<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED OCTOBER 31, 1998
COMMISSION FILE NUMBER 1-13099
THE MAXIM GROUP, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 58-2060334
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
210 Town Park Drive, Kennesaw, Georgia 30144
- ---------------------------------------- ------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (678) 355-4000
------------------
N/A
- --------------------------------------------------------------------------------
(Former name, former address, and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the last 90 days.
Yes X No
----------- -----------
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date:
Common Stock, $.001 par value 18,880,018
--------------------------------- ----------------------------------
Class Outstanding at December 7, 1998
<PAGE> 2
PART I--FINANCIAL INFORMATION
ITEM 1--FINANCIAL STATEMENTS
THE MAXIM GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Per Share Information)
(Unaudited)
<TABLE>
<CAPTION>
October 31, January 31,
Assets 1998 1998
- ------------------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents, including restricted cash of $8,881 at
October 31, 1998 and $22,786 at January 31, 1998 $ 34,152 $ 28,880
Current portion of franchise license fees receivable, net of allowance
for doubtful accounts of $417 at October 31, 1998 and $528 at
January 31, 1998 2,735 3,107
Trade accounts receivable, net of allowance for doubtful accounts of
$4,219 at October 31, 1998 and $1,917 at January 31, 1998 96,460 56,432
Accounts receivable from officers and employees 1,862 1,593
Current portion of notes receivable from franchisees and related
parties, net of allowance for doubtful accounts of $132 at
October 31, 1998 and $261 at January 31, 1998 2,255 1,165
Inventories 112,450 54,693
Refundable income taxes 1,865 2,558
Deferred income taxes 6,666 5,714
Prepaid expenses 15,060 3,406
-------- --------
Total current assets 273,505 157,548
Property and equipment, net of accumulated depreciation and
amortization of $58,715 at October 31, 1998 and $48,039 at
January 31, 1998 188,446 137,207
Franchise license fees receivable, less current portion, net of allowance
for doubtful accounts of $210 at October 31, 1998 and January 31, 1998 4,620 2,718
Notes receivable from franchisees, less current portion 4,251 3,506
Intangible assets, net of accumulated amortization of $1,891 at
October 31, 1998 and $1,626 at January 31, 1998 51,606 13,640
Other assets 13,667 6,875
-------- --------
$536,095 $321,494
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE> 3
THE MAXIM GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS, CONTINUED
(In Thousands, Except Per Share Information)
(Unaudited)
<TABLE>
<CAPTION>
October 31, January 31,
Liabilities And Stockholders' Equity 1998 1998
- ---------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
Current liabilities:
Current portion of long-term debt $ 110,902 $ 384
Current portion of capital lease obligations 504 501
Rebates payable to franchisees 4,886 3,975
Accounts payable 61,892 23,376
Accrued expenses 53,034 14,333
Deferred revenue 2,561 1,750
Deposits 5,443 2,897
--------- ---------
Total current liabilities 239,222 47,216
Long-term debt, less current portion 116,041 129,349
Capital lease obligations, less current portion 1,050 1,429
Deferred taxes 9,007 9,725
--------- ---------
Total liabilities 365,320 187,719
--------- ---------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.001 par value; 1,000 shares authorized, no
shares issued or outstanding 0 0
Common stock, $.001 par value; 25,000 shares authorized,
21,143 shares issued at October 31, 1998 and 17,352
shares issued at January 31, 1998 21 17
Additional paid-in capital 184,401 119,264
Retained earnings 21,171 29,388
Treasury stock, 2,366 shares at October 31, 1998 and 1,221
shares at January 31, 1998 (34,818) (14,894)
--------- ---------
Total stockholders' equity 170,775 133,775
--------- ---------
$ 536,095 $ 321,494
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE> 4
THE MAXIM GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Information)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------
October 31, October 31,
1998 1997
----------- -----------
<S> <C> <C>
Revenues:
Sales of floorcovering products $ 235,116 $ 81,017
Fiber and PET sales 8,257 7,213
Fees from franchise services 13,698 8,695
Other 1,641 1,403
--------- ---------
Total revenues 258,712 98,328
Cost of sales 165,707 66,852
--------- ---------
Gross profit 93,005 31,476
Selling, general, and administrative expenses 79,211 21,655
Interest income (345) (212)
Interest expense 3,717 1,589
Other 0 (208)
--------- ---------
Earnings before income tax expense and extraordinary charge 10,422 8,652
Income tax expense 4,016 3,470
--------- ---------
Earnings before extraordinary charge 6,406 5,182
Extraordinary charge--early retirement of debt, net of income tax benefit 377 785
--------- ---------
Net earnings $ 6,029 $ 4,397
========= =========
Earnings per common share:
Basic:
Earnings before extraordinary charge $ 0.33 $ 0.32
Extraordinary charge (0.02) (0.05)
--------- ---------
Basic earnings $ 0.31 $ 0.27
========= =========
Diluted:
Earnings before extraordinary charge $ 0.32 $ 0.31
Extraordinary charge (0.02) (0.05)
--------- ---------
Diluted earnings $ 0.30 $ 0.26
========= =========
Weighted average number of common shares outstanding:
Basic 19,428 16,164
========= =========
Diluted 20,241 16,922
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE> 5
THE MAXIM GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Information)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
-----------------------------
October 31, October 31,
1998 1997
----------- -----------
<S> <C> <C>
Revenues:
Sales of floorcovering products $ 403,101 $ 229,388
Fiber and PET sales 20,431 19,726
Fees from franchise services 34,980 23,268
Other 5,613 4,414
--------- ---------
Total revenues 464,125 276,796
Cost of sales 308,907 189,078
--------- ---------
Gross profit 155,218 87,718
Selling, general, and administrative expenses 123,510 62,818
Interest income (763) (437)
Interest expense 8,917 4,252
Other (307) (292)
Nonrecurring charges 33,000 0
--------- ---------
(Loss) earnings before income tax (benefit) expense and extraordinary
charge (9,139) 21,377
Income tax (benefit) expense (1,299) 8,359
--------- ---------
(Loss) earnings before extraordinary charge (7,840) 13,018
Extraordinary charge--early retirement of debt, net of income tax benefit 377 785
--------- ---------
Net (loss) earnings $ (8,217) $ 12,233
========= =========
(Loss) earnings per common share:
Basic:
(Loss) earnings before extraordinary charge $ (0.45) $ 0.81
Extraordinary charge (0.02) (0.05)
--------- ---------
Basic (loss) earnings $ (0.47) $ 0.76
========= =========
Diluted:
(Loss) earnings before extraordinary charge $ (0.45) $ 0.78
Extraordinary charge (0.02) (0.05)
--------- ---------
Diluted (loss) earnings $ (0.47) $ 0.73
========= =========
Weighted average number of common shares outstanding:
Basic 17,385 16,189
========= =========
Diluted 17,385 16,723
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE> 6
THE MAXIM GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands, Except Per Share Information)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
---------------------------
October 31, October 31,
1998 1997
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net (loss) earnings $ (8,217) $ 12,233
----------- -----------
Adjustments to reconcile net (loss) earnings to net cash provided by (used in)
operating activities:
Nonrecurring charges 33,000 0
Depreciation and amortization 12,082 8,722
Deferred income taxes (1,670) (479)
Changes in assets and liabilities:
Increase in receivables (31,525) (18,934)
Increase in inventories (19,294) (2,975)
Decrease in refundable income taxes 693 784
Increase in prepaid expenses and other assets (14,247) (5,766)
Increase in rebates and accounts payable, accrued expenses, deferred
revenue, and deposits 37,361 2,903
----------- -----------
Total adjustments 16,400 (15,745)
----------- -----------
Net cash provided by (used in) operating activities 8,183 (3,512)
----------- -----------
Cash flows from investing activities:
Capital expenditures (46,015) (26,769)
Acquisitions, net of cash acquired (25,354) (1,738)
----------- -----------
Net cash used in investing activities (71,369) (28,507)
----------- -----------
Cash flows from financing activities:
Proceeds from issuance of common stock, net 0 47,240
Proceeds from exercise of options, net 3,737 1,000
Purchase of treasury stock (19,924) (14,043)
Borrowings under revolving credit agreement 128,481 33,199
Repayments of revolving credit agreement (43,461) 0
Principal payments on capital lease obligations (375) (590)
----------- -----------
Net cash provided by financing activities 68,458 66,806
----------- -----------
Net increase in cash 5,272 34,787
Cash, beginning of period 28,880 6,439
----------- -----------
Cash, end of period $ 34,152 $ 41,226
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during period for:
Interest $ 11,601 $ 4,283
=========== ===========
Income taxes $ 242 $ 3,312
=========== ===========
Supplemental disclosure of noncash investing and financing activities:
Common stock issued in connection with acquisitions $ 61,400 $ 3,000
=========== ===========
Note payable issued in connection with acquisition $ 11,000 $ 0
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE> 7
THE MAXIM GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars In Thousands, Except Per Share Information)
(Unaudited)
1. Consolidated Financial Statements
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with the instructions to Form 10-Q and
do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair
presentation have been included. These statements should be read in
conjunction with the consolidated financial statements and notes
thereto included in the Company's 1998 Annual Report on Form 10-K as
filed with the Securities and Exchange Commission.
