FUNDING SOURCES. Nothing in this Agreement shall be deemed to
obligate any Lender to obtain the funds for any Loan in any particular place or
manner or to constitute a representation by any Lender that it has obtained or
will obtain the funds for any Loan in any particular place or manner.
3.14 FAILURE TO CHARGE NOT SUBSEQUENT WAIVER. Any decision by the
Administrative Agent or any Lender not to require payment of any interest, fee,
cost or other amount payable under any Loan Document, or to calculate any amount
payable by a particular method, on any occasion shall in no way limit or be
deemed a waiver of the Administrative Agent's or such Lender's right to require
full payment of any interest, fee, cost or other amount payable under any Loan
Document, or to calculate an amount payable by another method that is not
inconsistent with this Agreement, on any other or subsequent occasion.
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3.15 ADMINISTRATIVE AGENT'S RIGHT TO ASSUME PAYMENTS WILL BE MADE.
Unless the Administrative Agent shall have been notified by a Borrower prior to
the date on which any payment to be made by such Borrower hereunder is due that
such Borrower does not intend to remit such payment, the Administrative Agent
may, in its discretion, assume that each Borrower has remitted such payment when
so due and the Administrative Agent may, in its discretion and in reliance upon
such assumption, make available to each Lender on such payment date an amount
equal to such Lender's share of such assumed payment. If a Borrower has not in
fact remitted such payment to the Administrative Agent, each Lender shall
forthwith on demand repay to the Administrative Agent the amount of such assumed
payment made available to such Lender, together with interest thereon in respect
of each day from and including the date such amount was made available by the
Administrative Agent to such Lender to the date such amount is repaid to the
Administrative Agent at the Federal Funds Rate.
3.16 FEE DETERMINATION DETAIL. The Administrative Agent, and any
Lender, shall provide reasonable detail to each Borrower regarding the manner in
which the amount of any payment to the Administrative Agent and the Lenders, or
that Lender, under Article III has been determined, concurrently with demand for
such payment.
3.17 SURVIVABILITY. All of each Borrower's obligations under Section
3.6 shall survive for the ninety (90) day period following the date on which the
Revolving Commitment are terminated and all Loans hereunder are fully paid, and
each Borrower shall remain obligated thereunder for all claims under such
Section made by any Lender to such Borrower prior to the expiration of such
period.
3.18 APPLICATION OF PAYMENTS.
(a) If an Event of Default occurs, and the Revolving
Commitment is terminated and the maturity of the Obligations is accelerated
pursuant to Section 10.2, the Administrative Agent shall apply all payments in
respect of any Obligations, all proceeds of Collateral, and all other amounts
received on account of the Obligations in the following order:
(i) FIRST, to pay interest on and principal of the
Overline Loans;
(ii) SECOND, to pay all Deferred Interest;
(iii) THIRD, to pay interest on and then principal
of any portion of any Revolving Loans which the Administrative Agent may have
advanced on behalf of any Lender for which the Administrative Agent has not
been reimbursed by such Lender or the Borrowers;
(iv) FOURTH, to pay Obligations in respect of any
expense reimbursements (including attorneys' fees and disbursements),
indemnities and other similar amounts then due to the Administrative Agent or
any Lender,
(v) FIFTH, to pay, pro rata, any amounts owing
to the Administrative Agent or any Lender in respect of overdrafts and
related liabilities arising from treasury, depository or cash management
services provided to any of the Borrowers or any of their respective
Subsidiaries or in connection with any automated clearing house transfer of
funds;
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(vi) SIXTH, to pay Obligations in respect of any
fees then due to the Administrative Agent and the Lenders;
(vii) SEVENTH, to pay all other accrued and unpaid
interest due in respect of the Loans;
(viii) EIGHTH, to repay the outstanding principal
amount of all other Revolving Loans;
(ix) NINTH, to repay the outstanding principal
amount of Term Loan A, Term Loan B and the Convertible Loan, in such order;
and
(x) TENTH, to the ratable payment of all other
Obligations;
PROVIDED, HOWEVER, if sufficient funds are not available to fund all payments to
be made in respect of any of the Obligations described in any of the foregoing
clauses (i) through (x), the available funds being applied with respect to any
such Obligation (unless otherwise specified in such clause) shall be allocated
to the payment of such Obligations ratably, based on the proportion of the
Administrative Agent's and each Lender's or the Issuing Bank's interest in the
aggregate outstanding Obligations described in such clauses.
(b) Each of the Borrowers hereby waives any right that such
Borrower may have under Section 2822(a) of the California Civil Code to
designate how any payment received by the Administrative Agent or any Lender
(whether made by a Borrower or any Subsidiary Guarantor) with respect to the
Obligations are applied and/or which portion of the Obligations are reduced by
such payment.
ARTICLE IV.
CONVERSION OF CONVERTIBLE NOTES AND PIK INTEREST
NOTES (CONVERTIBLE LOANS)
4.1 RIGHT TO CONVERT.
(a) The Lenders shall have the right, from time to time, at
their option, on or after February 1, 2001, to convert, in accordance with
Section 4.2, some or all of the principal amount of the Convertible Notes and/or
PIK Interest Notes (CL) into a number of fully paid and nonassessable shares of
Day Runner Common Stock (as such shares shall then be constituted), obtained by
dividing the aggregate principal amount of the Convertible Notes and PIK
Interest Notes (CL) to be converted by the Conversion Price, in effect at such
time, by surrender of such Convertible Notes and PIK Interest Note (CL) so to be
converted in whole or in part, in the manner and subject to the limitations
provided in Section 4.2. A holder of Convertible Notes or PIK Interest Notes
(CL) is not entitled to any rights of a holder of Day Runner Common Stock until
such holder has converted its Notes to Day Runner Common Stock, and only to the
extent such Notes are deemed to have been converted to Day Runner Common Stock
under this Article IV.
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(b) For the purposes of this Article IV and Sections 6.15,
7.20 and 8.9, (i) references to the Convertible Notes shall include both the
Convertible Notes and PIK Interest Notes (CL), (ii) the "CONVERSION STOCK" shall
mean the authorized Day Runner Common Stock into which the Convertible Notes may
be converted and/or the Day Runner Common Stock received by the Lenders pursuant
to such Conversion., as applicable.
4.2 EXISTENCE OF CONVERSION RIGHT; ISSUANCE OF COMMON STOCK ON
CONVERSION.
(a) The conversion right described in this Article IV may be
exercised from time to time, on one or more occasions, and in any amount up to,
100% of all outstanding Convertible Notes, but subject to the limitation on the
percentage of Day Runner Common Stock which may be obtained on conversion set
forth in Section 4.4. The Lenders may elect to exercise this conversion right by
a vote of the Requisite Lenders holding the Convertible Notes (but not
otherwise), and such election shall be binding on all of the Lenders regardless
of whether or not they elected to convert. Upon the exercise of the conversion
right, each of the Lenders shall surrender all or some portion of its
Convertible Notes to the Administrative Agent, and the Administrative Agent
shall distribute shares received on account of such surrendered Notes to each of
the Lenders. Each Lender shall pay to the Administrative Agent all transfer
taxes and other fees allocable to such Lender's shares, which the Administrative
Agent must pay pursuant to this Section 4.2, or otherwise in connection with the
conversion process.
(b) In order to exercise the conversion right with respect to
any or all of the Convertible Notes, the Administrative Agent shall surrender
all of such Notes to be converted in whole or in part, duly endorsed, at an
office or agency maintained by Day Runner at 2750 West Monroe Avenue, Fullerton,
California 92833 (or other addresses designated in a writing delivered to the
Administrative Agent, and shall give written notice of conversion in the form
provided on the Notes to Day Runner that the Lenders elect to convert such
Notes. Such notice shall also state the name or names (with address or
addresses) in which the certificate or certificates for shares of the Conversion
Stock shall be issued (which may be the Lender or any assignee of such Lender),
and shall be accompanied by transfer taxes, if required pursuant to Section 4.5.
Each such Note surrendered for conversion shall, unless the shares issuable on
conversion are to be issued in the same name as such Note, be duly endorsed by,
or be accompanied by instruments of transfer in form satisfactory to Day Runner
duly executed by, the Agent.
(c) As promptly as practicable after satisfaction of the
requirements for conversion set forth above, subject to compliance with any
restrictions on transfer if shares issuable on conversion are to be issued in a
name other than that of the Noteholder (as if such transfer were a transfer of
the Notes (or portion thereof) so converted), Day Runner shall issue and shall
deliver to the Administrative Agent, a certificate or certificates for the
number of full shares of the Conversion Stock. At such time, if the principal
amount of the Convertible Notes surrendered by the Lenders for conversion
exceeds the amount which the Lenders have elected to convert, Day Runner shall
issue to the Administrative Agent (without charge) for distribution to the
Lenders, new Notes for the balance of the principal amount of the Convertible
Notes which has not been converted (which shall be pro rata to each Lender).
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(d) Each conversion shall be deemed to have been effected as
to any such Note (or portion thereof) on the date on which the requirements set
forth in this Section 4.2 have been satisfied as to such note (or portion
thereof), and the Person in whose name any certificate or certificates for
shares of the Conversion Stock shall be deemed to have become on said date the
holder of record of the shares represented thereby; provided, however, that any
such surrender on any date when the stock transfer books of Day Runner shall be
closed shall deem the Person in whose name the certificates are to be issued to
be the record holder thereof for all purposes on the next succeeding day on
which such stock transfer books are open, but such conversion shall be at the
Conversion Price in effect on the date upon which such Note shall be
surrendered.
4.3 FRACTIONAL SHARES.
No fractional shares of Conversion Stock or script representing
fractional shares shall be issued upon conversion of Convertible Notes. The
number of issued shares shall be rounded up to the next whole number of shares
if the number of shares due on conversion includes a fractional share of .50 or
higher; otherwise, the number of shares shall be rounded down to eliminate the
fractional share.
4.4 CONVERSION PRICE; MAXIMUM SHARES.
(a) The Convertible Notes shall be convertible at the rate of
One Dollar and Fifteen Cents ($1.15) of the principal amount of the Convertible
Notes for each share of Day Runner Common Stock.
(b) Day Runner represents that (i) the Day Runner Common
Stock, a single class of preferred stock ("AUTHORIZED PREFERRED STOCK"), and
various options and warrants included in the 3,122,154 shares described in
subparagraph (ii), are its only classes of stock or other equity interests, and
that it has no other authorized or outstanding class of common stock or
preferred stock, no warrants, rights or other options to acquire stock or an
equity interest, no debt convertible into stock or an equity interest, and no
other equity interests whether present or future of any type whatsoever (all of
the foregoing being referred to as "EQUITY INTERESTS") except as contemplated by
this Agreement; (ii) it has Twenty-Nine Million (29,000,000) authorized shares
of Day Runner Common Stock, of which approximately 3,122,154 are issued and
outstanding or available in connection with options and rights previously
granted or authorized; (iii) as of the Closing Date, it has the corporate power
to issue up to 25,877,846 additional shares of Day Runner Common Stock without
any vote of its shareholders; and (iv) no shares of Authorized Preferred Stock
are either issued and outstanding or subject to any warrants, rights or other
options to acquire such shares.
(c) Day Runner covenants and agrees that it will not take any
action to increase the number of authorized shares of Day Runner Common Stock
without the written consent of the Agent.
(d) Day Runner agrees that it shall reserve Twenty-Three
Million, Two Hundred Thousand (23,200,000) shares of its authorized but unissued
Day Runner Common Stock for issuance upon conversion of the Convertible Notes,
and that such shares will not be
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issued or used for any other purpose. The Lenders may not exercise their
conversion rights provided in this Article IV to the extent that, after
giving effect to such exercise and to all previous exercises of such
conversion right, the number of shares of Conversion Stock would exceed
Twenty-Three Million, Two Hundred Thousand (23,200,000) shares. The Lenders
acknowledge that, because of this limitation, a portion of the Convertible
Notes may not be able to be converted and, in such event, Borrowers
acknowledge that such remaining Convertible Notes shall continue to be valid
and enforceable according to their terms (except for the right of conversion).
(e) Day Runner agrees that it shall not authorize or permit
the issuance of any additional shares of Day Runner Common Stock beyond
3,122,154 shares as set forth in Section 4.4 (b)(ii) and will not authorize or
permit the issuance of any shares of the Authorized Preferred Stock or any other
Equity Interests, whether or not dilutive and whether or not for fair market
value, except for (i) shares of the Conversion Stock as limited in Section 4.4
(d), and (ii) options granted to directors, officers and employees to acquire
its Common Stock provided that (A) the exercise price for such stock shall be at
least the fair market value of the Day Runner Common Stock on the date the
option is granted, (B) the maximum number of shares of Day Runner Common Stock
issuable upon the exercise of such options shall not exceed Two Million, Six
Hundred Seventy Seven Thousand Eight Hundred Forty Six Shares (2,677,846)
shares, and (C) all such shares must be issued from shares of Day Runner Common
Stock which are presently authorized and unissued. In addition, Day Runner shall
not authorize, permit, or carry out any stock split, reverse stock split,
reclassification, recapitalization, payment of stock dividends or any other
transaction which either dilutes or increases the number of shares of Day Runner
Common Stock or the share of Day Runner's capital structure represented by one
share of Day Runner Common Stock.
4.5 TAXES ON SHARES ISSUED. The issue of stock certificates on
conversions of any Convertible Notes shall be made without charge to the
converting Noteholder for any documentary, stamp or similar issue or transfer
tax in respect of the issue thereof. Day Runner shall not, however, be required
to pay any such tax which may be payable in respect of any transfer involved in
any issue and delivery of stock in any name other than that of the holder of any
Convertible Note converted, and Day Runner shall not be required to issue or
deliver any such stock certificate unless and until the Person or Persons
requesting the issue thereof shall have paid to Day Runner the amount of such
tax or shall have established to the satisfaction of Day Runner that such tax
has been paid.
4.6 REPRESENTATIONS AND COVENANTS.
(a) Day Runner shall reserve, free from any preemptive rights,
out of its authorized but unissued shares or shares held in treasury, at all
times, sufficient shares of Conversion Stock to provide for the conversion into
the maximum number of shares of Conversion Stock permitted under Section 4.4(d).
(b) Day Runner covenants that all shares of Conversion Stock
which may be issued and delivered upon conversion of the Convertible Notes shall
be duly and validly issued, fully paid and non-assessable by Day Runner, free of
preemptive rights, and free from all taxes,
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liens, adverse claims and charges. The issuance of Convertible Notes as
provided in this Agreement do not give rise to any rights, other than those
which have been waived or satisfied, for or relating to the registration of
any shares of Common Stock of Day Runner.
(c) Day Runner represents and warrants that the shares of
Conversion Stock will not require registration with or approval of any
Governmental Agency under any federal or state law before such shares may be
validly issued upon conversion. In connection therewith, Day Runner shall
execute the Registration Rights Agreement.
(d) Day Runner further covenants that, if at any time the Day
Runner Common Stock shall be listed on the Nasdaq National Market or any other
national securities exchange or automated quotation system, Day Runner will, if
permitted by the rules of such exchange or automated quotation system, list and
keep listed, so long as the Day Runner Common Stock shall be so listed on such
exchange or automated quotation system, all Conversion Stock (issuable and
issued),provided, however, that, if the rules of such exchange or automated
quotation system permit the Company to defer the listing of such Day Runner
Common Stock until the first conversion of the Convertible Notes into Conversion
Stock, Day Runner covenants to list such Conversion Stock issuable upon
conversion of the Convertible Notes in accordance with the requirements of such
exchange or automated quotation system at such time.
(e) Except as disclosed in the Day Runner 10-K and Schedule
4.6(e), there are no outstanding warrants, options, convertible securities or
other commitments of sale related to or entitling any person to purchase or
otherwise acquire any securities or interest in any Subsidiary of Day Runner.
Except as disclosed in the Day Runner 10-K and except as provided in the Loan
Documents, there are no consensual encumbrances or restrictions on the ability
of any Subsidiary of Day Runner (i) to pay any dividends or make any
distributions on such Subsidiary's Common Stock or to pay any indebtedness owed
to Day Runner or any other Subsidiary of Day Runner, (ii) to make or make any
loans or advances to, or investments in, Day Runner or any other Subsidiary of
Day Runner, or (iii)to transfer any of its properties or assets to Day Runner or
any other Subsidiary of Day Runner.
(f) As of the Effective Date, the information set forth under
the caption "Capitalization" in the Day Runner 10-K is true and correct in all
material respects. As of the Effective Date, neither Day Runner nor any of its
Subsidiaries is a party to or bound by any instrument, agreement or other
arrangement, including, but not limited to, any voting trust agreement,
stockholders' agreement or other agreement or instrument, affecting the
securities or rights or obligations of securityholders of Day Runner or of its
Subsidiaries or providing for any of them to issue, sell, transfer or acquire
any capital stock, rights, warrants, options or other securities of Day Runner
or its Subsidiaries, except for this Agreement and the Loan Documents, as set
forth in the Day Runner 10-K, and other agreements which, if effected, would not
be inconsistent with Day Runner's obligations pursuant to the terms of the
Convertible Notes. The Convertible Notes and the Common Stock of Day Runner
conform in all material respects to all statements with respect thereto
contained in the Day Runner 10-K.
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(g) The Common Stock of Day Runner is registered pursuant to
Section 12(g) of the Exchange Act, and Day Runner has taken no action designed
to, or likely to have the effect of, terminating the registration of the Common
Stock of Day Runner under the Exchange Act, nor has Day Runner received any
notification that the SEC or the NASD is contemplating terminating such
registration. Day Runner has filed in a timely manner all reports and other
information required to be filed with the SEC pursuant to the Exchange Act
during the twelve calendar months and any portion of a shorter period of time
that Day Runner has been subject to the reporting requirements of the Exchange
Act).
(h) The Convertible Notes will be issued pursuant to the terms
and conditions of this Agreement. The Convertible Notes have been duly
authorized and, when validly authenticated, issued, and delivered, will be duly
authorized, validly issued and outstanding obligations of Day Runner entitled to
the benefits of this Agreement. The Conversion Stock issuable upon conversion of
the Convertible Notes will, upon such issuance, be duly authorized, validly
issued, fully paid and non-assessable, and Day Runner has duly authorized and
reserved for issuance upon conversion of the Convertible Notes the Conversion
Stock. The Convertible Notes and the Conversion Stock are not and will not be
subject to any preemptive or other similar rights of any securityholder of Day
Runner or its Subsidiaries; all corporate action required to be taken for the
authorization, issue and sale of the Convertible Notes, and the Conversion Stock
has been duly and validly taken; and the certificates representing the
Convertible Notes, and the Conversion Stock will be in due and proper form. Upon
the issuance and delivery pursuant to the terms of this Agreement hereunder, the
Lenders will acquire good and marketable title thereto free and clear of any
lien, charge, claim, encumbrance, pledge, security interest, defect or other
restriction or equity of any kind whatsoever.
(i) (i) Day Runner has full legal right, power and authority
to authorize, issue, and deliver the Convertible Notes and the Conversion Stock,
to enter into this Agreement and the Registration Rights Agreement and to
consummate the transactions provided for in such agreements; (ii) this Agreement
and the Registration Rights Agreement have been duly and properly authorized,
executed and delivered by Day Runner; (iii) the covenants in Section 4.4(e)
relating to the nonissuance of shares are valid and enforceable, and (iv) this
Agreement and the Registration Rights Agreement constitute legal, valid and
binding agreements of Day Runner enforceable against Day Runner in accordance
with their respective terms, except to the extent that enforcement hereof or
thereof may be limited by (x) bankruptcy, insolvency, reorganization, moratorium
or similar laws now or hereafter in effect relating to creditors' rights
generally and (y) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity) and except to
the extent that rights to indemnification and contribution contained in this
Agreement may be limited by federal or state securities laws on public policy
relating thereto.