The results of operations for the periods presented are not necessarily
indicative of the operating results to be expected for the full year.
2. Inventories
Inventories consisted of the following (in thousands):
<TABLE>
<CAPTION>
October 31, January 31,
1998 1998
----------- -----------
<S> <C> <C>
Raw materials $ 21,289 $ 14,809
Work in process 3,755 3,363
Finished goods 87,406 36,521
-------- --------
$112,450 $ 54,693
======== ========
</TABLE>
3. Senior Subordinated Notes
On October 16, 1997, the Company completed the sale of $100 million of
9-1/4% Senior Subordinated Notes ("Notes") due 2007, to institutional
buyers in a private offering under Rule 144A promulgated under the
Securities Act of 1933. The net proceeds to the Company from the
offering of the Notes were approximately $96 million, net of an issue
discount and fees and related costs. The Company used the net proceeds
from the offering of the Notes to repay all borrowings outstanding
under its revolving credit agreements of approximately $82.7 million
and for general corporate purposes, including capital expenditures.
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<PAGE> 8
Each of the Company's subsidiaries has fully and unconditionally
guaranteed the Notes on a joint and several basis. The guarantor
subsidiaries comprise all of the direct and indirect subsidiaries of
the Company. The Company has not presented separate financial
statements and other disclosures concerning the guarantor subsidiaries
because management has determined that such information is not material
to investors. There are no significant restrictions on the ability of
the guarantor subsidiaries to make distributions to the Company.
The Company is currently in default of the restricted payment covenant
contained in the Indenture (the "Indenture") pursuant to which the
Notes were issued. The default occurred on September 3, 1998 when the
Company repurchased shares of its common stock in the open market
pursuant to its ongoing stock repurchase program. At the time of this
stock repurchase, the Company believed that it had sufficient funds
available under the restricted payments provision of the Indenture to
make the repurchase. The Company, however, excluded from the
calculation of its restricted payment availability, nonrecurring
charges totaling $33 million taken in the quarter ended July 31, 1998,
believing such charges to be excluded from consolidated net income of
the Company, as defined in the Indenture, and thus not effecting a
reduction in the Company's restricted payments availability thereunder.
By the time the Company realized that its treatment of this
nonrecurring charge was impermissible under the Indenture, it had
purchased additional shares of common stock in the open market in
violation of the terms of the Indenture.
On November 12, 1998, the Company notified the Trustee under the
Indenture of its default of the restricted payment covenant in the
Indenture. In accordance with the terms of the Indenture, the Trustee
on November 17, 1998 notified the Company that such default shall
become an event of default on December 17, 1998 (30 days after the date
of the Trustee's notice to the Company). If this default is not cured
by the Company prior to December 17, 1998, the Trustee or the holders
of not less than 25% in aggregate principal amount of Notes outstanding
may declare all unpaid principal of, premium, if any, and accrued
interest of all Notes to be due and payable. The Company will seek the
consent of the Note holders for a waiver of these inadvertent
violations of the restricted payment convenant of the Indenture. In
order to be effective, holders of a majority in aggregate principal
amount of all outstanding Notes must consent to the waiver.
Because either the Trustee or the holders of not less than 25% in
aggregate principal amount of Notes outstanding may accelerate payment
of the Notes beginning on December 17, 1998, the Notes are classified
as current liabilities of the Company on the accompanying October 31,
1998 balance sheet. Once the Company receives the requisite consent to
the waiver from the holders of Notes, however, the Notes will again be
classified as long-term debt of the Company.
4. Nonrecurring Charges
During the period ended July 31, 1998, the Company reevaluated its
retail strategy. As a result of the assessment, the Company made the
determination that it would amend its franchise agreement, close
certain Company-owned stores, and write down the value of certain
retail assets including goodwill.
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<PAGE> 9
The Company recorded a $33 million charge for certain nonrecurring
items during the period ended July 31,1998. On June 1, 1998 the Company
amended its franchise agreement with the majority of its members,
whereby the Company established certain requirements for more
uniformity in the appearance and merchandising of the franchise stores.
As part of the amended franchise agreement, the number of vendors
available to franchise members through the Company, to buy from and
earn rebates, has been reduced. The Company has recorded allowances for
receivables due from vendors replaced in the amended franchise
agreement and has also established a reserve to settle claims from
certain parties. In addition, the Company has written down to fair
value certain assets made obsolete by the new franchise agreement. The
Company also accrued for the costs of closing 14 Company-owned retail
stores. The Company anticipates all stores will be closed within nine
months.
As part of the Company's reevaluation of its retail strategy, the
acquisition of the retail store assets of Shaw Industries, Inc. was
considered and consummated.
In connection with the reevaluation of the Company's retail strategy
described above, the Company analyzed the performance of its Company
owned retail regions. This analysis indicated that significant
strategic and operational changes would be necessary in some stores,
including changes in the customer mix, location, store design, and
merchandising. These factors also caused management to assess the
realizability of the goodwill recorded for these regions.
The determination of goodwill impairment was made by comparing the
unamortized goodwill balance for each region to the estimate of the
related region's undiscounted future cash flows. The assumptions used
reflected earnings, market and industry conditions, as well as current
operating plans. The assessment indicated a permanent impairment of
goodwill related to certain of the regions, therefore such goodwill was
written down to fair market value which resulted in a write-off
totaling $4.2 million.
The major components of the nonrecurring charges are as follows:
<TABLE>
<CAPTION>
CHARGED
TO
INITIAL RELATED REMAINING
CHARGE ACCOUNTS BALANCE
------- -------- ---------
<S> <C> <C> <C>
Vendors' receivable allowances $ 5,300 $ 5,300 $ 0
Claims reserves 10,700 0 10,700
Write-down of equipment 2,200 2,200 0
Store closure and carrying costs 10,600 933 9,667
Write-down of goodwill 4,200 4,200 0
------- ------- -------
$33,000 $12,633 $20,367
======= ======= =======
</TABLE>
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<PAGE> 10
5. Earnings Per Share
Effective January 31, 1998, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 128, "Earnings Per Share", which
specifies the computation, presentation and disclosure requirements for
earnings per share. Basic earnings per share is computed by dividing
net earnings by the weighted average number of common shares
outstanding during each period. Diluted earnings per common share
assumes exercise of outstanding stock options and the conversion into
common stock during the periods outstanding.
A reconciliation of net earnings (loss) and the weighted average number
of common shares outstanding used to calculate basic and diluted
earnings (loss) per common share for the three and nine months ended
October 31, 1998 and 1997 is as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
October 31 October 31
----------------------- -----------------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Basic earnings (loss) per common
share:
Earnings (loss) before
extraordinary charge $ 6,406 $ 5,182 $ (7,840) $ 13,018
Extraordinary charge 377 785 377 785
-------- -------- -------- --------
Net earnings (loss) $ 6,029 $ 4,397 $ (8,217) $ 12,233
======== ======== ======== ========
Weighted average number of
common shares outstanding 19,428 16,164 17,385 16,189
======== ======== ======== ========
Basic earnings (loss) per common
share:
Earnings (loss) before
extraordinary charge $ 0.33 $ 0.32 $ (0.45) $ 0.81
Extraordinary charge (0.02) (0.05) (0.02) (0.05)
-------- -------- -------- --------
Basic earnings (loss) $ 0.31 $ 0.27 $ (0.47) $ 0.76
======== ======== ======== ========
Diluted earnings (loss) per
common share:
Earnings (loss) before
extraordinary charge $ 6,406 $ 5,182 $ (7,840) $ 13,018
Extraordinary charge 377 785 377 785
-------- -------- -------- --------
Net earnings (loss) $ 6,029 $ 4,397 $ (8,217) $ 12,233
======== ======== ======== ========
</TABLE>
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<PAGE> 11
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
October 31 October 31
----------------------- -----------------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Weighted average number of
common shares outstanding 19,428 16,164 17,385 16,189
Shares issuable from assumed
exercise of outstanding stock
options 813 758 N/A(a) 534
-------- -------- -------- --------
Weighted average number of
common and common
equivalent shares 20,241 16,922 17,385 16,723
======== ======== ======== ========
Diluted earnings (loss) per
common share:
Earnings (loss) before
extraordinary charge $ 0.32 $ 0.31 $ (0.45) $ 0.78
Extraordinary charge (0.02) (0.05) (0.02) (0.05)
-------- -------- -------- --------
Diluted earnings (loss) $ 0.30 $ 0.26 $ (0.47) $ 0.73
======== ======== ======== ========
</TABLE>
(a) Common equivalent shares are antidilutive for the
nine months ended October 31, 1998.
6. Acquisitions
Effective August 9, 1998, the Company acquired substantially all of the
residential retail store assets of Shaw Industries, Inc. and its wholly
owned subsidiary, Shaw Carpet Showplace, Inc. (collectively, "Shaw"),
pursuant to an Agreement and Plan of Merger dated as of June 23, 1998.
These assets include 266 retail stores with annual revenues of
approximately $584 million and are being operated through the Company's
newly organized Maxim Retail Stores, Inc. subsidiary. The Company
intends to continue operating the residential retail stores acquired
from Shaw as retail floorcovering stores. Under the terms of the Merger
Agreement, the Company issued to Shaw 3,150,000 shares of common stock
of the Company and a one-year note in the principal amount of $18
million (adjusted to $11 million after giving effect to purchase price
adjustments) and paid Shaw $25 million in cash. The acquisition has
been reflected on a purchase basis of accounting. The purchase price
has been allocated to the assets acquired and liabilities assumed based
upon estimates of the fair values at the date of acquisition. The
allocation has been based on preliminary estimates and studies which
may be revised at a later date.
The operating results of the retail stores acquired from Shaw are
included in the Company's consolidated statement of operations from the
date of acquisition. The following unaudited pro forma summary presents
the consolidated results of operations as if the acquisition of the
retail store assets of Shaw (which occurred on August 8, 1998) had
occurred on February 1, 1997. The pro forma expenses include the
recurring costs which are directly attributable to the acquisition,
such as interest expense and amortization of goodwill and their related
tax effects.
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<PAGE> 12
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
October 31, October 31,
------------------------ ------------------------
1998 1997 1998 1997
-------- ---------- -------- --------
<S> <C> <C> <C> <C>
Net revenues $258,712 $ 229,956 $737,081 $656,024
======== ========== ======== ========
Net earnings (loss) $ 6,029 $ 573 $(12,343) $ 8,862
======== ========== ======== ========
Basic earnings (loss) per common share $ .31 $ .05 $ (.63) $ .46
======== ========== ======== ========
Diluted earnings (loss) per common share $ .30 $ .05 $ (.63) $ .45
======== ========== ======== ========
</TABLE>
Effective September 25, 1998, the Company acquired CarpetsPlus of
America, LLC, a floorcovering buying group with approximately 200
member stores. The acquisition has been reflected on a purchase basis
of accounting at a price of approximately $9.2 million, consisting of a
cash payment of $2.3 million, and the issuance of $6.9 million in
stock. In addition to the consideration received at closing, the
shareholders of CarpetsPlus of America may receive up to $2.3 million
of shares of common stock of the Company based on the profitability of
the acquired company during the two-year period ending January 31,
2001.
7. Subsequent Event
On November 12, 1998, the Company executed a definitive agreement to
sell substantially all of the assets of its Image Industries, Inc.
subsidiary to a subsidiary of Mohawk Industries, Inc. Under the terms
of the agreement, total consideration is $232 million, which includes
the assumption of approximately $52 million in related debt and
short-term liabilities. The transaction is expected to close on or
about January 22, 1999.
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<PAGE> 13
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
During the three months ended October 31, 1998, the Company acquired
the retail store assets of Shaw Industries, Inc. ("Shaw"). These assets
include 266 retail floorcovering stores which, effective on August 9,
1998, were owned and operated by the Company. The acquisition of these
assets resulted in a 254.7% increase in the number of Company-owned
stores. As reflected in the following discussion, the acquisition of
these assets materially impacted the Company's financial condition and
results of operations as of and for the three- and nine-month periods
ended October 31, 1998.
Total Revenues. Total revenues increased 163.1% to $258.7 million for
the three months ended October 31, 1998 from $98.3 million for the
three months ended October 31, 1997. Total revenues increased 67.7% to
$464.1 million for the nine months ended October 31, 1998 from $276.8
million reported in the prior year period. The components of total
revenues are discussed below:
Sales of Floorcovering Products. Sales of floorcovering
products increased 190.3% to $235.1 million for the three
months ended October 31, 1998 from $81.0 million for the three
months ended October 31, 1997, and increased 75.7% to $403.1
million for the nine months ended October 31, 1998 from $229.4
million in the prior year period. Sales of floorcovering
products in Company-owned stores increased 414.6% to $186.8
million for the three months ended October 31, 1998 from $36.3
million for the three months ended October 31, 1997, and
increased 154.9% to $263.1 million for the nine months ended
October 31, 1998 from $103.2 million in the prior year period.
The growth in retail sales of floorcovering products was
primarily due to the impact of the acquisition of the retail
store assets of Shaw and, to a lesser extent, to internal
growth. Sales of manufactured carpet increased 6.9% to $43.3
million for the three months ended October 31, 1998 from $40.5
million for the three months ended October 31, 1997, and
increased 8.6% to $125.8 million for the nine-months ended
October 31, 1998 from $115.8 million in the prior year period.
Unit sales of manufactured carpet remained constant at 7.2
million square yards for the three months ended October 31,
1998 and October 31, 1997, and increased 6.0% to 21.2 million
square yards for the nine months ended October 31, 1998 from
20.0 million square yards in the prior year period. Sales from
the Company's two retail distribution centers amounted to $4.6
million for the three months ended October 31, 1998 compared
to $4.2 million for the three months ended October 31, 1997,
and $13.7 million for the nine months ended October 31, 1998
compared to $10.7 million in the prior year period, largely
representing sales to the Company's franchisees.
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<PAGE> 14
Fees From Franchise Services. Fees from franchise services,
which include franchise license fees and royalties, brokering
of floorcovering products, and advertising, increased 57.5% to
$13.7 million for the three months ended October 31, 1998 from
$8.7 million for the three months ended October 31, 1997, and
increased 50.2% to $35.0 million for the nine months ended
October 31, 1998 from $23.3 million in the prior year period.
This increase was attributable to increases in brokering
activity generated from new CarpetMAX and GCO franchisees,
growth in demand for franchise services from existing
CarpetMAX and GCO franchisees, greater utilization of
advertising and other services offered to franchisees, and an
expansion of advertising services offered by the Company.
Fiber and PET Sales. Sales of fiber and polyethylene
terephthalate ("PET") increased 15.3% to $8.3 million for the
three months ended October 31, 1998 from $7.2 million for the
three months ended October 31, 1997, and increased 4.1% to
$20.4 million for the nine months ended October 31, 1998 from
$19.7 million in the prior year period. Unit sales increased
1.8% to 17.2 million pounds for the three months ended October
31, 1998 from 16.9 million pounds for the three months ended
October 31, 1997, and decreased 7.7% to 45.7 million pounds
for the nine months ended October 31, 1998 from 49.5 million
pounds in the prior year period. The unit sales decrease was
the result of increased demand from the Company's carpet
operations. The average selling price per pound of fiber and
PET for the nine months ended October 31, 1998 increased by
11% compared to the prior year period.
Gross Profit. Gross profit increased 195.2% to $93.0 million for the
three months ended October 31, 1998 from $31.5 million for the three
months ended October 31, 1997, and increased 77.0% to $155.2 million
for the nine months ended October 31, 1998 from $87.7 million in the
prior year period. As a percentage of revenues, gross profit was 36.0%
for the three months ended October 31, 1998 compared to 32.0% for the
three months ended October 31, 1997 and 33.4% for the nine months ended
October 31, 1998 compared to 31.7% in the prior year period.
Contributing to the increase in gross profit as a percentage of
revenues was the continuing change in the business mix of the Company
to a revenue base consisting principally of the net sales of
floorcovering products, which change was accelerated by the acquisition
of the retail store assets of Shaw in August 1998.
Selling, General, and Administrative Expenses. Selling, general, and
administrative expenses increased 265.0% to $79.2 million for the three
months ended October 31, 1998 from $21.7 million for the three months
ended October 31, 1997, and increased 96.7% to $123.5 million for the
nine months ended October 31, 1998 from $62.8 million in the prior year
period. Increases in operating expenses on an absolute basis reflects
an overall growth in the size of the Company's operations required to
serve a growing retail base, including the retail store assets acquired
from Shaw, as well as increased selling costs at Image related to newly
created territories. As a percentage of revenues, selling, general, and
administrative expenses increased to 30.6% for the three months ended
October 31, 1998 from 22.0% for the three months ended October 31, 1997
and increased to 26.6% from 22.7% for the nine months ended October 31,
1998 as compared to the prior year period.
Interest Expense. Interest expense increased 131.3% to $3.7 million for
the three months ended October 31, 1998 from $1.6 million for the three
months ended October 31, 1997, and
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<PAGE> 15
increased 107.0% to $8.9 million for the nine months ended October 31,
1998 from $4.3 million in the prior year period, due principally to the
Company having a higher debt balance and a higher interest rate during
the nine months ended October 31, 1998 as compared to the prior year
period. In October 1997, the Company issued $100 million of 9-1/4%
senior subordinated notes. See "Liquidity and Capital Resources."
Nonrecurring Charges. During the three months ended July 31, 1998, the
Company reevaluated its retail strategy. As a result of the assessment,
the Company made the determination that it would amend its franchise
agreement, close certain Company-owned stores, and write down the value
of certain retail assets including goodwill. The Company recorded a $33
million charge for certain nonrecurring items during the period ended
July 31, 1998. On June 1, 1998, the Company amended its franchise
agreement with the majority of its members, whereby the Company
established certain requirements for more uniformity in the appearance
and merchandising of the franchise stores. As part of the amended
franchise agreement, the number of vendors available to franchise
members through the Company, to buy from and earn rebates, has been
reduced. The Company has recorded allowances for receivables due from
vendors replaced in the amended franchise agreement and has also
established a reserve to settle claims from certain parties.
In addition, the Company has written down to fair value certain assets
made obsolete by the amended franchise agreement. The Company also
accrued for the costs of closing 14 Company-owned retail stores. The
Company anticipates all stores will be closed within nine months.