(j) Neither Day Runner nor any affiliate (as such term is
defined in Rule 501(b) under the Securities Act) of Day Runner has, directly or
through any agent, sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of, any "security" (as defined in the Securities Act),
which is or could reasonably be expected to be integrated with the issuance of
the Convertible Notes in a manner that would require the registration of the
Convertible Notes under the Securities Act. Day Runner and its Subsidiaries have
not incurred any liability for a
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fee, commission, or other compensation on account of the employment of a
broker or finder in connection with the transactions contemplated by this
Agreement other than as contemplated hereby.
(k) None of Day Runner, any affiliate (as such term is defined
in Rule 501(b) under the Securities Act) of Day Runner and any other Person
acting on its or their behalf has engaged, in connection with the offering of
the Convertible Notes in any form of general solicitation or general advertising
within the meaning of Rule 502(c) under the Securities Act.
4.7 RESPONSIBILITY OF ADMINISTRATIVE AGENT. The Administrative Agent
shall not at any time be under any duty or responsibility to any of the Lenders
to determine the Conversion Price or whether any facts exist which may require
any adjustment of the Conversion Price, or with respect to the nature or extent
or calculation of any such adjustment when made, or with respect to the method
employed, or herein in making the same. The Administrative Agent shall not be
accountable with respect to the validity or value (or the kind or amount) of any
shares of Day Runner Common Stock, or of any securities or property, which may
at any time be issued or delivered upon the conversion of any Convertible Note;
and the Administrative Agent makes no representations or warranties with respect
thereto. The Administrative Agent shall not be responsible for any failure of
Day Runner to issue, transfer or deliver any shares of Day Runner Common Stock
or stock certificates or other securities or property or cash upon the surrender
of any Note for the purpose of conversion or to comply with any of the duties,
responsibilities or covenants of Day Runner contained in this Article. The
Administrative Agent shall be responsible for tendering Convertible Notes
actually surrendered by the Lenders for conversion, and for delivering
Conversion Stock actually received from Day Runner to the Lenders, as provided
in Section 4.2(b) and (c).
4.8 SHAREHOLDERS AGREEMENT. The Lenders shall enter a shareholders
agreement (the "SHAREHOLDERS AGREEMENT") governing various matters which would
arise if they elect to exercise the right of conversion.
4.9 REPRESENTATIONS OF LENDERS. Each Lender represents and warrants,
severally and only as to itself, to Borrowers that:
(a) INVESTMENT. The Convertible Notes and the Conversion Stock
upon conversion of the Convertible Notes are being and will be acquired by such
Lender for investment and not with a view to the resale or distribution of such
interest or any part thereof, but without prejudice, however, to the right of
such Lender at all times to sell or otherwise dispose of all or any part of such
interest under a registration available under the Securities Act or under an
exemption from such registration available under the Securities Act, it being
understood that the disposition by such Lender of the Convertible Notes and the
Conversion Stock upon conversion of the Convertible Notes by such Lender shall,
at all times, remain entirely within its control.
(b) OFFER OF SECURITIES, ETC. Neither such Lender nor any
Person authorized to act on its behalf has, directly or indirectly, offered to
sell the Convertible Notes and the Conversion Stock upon conversion of the
Convertible Notes or any other similar securities (the
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sale or offer of which would be integrated with the sale or offer of the
Notes or the Certificates), for sale to, or solicited any offer to acquire
any of the same from, any Person.
(c) NO REGISTRATION. Such Lender understands and acknowledges
that the Convertible Notes and the Conversion Stock upon conversion of the
Convertible Notes have not been registered under the Securities Act in reliance
upon the exemption provided in Section 4(2) of the Securities Act or another
applicable exemption, that the Convertible Notes and the Conversion Stock upon
conversion of the Convertible Notes have not been registered or qualified under
the securities or blue sky laws of any jurisdiction, that the Convertible Notes
may be resold (which resale is not currently contemplated) or otherwise
transferred only if so registered or qualified or if an exemption from
registration or qualification is available, that, except as provided herein and
in the Registration Rights Agreement, none of the Borrowers is required to
register the Convertible Notes or the Conversion Stock. Such Lender will comply
with all applicable federal and state securities laws in connection with any
subsequent resale of the Convertible Notes and the Conversion Stock upon
conversion of the Convertible Notes held by it.
(d) INSTITUTIONAL INVESTOR. Such Lender is a sophisticated
institutional investor, and has knowledge and experience in financial and
business matters and is capable of evaluating the merits and risks of its
investment in the Convertible Notes and the Conversion Stock and is able to bear
the economic risk of such investment. Such Lender has been given such
information concerning the Convertible Notes and the Conversion Stock upon
conversion of the Convertible Notes and the other Loan Documents as it has
requested.
(e) LEGEND. Such Lender understands and acknowledges that to
the extent provided in the Registration Rights Agreement, the Convertible Notes
and the Conversion Stock will bear legends restricting their transfer except in
compliance with the Securities Act, the regulations of the Securities and
Exchange Commission, and applicable blue sky laws.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
The Borrowers, jointly and severally, represent and warrant to the
Lenders the following, PROVIDED THAT, the officers and directors who sign this
Agreement on behalf of Filofax and Bidco shall not have personal responsibiltiy
for such representations and warranties:
5.1 EXISTENCE AND QUALIFICATION; POWER; COMPLIANCE WITH LAWS. Each
Borrower is a corporation duly formed and validly existing under the Laws of its
jurisdiction of incorporation. Each Borrower incorporated under the Laws of a
jurisdiction within the United States is in good standing under the Laws of such
jurisdiction of incorporation. Schedule 5.1 hereto correctly sets forth the
names, form of legal entity, number of shares of capital stock (or other
applicable unit of equity interest) issued and outstanding, and the record owner
thereof and jurisdictions of organization of all Borrowers. Each Borrower is
duly qualified or registered to transact business and is in good standing in
each other jurisdiction in which the conduct of its business or the ownership or
leasing of its Properties makes such qualification or registration
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necessary, except where the failure so to qualify or register and to be in
good standing would not constitute a Material Adverse Effect. Each Borrower
has all requisite power and authority to conduct its business, to own and
lease its Properties and to execute and deliver each Loan Document to which
it is a Party and to perform its Obligations. All outstanding shares of
capital stock of each Borrower are duly authorized, validly issued, fully
paid and non-assessable, and no holder thereof has any enforceable right of
rescission under any applicable state or federal securities Laws. Each
Borrower is in compliance with all Laws and other legal requirements
applicable to its business, has obtained all authorizations, consents,
approvals, orders, licenses and permits from, and has accomplished all
filings, registrations and qualifications with, or obtained exemptions from
any of the foregoing from, any Governmental Agency that are necessary for the
transaction of its business, except where the failure so to comply, obtain
authorizations, etc., file, register, qualify or obtain exemptions does not
constitute a Material Adverse Effect.
5.2 AUTHORITY; COMPLIANCE WITH OTHER AGREEMENTS AND INSTRUMENTS AND
GOVERNMENT REGULATIONS. The execution, delivery and performance by each Borrower
and the Subsidiary Guarantors of the Loan Documents to which each is a Party
have been duly authorized by all necessary corporate action, and do not and will
not:
(a) Require any consent or approval not heretofore obtained of
any partner, director, stockholder, security holder or creditor of such Party;
(b) Violate or conflict with any provision of such Party's
charter, articles of incorporation or bylaws, as applicable;
(c) Result in or require the creation or imposition of any
Lien (other than pursuant to the Loan Documents) upon or with respect to any
Property now owned or leased or hereafter acquired by such Party;
(d) Violate any Requirement of Law applicable to such Party;
(e) Result in a breach of or constitute a default under, or
cause or permit the acceleration of any obligation owed under, any indenture or
loan or credit agreement or any other Contractual Obligation to which such Party
is a party or by which such Party or any of its Property is bound or affected;
and such Party is not in violation of, or default under, any Requirement of Law
or Contractual Obligation, including without limitation the provisions of any
indenture, loan or credit agreement described in Section 5.2(e).
5.3 GOVERNMENT APPROVALS.
(a) Except as previously obtained or made, no authorization,
consent, approval, order, license or permit from, or filing, registration or
qualification with, any Governmental Agency is or will be required to authorize
or permit under applicable Laws the execution, delivery and performance by each
Borrower or any Subsidiary Guarantor of the Loan Documents to which it is a
Party.
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(b) Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
Governmental Agency necessary in connection with the execution and delivery by
Day Runner of this Agreement and the consummation of the transactions herein
contemplated (except such additional steps as may be required by the SEC, the
NASD or such additional steps as may be necessary under state securities or Blue
Sky laws) has been obtained or made and is in full force and effect.
5.4 SUBSIDIARIES.
(a) Schedule 5.4 hereto correctly sets forth the names, form
of legal entity, number of shares of capital stock (or other applicable unit of
equity interest) issued and outstanding, and the record owner thereof and
jurisdictions of organization of all Subsidiaries of each Borrower as of the
date hereof. Unless otherwise indicated in Schedule 5.4, all of the outstanding
shares of capital stock, or all of the units of equity interest, as the case may
be, of each such Subsidiary are owned of record and beneficially by a Borrower,
there are no outstanding options, warrants or other rights to purchase capital
stock of any such Subsidiary, and all such shares or equity interests so owned
are duly authorized, validly issued, fully paid and non- assessable, and were
issued in compliance with all applicable state and federal securities and other
Laws, and are free and clear of all Liens and Rights of Others, except for
Permitted Encumbrances.
(b) Each Subsidiary is a corporation duly formed and validly
existing under the Laws of its jurisdiction of organization. Each Subsidiary
incorporated under the Laws of a jurisdiction within the United States is in
good standing under the Laws of such jurisdiction of incorporation. Each
Subsidiary is duly qualified to do business as a foreign organization and is in
good standing as such in each jurisdiction in which the conduct of its business
or the ownership or leasing of its Properties makes such qualification necessary
(except where the failure to be so duly qualified and in good standing does not
constitute a Material Adverse Effect), and has all requisite power and authority
to conduct its business and to own and lease its Properties.
(c) Each Subsidiary is in compliance with all Laws and other
requirements applicable to its business and has obtained all authorizations,
consents, approvals, orders, licenses, and permits from, and each such
Subsidiary has accomplished all filings, registrations, and qualifications with,
or obtained exemptions from any of the foregoing from, any Governmental Agency
that are necessary for the transaction of its business, except where the failure
to be in such compliance, obtain such authorizations, consents, approvals,
orders, licenses, and permits, accomplish such filings, registrations, and
qualifications, or obtain such exemptions, does not constitute a Material
Adverse Effect.
5.5 FINANCIAL STATEMENTS. Day Runner has furnished to the
Administrative Agent (a) the audited consolidated financial statements of Day
Runner and its Subsidiaries for the Fiscal Year ended June 30, 2000, and (b) the
unaudited consolidated balance sheet and statement of operations of Day Runner
and its Subsidiaries for the months and portion of the Fiscal Year ended July
31, 2000 and August 31, 2000 and September 30, 2000. The financial statements
described in clause (a) fairly present in all material respects the financial
condition, statement of cash flows and changes in financial position, and the
balance sheet and statement of operations
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described in clause (b) fairly present in all material respects the financial
condition and results of operations of Day Runner and its Subsidiaries as of
such dates and for such periods in conformity with GAAP consistently applied,
subject only, in the case of clause (b), to normal year-end accruals and
audit adjustments and footnotes.
5.6 NO OTHER LIABILITIES; NO MATERIAL ADVERSE CHANGES. Each Borrower
and its Subsidiaries do not have any material liability or material contingent
liability required under GAAP to be reflected or disclosed, and not reflected or
disclosed, in the balance sheet described in Section 5.5(a), other than
liabilities and contingent liabilities arising in the ordinary course of
business since the date of such financial statements. Schedule 5.6 sets forth
all Funded Debt of Day Runner and its Subsidiaries as of the Effective Date. As
of the Effective Date, no circumstance or event has occurred that constitutes a
Material Adverse Effect since June 30, 2000.
5.7 TITLE TO PROPERTY. Each Borrower and its Subsidiaries have valid
title to the Property (other than assets which are the subject of a Capital
Lease Obligation) reflected in the balance sheet described in Section 5.5(a),
other than items of Property or exceptions to title which are in each case
immaterial and Property subsequently sold or disposed of in the ordinary course
of business. Such Property is free and clear of all Liens, other than Liens
described in Schedule 5.7 and Permitted Encumbrances.
5.8 INTANGIBLE ASSETS. Each Borrower and its Subsidiaries own, or
possess the right to use to the extent necessary in their respective businesses,
all material trademarks, trade names, copyrights, patents, patent rights,
computer software, licenses and other Intangible Assets that are used in the
conduct of their businesses as now operated, and no such Intangible Asset,
conflicts with the valid trademark, trade name, copyright, patent, patent right
or Intangible Asset of any other Person to the extent that such conflict
constitutes a Material Adverse Effect.
5.9 PUBLIC UTILITY HOLDING COMPANY ACT. No Borrower nor any
Subsidiary of any Borrower is a "holding company", or a "subsidiary company"
of a "holding company", or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company", within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
5.10 LITIGATION. There are no actions, suits, proceedings or
investigations pending as to which any Borrower or any of its Subsidiaries have
been served or have received notice or, to the best knowledge of any Borrower,
threatened against or affecting any Borrower or any of its Subsidiaries or any
Property of any of them before any Governmental Agency, which such actions,
suits, proceedings or investigations, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
5.11 BINDING OBLIGATIONS. Each of the Loan Documents to which any
Borrower or any of the Subsidiary Guarantors is a Party will, when executed and
delivered by such Borrower or such Subsidiary Guarantor, constitute the legal,
valid and binding obligation of such Borrower or such Subsidiary Guarantor,
enforceable against such Borrower or such Subsidiary Guarantor in accordance
with its terms, except as enforcement may be limited by Debtor Relief Laws or
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equitable principles relating to the granting of specific performance and other
equitable remedies as a matter of judicial discretion.
5.12 NO DEFAULT. No event has occurred and is continuing that is an
Event of Default.
5.13 ERISA.
(a) With respect to each Pension Plan:
(i) Pension Plan complies in all material respects
with ERISA and any other applicable Laws to the extent that noncompliance could
reasonably be expected to have a Material Adverse Effect;
(ii) such Pension Plan has not incurred any
"accumulated funding deficiency" (as defined in Section 302 of ERISA) that could
reasonably be expected to have a Material Adverse Effect;
(iii) no "reportable event" (as defined in Section
4043 of ERISA, but excluding such events as to which the PBGC has by regulation
waived the requirement therein contained that it be notified within thirty days
of the occurrence of such event) has occurred that could reasonably be expected
to have a Material Adverse Effect; and
(iv) none of the Borrowers nor any of their
respective Subsidiaries has engaged in any non-exempt "prohibited transaction"
(as defined in Section 4975 of the Code) that could reasonably be expected to
have a Material Adverse Effect.
(b) None of the Borrowers nor any of their respective
Subsidiaries has incurred or expects to incur any withdrawal liability to any
Multiemployer Plan that could reasonably be expected to have a Material Adverse
Effect.
5.14 REGULATIONS U AND X; INVESTMENT COMPANY ACT. No part of the
proceeds of any Loan hereunder will be used to purchase or carry, or to extend
credit to others for the purpose of purchasing or carrying, any Margin Stock in
violation of Regulations U and X. None of the Borrowers nor any of their
respective Subsidiaries is or is required to be registered as an "investment
company" under the Investment Company Act of 1940.
5.15 DISCLOSURE. No information, exhibit or report furnished by any
Borrower or any Subsidiary Guarantor in connection with the negotiation of the
Loan Documents, pursuant to the terms of the Loan Documents, or in connection
with any Loan as of the date thereof contained any untrue statement of a
material fact or omitted a material fact necessary to make the statement made
not misleading in light of all the circumstances existing at the date the
statement was made. Except as provided in Schedule 5.15, no SEC Document filed
by any Borrower since December 1, 1997 contained any untrue statement of a
material fact or omitted a material fact necessary to make the statement made
not misleading in light of all the circumstances existing at the date the
statement was made.
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5.16 TAX LIABILITY. Each Borrower and its Subsidiaries have filed all
tax returns which are required to be filed, and have paid, or made provision for
the payment of, all taxes with respect to the periods, Property or transactions
covered by said returns, or pursuant to any assessment received by any Borrower
or any of its Subsidiaries, except such taxes, if any, as are being contested in
good faith by appropriate proceedings and as to which adequate reserves have
been established and maintained.
5.17 PROJECTIONS. The assumptions set forth in the Projections are
reasonable and consistent with each other and with all facts known to the
Borrowers and the Subsidiaries of the Borrowers, and the Projections are
reasonably based on such assumptions. The Projections were prepared in good
faith and represent management's opinion of the projected financial performance
of the Borrowers and their respective Subsidiaries based upon the information
available to the Borrowers at the time so furnished.
5.18 ENVIRONMENTAL MATTERS.
(a) Except as described in Schedule 5.18, to the knowledge of
the Borrowers and each Subsidiary of each Borrower, (i) each Borrower and each
Subsidiary of each Borrower is in compliance with all applicable federal or
state environmental, hazardous waste, health and safety statutes, and any rules
or regulations adopted pursuant thereto, which govern or affect any of any
Borrower's or any such Subsidiary's operations and/or properties, including
without limitation the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Superfund Amendments and Reauthorization Act of 1986,
the Federal Resource Conservation and Recovery Act of 1976, and the Federal
Toxic Substances Control Act, as any of the same may be amended, modified or
supplemented from time to time, (ii) none of the operations of any Borrower or
any of its Subsidiaries is the subject of any federal or state investigation
evaluating whether any remedial action is needed to respond to a release of any
Hazardous Material and (iii) none of the Borrowers and none of their respective
Subsidiaries have any contingent liability in connection with any release of any
Hazardous Materials, in each case, where such lack of compliance, investigation
or contingent liability could reasonably be expected to have a Material Adverse
Effect.
(b) As of the Effective Date (a) neither Borrower nor any of
its Subsidiaries at any time has disposed of, discharged, released or threatened
the release of any Hazardous Materials on, from or under the Real Property in
violation of any Hazardous Materials Law that would individually or in the
aggregate constitute a Material Adverse Effect, (b) to the best knowledge of the
Borrowers, no condition exists that violates any Hazardous Material Law
affecting any Real Property except for such violations that would not
individually or in the aggregate constitute a Material Adverse Effect, (c) no
Real Property or any portion thereof is or has been utilized by any Borrower or
any of its Subsidiaries as a site for the manufacture of any Hazardous Materials
and (d) to the extent that any Hazardous Materials are used, generated or stored
by any Borrower or any of its Subsidiaries on any Real Property, or transported
to or from such Real Property by any Borrower or any of its Subsidiaries, such
use, generation, storage and transportation are in compliance with all Hazardous
Materials Laws except for such noncompliance that would not constitute a
Material Adverse Effect or be materially adverse to the interests of the
Lenders.
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5.19 [INTENTIONALLY OMITTED]
5.20 ACCOUNT WARRANTIES. With respect to each Account included as an
Eligible Account in the books or records of Day Runner, or in any Borrowing Base
Certificate, or Monthly Report, and the respective account debtor, Day Runner
hereby represents to the Lenders (the "ACCOUNT WARRANTIES") that:
(a) The Account is genuine, is in all respects what it
purports to be, and is not evidenced by a judgment;
(b) The Account represents a bona fide transaction completed
in accordance with the terms and provisions contained in the documents with
respect thereto;
(c) Day Runner has not made any agreement with the account
debtor for any credit, offset or reduction with respect to the Account, except a
discount or allowance for prompt payment granted in the ordinary course of its
business consistent with past practice;
(d) There are no facts or circumstances to Day Runner's
knowledge which in any way impair the validity or collectability of the Account
to reduce the amount payable thereunder;
(e) The services furnished or goods sold or leased giving rise
to the Account when delivered were not subject to any Lien except in favor of
the Administrative Agent and except for Permitted Liens;
(f) No payments have been or shall be made on the Account
except payments deposited in accounts with the Administrative Agent or delivered
to the Administrative Agent pursuant to this Agreement;
(g) To Day Runner's knowledge, account debtor is solvent, and
Day Runner has no knowledge of any proceeding or action which is threatened or
pending against such account debtor which could result in any material adverse
change in such account debtor's financial condition; and
(h) The Account meets all other requirements to be an Eligible
Account.
If any Account Warranty stated in this Section is breached when made,
or is no longer true at any time thereafter, as to any Account, the
Administrative Agent may at any time determine that such Account is not an
Eligible Account, but the breach of any Account Warranty shall not constitute an
Event of Default if the Account Warranty was true, to the best of Day Runner's
knowledge, when it was made.
5.21 INVENTORY WARRANTIES. With respect to all Inventory included as
Eligible Inventory in the books or records of Day Runner, or in any Borrowing
Base Certificate, or Monthly Report, Day Runner represents (collectively, the
"Inventory Warranties") to the Lenders that:
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(a) the Monthly Reports are prepared in accordance with
Section 8.1 (s) and accurately and completely describe the Inventory in all
material respects;
(b) the Inventory is owned by Day Runner free and clear of all
Liens (except Liens in favor of the Administrative Agent and Permitted
Encumbrances);
(c) no Inventory has been placed on consignment with any
Person and, except as reflected on the Monthly Reports or as permitted in the
definition of Eligible Inventory, no Inventory is stored with a bailee,
warehouseman or similar party or evidenced by any negotiable warehouse receipt
or document of title issued by any bailee, warehouseman or similar party;
(d) all Inventory is of a quality and quantity usable or
salable in the ordinary course of Day Runner's business and, if salable, is, to
the knowledge of Day Runner, salable at values equal to or in excess of Day
Runner's book value amounts thereof, except as described in the Monthly Reports;
and
(e) The Inventory meets all other requirements to be Eligible
Inventory.
If any Inventory Warranty stated in this Section is breached when made,
or is no longer true at any time thereafter, as to any Inventory, the
Administrative Agent may at any time determine that such Inventory is not
Eligible Inventory, but the breach of any Inventory Warranty shall not
constitute an Event of Default if the Inventory Warranty was true, to the best
of Day Runner's knowledge, when it was made.
5.22 ACCOUNTING. Day Runner maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (a) transactions are
executed in accordance with management's general or specific authorization; (b)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (c) access to assets is permitted only in
accordance with management's general or specific authorization; and (d) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
ARTICLE VI.
AFFIRMATIVE COVENANTS (OTHER THAN INFORMATION AND
REPORTING REQUIREMENTS)
So long as any Loan remains unpaid, or any other Obligation remains
unpaid, or any portion of the Revolving Commitment remains in force, each
Borrower shall, and shall cause its Subsidiaries to, unless the Administrative
Agent (with the written approval of the Requisite Lenders) otherwise consents:
6.1 PAYMENT OF TAXES AND OTHER POTENTIAL LIENS. Pay and discharge
promptly all taxes, assessments and governmental charges or levies imposed upon
any of them, upon their respective Property or any part thereof and upon their
respective income or profits or any part thereof, except that each Borrower and
its Subsidiaries shall not be required to pay or cause to be
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paid any tax, assessment, charge or levy that is not yet delinquent, or is
being contested in good faith by appropriate proceedings so long as the
relevant entity has established and maintains adequate reserves for the
payment of the same.
6.2 PRESERVATION OF EXISTENCE. Preserve and maintain their
respective existences in the jurisdiction of their formation and all material
authorizations, rights, franchises, privileges, consents, approvals, orders,
licenses, permits, or registrations from any Governmental Agency that are
necessary for the transaction of their respective business and qualify and
remain qualified to transact business in each jurisdiction in which such
qualification is necessary in view of their respective business or the
ownership or leasing of their respective Properties except (a) a merger
permitted by Section 7.3 or (b) where the failure to so preserve, maintain,
qualify or remain qualified would not constitute a Material Adverse Effect.
6.3 MAINTENANCE OF PROPERTIES. Maintain, preserve and protect all
of their respective Properties in good order and condition, subject to wear
and tear in the ordinary course of business, and not permit any waste of
their respective Properties, provided that the failure to so maintain,
preserve or protect a particular item or items of Property shall not
constitute a violation of this covenant if such failure is not reasonably
likely to cause a Material Adverse Effect.
6.4 MAINTENANCE OF INSURANCE. Maintain liability, casualty and other
insurance (subject to customary deductibles and retentions) with responsible
insurance companies in such amounts and against such risks as is carried by
responsible companies engaged in similar businesses and owning similar assets in
the general areas in which each Borrower and its Subsidiaries operate.
6.5 COMPLIANCE WITH LAWS. Comply with all Requirements of Law,
noncompliance with which could constitute a Material Adverse Effect.
6.6 INSPECTION RIGHTS. Upon reasonable notice, at any time during
regular business hours and as often as reasonably requested (but not so as to
materially interfere with the business of any Borrower or any of its
Subsidiaries) permit the Administrative Agent or any Lender, or any authorized
employee, agent or representative thereof (including, without limitation, any
auditors, accountants or other financial consultants engaged by the
Administrative Agent to review the financial condition of Day Runner and its
Subsidiaries), to examine, audit and make copies and abstracts from the records
and books of account of, and to visit and inspect the Properties of, any
Borrower and its Subsidiaries and to discuss the affairs, finances and accounts
of any Borrower and its Subsidiaries with any of their officers, key employees
or (with prior coordination through such Borrower) independent accountants.
6.7 KEEPING OF RECORDS AND BOOKS OF ACCOUNT. Keep adequate records
and books of account reflecting all financial transactions in conformity with
GAAP, consistently applied (provided that the records and books of account of
any Foreign Subsidiary shall be kept in accordance with generally accepted
accounting principles as in effect in the United Kingdom or in the
jurisdiction in which such Foreign Subsidiary is formed), and in material
conformity with all applicable requirements of any Governmental Agency having
regulatory jurisdiction over each Borrower and its Subsidiaries.
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6.8 COMPLIANCE WITH AGREEMENTS. Promptly and fully comply with all
Contractual Obligations to which any one or more of them is a party, except for
any such Contractual Obligations the non-performance of which would cause either
(a) a Default or (b) a Material Adverse Effect.
6.9 USE OF PROCEEDS. Use the proceeds of all Revolving Loans for
working capital purposes and to make Capital Expenditures permitted under
Section 7.16, provided that in no event shall the proceeds of any Revolving Loan
be used to pay interest on, or repay principal of, any Term Loan or any Term
Note.
6.10 HAZARDOUS MATERIALS LAWS. Keep and maintain all Real Property
and each portion thereof in compliance in all material respects with all
applicable Hazardous Materials Laws and promptly notify the Administrative
Agent in writing (attaching a copy of any pertinent written material) of (a)
any and all material enforcement, cleanup, removal or other governmental or
regulatory actions instituted, completed or threatened in writing by a
Governmental Agency pursuant to any applicable Hazardous Materials Laws, (b)
any and all material claims made or threatened in writing by any Person
against any Borrower relating to damage, contribution, cost recovery,
compensation, loss or injury resulting from any Hazardous Materials and (c)
discovery by any Responsible Official of any Borrower of any material
occurrence or condition on any real Property adjoining or in the vicinity of
such Real Property that could reasonably be expected to cause such Real
Property or any part thereof to be subject to any restrictions on the
ownership, occupancy, transferability or use of such Real Property under any
applicable Hazardous Materials Laws.
6.11 ADDITIONAL MATERIAL SUBSIDIARIES.
(a) Each Borrower shall cause each of its Material
Subsidiaries (other than DRC), and Day Runner shall cause each of its
Subsidiaries of which Filofax is a direct or indirect Subsidiary, existing on
the Effective Date to become a Subsidiary Guarantor as of the Effective Date.
Each such Subsidiary Guarantor shall provide to the Administrative Agent and its
counsel on the Effective Date such legal opinions, certificates and other
documents as are reasonably required by the Administrative Agent.
(b) Subject to any applicable Requirement of Law, each
Borrower shall cause each Subsidiary of such Borrower, whether now existing or
hereafter acquired, that becomes a Material Subsidiary, or a Subsidiary of which
Filofax is a direct or indirect Subsidiary, after the Effective Date to (i)
become a Subsidiary Guarantor by executing and delivering (A) with respect to
any Material Subsidiary (other than a Subsidiary of Filofax), an Instrument of
Joinder to Subsidiary Guaranty, in substantially the form of Exhibit G, or (B)
with respect to any Subsidiary of Filofax, Instruments of Joinder to Subsidiary
Guaranty, in substantially the forms of Exhibits H and I, and (ii) provide to
the Administrative Agent in connection therewith such legal opinions,
certificates and other documents as shall be satisfactory to the Administrative
Agent, in each case within fifteen (15) Banking Days of the date such Subsidiary
becomes a Material Subsidiary.
6.12 [INTENTIONALLY OMITTED]
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6.13. FURTHER ASSURANCES.
(a) If, after the Effective Date, Day Runner or any of its
Subsidiaries forms or acquires a new Subsidiary, Day Runner or such Subsidiary
shall pledge to the Administrative Agent, for the benefit of the Lenders, all
the capital stock of each such Subsidiary, in each case pursuant to a supplement
to a Pledge Agreement in form and substance reasonably satisfactory to the
Administrative Agent. In addition, at the request of the Administrative Agent
(which request may be made at any time and from time to time at its sole and
absolute discretion), Day Runner shall, within 30 days after the Administrative
Agent's request, pledge, or cause each relevant Subsidiary to pledge, to the
Administrative Agent, for the benefit of the Lenders, all of the capital stock
of any Subsidiary that is not then pledged to the Administrative Agent for the
benefit of the Lenders, in each case pursuant to a supplement to a Pledge
Agreement in form and substance reasonably satisfactory to the Administrative
Agent.
(b) Day Runner shall, and shall cause each Subsidiary to, at
the Day Runner's cost and expense, execute and deliver any and all further
documents, financing statements, agreements and instruments, and take all
further action (including filing Uniform Commercial Code and other financing
statements), that may be required under applicable law, or that the
Administrative Agent may reasonably request, in order to effectuate the
transactions contemplated by the Loan Documents and in order to grant, preserve,
protect and perfect the validity and first priority (with such exceptions
expressly permitted by the Loan Documents) of the security interests created or
intended to be created by the Collateral Documents. Day Runner will cause (i)
any Subsidiary that is formed, organized or acquired after the Effective Date or
(ii) at the request of the Administrative Agent (which request may be made at
any time and from time to time at its sole and absolute discretion), any
Subsidiary that has not previously executed a Subsidiary Guaranty, Security
Agreement and/or other applicable Collateral Document, to execute a Subsidiary
Guaranty, Security Agreement and/or each other applicable Collateral Document
(in each case with such changes in the form as may be required to accommodate
local law of the jurisdiction of formation or organization of such Subsidiary)
in favor of the Administrative Agent (x) with respect to any Subsidiary
described in clause (i) above, within 30 days after such Subsidiary is formed,
organized or acquired or (y) with respect to any Subsidiary described in clause
(ii) above, within 30 days after the Administrative Agent's request.
6.14. DEPOSIT ACCOUNTS; CASH CONCENTRATION; CASH FLOW SWEEP.
(a) Day Runner agrees that (i) it will maintain, and cause
each of its domestic Subsidiaries to maintain, all of its Cash and Cash
Equivalents in deposit accounts or securities accounts maintained by the
Administrative Agent, (ii) it will cause each of its Foreign Subsidiaries that
is a Material Subsidiary (including, without limitation, Filofax and Filofax
Group) (and each other Subsidiary requested by the Administrative Agent) to
maintain all of its Cash and Cash Equivalents in deposit accounts or securities
accounts maintained by a Lender, and (iii) neither Day Runner nor any of its
Subsidiaries shall establish or maintain any bank account, deposit account or
securities account, or other accounts of any type or nature with any financial
institution of any nature (other than accounts listed on Schedule 6.14(a)) or
with any other Person without the prior written consent of the Administrative
Agent.
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(b) Day Runner will maintain with the Administrative Agent, in
addition to any other accounts maintained with the Administrative Agent, (i) a
deposit account to be denominated as the "CONCENTRATION ACCOUNT", (ii) an
interest bearing deposit account to be denominated as the "TERM LOAN INTEREST
RESERVE ACCOUNT" and (iii) a "Lockbox" deposit service as to which Day Runner
has instructed its account debtors with respect to domestic accounts receivable
to direct payments with respect to such accounts receivable (the "LOCKBOX").
Prior to the end of each Banking Day, Day Runner shall pay, or cause to be paid,
to the Administrative Agent (x) for deposit in the Term Loan Interest Reserve
Account, all Cash and Cash Equivalents then held in the Lockbox and (y) for
deposit in the Concentration Account, all Cash and Cash Equivalents held by Day
Runner or any of its domestic Subsidiaries (other than such Cash and Cash
Equivalents held in the Lockbox). In addition, Day Runner shall cause each
Foreign Subsidiary (including, without limitation, Filofax and Filofax Group),
unless the Administrative Agent otherwise consents in writing, to pay, or cause
to be paid, to the Administrative Agent for deposit in the Concentration
Account, as frequently as practicable and no less than twice per calendar month
(subject to the proviso below), all Cash and Cash Equivalents (including all
proceeds of Collateral) of such Subsidiary in excess of "Minimum Amount" set
forth on Schedule 6.14(b) opposite the name of such Subsidiary (or the Foreign
Currency Equivalent thereof), PROVIDED that no such payment to the Concentration
Account shall be required by any Foreign Subsidiary pursuant this Section
6.14(b) unless the amount of all Cash and Cash Equivalents then held by such
Foreign Subsidiary exceeds the "Maximum Amount" set forth on Schedule 6.14(b)
opposite the name of such Subsidiary (or the Foreign Currency Equivalent
thereof) for a period of five (5) consecutive Banking Days.
(c) Day Runner shall maintain on deposit in the Term Loan
Interest Reserve Account, as of the end of each Banking Day, an amount at least
equal to the amount of the accrued and unpaid interest on the outstanding Term
Loans (other than interest that may be paid in PIK Interest Notes (TLB)) as of
the end of such Banking Day (such amount, the "Required Balance"), provided that
if, at end of any Banking Day, the amount on deposit in the Term Loan Interest
Reserve Account is not at least equal to the Required Balance, then all Cash and
Cash Equivalents deposited in the Term Loan Interest Reserve Account shall be
retained on deposit therein until the end of the first Banking Day on which the
amount on deposit in the Term Loan Interest Reserve Account is at least equal to
the Required Balance for such Banking Day.
(d) The Parties shall agree, on or before December 31, 2000,
to a mechanism for the repayment of excess cash flow which is not necessary for
anticipated operations of Borrowers and the application of such excess cash flow
first to repayment of Term Loan B and, if Term Loan B has been repaid in full,
to repayment of the Convertible Loan.
6.15. CONVERTIBLE NOTES AND COMMON STOCK.
(a) Day Runner shall maintain a transfer agent and, if
necessary under the laws of the jurisdiction of incorporation of Day Runner, a
registrar (which may be the same entity as the transfer agent) for the Day
Runner Common Stock.
57
<PAGE>
(b) Day Runner shall cooperate with the Lenders and use its
best efforts to permit the Convertible Notes and Conversion Stock to be eligible
for clearance and settlement through the DTC.
(c) Day Runner shall endeavor promptly to comply with all
Federal and state securities laws regulating the order and delivery of shares of
Conversion Stock upon conversion of the Convertible Notes, if any, and will
endeavor promptly, if permitted by the rules of such exchange, over-the-counter
market or other market, to list or cause to have quoted such shares of
Conversion Stock on each national securities exchange or in the over-the-counter
market or such other market on which the Common Stock is then listed or quoted.
(d) If Day Runner shall register some or all of the Conversion
Stock pursuant to the Registration Rights Agreement, it shall use its best
efforts to have such registered stock listed on the Nasdaq National Market or
other exchange or market.
6.16. MAJOR ACCOUNTS PAYABLES AGREEMENT. Day Runner shall deliver to
the Agent on or before December 31, 2000, a Major Account Payables Agreement
executed by each of Day Runner's customers whose purchases exceeded $5,000,000
in Fiscal Year 2000 (which Day Runner represents consists of four customers), in
form and substance satisfactory to the Administrative Agent, and failure to
deliver such Agreement shall constitute an Event of Default hereunder.
ARTICLE VII.
NEGATIVE COVENANTS
So long as any Loan remains unpaid, or any other Obligation remains
unpaid, or any portion of the Revolving Commitment remains in force, each
Borrower shall not, and shall not permit any of its Subsidiaries to:
7.1 PAYMENT OF SUBORDINATED OBLIGATIONS. Pay any principal
(including sinking fund payments) with respect to any Subordinated
Obligation, or purchase or redeem (or offer to purchase or redeem) any
Subordinated Obligation, or deposit any monies, securities or other Property
with any trustee or other Person to provide assurance that the principal or
any portion thereof of any Subordinated Obligation will be paid when due or
otherwise to provide for the defeasance of any Subordinated Obligation.
7.2 DISPOSITION OF PROPERTY. Make any Disposition of its Property,
whether now owned or hereafter acquired, except (a) a Disposition by a Borrower
to another Borrower that is not a Foreign Subsidiary, (b) a Disposition by a
Subsidiary of a Borrower to such Borrower, (c) so long as the Net Cash Sale
Proceeds of such Disposition are applied in accordance with Section 3.2(a), a
Disposition of the Property of Day Runner Australia PTY, Ltd., Day Runner Canada
Inc. and Day Runner de Mexico, in each case substantially as an entirety (or a
Disposition of the capital stock thereof) in connection with a discontinuation
of the operations of such Subsidiary and (d) a Disposition by any Borrower to
any Subsidiary of inventory in a manner consistent with past practice, provided
that the Lien granted in the Security Agreement
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<PAGE>
by such Borrower to the Administrative Agent, for the benefit of the Lenders,
on such inventory shall continue and remain in full force and effect.
7.3 MERGERS. Merge or consolidate with or into any Person.
7.4 [INTENTIONALLY OMITTED]
7.5 [INTENTIONALLY OMITTED]
7.6 DISTRIBUTIONS. Make any Distribution, whether from capital,
income or otherwise, and whether in Cash or other Property, except
Distributions by any Subsidiary of a Borrower to such Borrower.
7.7 ERISA. At any time, permit any Pension Plan to: (a) engage in
any non-exempt "prohibited transaction" (as defined in Section 4975 of the
Code); (b) fail to comply with ERISA or any other applicable Laws; (c) incur
any material "accumulated funding deficiency" (as defined in Section 302 of
ERISA); (d) terminate in any manner, which, with respect to each event listed
above, could reasonably be expected to result in a Material Adverse Effect or
(e) withdraw, completely or partially, from any Multiemployer Plan if to do
so could reasonably be expected to result in a Material Adverse Effect.