In connection with the reevaluation of the Company's retail strategy
described above, the Company analyzed the performance of its
Company-owned retail regions. This analysis indicated that significant
strategic and operational changes would be necessary in some stores,
including changes in the customer mix, location, store design, and
merchandising. These factors also caused management to assess the
realizability of the goodwill recorded for these regions.
The determination of goodwill impairment was made by comparing the
unamortized goodwill balance for each region to the estimate of the
related region's undiscounted future cash flows. The assumptions used
reflected the earnings, market, and industry conditions, as well as
current operating plans. The assessment indicated a permanent
impairment of goodwill related to certain of the regions, therefore
such goodwill was written down to fair market value which resulted in a
write-off totaling $4.2 million.
Income Tax Expense. The Company recorded income tax expense of $4.0
million for the three months ended October 31, 1998 compared to a $3.5
million expense for the three months ended October 31, 1997, and a $1.3
million tax benefit for the nine months ended October 31, 1998 compared
to $8.4 million expense in the prior year period. The decrease in
income tax expense is due to the Company recording a loss from a
nonrecurring charge for the nine months ended October 31, 1998, as
compared to the prior year period.
Extraordinary Charges. The extraordinary charges recorded in the three
months ended October 31, 1998 and 1997 resulted from the write-off of
unamortized financing fees associated with former revolving credit
facilities. The resultant charges amounted to
-15-
<PAGE> 16
$377,000, net of an income tax benefit of $236,000 for the three months
ended October 31, 1998 and amounted to $785,000, net of an income tax
benefit of $523,000, for the three months ended October 31, 1997.
Net Earnings. As a result of the foregoing factors, the Company
recorded net earnings of $6.0 million for the three months ended
October 31, 1998 compared to net earnings of $4.4 million for the three
months ended October 31, 1997, and a net loss of $8.2 million for the
nine months ended October 31, 1998 compared to net earnings of $12.2
million in the prior year period.
Liquidity and Capital Resources
General. The Company's primary capital requirements are for new store
openings, investments in the manufacturing operations, working capital
and acquisitions. The Company historically has met its capital
requirements through a combination of cash flow from operations, net
proceeds from the sale of equity and debt securities, bank lines of
credit, and standard payment terms.
In March 1997, the Board of Directors of the Company authorized a stock
repurchase program pursuant to which the Company has periodically
repurchased shares of its common stock in the open market. As of
December 7, 1998, the Company had repurchased an aggregate of 2,365,900
shares of its common stock in the open market for a total of $34.8
million. These purchases were, and any future purchases will be,
financed from borrowings under the Company's revolving credit facility
and cash balances. As discussed below, the ability of the Company to
repurchase its common shares is limited by certain restrictions
contained in the Indenture relating to the Company's Senior Notes.
See "Senior Notes."
On November 12, 1998, the Company entered into an agreement to sell
substantially all the assets of its Image Industries, Inc. subsidiary
("Image") to Aladdin Manufacturing Corporation ("Aladdin"), a wholly
owned subsidiary of Mohawk Industries, Inc. ("Mohawk"). The transaction
is valued at approximately $232 million, including the assumption by
Aladdin of approximately $52 million of Image liabilities. The Company
expects to apply the cash proceeds from this transaction, which is
expected to close on or about January 22, 1999, to repay debt.
Credit Facility. On November 25, 1998, the Company established credit
facilities providing for aggregate commitments of $141 million (the
"Credit Facility"). The Credit Facility consists of (i) $110 million of
revolving credit, of which $19.3 million was available for borrowings
on December 7, 1998 and (ii) a special-purpose letter of credit in the
amount of up to $31 million for use as credit support for the
Summerville Loan (defined below) to be used to finance the expansion of
Image's fiber extrusion capabilities at its plant in Summerville,
Georgia. As of December 7, 1998, the Company had $84.9 million
outstanding under the revolving portion of the Credit Facility and had
$1.5 million outstanding on the letter of credit. The Company's
obligations under the letter of credit will be assumed by Mohawk in
connection with Aladdin's purchase of Image and the Company will be
released from all obligations thereunder. Amounts outstanding under the
Credit Facility bear interest at a variable rate based on LIBOR or the
prime rate, at the Company's option. The Credit Facility contains
customary covenants. As of December 7, 1998, the Company was in
compliance with all covenants under the Credit Facility.
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<PAGE> 17
Summerville Loan. Effective September 1, 1997, the Development
Authority of the city of Summerville, Georgia (the "Authority"), issued
Exempt Facility Revenue Bonds in an aggregate principal amount of $30
million (the "Facility Revenue Bonds"). On September 17, 1997, the
Authority loaned (the "Summerville Loan") the proceeds from the sale of
the Facility Revenue Bonds to Image to finance, in whole or in part,
the expansion of Image's fiber extrusion capabilities at its plant in
Summerville, Georgia. The Facility Revenue Bonds and the interest
thereon are special, limited obligations of the Authority, payable
solely from the revenues and income derived from a loan agreement
between Image and the Authority, which payment thereof and funds which
may be drawn under the special-purpose letter of credit described
above. The Facility Revenue Bonds and the Summerville Loan will mature
on September 1, 2017, and the interest rate of the Facility Revenue
Bonds is to be determined from time to time based on the minimum rate
of interest that would be necessary to sell the Facility Revenue Bonds
in a secondary market at the principal amount thereof. The interest
rate on the Summerville Loan equals the interest rate on the Facility
Revenue Bonds. Image's obligations under the Summerville Loan will be
assumed by Aladdin in connection with Aladdin's purchase of Image and
Image will be released from all obligations thereunder.
Senior Notes. On October 16, 1997, the Company completed the sale of
$100 million of 9-1/4% senior subordinated notes ("Senior Notes") due
2007. Each of the Company's subsidiaries has fully and unconditionally
guaranteed the Senior Notes on a joint and several basis. The guarantor
subsidiaries comprise all of the direct and indirect subsidiaries of
the Company. The Company has not presented separate financial
statements and other disclosures concerning the guarantor subsidiaries
because management has determined that such information is not material
to investors. There are no significant restrictions on the ability of
the guarantor subsidiaries to make distributions to the Company.
The Company is currently in default of the restricted payment covenant
contained in the Indenture (the "Indenture") pursuant to which the
Senior Notes were issued. The default occurred on September 3, 1998
when the Company repurchased shares of its common stock in the open
market pursuant to its ongoing stock repurchase program. At the time of
this stock repurchase, the Company believed that it had sufficient
funds available under the restricted payments provision of the
Indenture to make the repurchase. The Company, however, excluded from
the calculation of its restricted payment availability, nonrecurring
charges totaling $33 million taken in the quarter ended July 31, 1998,
believing such charges to be excluded from consolidated net income of
the Company, as defined in the Indenture, and thus not effecting a
reduction in the Company's restricted payments availability thereunder.
By the time the Company realized that its treatment of this
nonrecurring charge was impermissible under the Indenture, it had
purchased additional shares of common stock in the open market in
violation of the terms of the Indenture.
On November 12, 1998, the Company notified the Trustee under the
Indenture of its default of the restricted payment covenant in the
Indenture. In accordance with the terms of the Indenture, the Trustee
on November 17, 1998 notified the Company that such default shall
become an event of default on December 17, 1998 (30 days after the date
of the Trustee's notice to the Company). If this default is not cured
by the Company prior to December 17, 1998, the Trustee or the holders
of not less than 25% in aggregate principal
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<PAGE> 18
amount of Senior Notes outstanding may declare all unpaid principal of,
premium, if any, and accrued interest of all Senior Notes to be due and
payable. The Company will seek the consent of the Senior Note holders
for a waiver of these inadvertent violations of the restricted payment
convenant of the Indenture. In order to be effective, holders of a
majority in aggregate principal amount of all outstanding Senior Notes
must consent to the waiver.
Because either the Trustee or the holders of not less than 25% in
aggregate principal amount of Senior Notes outstanding may accelerate
payment of the Senior Notes beginning on December 17, 1998, the Senior
Notes are classified as current liabilities of the Company on the
accompanying October 31, 1998 balance sheet. Once the Company receives
the requisite consent to the waiver from the holders of Senior Notes,
however, the Senior Notes will again be classified as long-term debt of
the Company.
Although the Company believes that it will be able to obtain a default
waiver from the holders of the Senior Notes, there can be no assurance
that such waiver will be granted. If a waiver is not obtained by the
Company, repayment of the Senior Notes may be accelerated, as discussed
above. Any such acceleration, as well as the failure of the Company to
obtain a default waiver from the Senior Note holders by January 31,
1999, will constitute an event of default under the Credit Facility.
There can be no assurance that the Company will be able to obtain
alternative sources of financing if repayment of either the Senior
Notes or the Credit Facility is accelerated.
Cash Flows. During the nine months ended October 31, 1998, operating
activities provided $8.2 million of cash compared to $3.5 million of
cash used in the nine months ended October 31, 1997. The increase in
cash provided by operating activities resulted primarily from an
increase in trade liabilities. The increase in trade liabilities,
partially offset by an increase in inventories and accounts receivable,
was due to increased product purchases and higher sales of
floorcovering products to franchisees and other carpet retailers.