7.8 CHANGE IN NATURE OF BUSINESS. Make any material change in the
nature of the business of Day Runner and its Subsidiaries, taken as a whole.
7.9 LIENS. Create, incur, assume or suffer to exist any Lien of any
nature upon or with respect to any of their respective Properties, or sell or
factor any accounts receivable or engage in any sale and leaseback transaction
with respect to any of their respective Properties, whether now owned or
hereafter acquired, except:
(a) Liens existing on the Effective Date and disclosed in
Schedule 5.7 and any renewals/extensions or amendments thereof, provided that
the obligations secured or benefited thereby are not increased;
(b) Liens granted to the Administrative Agent, for the benefit
of the Lenders, pursuant to any Loan Document;
(c) Permitted Encumbrances; and
(d) Liens on Property acquired by any Borrower or any of its
Subsidiaries, PROVIDED that such Liens were in existence at the time of the
acquisition of such Property and were not created in contemplation of such
acquisition, and Liens on Property that secure Indebtedness permitted pursuant
to Section 7.10(d); PROVIDED that the aggregate Indebtedness secured by Liens
pursuant to this Section is not in excess of $500,000 in principal amount.
7.10 INDEBTEDNESS AND GUARANTY OBLIGATIONS. Create, incur or assume
any Indebtedness or Guaranty Obligation except:
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<PAGE>
(a) Indebtedness and Guaranty Obligations existing on the
Effective Date and disclosed in Schedule 7.10, and refinancings, renewals,
extensions or amendments that do not increase the amount thereof;
(b) Indebtedness and Guaranty Obligations under the Loan
Documents;
(c) Indebtedness and Guaranty Obligations owed to any Borrower
or any of the Subsidiary Guarantors; PROVIDED that any such Indebtedness is
evidenced by a promissory note, in substantially the form of Exhibit J, that is
pledged to the Administrative Agent, for the benefit of the Lenders, and is
subordinated in right of payment to the Loans on terms and in form satisfactory
to the Administrative Agent;
(d) Indebtedness consisting of Capital Lease Obligations, or
otherwise incurred to finance the purchase or construction of capital assets
(which shall be deemed to exist if the Indebtedness is incurred at or within 180
days before or after the purchase or construction of the capital asset), or to
refinance any such Indebtedness, PROVIDED that the aggregate principal amount of
such Indebtedness outstanding at any time does not exceed $500,000;
(e) Indebtedness consisting of Interest Rate Protection
Agreements entered into in order to manage existing or anticipated interest rate
risks and not for speculative purposes;
(f) Indebtedness constituting Subordinated Obligations;
(g) the Tender Offer Notes; and
(h) other Indebtedness that is not secured by a Lien on any
Property of any Borrower or any of the Subsidiaries of any Borrower; PROVIDED
that the aggregate principal amount thereof does not exceed $250,000 at any
time.
7.11 TRANSACTIONS WITH AFFILIATES. Enter into any transaction of any
kind with any Affiliate of any Borrower or any Affiliate of any Subsidiary of
any Borrower other than (a) salary, bonus, employee stock option and other
compensation arrangements with directors or officers in the ordinary course of
business; and (b) transactions on overall terms at least as favorable to the
applicable Borrower or its Subsidiary as would be the case in an arm's-length
transaction between unrelated parties of equal bargaining power.
7.12 FUNDED SENIOR DEBT RATIO. Permit the Funded Senior Debt Ratio,
as of the last day of any month ending on or after December 31, 2000, to be
greater than the ratio set forth below opposite the period during which such
month ends:
<TABLE>
<S> <C>
--------------------------------------------- ---------------------------------------------
December 31, 2000 N/A
--------------------------------------------- ---------------------------------------------
January 31, 2001 N/A
--------------------------------------------- ---------------------------------------------
February 28, 2001 N/A
--------------------------------------------- ---------------------------------------------
March 31, 2001 N/A
--------------------------------------------- ---------------------------------------------
April 30, 2001 N/A
--------------------------------------------- ---------------------------------------------
May 31, 2001 N/A
--------------------------------------------- ---------------------------------------------
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<PAGE>
June 30, 2001 4.6
--------------------------------------------- ---------------------------------------------
July 31, 2001 4.6
--------------------------------------------- ---------------------------------------------
August 31, 2001 4.5
--------------------------------------------- ---------------------------------------------
September 30, 2001 4.7
--------------------------------------------- ---------------------------------------------
October 31, 2001 5.0
--------------------------------------------- ---------------------------------------------
November 30, 2001 5.1
--------------------------------------------- ---------------------------------------------
December 31, 2001 4.7
--------------------------------------------- ---------------------------------------------
January 31, 2002 4.3
--------------------------------------------- ---------------------------------------------
February 28, 2002 4.1
--------------------------------------------- ---------------------------------------------
March 31, 2002 4.1
--------------------------------------------- ---------------------------------------------
April 30, 2002 4.0
--------------------------------------------- ---------------------------------------------
May 31, 2002 4.0
--------------------------------------------- ---------------------------------------------
June 30, 2002 3.9
--------------------------------------------- ---------------------------------------------
</TABLE>
7.13 FIXED CHARGE COVERAGE RATIO. Permit the Fixed Charge Coverage
Ratio, as of the last day of any month ending on or after December 31, 2000, to
be less than the ratio set forth below opposite the period during which such
month ends:
<TABLE>
<S> <C>
--------------------------------------------- ---------------------------------------------
December 31, 2000 N/A
--------------------------------------------- ---------------------------------------------
January 31, 2001 N/A
--------------------------------------------- ---------------------------------------------
February 28, 2001 N/A
--------------------------------------------- ---------------------------------------------
March 31, 2001 N/A
--------------------------------------------- ---------------------------------------------
April 30, 2001 N/A
--------------------------------------------- ---------------------------------------------
May 31, 2001 N/A
--------------------------------------------- ---------------------------------------------
June 30, 2001 .7
--------------------------------------------- ---------------------------------------------
July 31, 2001 .8
--------------------------------------------- ---------------------------------------------
August 31, 2001 .9
--------------------------------------------- ---------------------------------------------
September 30, 2001 .9
--------------------------------------------- ---------------------------------------------
October 31, 2001 .9
--------------------------------------------- ---------------------------------------------
November 30, 2001 .8
--------------------------------------------- ---------------------------------------------
December 31, 2001 .8
--------------------------------------------- ---------------------------------------------
January 31, 2002 .9
--------------------------------------------- ---------------------------------------------
February 28, 2002 1.0
--------------------------------------------- ---------------------------------------------
March 31, 2002 1.0
--------------------------------------------- ---------------------------------------------
April 30, 2002 1.1
--------------------------------------------- ---------------------------------------------
May 31, 2002 1.1
--------------------------------------------- ---------------------------------------------
June 30, 2002 1.1
--------------------------------------------- ---------------------------------------------
</TABLE>
7.14 [INTENTIONALLY OMITTED]
7.15 INVESTMENTS. Make or suffer to exist any Investment, other than:
(a) Investments in existence on the Effective Date and
disclosed on Schedule 7.15;
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(b) Investments consisting of Cash Equivalents;
(c) Investments consisting of advances to officers, directors
and employees of Borrowers and their Subsidiaries in the ordinary course of
business not to exceed $50,000 at any time outstanding;
(d) Investments received in connection with the bankruptcy or
reorganization of suppliers and customers and in settlement of disputes with
customers and suppliers arising in the ordinary course of business;
(e) Investments of any Borrower in any Borrower or any
Subsidiary Guarantor;
(f) Investments of a Borrower in any Subsidiary of such
Borrower that is not a Subsidiary Guarantor (other than DRC); provided that the
aggregate amount of all such Investments shall not exceed $1,500,000; and
(g) Investments by Day Runner in DRC in existence on the
effective date of the Existing Agreement.
7.16 CAPITAL EXPENDITURES. The Borrowers shall not, and shall not
permit any of their respective Subsidiaries to, make any Capital Expenditures in
any Fiscal Year, if, after giving effect thereto, the aggregate amount of all
Capital Expenditures made by the Borrowers and their Subsidiaries in such Fiscal
Year would exceed $5,000,000.
7.17 PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES. Enter into, or
permit any of its Subsidiaries to enter into, any agreement, instrument or
other document (other than any Loan Document) which directly or indirectly
prohibits or restricts in any manner, or would have the effect of prohibiting
or restricting in any material manner, the ability of any of the Borrower's
Subsidiaries to (i) pay dividends or make any other distributions in respect
of its capital stock or any other equity interest or participation in its
profits owned by the Borrower or any of its Subsidiaries, or pay or repay any
Indebtedness owed to the Borrower or any of its Subsidiaries, (ii) make loans
or advances to any of the Borrowers or any of their Subsidiaries, or (iii)
transfer any of its properties or assets to the Borrowers or any of their
Subsidiaries.
7.18 LEASE OBLIGATIONS. The Borrowers shall not, and shall not permit
any of their respective Subsidiaries to, incur any obligations with respect to
any lease that is not a Capital Lease in any Fiscal Year, if, after giving
effect thereto, the aggregate amount of all obligations of the Borrowers and
their Subsidiaries with respect to leases that are not Capital Leases would
exceed $7,500,000 in any Fiscal Year, without the prior written consent of the
Administrative Agent.
7.19 MINIMUM EBITDA. As of the last day of each month ending on or
after December 31, 2000, permit EBITDA for the trailing six (6) months ending on
the last day of such month, to be less than the amount set forth below opposite
such date:
62
<PAGE>
<TABLE>
<S> <C>
--------------------------------------------- ---------------------------------------------
December 31, 2000 $ 12,500,000
--------------------------------------------- ---------------------------------------------
January 31, 2001 $ 13,200,000
--------------------------------------------- ---------------------------------------------
February 28, 2001 $ 12,800,000
--------------------------------------------- ---------------------------------------------
March 31, 2001 $ 9,100,000
--------------------------------------------- ---------------------------------------------
April 30, 2001 $ 5,700,000
--------------------------------------------- ---------------------------------------------
May 31, 2001 $ 2,800,000
--------------------------------------------- ---------------------------------------------
June 30, 2001 $ 700,000
--------------------------------------------- ---------------------------------------------
July 31, 2001 $900,000
--------------------------------------------- ---------------------------------------------
August 31, 2001 $ 2,000,000
--------------------------------------------- ---------------------------------------------
September 30, 2001 $ 5,000,000
--------------------------------------------- ---------------------------------------------
October 31, 2001 $ 7,300,000
--------------------------------------------- ---------------------------------------------
November 30, 2001 $ 8,900,000
--------------------------------------------- ---------------------------------------------
December 31, 2001 $ 10,500,000
--------------------------------------------- ---------------------------------------------
January 31, 2002 $ 11,100,000
--------------------------------------------- ---------------------------------------------
February 28, 2002 $ 10,700,000
--------------------------------------------- ---------------------------------------------
March 31, 2002 $ 8,100,000
--------------------------------------------- ---------------------------------------------
April 30, 2002 $ 5,900,000
--------------------------------------------- ---------------------------------------------
May 31, 2002 $ 4,600,000
--------------------------------------------- ---------------------------------------------
June 30, 2002 $ 3,100,000
--------------------------------------------- ---------------------------------------------
</TABLE>
7.20 CONVERTIBLE NOTES AND COMMON STOCK.
(a) Day Runner shall not, and shall not permit its Affiliates
(as defined in rule 501(b) under the Securities Act) or any Person acting on its
behalf to engage, in connection with the issuance of the Convertible Notes, in
any form of general solicitation or general advertising within the meaning of
Rule 502(c) under the Securities Act, nor will any Person acting on its or their
behalf, directly or indirectly, make offers or sales of any security, or solicit
offers to buy any security, under the circumstances that would require the
registration of the Convertible Notes under the Securities Act. Day Runner will
not permit any of its Affiliates to resell any Convertible Notes that have been
acquired by any of them.
(b) Day Runner will not, so long as any Convertible Notes are
outstanding, be or become, an open-ended investment company, unit investment
trust or face-amount certificate company that is or is required to be registered
under Section 8 of the Investment Company Act, and will not be or become a
closed-end investment company required to be registered, but not registered
thereunder.
(c) Day Runner agrees that no future offer, sale or issuance
of debt securities of Day Runner or any of its Subsidiaries will be made if, as
a result of the doctrine of "integration" referred to in Rule 502 under the
Securities Act, such offer and sale would render invalid (for the purpose of the
issuance of the Convertible Notes by the Borrowers to the Lenders), the
exemption from the registration requirements of the Securities Act provided by
Section 4(2) thereof or by Rule 144A.
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<PAGE>
ARTICLE VIII.
INFORMATION AND REPORTING COVENANTS
8.1 FINANCIAL AND BUSINESS INFORMATION. So long as any Loan remains
unpaid, or any other Obligation remains unpaid, or any portion of the Revolving
Commitment remains in force, Day Runner shall, unless the Administrative Agent
(with the written approval of the Requisite Lenders) otherwise consents, at Day
Runner's sole expense, deliver to each Lender:
(a) As soon as practicable, and in any event within 30 days
after the end of each Fiscal Quarter (other than the fourth Fiscal Quarter in
any Fiscal Year), the consolidated balance sheet of Day Runner and its
Subsidiaries as at the end of such Fiscal Quarter and the consolidated
statements of operations and cash flows for such Fiscal Quarter, and the portion
of the Fiscal Year ended with such Fiscal Quarter, all in reasonable detail.
Such financial statements shall be certified by the chief financial officer of
Day Runner as fairly presenting in all material respects the financial
condition, results of operations and cash flows of Day Runner and its
Subsidiaries in accordance with GAAP (other than footnote disclosures),
consistently applied, as at such date and for such periods, subject only to
normal year-end accruals and audit adjustments;
(b) As soon as practicable, and in any event within 30 days
after the end of each Fiscal Quarter a certificate of a Senior Officer of Day
Runner stating that the representations and warranties in Article V hereof are
true and correct in all material respects as of the date of such certificate and
that no Event of Default has occurred and is continuing or, if an Event of
Default has occurred and is continuing, a statement as to the nature thereof and
the action that Day Runner has taken and proposes to take with respect thereto;
(c) As soon as practicable, and in any event within 100 days
after the end of each Fiscal Year, the consolidated balance sheet of Day Runner
and its Subsidiaries as at the end of such Fiscal Year and the consolidated
statements of operations, stockholders' equity and cash flows, in each case of
Day Runner and its Subsidiaries for such Fiscal Year, with all related
consolidating financial statements prepared by Day Runner, all in reasonable
detail. Such consolidated financial statements shall be prepared in accordance
with GAAP, consistently applied, and shall be accompanied by a report of
Deloitte & Touche LLP or other independent public accountants of recognized
standing selected by Day Runner and reasonably satisfactory to the Requisite
Lenders, which report shall be prepared in accordance with generally accepted
auditing standards as at such date, and shall not be subject to any
qualifications or exceptions. Such accountants' report shall be accompanied by a
certificate stating that, in making the examination pursuant to generally
accepted auditing standards necessary for the certification of such financial
statements and such report, such accountants have obtained no knowledge of any
Event of Default then existing relating to the breach by any Borrower of any of
Sections 7.1, 7.2, 7.6, 7.9, 7.10, 7.12, 7.13, 7.16 and 7.19 of this Agreement
or, if, in the opinion of such accountants, any such Event of Default shall
exist, stating the nature and status of such Event of Default;
(d) As soon as practicable, and in any event within 20 days
after the end of each month, the consolidated and consolidating balance sheet of
Day Runner and its Subsidiaries
64
<PAGE>
as at the end of such month and the consolidated statements of operations and
cash flows for such month, all in reasonable detail and prepared in
comparison with the projections delivered to the Administrative Agent with
respect to such month and the corresponding month in the preceding Fiscal
Year. Such financial statements shall be certified by the chief financial
officer of Day Runner as fairly presenting in all material respects the
financial condition, results of operations and cash flows of Day Runner and
its Subsidiaries in accordance with GAAP (other than footnote disclosures),
consistently applied, as at such date and for such periods, subject only to
normal year-end accruals and audit adjustments;
(e) As soon as practicable, and in any event within thirty
(30) days after the commencement of each Fiscal Year, a budget and projection by
month and Fiscal Quarter for that Fiscal Year, and for the next succeeding
Fiscal Year, including for the first such Fiscal Year, projected consolidated
balance sheets, statements of operations and statements of cash flow, in each
case by Fiscal Quarter and, for succeeding Fiscal Years, projected consolidated
condensed balance sheets and statements of operations and cash flows of each
Borrower and its Subsidiaries, all in reasonable detail (it being understood
that any projections provided hereunder shall be were prepared in good faith and
will represent management's opinion of the projected financial performance of
the Borrowers and their respective Subsidiaries based upon the information
available to the Borrowers at the time so furnished);
(f) As soon as practicable, and in any event within fifteen
(15) days after the end of each month, a report, in form and substance
reasonably satisfactory to the Administrative Agent, from the management of
Filofax Group with respect to the results from operations of Filofax Limited and
certain of its other Subsidiaries for the preceding month;
(g) [Intentionally Omitted]
(h) Promptly after request by the Administrative Agent or the
Requisite Lenders, copies of any detailed audit reports, management letters or
recommendations submitted to the board of directors (or the audit committee of
the board of directors) of any Borrower by independent accountants in connection
with the accounts or books of such Borrower or any of its Subsidiaries, or any
audit of any of them and/or any tax returns filed by any Borrower or any of its
Subsidiaries with the federal governments of the United States or the United
Kingdom;
(i) (i) As soon as practicable, and in any event within 45
days after the end of each Fiscal Quarter, a copy of the Form 10-Q for such
Fiscal Quarter filed with the Securities and Exchange Commission by any
Borrower; (ii) as soon as practicable, and in any event within 100 days after
the end of each Fiscal Year a copy of the Form 10-K for such Fiscal Year filed
with the Securities and Exchange Commission by any Borrower; and (iii) promptly
after the same are available, and in any event within two (2) Banking Days after
filing with the Securities and Exchange Commission, copies of each annual
report, proxy or financial statement or other report or communication sent to
the stockholders of any Borrower, and copies of all annual, regular, periodic
and special reports and registration statements which any Borrower may file or
be required to file with the Securities and Exchange Commission under Section 13
or 15(d) of the Securities Exchange Act of 1934, as amended, and not otherwise
required to be delivered to the Lenders pursuant to the other provisions of this
Section 8.1;
65
<PAGE>
(j) Promptly after request by the Administrative Agent or any
Lender, copies of any other report or other document that was filed by any
Borrower with any Governmental Agency;
(k) Promptly upon a Senior Officer of any Borrower becoming
aware, and in any event within five (5) Banking Days after becoming aware, of
the occurrence of any (i) "reportable event" (as such term is defined in Section
4043 of ERISA, but excluding such events as to which the PBGC has by regulation
waived the requirement therein contained that it be notified within thirty days
of the occurrence of such event) or (ii) non-exempt "prohibited transaction" (as
such term is defined in Section 406 of ERISA or Section 4975 of the Code)
involving any Pension Plan or any trust created thereunder, telephonic notice
specifying the nature thereof, and, no more than two (2) Banking Days after such
telephonic notice, written notice again specifying the nature thereof and
specifying what action the applicable Borrower is taking or proposes to take
with respect thereto, and, when known, any action taken by the Internal Revenue
Service with respect thereto;
(l) As soon as practicable, and in any event within two (2)
Banking Days after a Senior Officer becomes aware of the existence of any
condition or event which constitutes a Default or Event of Default, telephonic
notice specifying the nature and period of existence thereof, and, no more than
two (2) Banking Days after such telephonic notice, written notice again
specifying the nature and period of existence thereof and specifying what action
the Borrowers are taking or propose to take with respect thereto;
(m) Promptly upon a Senior Officer of any Borrower becoming
aware that (i) any Person has commenced a legal proceeding with respect to a
claim against any Borrower that such Borrower reasonably believes is $500,000 or
more in excess of the amount thereof that is fully covered by insurance or
indemnification agreement of a financially responsible Person, (ii) any creditor
under a credit agreement involving Indebtedness of $100,000 or more or any
lessor under a material lease involving aggregate rent of $200,000 per year or
more has asserted a material default thereunder on the part of any Borrower or,
(iii) any Person has commenced a legal proceeding with respect to a claim
against any Borrower under a contract that is not a credit agreement or material
lease with respect to a claim of in excess of $200,000 or which otherwise may
reasonably be expected to result in a Material Adverse Effect, a written notice
describing the pertinent facts relating thereto and what action the applicable
Borrower is taking or proposes to take with respect thereto;
(n) [Intentionally Omitted]
(o) As promptly as practicable, and in any event within five
(5) Banking Days after the end of each calendar month, a rolling thirteen (13)
week cash forecast for Day Runner and its Subsidiaries which shall include a
cash forecast by Fiscal Quarter up to the Fiscal Quarter ending June 30, 2002,
which cash forecast shall include the projected Borrowing Base for such weekly
period or Fiscal Quarter;
(p) As promptly as practicable, and in any event within five
(5) Banking Days of the end of each calendar month, a sales report with respect
to Day Runner and its Subsidiaries
66
<PAGE>
for the preceding calendar month setting forth sales data with respect to
each customer of Day Runner or any of its Subsidiaries that accounts for more
than 10% of the aggregate sales of Day Runner and its Subsidiaries (on a
consolidated basis) (such a customer, a "SIGNIFICANT CUSTOMER") with a
comparison of such sales data to (i) the sales data with respect to each
Significant Customer for the corresponding month in the prior Fiscal Year and
(ii) the projected sales to each Significant Customer set forth in the
revised operating plan and projections delivered pursuant to Section 7.1(o);
(q) As promptly as practicable, and in any event within
fifteen (15) days of the end of each month, a report setting forth with respect
to each Significant Customer, point-of-sale and inventory on-hand data by
product category for the preceding calendar month, together with a comparison of
such data with the results for the corresponding month in the prior Fiscal Year;
(r) Within 15 days after the end of each month, commencing
with the month ended December 31, 2000, a Borrowing Base Certificate
demonstrating any Borrower's compliance with the borrowing limitations in
Article II as of the end of such month, with a listing and aging of Borrower's
Accounts (together with a current list of names, addresses and outstanding debts
of all the Accounts Debtors);
(s) As of the Effective Date and within 15 days after the end
of each month, a written report (the "MONTHLY REPORT"), which shall include, as
of the last Business Day of such month, the following, in form satisfactory to
the Administrative Agent: (i) a detailed aged trial balance of Accounts; (ii) a
detailed schedule listing any adjustments on any Borrower 's books and records
to Accounts previously included in any Monthly Report; (iii) an aged unpaid
invoice register and accounts payable reconciliation trial balance; (iv) a
schedule of Inventory determined on an average cost basis, valued at the lower
of cost or market value and setting forth the location of all such Inventory,
including Inventory not in the possession of any Borrower and the name of the
Person in possession thereof describing the type, quality and quantity of such
Inventory and whether and how much of such Inventory consists of raw materials,
work in process, finished goods or otherwise; and (v) a schedule of Equipment
and fixtures listing any additions or deletions to Equipment and fixtures
previously included in any Monthly Report; and (vi) such additional information
as the Administrative Agent shall from time to time request; and
(t) Such other data and information as from time to time may
be reasonably requested by the Administrative Agent, any Lender (through the
Administrative Agent) or the Requisite Lenders.
8.2 COMPLIANCE CERTIFICATES. So long as any Loan remains unpaid, or
any other Obligation remains unpaid or unperformed, or any portion of the
Revolving Commitment remains outstanding, Day Runner shall, at Day Runner's
sole expense, deliver to each Lender concurrently with the financial
statements required pursuant to Sections 8.1 (a) and 8.1(c), a Compliance
Certificate signed by a Senior Officer of Day Runner.
8.3 ACCOUNTS REPORTING. Day Runner shall deliver to the
Administrative Agent, on a monthly basis, schedules in form satisfactory to
the Administrative Agent describing all Accounts created or acquired,
containing such information with respect thereto as the
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<PAGE>
Administrative Agent may require. Together with each schedule, upon request
therefor, Day Runner shall furnish to the Administrative Agent copies of
customer invoices or the equivalent thereof copies of original purchase
orders, shipping or delivery receipts for all merchandise sold, and such
other supporting documents as the Administrative Agent may require. All such
invoices shall represent actual sales and Day Runner shall not back date,
postdate or redate any invoice or sale or make sales on extended dating or
credit terms beyond that customary in Day Runner's industry. Within fifteen
(15) days after the end of each month, or sooner if available, Day Runner
shall deliver to the Administrative Agent current monthly agings of Accounts
and accounts payable relating to the business of Day Runner, and a current
Accounts analysis, in form satisfactory to the Administrative Agent, together
in each instance with such further information with respect thereto as the
Administrative Agent may require. Day Runner's failure to execute and deliver
the schedules describing Accounts or otherwise to comply with the
requirements of this Section 8.3 shall not affect or limit the
Lender's/Agent's security interest or other rights in and to the Accounts or
other Collateral.
8.4 INVENTORY REPORTING. The Day Runner shall conduct a full and
complete physical count of Inventory, at least annually and, upon the occurrence
of an Event of Default, more frequently if the Administrative Agent shall
require, in a manner and in accordance with procedures approved by Day Runner's
independent auditors and the Administrative Agent, and shall promptly extend,
price and summarize such physical counts and submit a report thereof to the
Administrative Agent. Values shown on all reports of Inventory shall be at the
lower of cost (determined on an average FIFO basis) or market. Day Runner shall
furnish to the Administrative Agent upon request such detailed information or
supporting documents with respect to all such reports of Day Runner's Inventory
as the Administrative Agent may require to determine the accuracy thereof
including copies of vendor invoices or other documents to support pricing and
the physical count sheets. On the first Wednesday of each month, or sooner if
available, Day Runner shall deliver to the Administrative Agent (a) a current
perpetual inventory listing and describing all Inventory of Day Runner, (b) a
current category report containing descriptions of all Inventory of Day Runner
by product class and owner, and verifying all Eligibility Reserves and the
current advance rates applied against Eligible Inventory, and (c) such other
reports or information as the Administrative Agent may from time to time
require. In addition, within fifteen (15) days after the end of each month, or
sooner if available, Day Runner shall deliver to the Administrative Agent a
report in form and substance satisfactory to the Administrative Agent describing
the total sales of Inventory by Day Runner and the cost of goods sold.
8.5 ACCOUNT COVENANTS. Day Runner shall promptly upon its learning
thereof: (a) inform the Administrative Agent in writing of any material delay in
Day Runner's performance of any of its obligations to any account debtor, or of
any assertion of any claims, offsets or counterclaims by any account debtor, if
such claims, offsets or counterclaims are, singly or in the aggregate, material
in amount; and (b) inform the Administrative Agent of any material adverse
information relating to the financial condition of any account debtor if such
account debtor has been, is, and/or is reasonably expected to be a material
customer of Day Runner. With respect to any Accounts arising out of contracts or
transactions with he United States of America, any state or any local government
or any department, agency or instrumentality thereof, before any such Accounts
are included in the Borrowing Base, Day
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Runner shall notify the Administrative Agent in writing and, in such event or
on request by the Administrative Agent, execute any instruments and take any
other action required to perfect or assure the enforceability of the
Administrative Agent's security interest in the proceeds paid in respect of
such Account under the provisions of the Federal Assignment of Claims act of
1940, as amended, or any comparable state or local laws. The Lender shall
have the right, from time to time (whether or not any Default or Event of
Default has occurred) to verify by mail, telephone or other communication
with the account debtor, the validity, amount or any other matter relating to
any or all of the Account.
8.6 INVENTORY COVENANTS. Day Runner shall at all times maintain a
perpetual inventory, keeping accurate records itemizing and describing the kind,
type, location, quality and quantity of Inventory and Eligible Inventory, Day
Runner's cost therefor, daily withdrawals therefrom and accessions thereto, all
of which shall be available upon request. No Inventory shall be at any time or
times hereafter stored with a bailee, warehouseman, consignee or similar third
party unless the Administrative Agent has been notified and, if the
Administrative Agent so requests, the third party has acknowledged in writing
the Administrative Agent's Lien thereon. Day Runner shall not sell any Inventory
to any customer on approval or any other basis which entitles the customer to
return or may obligate any Borrower to repurchase such Inventory, except only in
the ordinary course of business, and then only if the Administrative Agent has
been notified. No Inventory will be disposed of in partial or complete
satisfaction of any Indebtedness other than the Obligations.
8.7 EQUIPMENT COVENANTS. Day Runner shall at all times keep accurate
records itemizing and describing the kind, type, age and condition of the
Equipment, together with records of any Borrower's cost therefor and all
accumulated depreciation thereof. Each Borrower at its expense shall cause the
Equipment and fixtures to be maintained and preserved in the same condition,
repair and working order as on the Effective Date, ordinary wear and tear
excepted. In the case of any loss or damage to any of the Equipment or fixtures,
any Borrower shall, as promptly as practicable, make or cause to be made all
repairs, replacements and other improvements which are necessary or desirable
and promptly furnish to the Administrative Agent a written report with respect
to any loss or damage in excess of $100,000.
8.8 APPOINTMENT OF THE ADMINISTRATIVE AGENT AS ANY BORROWERS'
ATTORNEY-IN-FACT. Each Borrower hereby irrevocably designates, makes,
constitutes and appoints the Administrative Agent (and all persons designated by
the Administrative Agent) as its true and lawful attorney-in-fact and authorizes
the Administrative Agent, in any Borrower's or the Administrative Agent's name,
to: (a) at any time following the occurrence of an Event of Default for so long
as it may be continuing and without prior notice to any Borrower, (i) notify any
account debtors that an Account or the Accounts have been assigned to the
Administrative Agent and that the Administrative Agent has a security interest
therein, direct any account debtors to make all payments in respect of the
Accounts directly to the Administrative Agent or otherwise demand payment of any
or all of the Accounts; (ii) enforce payment of any or all of the Accounts by
legal proceedings or otherwise; (iii) exercise any borrower's rights and
remedies with respect to any actions or proceedings brought to collect an
Account; (iv) sell or assign any Account upon such terms, for such amount and at
such time or times as the Administrative Agent deems advisable; (v) settle,
adjust, compromise, extend or renew any Account; (vi) discharge and
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release any Account; (viii) prepare, file and sign any Borrower's name on any
proof of claim in bankruptcy or other similar document against an account
debtor; (viii) direct the post office authorities to change the address for
delivery of any Borrower's mail to an address designated by the
Administrative Agent and thereafter open and dispose of all mail addressed to
any Borrower; (ix) have access to any postal box into which any Borrower's
mail is deposited; (x) sign any Borrower's name on any verification of
Accounts and notices thereof to Account Debtors; and (xi) execute any
documents and instruments and do all acts and .things which are necessary, in
the Administrative Agent's sole and absolute discretion, to fulfill any
Borrower's obligations under this Agreement, to protect the Administrative
Agent's security interest or to preserve, protect or realize upon the
Collateral and (b) at any time, whether or not any Default or Event of
Default has occurred, (i) take control in any manner of any item of payment
or proceeds in respect of any Inventory, Accounts or other Collateral; (ii)
endorse any Borrower's name upon any items of payment or proceeds in respect
of any Inventory, Accounts or other Collateral and deposit such items or
proceeds for payment of the Obligations; (iii) debit the accounts of the
Borrowers as provided in Section 3.12(b); (iv) file any document which the
Administrative Agent believes is necessary or desirable in connection with
the perfection of Liens on the Collateral (including, without limitation, the
execution and filing of any financing statement or similar document), and (v)
endorse any Borrower's name upon any document, instrument, invoice, or
similar document or agreement relating to any Account or any goods or
services pertaining thereto; provided, however, that Administrative Agent
shall be under no obligation whatsoever to take any of the foregoing actions
and, absent bad faith or actual malice, the Administrative Agent shall have
no responsibility or liability for any act taken or omission with respect
thereto.
8.9 CONVERTIBLE NOTES AND COMMON STOCK. So long as any of the
Convertible Notes or Conversion Stock are "restricted securities" within the
meaning of Rule 144(a)(3) under the Securities Act, Day Runner shall, during any
period in which it is not subject to and in compliance with Sections 13 or 15(d)
of the Exchange Act, provide to each holder of such restricted securities and to
each prospective purchaser (as designated by such holder) of such restricted
securities, upon the request of such holder or prospective purchaser, any
information required to be provided by Rule 144A(d)(4) under the Securities Act.
This covenant is intended to be for the benefit of the holders, and prospective
purchasers designated by such holders, from time to time of such restricted
securities.
ARTICLE IX.
CONDITIONS
9.1 EFFECTIVE DATE. The occurrence of the Effective Date, and the
obligations of each Lender pursuant to the Revolving Commitment, are subject to
the following conditions precedent, each of which shall be satisfied on or prior
to the Closing Date:
(a) The Administrative Agent shall have received all of the
following, each of which shall be originals unless otherwise specified, each
properly executed by a Responsible Official of each party thereto, each dated as
of the Effective Date and each in form and substance reasonably satisfactory to
the Administrative Agent and its legal counsel (unless otherwise
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specified or, in the case of the date of any of the following, unless the
Administrative Agent otherwise agrees or directs):
(1) at least one (1) executed counterpart of this
Agreement, together with arrangements satisfactory to the Administrative Agent
for additional executed counterparts, sufficient in number for distribution to
the Lenders and Borrowers;
(2) an original Revolving Loan Note executed by each
Borrower in favor of each Lender, in a principal amount equal to that Lender's
Pro Rata Share of the Revolving Commitment;
(3) an original Term Loan Note A, Term Loan Note B,
and Convertible Note executed by each Borrower in favor of each Lender and in a
principal amount equal to such Lender's Pro Rate Share of the principal amount
thereof;
(4) A Global Reaffirmation and Amendment Agreement in
the form of Exhibit K ("GLOBAL MODIFICATION") executed by each Borrower,
Borrower Guarantor, Subsidiary Guarantor, each party to a Pledge Agreement, and
each party to a Security Agreement, and the filing of all necessary documents in
the public records in connection therewith;
(5) with respect to each Borrower and any of its
respective Subsidiaries that is a Party to any Loan Document, such documentation
as the Administrative Agent may reasonably require to establish the due
organization, valid existence and good standing of such Person, qualification to
engage in business in each material jurisdiction in which it is engaged in
business or required to be so qualified, such Person's authority to execute,
deliver and perform the Loan Documents to which it is a Party, the identity,
authority and capacity of each Responsible Official thereof authorized to act on
its behalf, including certified copies of articles of incorporation and
amendments thereto, bylaws and amendments thereto, certificates of good
standing, certificates of corporate resolutions, incumbency certificates,
Certificates of Responsible Officials, and the like, in each case to the extent
applicable in the relevant jurisdiction;
(6) the written opinion of Orrick, Herrington &
Sutcliffe LLP, in form and substance reasonably satisfactory to Administrative
Agent, which shall reaffirm its opinion rendered in connection with the Existing
Agreement, and cover such additional matters as the Administrative Agent shall
request;
(7) a Certificate of the chief financial officer of
each of the Borrowers, certifying that the representations contained in Article
V are true and correct in all material respects;
(8) a release, in the form of Exhibit L (the
"Release");
(9) the Registration Rights Agreement; and
(10) such other assurances, certificates, documents,
consents or opinions as the Administrative Agent or the Requisite Lenders
reasonably may require.
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(b) The Fees payable pursuant to Section 3.4 shall have been
paid.
(c) No material action, suit, proceeding or investigation
shall be pending against any Borrower; no law, regulation, judgment or court
order shall be applicable that restrains, prevents or imposes materially adverse
conditions upon the making of the Loans, and each Borrower and Subsidiary
Guarantor shall have received all governmental and Material third party
approvals necessary for such Party's execution of the Loan Documents to which it
is a party.
(d) No circumstance or event shall have occurred that
constitutes a Material Adverse Effect since June 30, 2000.
(e) The reasonable costs and expenses of the Administrative
Agent in connection with the preparation of the Loan Documents payable pursuant
to Section 12.3, and invoiced with supporting detail to the Borrowers prior to
the Closing Date, shall have been paid.
(f) The representations and warranties of each Borrower
contained in Article V of this Agreement and in each other Loan Document to
which such Borrower is a party shall be true and correct in all material
respects.
(g) Borrowers and any other Parties shall be in compliance
with all the terms and provisions of the Loan Documents, and no Default or Event
of Default shall have occurred and be continuing.
(h) [Intentionally Omitted]
(i) [Intentionally Omitted]
(j) On or prior to the Closing Date, the Lenders shall have
entered into the Shareholders Agreement, and the Borrowers shall have received a
fairness opinion from an independent valuation firm selected by Day Runner and
reasonably acceptable to Agent concluding that the issuance of the Convertible
Notes and the consideration to be paid by the Lenders upon conversion are fair
to Day Runner from a financial point of view.
(k) All legal matters relating to the Loan Documents shall be
reasonably satisfactory to the Administrative Agent and its counsel.
(l) The Lenders shall return the notes issued under the
Existing Agreement at the time Borrowers deliver the Notes described in Section
9.1(a)(3).
9.2 REVOLVING LOANS. The obligation of each Lender to make any
Revolving Loan is subject to the Effective Date having occurred, and to the
following conditions precedent (unless the Requisite Lenders or, in any case
where the approval of all of the Lenders is required pursuant to Section 12.2,
all of the Lenders, in their sole and absolute discretion, shall agree
otherwise):
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(a) Except for representations and warranties which expressly
speak as of a particular date, the representations and warranties contained in
Article V shall be true and correct in all material respects on and as of the
date of the Loan as though made on that date;
(b) No Default or Event of Default shall have occurred and be
continuing;
(c) Borrowers' operating results as set forth in the most
recent financial information provided in accordance with Section 8.1. are not
materially different than as set forth in the Projections;
(d) No circumstance or event shall have occurred that
constitutes a Material Adverse Effect since June 30, 2000; and
(e) the date of any requested Revolving Loan is on or after
February 1, 2001, and on or before March 30, 2002.
ARTICLE X.