During the nine months ended October 31, 1998, investing activities
used cash of $71.4 million compared to $28.5 million for the nine
months ended October 31, 1997. The increase is primarily due to an
increase in capital expenditures relating to manufacturing operations
and the acquisition of the retail store assets of Shaw.
During the nine months ended October 31, 1998, financing activities
provided cash of $68.5 million compared to $66.8 million in the nine
months ended October 31, 1997. This increase is primarily due to
borrowings under the Company's revolving credit agreement.
Capital Expenditures. The Company anticipates that it will require
approximately $10 million for the remainder of fiscal 1999 to (i) open
approximately two new Gallery stores (assuming approximately 50% of
such stores will be located on Company-owned property and the remainder
on leased property), (ii) reconfigure eight existing CarpetMAX stores,
and (iii) upgrade its management information systems. The actual costs
that the Company will incur in opening new Gallery stores cannot be
predicted with precision because the opening costs will vary based upon
geographic location, the size of the store, the amount of supplier
contributions and the extent of the buildout required at the selected
site. The Company anticipates that it will require approximately $3
million during the remainder of fiscal 1999 for capital expenditures at
Image, including the expansion of Image's polyester fiber production
capacity.
The Company believes that borrowings under the Credit Facility,
proceeds from the sale of Image, and cash flows from operating
activities will be adequate to meet the Company's working capital
needs, planned capital expenditures, and debt service obligations
through fiscal 2000. As the Company's debt matures, or is accelerated,
as described above, the Company may need to refinance such debt. There
can be no assurance that such debt can be refinanced or, if so, whether
it can be refinanced on terms acceptable to the Company. If the Company
is unable to service its indebtedness, it will be required to adopt
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<PAGE> 19
alternative strategies, which may include actions such as reducing or
delaying capital expenditures, selling assets, restructuring, or
refinancing its indebtedness or seeking additional equity capital.
There can be no assurance that any of these strategies could be
effected on satisfactory terms, if at all.
Recent Accounting Pronouncements. Effective with the three months ended
April 30, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130 ("SFAS 130"), "Reporting Comprehensive Income". SFAS
130 establishes standards for reporting and display of comprehensive
income and its components in financial statements. SFAS 130 did not
have an impact on the Company's financial statements.
In June 1997, the FASB issued Statement of Financial Accounting
Standards No. 131 ("SFAS 131"), "Disclosures About Segments of an
Enterprise and Related Information", which is effective for fiscal
years beginning after December 15, 1997. SFAS 131 establishes reporting
standards for public companies concerning operating segments and
related disclosures about products and services, geographic areas and
major customers. SFAS 131 will be adopted with the Company's Annual
Report for the fiscal year ending January 31, 1999.
In June 1998, the FASB issued Statement of Financial Accounting
Standards No. 133 ("SFAS 133"), "Accounting for Derivative Instruments
and Hedging Activities", which is effective for fiscal years beginning
after June 15, 1999. Early adoption is encouraged. SFAS 133 establishes
accounting and reporting standards for derivative instruments and
transactions involving hedge accounting. The Company does not
anticipate this statement will have an impact on its financial
statements.
In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-5 ("SOP 98-5"), "Reporting on the Costs
of Start-Up Activities", which is effective for fiscal years beginning
after December 15, 1998. SOP 98-5 requires entities to expense certain
start-up costs and organization costs as they are incurred. The Company
does not anticipate that this statement will have an impact on its
financial statements.
Year 2000. The year 2000 issue is the result of computer programs being
written using two digits rather than four to define the applicable
year. Any of the Company's computer programs that have time-sensitive
software may recognize a date using "00" as the year 1900 rather than
the year 2000. This could result in a system failure or miscalculations
causing disruptions of operations, including, among other things, a
temporary inability to process transactions, send invoices, or engage
in similar normal business activities.
Based on the assessment of the Company's information technology
systems, management presently believes that with the planned conversion
to new software and hardware and the planned modifications to existing
software and hardware, the effects of the year 2000 issue will be
timely resolved. The Company is in the process of conducting an
inventory and business risk assessment at its noninformation technology
systems. These noninformation technology systems include items such as
embedded technology, including microcontrollers used in the Company's
manufacturing processes. The Company will develop remediation plans for
such noninformation technology systems if its business risk assessment
indicates such is warranted. All costs associated with
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<PAGE> 20
analyzing the year 2000 issue or making conversions to existing systems
are being expensed as incurred.
The Company is planning formal communications with all of its
significant suppliers of goods and services to determine the extent to
which the Company's operations and systems are vulnerable to those
third parties' failure to remediate their own year 2000 issues. There
can be no guarantee that the systems of other companies on which the
Company's operations and systems rely will be timely converted and will
not have an adverse effect on the Company's results of operations. The
Company will utilize predominately internal resources to reprogram, or
replace, and test the Company's software for year 2000 compliance by
June 1999, which is prior to any anticipated impact on its operating
systems. Management has not estimated a total cost of the year 2000
issues; however, such costs are not expected to have a material effect
on the results of operations during any quarterly or annual reporting
period.
The costs to the Company of year 2000 compliance and the date on which
the Company believes it will complete the year 2000 modifications are
based on management's best estimates, which were derived utilizing
numerous assumptions of future events, including the continued
availability of certain resources, third-party modification plans, and
other factors. However, there can be no assurance that these estimates
will be achieved, and actual results could differ materially from those
anticipated. Specific factors that might cause such material
differences include, but are not limited to, the availability and cost
of personnel trained in this area, the ability to locate and correct
all relevant computer codes, and similar uncertainties.
Forward-Looking Statements. This Report contains statements that
constitute "forward-looking statements" within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Those statements appear in a number of places in
this Report and include statements regarding the intent, belief or
current expectations of the Company, its directors or its officers with
respect to, among other things: (i) the timing, magnitude and costs of
the roll-out of the Gallery Stores; (ii) potential acquisitions by the
Company; (iii) the Company's financing plans; (iv) trends affecting the
Company's financial condition or results of operations; (v) the
Company's business and growth strategies; and (vi) the declaration and
payment of dividends. Any such forward-looking statements are not
guarantees of future performance and involve risks and uncertainties,
and actual results may differ materially from those projected in the
forward-looking statements as a result of various factors. The
accompanying information contained in this Report, including without
limitation the information set forth under the headings "Management's
Discussion and Analysis of Financial Condition and Results of
Operations," identifies important factors that could cause such
differences.
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ITEM 3--QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
N/A
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PART II--OTHER INFORMATION
ITEM 3--DEFALTS UPON SENIOR SECURITIES.
The Company is currently in default of the restricted payment covenant
contained in the Indenture (the "Indenture") pursuant to which the 9 1/4% Senior
Subordinated Notes due October 15, 2007 (the "Notes") of the Company were
issued. The default occurred on September 3, 1998 when the Company repurchased
shares of its common stock in the open market pursuant to its ongoing stock
repurchase program. At the time of this stock repurchase, the Company believed
that it had sufficient funds available under the restricted payments provision
of the Indenture to make the repurchase. The Company, however, excluded from the
calculation of its restricted payment availability nonrecurring charges totaling
$33.0 million taken in the quarter ended July 31, 1998, believing such charges
to be excluded from Consolidated Net Income of the Company, as defined in the
Indenture, and thus not effecting a reduction in the Company's restricted
payments availability thereunder. By the time the Company realized that its
treatment of this nonrecurring charge was impermissible under the Indenture, it
had purchased additional shares of common stock in the open market in violation
of the terms of the Indenture.
On November 12, 1998, the Company notified the Trustee under the
Indenture of its default of the restricted payment covenant in the
Indenture. In accordance with the terms of the Indenture, the Trustee
on November 17, 1998 notified the Company that such default shall
become an Event of Default on December 17, 1998 (30 days after the date
of the Trustee's notice to the Company). If this default is not cured
by the Company prior to December 17, 1998, the Trustee or the holders
of not less than 25% in aggregate principal amount of Notes outstanding
may declare all unpaid principal of, premium, if any, and accrued
interest on all Notes to be due and payable. The Company will seek the
consent of the Note holders for a waiver of these inadvertent
violations of the restricted payment covenant of the Indenture. In
order to be effective, holders of a majority in aggregate principal
amount of all outstanding Notes must consent to the waiver.
ITEM 6--EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits
10.23 Credit Agreement among the Company, the Domestic Subsidiaries
of the Company, as Guarantors, the Lenders identified therein,
NationsBank, N.A., as Administrative Agent, SunTrust Bank,
Atlanta, as Documentation Agent, and Fleet National Bank, as
Co-Agent, dated as of November 25, 1998, in the aggregate
principal amount of $126 million.
10.24 364-Day Credit Agreement among Maxim Retail Stores, Inc., as
Borrower, the Domestic Subsidiaries of the Borrower, as
Guarantors, the Lenders identified therein and NationsBank,
N.A., as Agent, dated as of November 25,1998, in the
aggregate principal amount of $15 million.
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11 Statements Regarding Computation of Per Share Earnings
27.1 Financial Data Schedule (for SEC use only)
27.2 Restated Financial Data Schedule (for SEC use only)
(B) Reports on Form 8-K
The following report on Form 8-K was filed during the quarter ended
October 31, 1998: Current Report on Form 8-K dated August 9, 1998
(reporting that the Company had acquired substantially all the
residential retail store assets of Shaw Industries, Inc. and its wholly
owned subsidiary, Shaw Carpet Showplace, Inc., pursuant to an Agreement
and Plan of Merger dated June 23, 1998).