EVENTS OF DEFAULT AND REMEDIES UPON EVENT OF DEFAULT
10.1 EVENTS OF DEFAULT. The existence or occurrence and continuation
of any one or more of the following events, whatever the reason therefor and
under any circumstances whatsoever, shall constitute an Event of Default:
(a) A Borrower fails to pay any principal on any of the Loans,
or any portion thereof, on the date when due, or fails to make any payments
required under Section 3.2 (including the reductions on the Revolving Loans
required under Section 3.1(a)(1) so that the outstanding amount of the Revolving
Loans does not exceed the maximum permitted under Section 2.1 on or before the
date when due; or
(b) A Borrower fails to pay any interest on any of the Loans,
or any fees under Sections 3.3 or 3.4, or any portion thereof, within three (3)
Banking Days after the date when due; or fails to pay any other fee or amount
payable to the Lenders under any Loan Document, or any portion thereof, within
ten (10) Banking Days after demand therefor; or
(c) A Borrower fails to comply with any of the covenants
contained in Articles IV and VII, or with Sections 6.2, 6.5, 6.6, 6.9, 6.13,
6.14 (other than Section 6.14(c)), 6.15, 6.16 or 8.1; or
(d) A Borrower or any other Party fails to perform or observe
any other covenant or agreement (not specified in clause (a), (b) and (c) above)
contained in any Loan Document on its part to be performed or observed within
thirty (30) days after the occurrence thereof; or
(e) Any representation or warranty of any Borrower or any
Subsidiary Guarantor made in any Loan Document, or in any certificate or other
writing delivered by any
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Borrower or any Subsidiary Guarantor pursuant to any Loan Document, proves to
have been incorrect when made or reaffirmed in any material respect; or
(f) A Borrower (i) fails to pay the principal, or any
principal installment, of any present or future Indebtedness of $50,000 or more,
or any guaranty of present or future Indebtedness of $50,000 or more, on its
part to be paid, when due (or within any stated grace period), whether at the
stated maturity, upon acceleration, by reason of required prepayment or
otherwise or (ii) fails to perform or observe any other term, covenant or
agreement on its part to be performed or observed, or suffers any event of
default to occur, in connection with any present or future Indebtedness of
$50,000 or more, or of any guaranty of present or future Indebtedness of $50,000
or more, if as a result of such failure or sufferance any holder or holders
thereof (or an agent or trustee on its or their behalf) has the right to declare
such Indebtedness due before the date on which it otherwise would become due or
the right to require a Borrower to redeem or purchase, or offer to redeem or
purchase, all or any portion of such Indebtedness; or
(g) Any Loan Document, at any time after its execution and
delivery and for any reason other than the agreement or action (or omission to
act) of the Administrative Agent or the Lenders or satisfaction in full of all
the Obligations, ceases to be in full force and effect or is declared by a court
of competent jurisdiction to be null and void, invalid or unenforceable in any
respect which is materially adverse to the interests of the Lenders; or any
Party thereto denies in writing that it has any or further liability or
obligation under any Loan Document, or purports to revoke, terminate or rescind
same; or
(h) Any Change in Control occurs; or
(i) A final judgment against any Borrower or any Subsidiary
Guarantor is entered for the payment of money in excess of $500,000 (not covered
by insurance or for which an insurer has reserved its rights) and, absent
procurement of a stay of execution, such judgment remains unsatisfied for thirty
(30) calendar days after the date of entry of judgment, or in any event later
than five (5) days prior to the date of any proposed sale thereunder; or any
writ or warrant of attachment or execution or similar process is issued or
levied against the Property of any such Person and is not released, vacated or
fully bonded within thirty (30) calendar days after its issue or levy; or
(j) A Borrower or any Subsidiary Guarantor institutes or
consents to the institution of any proceeding under a Debtor Relief Law relating
to it or to all or any material part of its Property, or is unable or admits in
writing its inability to pay its debts as they mature, or makes an assignment
for the benefit of creditors; or applies for or consents to the appointment of
any receiver, trustee, custodian, conservator, liquidator, rehabilitator or
similar officer for it or for all or any material part of its Property; or any
receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar
officer is appointed without the application or consent of that Person and the
appointment continues undischarged or unstayed for sixty (60) calendar days; or
any proceeding under a Debtor Relief Law relating to any such Person or to all
or any part of its Property is instituted without the consent of that Person and
continues undismissed or unstayed for sixty (60) calendar days; or
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(k) The occurrence of an Event of Default (as such term is or
may hereafter be specifically defined in any other Loan Document) under any
other Loan Document; or
(1) Any Pension Plan maintained by any Borrower is finally
determined by the PBGC to have a material "accumulated funding deficiency" as
that term is defined in Section 302 of ERISA in excess of an amount equal to 5%
of the consolidated total assets of such Borrower as of the most-recently ended
Fiscal Quarter;
(m) Any Lien purported to be created under any Collateral
Document shall cease to be, or shall be asserted by any Borrower or any of its
Subsidiaries not to be, a valid and perfected Lien on any Collateral, with the
priority required by the applicable Collateral Document, except as a result of
the sale or other Disposition of the applicable Collateral in a transaction
permitted under the Loan Documents; or
(n) The board of directors of Day Runner fails to approve on
or before December 30, 2000, for any reason whatsoever, the issuance of the
Conversion Stock pursuant to the terms of this Agreement.
10.2 REMEDIES UPON EVENT OF DEFAULT. Without limiting any other
rights or remedies of the Administrative Agent or the Lenders provided for
elsewhere in this Agreement, or the other Loan Documents, or by applicable
Law, or in equity, or otherwise:
(a) Upon the occurrence, and during the continuance, of any
Event of Default other than an Event of Default described in Section 10.1(j)):
(1) the Administrative Agent may, and at the request of the
Requisite Lenders shall, by written notice to the Borrowers, declare that all
or any portion of the Revolving Commitment and all other obligations of the
Lenders and the Issuing Bank under the Revolving Commitment are terminated;
and
(2) the Administrative Agent may, and at the request of the
Requisite Lenders shall, declare all or any part of the unpaid principal of
all Loans, all interest accrued and unpaid thereon and all other amounts
payable under the Loan Documents to be forthwith due and payable, and shall
notify each Borrower thereof, whereupon the same shall become and be
forthwith due and payable, without protest, presentment, notice of dishonor,
demand or further notice of any kind, all of which are expressly waived by
each Borrower.
(b) Upon the occurrence of any Event of Default described in
Section 10.1(j)):
(1) the Revolving Commitment and all other obligations of
the Lenders shall terminate without notice to or demand upon any Borrower,
which are expressly waived by each Borrower; and
(2) the unpaid principal of all Loans, all interest accrued
and unpaid thereon and all other amounts payable under the Loan Documents
shall be forthwith due and payable, without notice of nonpayment, protest,
presentment, notice of dishonor, demand or further notice of any kind, all of
which are expressly waived by each Borrower.
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(c) Upon the occurrence and during the continuation of any
Event of Default, the Lenders and the Administrative Agent, or any of them,
without notice to (except as expressly provided for in any Loan Document) or
demand upon any Borrower, which are expressly waived by each Borrower, may
proceed (but only with the consent of the Requisite Lenders) to protect,
exercise and enforce their rights and remedies under the Loan Documents against
each Borrower and any other Party and such other rights and remedies as are
provided by Law or equity.
(d) The order and manner in which the Lenders' rights and
remedies are to be exercised shall be determined by the Administrative Agent in
its sole discretion, unless instructed by the Requisite Lenders, in which case,
by the Requisite Lenders in their sole discretion, and all payments received by
the Administrative Agent and the Lenders, or any of them, during the
continuation of an Event of Default, shall be applied first to the costs and
expenses (including reasonable attorneys' fees and disbursements and the
reasonably allocated costs of attorneys employed by the Administrative Agent on
behalf of the Lender, or by any Lender) of the Administrative Agent and of the
Lenders, and thereafter paid in the order specified in Section 3.18. Regardless
of how each Lender may treat payments for the purpose of its own accounting, for
the purpose of computing Borrower's Obligations hereunder and under the Notes,
payments during the continuation of an Event of Default shall be applied first,
to the costs and expenses of the Administrative Agent and the Lenders, as set
forth above, second, in the order specified in Section 3.18. No application of
payments will cure any Event of Default, or prevent acceleration, or continued
acceleration, of amounts payable under the Loan Documents, or prevent the
exercise, or continued exercise, of rights or remedies of the Lenders hereunder
or thereunder or at Law or in equity.
ARTICLE XI.
THE ADMINISTRATIVE AGENT
11.1 APPOINTMENT AND AUTHORIZATION. Subject to Section 11.8, each
Lender hereby irrevocably appoints and authorizes the Administrative Agent to
take such action as agent on its behalf and to exercise such powers under the
Loan Documents as are delegated to the Administrative Agent by the terms thereof
or are reasonably incidental, as determined by the Administrative Agent,
thereto. This appointment and authorization is intended solely for the purpose
of facilitating the servicing of the Loans and does not constitute appointment
of the Administrative Agent as trustee for any Lender or as representative of
any Lender for any other purpose and, except as specifically set forth in the
Loan Documents to the contrary, the Administrative Agent shall take such action
and exercise such powers only in an administrative and ministerial capacity.
11.2 ADMINISTRATIVE AGENT AND AFFILIATES. Wells Fargo Bank, National
Association (and each successor Administrative Agent) has the same rights and
powers under the Loan Documents as any other Lender and may exercise the same as
though it were not the Administrative Agent, and the term "Lender" or "Lenders"
includes Wells Fargo Bank, National Association in its individual capacity.
Wells Fargo Bank, National Association (and each successor Administrative Agent)
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of banking, trust or other business with any Borrower, any
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Subsidiary thereof, or any Affiliate of any Borrower or any Subsidiary thereof,
as if it were not the Administrative Agent and without any duty to account
therefor to the Lenders. Wells Fargo Bank, National Association (and each
successor Administrative Agent) need not account to any other Lender for any
monies received by it for reimbursement of its costs and expenses as
Administrative Agent hereunder, or (subject to Section 12.10) for any monies
received by it in its capacity as a Lender hereunder. The Administrative Agent
shall not be deemed to hold a fiduciary relationship with any Lender and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or otherwise exist against the
Administrative Agent.
11.3 LENDERS' CREDIT DECISIONS. Each Lender agrees that it has,
independently and without reliance upon the Administrative Agent, any other
Lender or the directors, officers, agents, employees or attorneys of the
Administrative Agent or of any other Lender, and instead in reliance upon
information supplied to it by or on behalf of the Borrowers and upon such other
information as it has deemed appropriate, made its own independent credit
analysis and decision to enter into this Agreement. Each Lender also agrees that
it shall, independently and without reliance upon the Administrative Agent, any
other Lender or the directors, officers, agents, employees or attorneys of the
Administrative Agent or of any other Lender, continue to make its own
independent credit analyses and decisions in acting or not acting under the Loan
Documents.
11.4 ACTION BY ADMINISTRATIVE AGENT.
(a) Absent actual knowledge of the Administrative Agent of the
existence of a Default, the Administrative Agent may assume that no Default has
occurred and is continuing, unless the Administrative Agent (or the Lender that
is then the Administrative Agent) has received notice from a Borrower stating
the nature of the Default or has received notice from a Lender stating the
nature of the Default and that such Lender considers the Default to have
occurred and to be continuing.
(b) The Administrative Agent has only those obligations under
the Loan Documents as are expressly set forth therein.
(c) Except for any obligation expressly set forth in the Loan
Documents and as long as the Administrative Agent may assume that no Event of
Default has occurred and is continuing, the Administrative Agent may, but shall
not be required to, exercise its discretion to act or not act, except that the
Administrative Agent shall be required to act or not act upon the instructions
of the Requisite Lenders (or of all the Lenders, to the extent required by
Section 12.2) and those instructions shall be binding upon the Administrative
Agent and all the Lenders, PROVIDED that the Administrative Agent shall not be
required to act or not act if to do so would be contrary to any Loan Document or
to applicable Law or would result, in the reasonable judgment of the
Administrative Agent, in substantial risk of liability to the Administrative
Agent.
(d) If the Administrative Agent has received a notice specified
in clause (a), the Administrative Agent shall immediately give notice thereof
to the Lenders and shall act or not act upon the instructions of the
Requisite Lenders (or of all the Lenders, to the extent required by Section
12.2), PROVIDED that the Administrative Agent shall not be required to act or
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not act if to do so would be contrary to any Loan Document or to applicable
Law or would result, in the reasonable judgment of the Administrative Agent,
in substantial risk of liability to the Administrative Agent, and except that
if the Requisite Lenders (or all the Lenders, if required under Section 12.2)
fail, for five (5) Banking Days after the receipt of notice from the
Administrative Agent, to instruct the Administrative Agent, then the
Administrative Agent, in its sole discretion, may act or not act as it deems
advisable for the protection of the interests of the Lenders.
(e) The Administrative Agent shall have no liability to any
Lender for acting, or not acting, as instructed by the Requisite Lenders (or all
the Lenders, if required under Section 11.2), notwithstanding any other
provision hereof.
11.5 LIABILITY OF ADMINISTRATIVE AGENT. Neither the Administrative
Agent nor any of its directors, officers, agents, employees or attorneys shall
be liable for any action taken or not taken by them under or in connection with
the Loan Documents, except for their own gross negligence or willful misconduct.
Without limitation on the foregoing, the Administrative Agent and its directors,
officers, agents, employees and attorneys:
(a) May treat the payee of any Note as the holder thereof
until the Administrative Agent receives notice of the assignment or transfer
thereof, in form satisfactory to the Administrative Agent, signed by the payee,
and may treat each Lender as the owner of that Lender's interest in the
Obligations for all purposes of this Agreement until the Administrative Agent
receives notice of the assignment or transfer thereof, in form satisfactory to
the Administrative Agent, signed by that Lender;
(b) May consult with legal counsel (including in-house legal
counsel), accountants (including in-house accountants) and other professionals
or experts selected by it, or with legal counsel, accountants or other
professionals or experts for Borrowers and/or their Subsidiaries or the Lenders,
and shall not be liable for any action taken or not taken by it in good faith in
accordance with any advice of such legal counsel, accountants or other
professionals or experts;
(c) Shall not be responsible to any Lender for any statement,
warranty or representation made in any of the Loan Documents or in any notice,
certificate, report, request or other statement (written or oral) given or made
in connection with any of the Loan Documents;
(d) Except to the extent expressly set forth in the Loan
Documents, shall have no duty to ask or inquire as to the performance or
observance by the Borrowers or their respective Subsidiaries of any of the
terms, conditions or covenants of any of the Loan Documents or to inspect any
collateral or any Property, books or records of the Borrowers or their
Subsidiaries;
(e) Will not be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness, effectiveness,
sufficiency or value of any Loan Document, any other instrument or writing
furnished pursuant thereto or in connection therewith, or any Collateral or the
perfection of any Lien thereon;
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(f) Will not incur any liability by acting or not acting in
reliance upon any Loan Document, notice, consent, certificate, statement,
request or other instrument or writing believed in good faith by it to be
genuine and signed or sent by the proper party or parties; and
(g) Will not incur any liability for any arithmetical error in
computing any amount paid or payable by any Borrower or any Subsidiary or
Affiliate thereof or paid or payable to or received or receivable from any
Lender under any Loan Document, including, without limitation, principal,
interest, commitment fees, Loans and other amounts; PROVIDED that, promptly upon
discovery of such an error in computation, the Administrative Agent, the Lenders
and (to the extent applicable) any Borrower and/or its Subsidiaries or
Affiliates shall make such adjustments as are necessary to correct such error
and to restore the parties to the position that they would have occupied had the
error not occurred.
11.6 INDEMNIFICATION. Each Lender shall, ratably in accordance with
its proportion of the aggregate principal amount of the Loans outstanding,
indemnify and hold the Administrative Agent and its directors, officers,
agents, employees and attorneys harmless against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever (including
reasonable attorneys' fees and disbursements and allocated costs of attorneys
employed by the Administrative Agent) that may be imposed on, incurred by or
asserted against it or them in any way relating to or arising out of the Loan
Documents (other than losses incurred by reason of the failure of any
Borrower to pay the Indebtedness represented by the Notes) or any action
taken or not taken by it as Administrative Agent thereunder, except such as
result from its own gross negligence or willful misconduct. Without
limitation on the foregoing, each Lender shall reimburse the Administrative
Agent upon demand for that Lender's Pro Rata Share of any out-of-pocket cost
or expense incurred by the Administrative Agent in connection with the
negotiation, preparation, execution, delivery, amendment, waiver,
restructuring, reorganization (including a bankruptcy reorganization),
enforcement or attempted enforcement of the Loan Documents, to the extent
that any Borrower or any other Party is required by Section 12.3 to pay that
cost or expense but fails to do so upon demand. Nothing in this Section 11.6
shall entitle the Administrative Agent or any indemnitee referred to above to
recover any amount from the Lenders if and to the extent that such amount has
theretofore been recovered from a Borrower or any of its Subsidiaries. To the
extent that the Administrative Agent or any indemnitee referred to above is
later reimbursed such amount by a Borrower or any of its Subsidiaries, it
shall return the amounts paid to it by the Lenders in respect of such amount.
11.7 SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may,
and at the request of the Requisite Lenders shall, resign as Administrative
Agent upon reasonable notice to the Lenders and each Borrower effective upon
acceptance of appointment by a successor Administrative Agent. If the
Administrative Agent shall resign as Administrative Agent under this
Agreement, the Requisite Lenders shall appoint from among the Lenders a
successor Administrative Agent for the Lenders, which successor
Administrative Agent shall be approved by each Borrower (and such approval
shall not be unreasonably withheld or delayed). If no successor
Administrative Agent is appointed prior to the effective date of the
resignation of the Administrative Agent, the Administrative Agent may
appoint, after consulting with the Lenders and each Borrower, a successor
Administrative Agent from among the Lenders. Upon the
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acceptance of its appointment as successor Administrative Agent hereunder,
such successor Administrative Agent shall succeed to all the rights, powers
and duties of the retiring Administrative Agent and the term "Administrative
Agent" shall mean such successor Administrative Agent and the retiring
Administrative Agent's appointment, powers and duties as Administrative Agent
shall be terminated. After any retiring Administrative Agent's resignation
hereunder as Administrative Agent, the provisions of this Article XI, and
Sections 12.3, 12.11 and 12.22, shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Administrative Agent under
this Agreement. Notwithstanding the foregoing, if (a) the Administrative
Agent has not been paid its agency fees under Section 3.4 or has not been
reimbursed for any expense reimbursable to it under Section 12.3, in either
case for a period of at least one (1) year and (b) no successor
Administrative Agent has accepted appointment as Administrative Agent by the
date which is thirty (30) days following a retiring Administrative Agent's
notice of resignation, the retiring Administrative Agent's resignation shall
nevertheless thereupon become effective and the Lenders shall perform all of
the duties of the Administrative Agent hereunder until such time, if any, as
the Requisite Lenders appoint a successor Administrative Agent as provided
for above.
11.8 NO OBLIGATIONS OF BORROWERS. Nothing contained in this Article
XI shall be deemed to impose upon any Borrower any obligation in respect of
the due and punctual performance by the Administrative Agent of its
obligations to the Lenders under any provision of this Agreement, and no
Borrower shall have liability to the Administrative Agent or any of the
Lenders in respect of any failure by the Administrative Agent or any Lender
to perform any of its obligations to the Administrative Agent or the Lenders
under this Agreement. Without limiting the generality of the foregoing, where
any provision of this Agreement relating to the payment of any amounts due
and owing under the Loan Documents provides that such payments shall be made
by a Borrower to the Administrative Agent for the account of the Lenders,
such Borrower's obligations to the Lenders in respect of such payments shall
be deemed to be satisfied upon the making of such payments to the
Administrative Agent in the manner provided by this Agreement.
ARTICLE XII.
MISCELLANEOUS
12.1 CUMULATIVE REMEDIES; NO WAIVER. The rights, powers, privileges
and remedies of the Administrative Agent and the Lenders provided herein or
in any Note or other Loan Document are cumulative and not exclusive of any
right, power, privilege or remedy provided by Law or equity. No failure or
delay on the part of the Administrative Agent or any Lender in exercising any
right, power, privilege or remedy may be, or may be deemed to be, a waiver
thereof; nor may any single or partial exercise of any right, power,
privilege or remedy preclude any other or further exercise of the same or any
other right, power, privilege or remedy. The terms and conditions of Article
XI (other than Section 11.8) hereof are inserted for the sole benefit of the
Administrative Agent and the Lenders; the same may be waived in whole or in
part, with or without terms or conditions, in respect of any Loan without
prejudicing the Administrative Agent's or the Lenders' rights to assert them
in whole or in part in respect of any other Loan.