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<PAGE> 24
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE MAXIM GROUP, INC.
Dated: December 7, 1998 By: /s/ A. J. Nassar
----------------------------------------
A. J. Nassar, President and Chief
Executive Officer
Dated: December 7, 1998 By: /s/ Gary Brugliera
----------------------------------------
Gary Brugliera, Chief Financial Officer
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<PAGE> 1
EXHIBIT 10.23
CREDIT AGREEMENT
among
THE MAXIM GROUP, INC.
as Borrower,
AND
THE DOMESTIC SUBSIDIARIES OF THE BORROWER
as Guarantors,
AND
THE LENDERS IDENTIFIED HEREIN,
AND
NATIONSBANK, N.A.,
as Administrative Agent
AND
SUNTRUST BANK, ATLANTA
as Documentation Agent
AND
FLEET NATIONAL BANK
as Co-Agent
DATED AS OF NOVEMBER 25, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
SECTION 1 DEFINITIONS AND ACCOUNTING TERMS.......................................................................1
1.1 Definitions..........................................................................................1
1.2 Computation of Time Periods and Other Definitional Provisions.......................................25
1.3 Accounting Terms....................................................................................25
SECTION 2 CREDIT FACILITIES.....................................................................................26
2.1 Revolving Loans.....................................................................................26
2.2 Letter of Credit Subfacility........................................................................28
2.3 Stand Alone Letter of Credit Facility...............................................................32
2.4 Indemnification of Issuing Lender...................................................................35
2.5 Continuations and Conversions.......................................................................36
2.6 Minimum Amounts.....................................................................................37
SECTION 3 GENERAL PROVISIONS APPLICABLE TO LOANS AND LETTERS OF CREDIT..........................................37
3.1 Interest............................................................................................37
3.2 Place and Manner of Payments........................................................................37
3.3 Prepayments.........................................................................................38
3.4 Fees................................................................................................39
3.5 Payment in full at Maturity.........................................................................40
3.6 Computations of Interest and Fees...................................................................40
3.7 Pro Rata Treatment..................................................................................41
3.8 Sharing of Payments.................................................................................42
3.9 Capital Adequacy....................................................................................43
3.10 Inability To Determine Interest Rate...............................................................43
3.11 Illegality.........................................................................................44
3.12 Requirements of Law................................................................................44
3.13 Taxes..............................................................................................45
3.14 Compensation.......................................................................................47
3.15 Evidence of Debt...................................................................................48
3.16 Replacement of Lenders.............................................................................48
SECTION 4 GUARANTY..............................................................................................49
4.1 Guaranty of Payment.................................................................................49
4.2 Obligations Unconditional...........................................................................49
4.3 Modifications.......................................................................................50
4.4 Waiver of Rights....................................................................................51
4.5 Reinstatement.......................................................................................51
4.6 Remedies............................................................................................51
4.7 Limitation of Guaranty..............................................................................51
4.8 Rights of Contribution..............................................................................52
</TABLE>
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<TABLE>
<S> <C> <C>
SECTION 5 CONDITIONS PRECEDENT..................................................................................52
5.1 Closing Conditions..................................................................................52
5.2 Conditions to All Extensions of Credit..............................................................56
SECTION 6 REPRESENTATIONS AND WARRANTIES........................................................................57
6.1 Financial Condition.................................................................................57
6.2 No Material Change..................................................................................57
6.3 Organization and Good Standing......................................................................57
6.4 Due Authorization...................................................................................58
6.5 No Conflicts........................................................................................58
6.6 Consents............................................................................................58
6.7 Enforceable Obligations.............................................................................58
6.8 No Default..........................................................................................59
6.9 Ownership...........................................................................................59
6.10 Indebtedness.......................................................................................59
6.11 Litigation.........................................................................................59
6.12 Taxes..............................................................................................59
6.13 Compliance with Law................................................................................59
6.14 ERISA..............................................................................................60
6.15 Subsidiaries.......................................................................................61
6.16 Use of Proceeds....................................................................................61
6.17 Government Regulation..............................................................................61
6.18 Environmental Matters..............................................................................62
6.19 Intellectual Property..............................................................................63
6.20 Solvency...........................................................................................64
6.21 Investments........................................................................................64
6.22 Location of Collateral.............................................................................64
6.23 Disclosure.........................................................................................64
6.24 Licenses, etc......................................................................................64
6.25 Collateral Documents...............................................................................65
6.26 Burdensome Restrictions............................................................................65
SECTION 7 AFFIRMATIVE COVENANTS.................................................................................66
7.1 Information Covenants...............................................................................66
7.2 Financial Covenants.................................................................................70
7.3 Preservation of Existence and Franchises............................................................70
7.4 Books and Records...................................................................................70
7.5 Compliance with Law.................................................................................71
7.6 Payment of Taxes and Other Indebtedness.............................................................71
7.7 Insurance...........................................................................................71
7.8 Maintenance of Property.............................................................................72
7.9 Performance of Obligations..........................................................................72
7.10 Collateral.........................................................................................72
7.11 Use of Proceeds....................................................................................73
7.12 Audits/Inspections.................................................................................73
</TABLE>
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<TABLE>
<S> <C> <C>
7.13 Additional Credit Parties..........................................................................73
7.14 Purchase Agreement.................................................................................74
7.15 Year 2000 Compliance...............................................................................74
SECTION 8 NEGATIVE COVENANTS....................................................................................74
8.1 Indebtedness........................................................................................74
8.2 Liens...............................................................................................76
8.3 Nature of Business..................................................................................76
8.4 Consolidation and Merger............................................................................76
8.5 Sale or Lease of Assets.............................................................................77
8.6 Sale Leasebacks.....................................................................................77
8.7 Advances, Investments and Loans.....................................................................78
8.8 Restricted Payments.................................................................................78
8.9 Transactions with Affiliates........................................................................78
8.10 Fiscal Year; Organizational Documents..............................................................78
8.11 No Limitations.....................................................................................78
8.12 No Other Negative Pledges..........................................................................79
8.13 Limitation on Foreign Operations...................................................................79
8.14 Capital Expenditures...............................................................................79
8.15 Prepayments of Indebtedness........................................................................79
8.16 Subordinated Debt..................................................................................80
8.17 Limitation on Store Openings.......................................................................80
SECTION 9 EVENTS OF DEFAULT.....................................................................................80
9.1 Events of Default...................................................................................80
9.2 Acceleration; Remedies..............................................................................83
9.3 Allocation of Payments After Event of Default.......................................................84
SECTION 10 AGENCY PROVISIONS....................................................................................85
10.1 Appointment........................................................................................85
10.2 Delegation of Duties...............................................................................86
10.3 Exculpatory Provisions.............................................................................86
10.4 Reliance on Communications.........................................................................87
10.5 Notice of Default..................................................................................87
10.6 Non-Reliance on Administrative Agent and Other Lenders.............................................88
10.7 Indemnification....................................................................................88
10.8 Administrative Agent in Its Individual Capacity....................................................89
10.9 Successor Administrative Agent.....................................................................89
SECTION 11 MISCELLANEOUS........................................................................................89
11.1 Notices............................................................................................89
11.2 Right of Set-Off...................................................................................90
11.3 Benefit of Agreement...............................................................................90
11.4 No Waiver; Remedies Cumulative.....................................................................93
11.5 Payment of Expenses; Indemnification...............................................................93
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
11.6 Amendments, Waivers and Consents...................................................................94
11.7 Counterparts/Telecopy..............................................................................95
11.8 Headings...........................................................................................95
11.9 Defaulting Lender..................................................................................96
11.10 Survival of Indemnification and Representations and Warranties....................................96
11.11 Governing Law; Jurisdiction.......................................................................96
11.12 Waiver of Jury Trial..............................................................................97
11.13 Time..............................................................................................97
11.14 Severability......................................................................................97
11.15 Further Assurances................................................................................97
11.16 Confidentiality...................................................................................97
11.17 Entirety..........................................................................................98
11.18 Binding Effect; Continuing Agreement..............................................................98
</TABLE>
SCHEDULES
Schedule 1.1(a) Commitment Percentages
Schedule 1.1(b) Indenture Default
Schedule 1.1(c) Permitted Liens
Schedule 2.2(c) Existing Revolving Letters of Credit
Schedule 2.3(c) Existing Stand Alone Letter of Credit
Schedule 6.10 Indebtedness
Schedule 6.15 Subsidiaries
Schedule 6.19 Intellectual Property
Schedule 6.22(a) Real Property Locations
Schedule 6.22(b) Personal Property Locations
Schedule 6.22(c) Chief Executive Offices
Schedule 7.7 Insurance
Schedule 11.1 Notices
EXHIBITS
Exhibit 2.1(b) Form of Notice of Borrowing
Exhibit 2.1(f) Form of Revolving Note
Exhibit 2.5 Form of Notice of Continuation/Conversion
Exhibit 7.1(c) Form of Officer's Certificate
Exhibit 7.13 Form of Joinder Agreement
Exhibit 10.1(b) Form of Intercreditor Agreement
Exhibit 11.3(b) Form of Assignment Agreement
iv
<PAGE> 6
CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "Credit Agreement"), is entered into as of
November 25, 1998 among THE MAXIM GROUP, INC., a Delaware corporation (the
"Borrower"), each of the Domestic Subsidiaries of the Borrower (individually a
"Guarantor" and collectively the "Guarantors"), the Lenders (as defined herein)
and NATIONSBANK, N.A., as Administrative Agent for the Lenders (in such
capacity, the "Administrative Agent"), SUNTRUST BANK, ATLANTA, as Documentation
Agent (in such capacity, the "Documentation Agent") and FLEET NATIONAL BANK, as
Co-Agent (in such capacity, the "Co-Agent").
RECITALS
WHEREAS, the Borrower and the Guarantors have requested the Lenders to
provide a senior secured credit facility in an amount up to $126 million; and
WHEREAS, the Lenders party hereto have agreed to make the requested
senior secured credit facility available to the Borrower on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITIONS AND ACCOUNTING TERMS
1.1 Definitions.
As used herein, the following terms shall have the meanings herein
specified unless the context otherwise requires. Defined terms herein shall
include in the singular number the plural and in the plural the singular:
"Additional Credit Party" means each Person that becomes a
Guarantor after the Closing Date, as provided in Section 7.13.
"Adjusted Base Rate" means the Base Rate plus the Applicable
Percentage.
"Adjusted Eurodollar Rate" means the Eurodollar Rate plus the
Applicable Percentage.
"Administrative Agent" shall have the meaning assigned to such
term in the heading hereof (or any successor thereto) or any successor
agent appointed pursuant to Section 10.9.
<PAGE> 7
"Affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling (including but not limited to
all directors and officers of such Person), controlled by or under
direct or indirect common control with such Person. A Person shall be
deemed to control a corporation if such Person possesses, directly or
indirectly, the power (a) to vote 10% or more of the securities having
ordinary voting power for the election of directors of such corporation
or (b) to direct or cause direction of the management and policies of
such corporation, whether through the ownership of voting securities,
by contract or otherwise.
"Agency Services Address" means NationsBank, N.A.,
NC1-001-15-04, 101 North Tryon Street, Charlotte, North Carolina 28255,
Attn: Agency Services, or such other address as may be identified by
written notice from the Administrative Agent to the Borrower.
"Applicable Percentage" means the appropriate applicable
percentages corresponding to the Leverage Ratio in effect as of the
most recent Calculation Date as shown below:
<TABLE>
<CAPTION>
- ------------- ---------------------- ------------------- ------------------- ------------------------ -----------------------
Applicable Percentage
Applicable Applicable Applicable Percentage for Commitment Fees
Pricing Leverage Percentage for Percentage for for Standby Letter of and Trade Letter of
Level Ratio Eurodollar Loans Base Rate Loans Credit Fees Credit Fees
- ------------- ---------------------- ------------------- ------------------- ------------------------ -----------------------
<S> <C> <C> <C> <C> <C>
I <2.25 to 1.0 .75% 0% .75% .20%
=
- ------------- ---------------------- ------------------- ------------------- ------------------------ -----------------------
II <2.75 to 1.0 but 1.0% 0% 1.0% .25%
=
>2.25 to 1.0
- ------------- ---------------------- ------------------- ------------------- ------------------------ -----------------------
III <3.25 to 1.0 but 1.25% 0% 1.25% .25%
=
>2.75 to 1.0
- ------------- ---------------------- ------------------- ------------------- ------------------------ -----------------------
IV <3.75 to 1.0 but 1.50% 0% 1.50% .375%
=
>3.25 to 1.0
- ------------- ---------------------- ------------------- ------------------- ------------------------ -----------------------
V >3.75 to 1.0 1.75% .25% 1.75% .375%
- ------------- ---------------------- ------------------- ------------------- ------------------------ -----------------------
</TABLE>
The Applicable Percentage for Loans, the Standby Letter of
Credit Fees, the Trade Letter of Credit Fees and the Commitment Fees
shall, in each case, be determined and adjusted quarterly on the date
(each a "Calculation Date") five Business Days after the date by which
the Borrower is required to provide the officer's certificate in
accordance with the provisions of Section 7.1(c); provided that the
initial Applicable Percentage for Loans, the Letter of Credit Fees and
the Commitment Fees shall be based on Pricing Level V (as shown above)
and shall remain at Pricing Level V until the first Calculation Date
subsequent to the Closing Date, and, thereafter, the Applicable
Percentage shall be determined by the Leverage Ratio calculated as of
the most recent Calculation Date; and provided further that if the
Borrower fails to provide the officer's certificate required by Section
7.1(c) on or before the most recent Calculation Date, the Applicable
Percentage for Loans, the Standby Letter of Credit Fees, the Trade
Letter of Credit Fees and the Commitment Fees from such Calculation
Date shall be based on Pricing Level V until such time that an
appropriate officer's certificate is provided whereupon the Applicable
2
<PAGE> 8
Percentage shall be determined by the then current Leverage Ratio. Each
Applicable Percentage shall be effective from one Calculation Date
until the next Calculation Date. Any adjustment in the Applicable
Percentage shall be applicable to all existing Loans and Letters of
Credit as well as any new Loans made or Letters of Credit issued.
The Borrower shall promptly deliver to the Administrative
Agent, at the address set forth on Schedule 11.1 and at the Agency
Services Address, at the time the officer's certificate is required to
be delivered by Section 7.1(c), information regarding any change in the
Leverage Ratio that would change the existing Applicable Percentage
pursuant to the preceding paragraph.
"Asset Coverage Ratio" means with respect to the Maxim Group
Parties on a consolidated basis, as of the end of each fiscal quarter
of the Borrower, the ratio of (a) the sum of Eligible Receivables plus
Eligible Inventory on such date to (b) the sum of (i) the aggregate
amount of Revolving Loans outstanding on such date plus (ii) the
aggregate amount available to be drawn under trade Revolving Letters of
Credit on such date.
"Asset Disposition" means the disposition of any or all of the
assets of a Credit Party or any of its Subsidiaries whether by sale,
lease, transfer or otherwise, other than (a) transfers of assets
permitted by Section 8.5 and (b) losses of assets or destroyed assets
permitted by clauses (a) and (b) of Section 7.7.
"Bankruptcy Code" means the Bankruptcy Code in Title 11 of the
United States Code, as amended, modified, succeeded or replaced from
time to time.
"Base Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest whole multiple of 1/100 of 1%)
equal to the greater of (a) the Federal Funds Rate in effect on such
day plus 1/2 of 1% or (b) the Prime Rate in effect on such day. If for
any reason the Administrative Agent shall have determined (which
determination shall be conclusive absent manifest error) that it is
unable after due inquiry to ascertain the Federal Funds Rate for any
reason, including the inability or failure of the Administrative Agent
to obtain sufficient quotations in accordance with the terms hereof,
the Base Rate shall be determined without regard to clause (a) of the
first sentence of this definition until the circumstances giving rise
to such inability no longer exist. Any change in the Base Rate due to a
change in the Prime Rate or the Federal Funds Rate shall be effective
on the effective date of such change in the Prime Rate or the Federal
Funds Rate, respectively.
"Base Rate Loan" means any Loan bearing interest at a rate
determined by reference to the Base Rate.
"Bonds" means those Revenue Bonds (Image Industries, Inc.,
Project), Series 1997 in the original aggregate principal amount of
$30,000,000 issued by Development Authority of the City of Summerville,
Georgia.
3
<PAGE> 9
"Borrower" means The Maxim Group, Inc., a Delaware
corporation, together with any successors and permitted assigns.
"Business Day" means any day other than a Saturday, a Sunday,
a legal holiday or a day on which banking institutions are authorized
or required by law or other governmental action to close in Charlotte,
North Carolina; provided that in the case of Eurodollar Loans, such day
is also a day on which dealings between banks are carried on in U.S.
dollar deposits in the London interbank market.
"Calculation Date" has the meaning set forth in the definition
of Applicable Percentage.
"Capital Expenditures" means all expenditures of the Credit
Parties and their Subsidiaries which, in accordance with GAAP, would be
classified as capital expenditures, including, without limitation,
Capital Leases.
"Capital Lease" means, as applied to any Person, any lease of
any property (whether real, personal or mixed) by that Person as lessee
which, in accordance with GAAP, is or should be accounted for as a
capital lease on the balance sheet of that Person and the amount of
such obligation shall be the capitalized amount thereof determined in
accordance with GAAP.