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12.2 AMENDMENTS; CONSENTS. No amendment, modification, supplement,
extension, termination or waiver of any provision of this Agreement or any other
Loan Document, no approval or consent thereunder (other than a consent relating
to a matter expressly stated by this Agreement to require only the
Administrative Agent's consent), and no consent to any departure by any Borrower
or any other Party therefrom, may in any event be effective unless in writing
signed by the Administrative Agent with the written approval of the Requisite
Lenders (and, in the case of any amendment, modification or supplement of or to
any Loan Document to which a Borrower is a Party, signed by such Borrower, and,
in the case of any amendment, modification or supplement to Article XI, signed
by the Administrative Agent), and then only in the specific instance and for the
specific purpose given; AND, without the approval in writing of the
Supermajority Lenders, no amendment, modification, supplement, termination or
waiver of the covenants contained in any of Sections 4.4(c) and (e), 7.12, 7.13
and 7.19 shall be effective; AND, without the approval in writing of all the
Lenders, no amendment, modification, supplement, termination, waiver or consent
(other than a consent relating to a matter expressly stated by this Agreement to
require only the Administrative Agent's consent) may be effective:
(a) To amend or modify the principal of, or the amount of
principal, principal prepayments or the rate of interest payable on, any Loan or
Note, or the amount of the Revolving Commitment, the Available Amount or the Pro
Rata Share of any Lender or the amount of any commitment fee payable to any
Lender, or any other fee or amount payable to any Lender under the Loan
Documents or to waive an Event of Default consisting of the failure of any
Borrower to pay when due principal, interest or any fee due to the Lenders or
the Issuing Bank;
(b) To postpone any date fixed for any payment of principal
of, prepayment of principal of or any installment of interest on, any Loan or
Note or any installment of any fee due to the Lenders or the Issuing Bank, or to
extend the term of the Revolving Commitment;
(c) To amend the provisions of the definition of "Requisite
Lenders," "Supermajority Lenders," or "Maturity Date;"
(d) To release any Subsidiary Guarantor from its obligations
under the Subsidiary Guaranty; or
(e) To amend or waive any provision of Article IX or this
Section 12.2; or
(f) To amend any provision of this Agreement that expressly
requires the consent or approval of all the Lenders; or
(g) To release any Collateral (other than in connection with
any sale or other Disposition permitted under the Loan Documents) that,
individually or in the aggregate, constitutes more than one-half of one percent
(0.05%) of the net book value of the consolidated assets of Day Runner and its
Subsidiaries as set forth in financial statements delivered to the
Administrative Agent and the Lenders pursuant to Section 8.1 for the Fiscal Year
ended June 30, 2000;
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(h) To waive compliance with Section 6.16, except that if Day
Runner has failed to secure the Major Accounts Payables Agreement from only one
of its four major customers, this failure may be waived by the Supermajority
Lenders; or
(i) To waive an Event of Default under Section 10.1(n)
consisting of the failure of the board of directors of Day Runner to approve on
or before December 30, 2000, for any reason whatsoever, the issuance of the
Conversion Stock pursuant to the terms of this Agreement.
Any amendment, modification, supplement, termination, waiver or consent pursuant
to this Section 12.2 shall apply equally to, and shall be binding upon, all the
Lenders and the Administrative Agent.
12.3 COSTS, EXPENSES AND TAXES. Borrowers, jointly and severally,
shall pay within ten (10) Banking Days after demand, accompanied by an
invoice therefor, the reasonable costs and expenses of the Administrative
Agent in connection with the negotiation, preparation, syndication, execution
and delivery of the Loan Documents and any amendment thereto or waiver
thereof. Borrowers, jointly and severally, shall also pay on demand,
accompanied by an invoice therefor, the reasonable costs and expenses of the
Administrative Agent and the Lenders in connection with the restructuring,
reorganization (including a bankruptcy reorganization of any Borrower or any
of their respective Subsidiaries, and including the restructuring reflected
in this Loan Agreement and the Loan Documents) and enforcement or attempted
enforcement of the Loan Documents, and any matter related thereto. The
foregoing costs and expenses shall include any applicable filing fees,
recording fees, search fees, and other out-of-pocket expenses and the
reasonable fees and out-of-pocket expenses of any legal counsel (including
reasonably allocated costs of any in-house legal counsel of the
Administrative Agent or any Lender), independent public accountants and other
outside experts retained by the Administrative Agent or any Lender, whether
or not such costs and expenses are incurred or suffered by the Administrative
Agent or any Lender in connection with or during the course of any bankruptcy
or insolvency proceedings of any Borrower or any Subsidiary thereof.
Borrowers, jointly and severally, shall pay any and all documentary and other
taxes, excluding (a) taxes imposed on or measured in whole or in part by a
Lender's overall net income or net worth imposed on it by (i) any
jurisdiction (or political subdivision thereof) in which it is organized or
maintains its principal office or (ii) any jurisdiction (or political
subdivision thereof) in which it is "doing business" or (b) any withholding
taxes or other taxes based on gross income imposed by the United States of
America for any period with respect to which it has failed to provide
Borrowers with the appropriate form or forms required by Section 12.21, to
the extent such forms are then required by applicable Laws, and all costs,
expenses, fees and charges payable or determined to be payable in connection
with the filing or recording of this Agreement, any other Loan Document or
any other instrument or writing to be delivered hereunder or thereunder, or
in connection with any transaction pursuant hereto or thereto, and shall
reimburse, hold harmless and indemnify on the terms set forth in 12.11 the
Administrative Agent and the Lenders from and against any and all loss,
liability or legal or other expense with respect to or resulting from any
delay in paying or failure to pay any such tax, cost, expense, fee or charge
or that any of them may suffer or incur by reason of the failure of any Party
to perform any of its Obligations.
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12.4 NATURE OF LENDERS' OBLIGATIONS. The obligations of the Lenders
hereunder are several and not joint or joint and several. Nothing contained in
this Agreement or any other Loan Document and no action taken by the
Administrative Agent or the Lenders or any of them pursuant hereto or thereto
may, or may be deemed to, make the Lenders a partnership, an association, a
joint venture or other entity, either among themselves or with the Borrowers or
any Affiliate of any of the Borrowers. A default by any Lender will not increase
the Pro Rata Share of the Revolving Commitment attributable to any other Lender.
Any Lender not in default may, if it desires, assume in such proportion as the
nondefaulting Lenders agree the obligations of any Lender in default, but is not
obligated to do so. The Administrative Agent agrees that it will use its best
efforts either to induce promptly the other Lenders to assume the obligations of
a Lender in default or to obtain promptly another Lender, reasonably
satisfactory to the Borrowers, to replace such a Lender in default.
12.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties contained herein or in any other Loan Document, or in any
certificate or other writing delivered by or on behalf of any one or more of the
Parties to any Loan Document, will survive the making of the Loans hereunder and
the execution and delivery of the Notes, and have been or will be relied upon by
the Administrative Agent and each Lender, notwithstanding any investigation made
by the Administrative Agent or any Lender or on their behalf.
12.6 NOTICES. Except as otherwise expressly provided in the Loan
Documents, all notices, requests, demands, directions and other communications
provided for hereunder or under any other Loan Document must be in writing and
must be mailed, telegraphed, telecopied, dispatched by commercial courier or
delivered to the appropriate party at the address set forth on the signature
pages of this Agreement or other applicable Loan Document or, as to any party to
any Loan Document, at any other address as may be designated by it in a written
notice sent to all other parties to such Loan Document in accordance with this
Section. Except as otherwise expressly provided in any Loan Document, if any
notice, request, demand, direction or other communication required or permitted
by any Loan Document is given by mail it will be effective on the earlier of
receipt or the fourth Banking Day after deposit in the United States mail with
first class or airmail postage prepaid; if given by telegraph or cable, when
delivered to the telegraph company with charges prepaid; if given by telecopier,
when sent; if dispatched by commercial courier, on the scheduled delivery date;
or if given by personal delivery, when delivered.
12.7 EXECUTION OF LOAN DOCUMENTS. Unless the Administrative Agent
otherwise specifies with respect to any Loan Document, (a) this Agreement and
any other Loan Document may be executed in any number of counterparts and any
party hereto or thereto may execute any counterpart, each of which when executed
and delivered will be deemed to be an original and all of which counterparts of
this Agreement or any other Loan Document, as the case may be, when taken
together will be deemed to be but one and the same instrument and (b) execution
of any such counterpart may be evidenced by a telecopier transmission of the
signature of such party. The execution of this Agreement or any other Loan
Document by any party hereto or thereto will not become effective until
counterparts hereof or thereof, as the case may be, have been executed by all
the parties hereto or thereto.
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12.8 BINDING EFFECT; ASSIGNMENT.
(a) This Agreement and the other Loan Documents to which each
Borrower is a Party will be binding upon and inure to the benefit of Borrowers,
the Administrative Agent, each of the Lenders, and their respective successors
and assigns, except that no Borrower may assign its rights hereunder or
thereunder or any interest herein or therein without the prior written consent
of all the Lenders. Any Lender may at any time pledge any of its Notes or any
other instrument evidencing its rights as a Lender under this Agreement to a
Federal Reserve Bank, but no such pledge shall release that Lender from its
obligations hereunder or grant to such Federal Reserve Bank the rights of a
Lender hereunder absent foreclosure of such pledge.
(b) From time to time following the Effective Date, each
Lender may assign to one or more Persons all or any portion of its Pro Rata
Share of the Revolving Commitment and/or Term Loans and/or Convertible Loans
and/or Conversion Stock; provided that (i) such Person, if not then a Lender or
an Affiliate of the assigning Lender, shall be approved by the Administrative
Agent and (if no Event of Default then exists) the Borrowers (neither of which
approvals shall be unreasonably withheld or delayed), (ii) such assignment shall
be evidenced by an Assignment and Acceptance, a copy of which shall be furnished
to the Administrative Agent as hereinbelow provided, (iii) except in the case of
an assignment to an Affiliate of the assigning Lender, to another Lender or of
the entire remaining Revolving Commitment of the assigning Lender or all of the
outstanding Term Loans of such Lender or all of the outstanding Convertible
Loans of such Lender, the assignment shall assign the same percentage of the
assigning Lender's Pro Rata Share of the Revolving Commitment, the Term Loans,
the Convertible Loans and the Conversion Stock, owing to or owned by such
assigning Lender, and shall not assign a Pro Rata Share of the Revolving
Commitment, the Term Loans and the Convertible Loans that, in the aggregate, is
equivalent to less than $5,000,000 and (iv) the effective date of any such
assignment shall be as specified in the Assignment and Acceptance, but not
earlier than the date which is five (5) Banking Days after the date the
Administrative Agent has received the Assignment and Acceptance. Upon the
effective date of such Assignment and Acceptance, the Person named therein shall
be a Lender for all purposes of this Agreement, with the Pro Rata Share of the
Revolving Commitment, Term Loans and Convertible Loans therein set forth and, to
the extent of such Pro Rata Share, the assigning Lender shall be released from
its further obligations under this Agreement. Each Borrower agrees that it shall
execute and deliver (against delivery by the assigning Lender to each Borrower
of its Revolving Loan Notes, Term Loan Notes, Convertible Notes, PIK Interest
Notes and Conversion Stock) to such assignee Lender, Revolving Loan Notes, Term
Loan Notes, Convertible Notes, PIK Interest Notes and Conversion Stock
evidencing that assignee Lender's Pro Rata Share of the Revolving Commitment,
Term Loans and Convertible Loans and to the assigning Lender, Revolving Loan
Notes, Term Loan Notes, PIK Interest Notes and Conversion Stock and Convertible
Notes evidencing the remaining balance Pro Rata Share retained by the assigning
Lender.
(c) By executing and delivering an Assignment and Acceptance,
the Person constituting the assignee thereunder acknowledges and agrees that:
(i) other than the representation and warranty that it is the legal and
beneficial owner of the Pro Rata Share of the Revolving Commitment, Term Loans,
Convertible Loans, and Conversion Stock being assigned thereby free and clear of
any adverse claim, the assigning Lender has made no representation or
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warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness or sufficiency
of this Agreement or any other Loan Document; (ii) the assigning Lender has
made no representation or warranty and assumes no responsibility with respect
to the financial condition of the Borrowers or the performance by the
Borrowers of the Obligations; (iii) it has received a copy of this Agreement,
together with copies of the most recent financial statements delivered
pursuant to Section 8.1 and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (iv) it will, independently and without
reliance upon the Administrative Agent or any Lender and based on such
documents and information as it shall deem appropriate at the time, continue
to make its own credit decisions in taking or not taking action under this
Agreement; (v) it appoints and authorizes the Administrative Agent to take
such action and to exercise such powers under this Agreement as are delegated
to the Administrative Agent by this Agreement; and (vi) it will perform in
accordance with their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as a Lender.
(d) The Administrative Agent shall maintain at the
Administrative Agent's Office a copy of each Assignment and Acceptance delivered
to it and a register (the "Register") of the name and address of each of the
Lenders and the Pro Rata Share of the Revolving Commitment, Term Loans,
Convertible Loans, and Conversion Stock held by each Lender, giving effect to
each Assignment and Acceptance. The Register shall be available during normal
business hours for inspection by any Borrower or any Lender upon reasonable
prior notice to the Administrative Agent. After receipt of a completed
Assignment and Acceptance executed by any Lender and an assignee, and receipt of
an assignment fee of $3,500 from such Lender or assignee, the Administrative
Agent shall, promptly following the effective date thereof, provide to the
Borrowers and the Lenders a revised Schedule 1.1-B giving effect thereto. Each
Borrower, the Administrative Agent and the Lenders shall deem and treat the
Persons listed as Lenders in the Register as the holders and owners of the Pro
Rata Share of the Revolving Commitment, Term Loans, Convertible Loans, and
Conversion Stock listed therein for all purposes hereof, and no assignment or
transfer of any such Pro Rata Share of the Revolving Commitment, Term Loans,
Convertible Loans and Conversion Stock shall be effective, in each case unless
and until an Assignment and Acceptance effecting the assignment or transfer
thereof shall have been accepted by the Administrative Agent and recorded in the
Register as provided above. Prior to such recordation, all amounts owed with
respect to the applicable Pro Rata Share of the Revolving Commitment, Term
Loans, and Convertible Loans shall be owed to the Lender listed in the Register
as the owner thereof, and any request, authority or consent of any Person who,
at the time of making such request or giving such authority or consent, is
listed in the Register as a Lender shall be conclusive and binding on any
subsequent holder, assignee or transferee of the corresponding Pro Rata Share of
the Revolving Commitment, Term Loans and Convertible Loans.
(e) Each Lender may from time to time grant participations to
one or more banks or other financial institutions in a portion of its Pro Rata
Share of the Revolving Commitment, Term Loans, Convertible Loans and Conversion
Stock; provided, however, that (i) such Lender's obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
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(iii) the participating banks or other financial institutions shall not be a
Lender hereunder for any purpose except, if the participation agreement so
provides, for the purposes of Sections 3.6, 3.7, 3.8, 12.11 and 12.22 but only
to the extent that the cost to the Borrowers does not exceed the cost which the
Borrowers would have incurred in respect of such Lender absent the
participation, (iv) the Borrowers, the Administrative Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement, (v)
the participation interest shall be expressed as a percentage of the granting
Lender's Pro Rata Share of the Revolving Commitment, Term Loans, Convertible
Loans, and Conversion Stock respectively, as they then exist and shall not
restrict an increase in the Revolving Commitment, or in the granting Lender's
Pro Rata Share of the Revolving Commitment, so long as the amount of the
participation interest is not affected thereby and (vi) the consent of the
holder of such participation interest shall not be required for amendments or
waivers of provisions of the Loan Documents other than those which (A) extend
the Maturity Date or any other date upon which any payment of money is due to
the Lenders, (B) reduce the rate of interest on any Loan, any fee or any other
monetary amount payable to the Lenders, (C) reduce the amount of any installment
of principal due with respect to any Loan or (D) release any Subsidiary
Guarantor from its obligations under the Subsidiary Guaranty.
(f) Notwithstanding any other restrictions on transfer of
interests contained herein, the Lenders may freely transfer, assign or otherwise
dispose of, or encumber, mortgage, pledge or create a security interest in, any
shares of Conversion Stock registered pursuant to the Registration Rights
Agreement.
12.9 RIGHT OF SETOFF. If an Event of Default has occurred and is
continuing, the Administrative Agent or any Lender may exercise its rights under
applicable Laws and, to the extent permitted by applicable Laws, apply any funds
in any deposit account maintained with it by any Borrower and/or any Property of
any Borrower in its possession against the Obligations.
12.10 SHARING OF SETOFFS. Each Lender severally agrees that if it,
through the exercise of any right of setoff, banker's lien or counterclaim
against any Borrower, or otherwise, receives payment of the Obligations held by
it that is ratably more than any other Lender, through any means, receives in
payment of the Obligations held by that Lender, then, subject to applicable
Laws: (a) the Lender exercising the right of setoff, banker's lien or
counterclaim or otherwise receiving such payment shall purchase, and shall be
deemed to have simultaneously purchased, from each of the other Lenders a
participation in the Obligations held by the other Lenders and shall pay to the
other Lenders a purchase price in an amount so that the share of the Obligations
held by each Lender after the exercise of the right of setoff, banker's lien or
counterclaim or receipt of payment shall be in the same proportion that existed
prior to the exercise of the right of setoff, banker's lien or counterclaim or
receipt of payment; and (b) such other adjustments and purchases of
participations shall be made from time to time as shall be equitable to ensure
that all of the Lenders share any payment obtained in respect of the Obligations
ratably in accordance with each Lender's share of the Obligations immediately
prior to, and without taking into account, the payment; provided that, if all or
any portion of a disproportionate payment obtained as a result of the exercise
of the right of setoff, banker's lien, counterclaim or otherwise is thereafter
recovered from the purchasing Lender by any Borrower or any Person claiming
through or succeeding to the rights of such Borrower, the purchase of a
participation shall be
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rescinded and the purchase price thereof shall be restored to the extent of
the recovery, but without interest. Each Lender that purchases a
participation in the Obligations pursuant to this Section 12.10 shall from
and after the purchase have the right to give all notices, requests, demands,
directions and other communications under this Agreement with respect to the
portion of the Obligations purchased to the same extent as though the
purchasing Lender were the original owner of the Obligations purchased. Each
Borrower expressly consents to the foregoing arrangements and agrees that any
Lender holding a participation in an Obligation so purchased pursuant to this
Section 12.10 may exercise any and all rights of setoff, banker's lien or
counterclaim with respect to the participation as fully as if the Lender were
the original owner of the Obligation purchased.
12.11 INDEMNITY BY BORROWERS. Borrowers jointly and severally agree to
indemnify, save and hold harmless the Administrative Agent and each Lender and
their respective directors, officers, agents, attorneys and employees
(collectively the "Indemnitees") from and against: (a) any and all claims,
demands, actions or causes of action if the claim, demand, action or cause of
action arises out of or relates to any act or omission (or alleged act or
omission) of any Borrower, its Affiliates or any of its officers, directors or
stockholders relating to the Revolving Commitment or the Term Loans, the
Convertible Loans, or the Conversion Stock the use or contemplated use of
proceeds of any Loan, or the relationship of the Borrowers and the Lenders under
this Agreement; (b) any administrative or investigative proceeding by any
Governmental Agency arising out of or related to a claim, demand, action or
cause of action described in clause (a) above; and (c) any and all liabilities,
losses, costs or expenses (including reasonable attorneys' fees and the
reasonably allocated costs of attorneys employed by any Indemnitee and
disbursements of such attorneys and other professional services) that any
Indemnitee suffers or incurs as a result of the assertion of any foregoing
claim, demand, action or cause of action; provided that no Indemnitee shall be
entitled to indemnification for any loss caused by its own gross negligence or
willful misconduct. If any claim, demand, action or cause of action is asserted
against any Indemnitee, such Indemnitee shall promptly notify the Borrowers, but
the failure to so promptly notify the Borrowers shall not affect the Borrowers'
obligations under this Section unless such failure materially prejudices the
Borrowers' right to participate in the contest of such claim, demand, action or
cause of action, as hereinafter provided. Such Indemnitee may (and shall, if
requested by the Borrowers in writing) contest the validity, applicability and
amount of such claim, demand, action or cause of action and shall permit the
Borrowers to participate in such contest. Any Indemnitee that proposes to settle
or compromise any claim or proceeding for which the Borrowers may be liable for
payment of indemnity hereunder shall give the Borrowers written notice of the
terms of such proposed settlement or compromise reasonably in advance of
settling or compromising such claim or proceeding and, so long as no Event of
Default has occurred and is continuing, shall obtain the Borrowers' prior
written consent (which shall not be unreasonably withheld or delayed). In
connection with any claim, demand, action or cause of action covered by this
Section 12.11 against more than one Indemnitee, all such Indemnitees shall be
represented by the same legal counsel (which may be a law firm engaged by the
Indemnitees or attorneys employed by an Indemnitee or a combination of the
foregoing) selected by the Indemnitees and, so long as no Event of Default has
occurred and is continuing, reasonably acceptable to the Borrowers; provided
that if such legal counsel determines in good faith that representing all such
Indemnitees would or is reasonably likely to result in a conflict of
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interest under Laws or ethical principles applicable to such legal counsel,
then to the extent reasonably necessary to avoid such a conflict of interest
or to permit unqualified assertion of such a defense or counterclaim, each
affected Indemnitee shall be entitled to separate representation by legal
counsel selected by that Indemnitee and, so long as no Event of Default has
occurred and is continuing, reasonably acceptable to the Borrowers, with all
such legal counsel using reasonable efforts to avoid unnecessary duplication
of effort by counsel for all Indemnitees; and further provided that the
Administrative Agent (as an Indemnitee) shall at all times be entitled to
representation by separate legal counsel (which may be a law firm or
attorneys employed by the Administrative Agent or a combination of the
foregoing). Any obligation or liability of the Borrowers to any Indemnitee
under this Section 12.11 shall survive the expiration or termination of this
Agreement and the repayment of all Loans and the payment and performance of
all other Obligations owed to the Lenders.
12.12 NONLIABILITY OF THE LENDERS. Each Borrower acknowledges and
agrees that:
(a) Any inspections of any Property of any Borrower and
reports of financial advisors made by or through the Administrative Agent or the
Lenders are for purposes of administration of the Loan only and such Borrower is
not entitled to rely upon the same (whether or not such inspections are at the
expense of such Borrower);
(b) By accepting or approving anything required to be
observed, performed, fulfilled or given to the Administrative Agent or the
Lenders pursuant to the Loan Documents, neither the Administrative Agent nor the
Lenders shall be deemed to have warranted or represented the sufficiency,
legality, effectiveness or legal effect of the same, or of any term, provision
or condition thereof, and such acceptance or approval thereof shall not
constitute a warranty or representation to anyone with respect thereto by the
Administrative Agent or the Lenders;
(c) The relationship between the Borrowers and the
Administrative Agent and the Lenders is, and shall at all times remain, solely
that of borrowers and lenders; neither the Administrative Agent nor the Lenders
shall under any circumstance be construed to be partners or joint venturers of
the Borrowers or their Affiliates; neither the Administrative Agent nor the
Lenders shall under any circumstance be deemed to be in a relationship of
confidence or trust or a fiduciary relationship with the Borrowers or their
Affiliates, or to owe any fiduciary duty to the Borrowers or their Affiliates;
neither the Administrative Agent nor the Lenders undertake or assume any
responsibility or duty to the Borrowers or their Affiliates to select, review,
inspect, supervise, pass judgment upon or inform the Borrowers or their
Affiliates of any matter in connection with their Property or the operations of
the Borrowers or their Affiliates; the Borrowers and their Affiliates shall rely
entirely upon their own judgment with respect to such matters; and any review,
inspection, supervision, exercise of judgment or supply of information
undertaken or assumed by the Administrative Agent or the Lenders in connection
with such matters is solely for the protection of the Administrative Agent and
the Lenders and neither the Borrowers nor any other Person is entitled to rely
thereon; and
(d) The Administrative Agent and the Lenders shall not be
responsible or liable to any Person for any loss, damage, liability or claim of
any kind relating to injury or death
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to Persons or damage to Property caused by the actions, inaction or
negligence of any Borrower and/or its Affiliates and each Borrower hereby
indemnifies and holds the Administrative Agent and the Lenders harmless on
the terms set forth in Section 12.11 from any such loss, damage, liability or
claim.
12.13 NO THIRD PARTIES BENEFITED. This Agreement is made for the
purpose of defining and setting forth certain obligations, rights and duties of
the Borrowers, the Administrative Agent and the Lenders in connection with the
Loans, and is made for the sole benefit of the Borrowers, the Administrative
Agent and the Lenders, and the Administrative Agent's and the Lenders'
successors and assigns. Except as provided in Sections 12.8 and 12.11, no other
Person shall have any rights of any nature hereunder or by reason hereof.
12.14 CONFIDENTIALITY. Each Lender agrees to hold any confidential
information that it may receive from the Borrowers pursuant to this Agreement in
confidence, except for disclosure: (a) to other Lenders or Affiliates of a
Lender; (b) to legal counsel and accountants for the Administrative Agent or any
Lender; (c) to other professional advisors to the Administrative Agent or any
Lender, PROVIDED that the recipient has accepted such information subject to a
confidentiality agreement substantially similar to this Section 12.14; (d) to
regulatory officials having jurisdiction over that Lender; (e) as required by
Law or legal process, PROVIDED that each Lender agrees to notify the Borrowers
of any such disclosures unless prohibited by applicable Laws, or in connection
with any legal proceeding to which that Lender and the Borrowers are adverse
parties; and (f) to another Person in connection with a disposition or proposed
disposition to that Person of all or part of that Lender's interests hereunder
or a participation interest in its Notes. For purposes of the foregoing,
"confidential information" shall mean all Projections, information relating to
acquisitions, information relating to the Borrowers' businesses and any other
information respecting the Borrowers or their Subsidiaries reasonably considered
by the Borrowers to be confidential, other than (i) information previously filed
with any Governmental Agency and available to the public, (ii) information
previously published in any public medium from a source other than, directly or
indirectly, that Lender, and (iii) information previously disclosed by the
Borrowers to any Person not associated with the Borrowers which does not owe a
professional duty of confidentiality to the Borrowers or which has not executed
an appropriate confidentiality agreement with the Borrowers. Nothing in this
Section shall be construed to create or give rise to any fiduciary duty on the
part of the Administrative Agent or the Lenders to the Borrowers.
12.15 FURTHER ASSURANCES. The Borrowers shall, at their expense and
without expense to the Lenders or the Administrative Agent, do, execute and
deliver such further acts and documents as the Requisite Lenders or the
Administrative Agent from time to time reasonably require for the assuring and
confirming unto the Lenders or the Administrative Agent of the rights hereby
created or intended now or hereafter so to be, or for carrying out the intention
or facilitating the performance of the terms of any Loan Document.
12.16 INTEGRATION. This Agreement, together with the other Loan
Documents and the letter agreement referred to in Section 3.4, comprises the
complete and integrated agreement of the parties on the subject matter hereof
and supersedes all prior negotiations, term sheets, and agreements, written or
oral, on the subject matter hereof. In the event of any conflict between the
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provisions of this Agreement and those of any other Loan Document, the
provisions of this Agreement shall control and govern; PROVIDED that the
inclusion of supplemental rights or remedies in favor of the Administrative
Agent or the Lenders in any other Loan Document shall not be deemed a conflict
with this Agreement. Each Loan Document was drafted with the joint participation
of the respective Parties thereto and shall be construed neither against nor in
favor of any party, but rather in accordance with the fair meaning thereof.
12.17 GOVERNING LAW. Except to the extent otherwise provided therein,
each Loan Document shall be governed by, and construed and enforced in
accordance with, the Laws of California applicable to contracts made and
performed in California.
12.18 SEVERABILITY OF PROVISIONS. Any provision in any Loan Document
that is held to be inoperative, unenforceable or invalid as to any party or in
any jurisdiction shall, as to that party or jurisdiction, be inoperative,
unenforceable or invalid without affecting the remaining provisions or the
operation, enforceability or validity of that provision as to any other party or
in any other jurisdiction, and to this end the provisions of all Loan Documents
are declared to be severable.
12.19 HEADINGS. Article and Section headings in this Agreement and the
other Loan Documents are included for convenience of reference only and are not
part of this Agreement or the other Loan Documents for any other purpose.
12.20 TIME OF THE ESSENCE. Time is of the essence of the Loan
Documents.
12.21 FOREIGN LENDERS AND PARTICIPANTS. Each Lender that is
incorporated or otherwise organized under the Laws of a jurisdiction other than
the United States of America or any State thereof or the District of Columbia,
and that has not previously done so in connection with the Existing Agreement,
shall deliver to the Borrowers (with a copy to the Administrative Agent), on or
before the Effective Date (or on or before accepting an assignment or receiving
a participation interest herein pursuant to Section 12.8, if applicable) two
duly completed copies, signed by a Responsible Official, of either Form W-8 BEN
(relating to such Lender and entitling it to a complete exemption from
withholding on all payments to be made to such Lender by the Borrowers pursuant
to this Agreement) (or any predecessor form in respect thereof) or Form W-8 EC1
(relating to all payments to be made to such Lender by the Borrowers pursuant to
this Agreement) of the United States Internal Revenue Service or such other
evidence (including, if reasonably necessary, Form W-9) ( or any predecessor
form in respect thereof) satisfactory to the Borrowers and the Administrative
Agent that no withholding under the federal income tax laws is required with
respect to such Lender. Thereafter and from time to time, each such Lender shall
(a) promptly submit to the Borrowers (with a copy to the Administrative Agent),
such additional duly completed and signed copies of one of such forms (or such
successor forms as shall be adopted from time to time by the relevant United
States taxing authorities) as may then be available under then current United
States laws and regulations to avoid, or such evidence as is satisfactory to the
Borrowers and the Administrative Agent of any available exemption from, United
States withholding taxes in respect of all payments to be made to such Lender by
the Borrowers pursuant to this Agreement and (b) take such steps as shall not be
disadvantageous to it, in the reasonable judgment of such Lender, and as may be
reasonably necessary (including the
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re-designation of its Eurodollar Lending Office, if any) to avoid any
requirement of applicable Laws that any Borrower make any deduction or
withholding for taxes from amounts payable to such Lender.
12.22 JOINT AND SEVERAL LIABILITY.
(a) Each Borrower shall be jointly and severally liable for
all of the Obligations, PROVIDED that, notwithstanding anything to the contrary
herein (including, without limitation, the representations and warranties set
forth in Article V), (i) Filofax Group shall be liable with respect to the Term
Loans and Convertible Loan only to the extent of the greater of (x) 13,533,000
pounds sterling and (y) its "distributable profits" (within the meaning of
Section 152(1)(b) the Companies Act and which, for the avoidance of doubt, shall
include both revenue reserves and reserves related to premiums on shares issued,
in each case, as reflected in Filofax Group's accounts) as of any date or dates
upon which payment is demanded under the Subsidiary Guaranty of Term Loans
executed by Filofax Group and (ii) and Filofax shall be liable with respect to
the Term Loans and Convertible Loans only to the extent of the greater of (x)
1,960,000 pounds sterling and (y) its "distributable profits" (within the
meaning of Section 152(1)(b) the Companies Act and which, for the avoidance of
doubt, shall include both revenue reserves and reserves related to premiums on
shares issued, in each case, as reflected in Filofax's accounts) as of any date
or dates upon which payment is demanded under the Borrower Guaranty of Term
Loans executed by Filofax.
(b) Each Borrower hereby agrees that its Obligations hereunder
shall not be discharged or otherwise affected as a result of (i) the invalidity
or unenforceability of any of the other Borrowers' obligations under this
Agreement or any other Loan Document or any other agreement or instrument
relating thereto, or any guaranty of the Obligations, (ii) the absence of any
attempt to collect the Obligations from any of the other Borrowers or other
action to enforce the same; (iii) any bankruptcy, insolvency, reorganization,
arrangement, readjustment of debt, liquidation or dissolution proceeding
commenced by or against any of the other Borrowers (other than such Borrower),
including without limitation, any discharge of, or bar or stay against
collecting, all or any of the Obligations (or any interest thereon) in or as a
result of any such proceeding; (iv) failure by the Administrative Agent or any
Lender to file or enforce a claim against any other Borrower or its estate in
any bankruptcy or insolvency case or proceeding; (v) any action taken by the
Administrative Agent or any Lender that is authorized hereby; or (vi) any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a surety or guarantor or any other third party obligor on any
Obligations, other than the payment in full of the Obligations.
(c) Each Borrower hereby waives (i) diligence, presentment,
demand of payment (except as expressly required hereunder), filing of claims
with a court in the event of receivership or bankruptcy of the other Borrowers,
protest or notice with respect to the Obligations, and all presentments, demands
for performance, notices of nonperformance (except to the extent expressly
required hereunder), protests, notices of protest, notices of dishonor and
notices of acceptance of this Agreement and the Obligations, the benefits of all
statutes of limitation, and all other demands (except as expressly required
hereunder) whatsoever (and shall not require that the same be made on the other
Borrowers as a condition precedent to its
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Obligations hereunder), (ii) all notices of the existence, creation or
incurring of new or additional indebtedness, arising either from additional
loans extended to the other Borrowers or otherwise, (iii) all notices that
the principal amount, or any portion thereof, and/or any interest on any
instrument or document evidencing all or any part of the Obligations is due
(except as expressly required hereunder), (iv) notices of any and all
proceedings to collect from the maker, any endorser or any other guarantor of
all or any part of the Obligations, or from any other Person, (v) any
requirement of marshalling or any other principle of election of remedies and
all rights and defenses arising out of an election of remedies by any Lender,
(vi) any defense based upon any Requirement of Law which provides that the
obligation of a surety must be neither larger in amount nor in other respects
more burdensome than that of the principal and (vii) without limiting the
generality of the foregoing or any other provision hereof, all rights and
benefits under California Civil Code Sections 2808, 2809, 810, 2811, 2819,
2839, 2845, 2849, 2850 and 3433.
12.23 REMOVAL OF A LENDER. Borrowers shall have the right to remove a
Lender as a party to this Agreement if such Lender is paid a material amount by
Borrowers pursuant to Section 3.6. Upon notice from Borrowers, such Lender shall
execute and deliver an Assignment and Acceptance covering that Lender's Pro Rata
Share of the Revolving Commitment and Term Loans, as the case may be, in favor
of such Person as Borrowers may designate (subject to the approval of the
Administrative Agent in its sole discretion), subject to payment in full by such
Person of all principal, interest and fees owing to such Lender through the date
of assignment and the agreement of such Person to indemnify such Lender with
respect to all then outstanding Letters of Credit. The Administrative Agent
shall, if requested by the Borrowers, use reasonable efforts to identify Persons
willing to accept such an assignment from such Lender.
12.24 WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY TO THIS AGREEMENT
HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTY HERETO OR ANY OF THEM WITH
RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR
TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR
A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
12.25 PURPORTED ORAL AMENDMENTS. EACH BORROWER EXPRESSLY ACKNOWLEDGES
THAT THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY ONLY BE AMENDED OR
MODIFIED, OR THE PROVISIONS HEREOF OR THEREOF WAIVED OR SUPPLEMENTED, BY AN
INSTRUMENT IN WRITING THAT COMPLIES WITH SECTION 12.2. EACH BORROWER AGREES THAT
IT WILL NOT RELY ON ANY COURSE OF DEALING, COURSE OF PERFORMANCE, OR ORAL OR
WRITTEN STATEMENTS BY ANY REPRESENTATIVE OF THE ADMINISTRATIVE AGENT OR ANY
LENDER THAT DOES NOT COMPLY WITH SECTION 12.2 TO EFFECT
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AN AMENDMENT, MODIFICATION, WAIVER OR SUPPLEMENT TO THIS AGREEMENT OR THE
OTHER LOAN DOCUMENTS.
12.26 ACKNOWLEDGMENT OF LENDERS. EACH OF THE LENDERS AND THE
ADMINISTRATIVE AGENT HEREBY ACKNOWLEDGES AND AGREES THAT AS OF THE EFFECTIVE
DATE, AFTER GIVING EFFECT TO THIS AGREEMENT, NO DEFAULT OR EVENT OF DEFAULT
SHALL HAVE OCCURRED AND BE CONTINUING WITH RESPECT TO THE COVENANTS SET FORTH IN
SECTIONS 6.14 OR 6.20 OF THE EXISTING AGREEMENT.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
DAY RUNNER, INC.
By:
--------------------------------------------
Name:
Title:
Address:
2750 West Moore Avenue
Fullerton, California 92833
Facsimile: 714-441-4848
DAY RUNNER UK PLC
By:
--------------------------------------------
Name:
Title:
Address:
Day Runner UK plc
Waverly House
7/12 Noel Street
London W1V 4NE
FILOFAX LIMITED
By:
--------------------------------------------
Name:
Title:
Address:
Day Runner UK plc
Waverly House
7/12 Noel Street
London W1V 4NE
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WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Administrative Agent
By:
--------------------------------------------
Name:
Title:
Address:
WELLS FARGO BANK, N.A., as Agent
Commercial Bank Loan Center
Agency Dept., 2840
201 3rd Street, 8th Floor
San Francisco, CA 94103
Attn: Manager
Telephone: 415-477-5319
Facsimile: 415-512-9408
AND
WELLS FARGO BANK, N.A., as Agent
333 South Grand Avenue, 3rd Floor
Los Angeles, CA 90071
Attn: Art Brokx
Telephone: 213-253--3247
Facsimile: 213-253-5913
PAYMENT INSTRUCTIONS:
WELLS FARGO, N.A.
San Francisco, CA
ABA #
For Acct.:
Acct. Name: SYNDIC/WFBCORP/DAY RUNNER
Ref.: Day Runner
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LENDERS:
WELLS FARGO BANK, NATIONAL ASSOCIATION
By:
--------------------------------------------
Name:
Title:
BANK OF SCOTLAND
By:
--------------------------------------------
Name:
Title:
CREDIT AGRICOLE INDOSUEZ
By:
--------------------------------------------
Name:
Title:
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MELLON BANK, N.A.
By:
--------------------------------------------
Name:
Title:
OAKTREE CAPITAL MANAGEMENT LLC
AS AGENT AND ON BEHALF OF CERTAIN FUNDS AND ACCOUNTS
By:
--------------------------------------------
Name:
Title:
By:
--------------------------------------------
Name:
Title:
NATIONAL WESTMINSTER BANK PLC
By:
--------------------------------------------
Name:
Title:
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