"Cash Equivalents" means (a) securities issued or directly and
fully guaranteed or insured by the United States of America or any
agency or instrumentality thereof (provided that the full faith and
credit of the United States of America is pledged in support thereof)
having maturities of not more than twelve months from the date of
acquisition, (b) U.S. dollar denominated time and demand deposits and
certificates of deposit of (i) any Lender, (ii) any domestic commercial
bank having capital and surplus in excess of $500,000,000 or (iii) any
bank whose short-term commercial paper rating from S&P is at least A-1
or the equivalent thereof or from Moody's is at least P-1 or the
equivalent thereof (any such bank being an "Approved Bank"), in each
case with maturities of not more than 270 days from the date of
acquisition, (c) commercial paper and variable or fixed rate notes
issued by any Approved Bank (or by the parent company thereof) or any
variable rate notes issued by, or guaranteed by, any domestic
corporation rated A-1 (or the equivalent thereof) or better by S&P or
P-1 (or the equivalent thereof) or better by Moody's and maturing
within six months of the date of acquisition, (d) repurchase agreements
with a bank or trust company (including any of the Lenders) or
recognized securities dealer having capital and surplus in excess of
$500,000,000 for direct obligations issued by or fully guaranteed by
the United States of America in which the Borrower shall have a
perfected first priority security interest (subject to no other Liens)
and having, on the date of purchase thereof, a fair market value of at
least 100% of the amount of the repurchase obligations and (e)
Investments, classified in accordance with GAAP as current assets, in
money market investment programs registered under the Investment
Company Act of 1940, as amended, which are administered by reputable
financial institutions having capital of at least $500,000,000 and
4
<PAGE> 10
the portfolios of which are limited to Investments of the character
described in the foregoing subdivisions (a) through (d).
"Change of Control" means either of the following: (a) any
"person" or "group" (within the meaning of Section 13(d) or 14(d) of
the Exchange Act), has become, directly or indirectly, the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act,
except that a Person shall be deemed to have "beneficial ownership" of
all shares that any such Person has the right to acquire, whether such
right is exercisable immediately or only after the passage of time), by
way of merger, consolidation or otherwise, of 25% or more of the Voting
Stock of the Borrower on a fully-diluted basis, after giving effect to
the conversion and exercise of all outstanding warrants, options and
other securities of the Borrower (whether or not such securities are
then currently convertible or exercisable); or (b) during any period of
two consecutive calendar years, individuals who at the beginning of
such period constituted the board of directors of the Borrower cease
for any reason to constitute a majority of the directors of the
Borrower then in office unless such new directors were elected by the
directors of the Borrower who constituted the board of directors of the
Borrower at the beginning of such period.
"Closing Date" means the date hereof.
"Co-Agent" shall have the meaning assigned to such term in the
heading hereof, together with any successors and assigns.
"Code" means the Internal Revenue Code of 1986 and the rules
and regulations promulgated thereunder, as amended, modified, succeeded
or replaced from time to time.
"Collateral" means all assets of the Credit Parties in which,
pursuant to the Collateral Documents, a Lien has been granted in favor
of the Administrative Agent, for the benefit of the Lenders.
"Collateral Documents" means the Security Agreements, the
Pledge Agreements, and such other documents executed and delivered in
connection with the attachment and perfection of the Administrative
Agent's security interests in the assets of the Credit Parties,
including without limitation, the UCC financing statements.
"Commitment Fees" means the fees payable to the Lenders
pursuant to Section 3.4(a).
"Commitments" means (i) with respect to each Lender, the
Revolving Loan Commitment and (ii) with respect to the Issuing Lender,
the LOC Commitment and the Stand Alone LOC Commitment.
"Credit Documents" means this Credit Agreement, the Notes, any
Joinder Agreement, the Collateral Documents, the LOC Documents, and all
other related
5
<PAGE> 11
agreements and documents issued or delivered hereunder or thereunder or
pursuant hereto or thereto.
"Credit Parties" means the Borrower and the Guarantors and
"Credit Party" means any one of them.
"Credit Party Obligations" means, without duplication, (a) all
of the obligations of the Credit Parties to the Lenders (including the
Issuing Lender) and the Administrative Agent, whenever arising, under
this Credit Agreement, the Notes, the Collateral Documents or any of
the other Credit Documents to which any Credit Party is a party and (b)
all liabilities and obligations owing from such Credit Party to any
Lender, or any Affiliate of a Lender, arising under Hedging Agreements.
"Debt Issuance" means the issuance of any Indebtedness for
borrowed money by a Credit Party or any of its Subsidiaries, other than
Indebtedness permitted by Section 8.1.
"Default" means any event, act or condition which with notice
or lapse of time, or both, would constitute an Event of Default.
"Defaulting Lender" means, at any time, any Lender that, (a)
has failed to make a Loan or purchase a Participation Interest required
pursuant to the terms of this Credit Agreement (but only for so long as
such Loan is not made or such Participation Interest is not purchased),
(b) has failed to pay to the Administrative Agent or any Lender an
amount owed by such Lender pursuant to the terms of this Credit
Agreement (but only for so long as such amount has not been repaid) or
(c) has been deemed insolvent or has become subject to a bankruptcy or
insolvency proceeding or to a receiver, trustee or similar official.
"Documentation Agent" shall have the meaning assigned to such
term in the heading hereof, together with any successors or assigns.
"Dollars" and "$" means dollars in lawful currency of the
United States of America.
"Domestic Subsidiary" means each direct and indirect
Subsidiary of the Borrower that is domiciled, incorporated or organized
under the laws of any state of the United States or the District of
Columbia whether existing as of the date hereof or hereafter created or
acquired. As of the Closing Date, the Domestic Subsidiaries are as set
forth on Schedule 6.15.
"EBITDA" means, for any period, with respect to the Maxim
Group Parties on a consolidated basis, without duplication, the sum of
(a) Net Income for such period (excluding the effect of any
extraordinary or other non-recurring gains (including any gain from the
sale of property) or non-cash losses) plus (b) an amount which, in the
determination of Net Income for such period has been deducted for (i)
Interest Expense for such period, (ii) total Federal, state, foreign or
other income or franchise taxes for such period and (iii) all
depreciation and amortization for such period, all as determined in
6
<PAGE> 12
accordance with GAAP plus (c) for the fiscal quarter ending July 31,
1998, $33,000,000 in non-cash charges of the Maxim Group Parties for
such period.
"EBITDAR" means, for any period, with respect to the Maxim
Group Parties on a consolidated basis, without duplication, the sum of
(a) Net Income for such period (excluding the effect of any
extraordinary or other non-recurring gains (including any gain from the
sale of property) or non-cash losses) plus (b) an amount which, in the
determination of Net Income for such period has been deducted for (i)
Interest Expense for such period, (ii) total Federal, state, foreign or
other income or franchise taxes for such period, (iii) all depreciation
and amortization for such period, and (iv) Rent Expense for such
period, all as determined in accordance with GAAP plus (c) for the
fiscal quarter ending July 31, 1998, $33,000,000 in non-cash charges of
the Maxim Group Parties for such period.
"Effective Date" means the date on which the conditions set
forth in Section 5.1 shall have been fulfilled (or waived in the sole
discretion of the Lenders) and on which the initial Loans shall have
been made and/or the initial Letters of Credit shall have been issued.
"Eligible Assignee" means (a) any Lender; (b) an Affiliate of
a Lender; and (c) any other Person approved by the Administrative Agent
and the Borrower (such approval not to be unreasonably withheld or
delayed); provided that (i) the Borrower's consent is not required
during the existence and continuation of an Event of Default, (ii)
approval by the Borrower shall be deemed given if no objection is
received by the assigning Lender and the Administrative Agent from the
Borrower within two Business Days after notice of such proposed
assignment has been received by the Borrower; and (iii) neither the
Borrower nor an Affiliate of the Borrower shall qualify as an Eligible
Assignee.
"Eligible Inventory" means, as of any date of determination
and without duplication, the lower of (a) the aggregate book value
(based on a FIFO or a moving average cost valuation, consistently
applied) or (b) fair market value of all raw materials and finished
goods inventory owned by any Maxim Group Party and in which
NationsBank, in its capacity as agent for the benefit of the Lenders
and the TROL Lenders has a first priority security interest, in either
case, less appropriate reserves determined in accordance with GAAP, but
excluding in any event (a) inventory subject to any Lien other than
liens in favor of NationsBank, in its capacity as agent for the benefit
of the Lenders and the TROL Lenders, (b) inventory which is not in good
condition or fails to meet standards for sale or use imposed by
governmental agencies, departments or divisions having regulatory
authority over such goods, (c) inventory which is discontinued or not
useable or saleable at prices approximating their cost in the ordinary
course of the applicable Maxim Group Party's business (including
without duplication the amount of any reserves for obsolescence,
unsalability or decline in value), (d) inventory located outside of the
United States, (e) inventory located at a location not owned or leased
by the applicable Maxim Group Party unless the Administrative Agent has
received a waiver and estoppel agreement, reasonably satisfactory to
the Administrative Agent, from the owner/operator of such location,
and, if deemed appropriate by the Administrative Agent, a UCC financing
7
<PAGE> 13
statement has been filed with respect to such location, (f) inventory
located at a location leased by the applicable Maxim Group Party at
which such Maxim Group Party maintains in excess of $400,000 of
inventory and with respect to which the Administrative Agent shall not
have received a landlord's waiver and estoppel agreement in a form
reasonably satisfactory to the Administrative Agent and (g) inventory
which is leased or on consignment.
"Eligible Receivables" means, at any time, the aggregate book
value of all accounts receivable, receivables, and obligations for
payment created or arising from the sale of inventory or the rendering
of services in the ordinary course of business (collectively, the
"Receivables") owned by or owing to the Maxim Group Parties, net of
allowances and reserves for doubtful or uncollectible accounts and
sales adjustments consistent with the Borrower's internal policies and
in any event in accordance with GAAP but excluding in any event (i)
Receivables subject to any Lien, other than Liens securing Credit Party
Obligations and Liens in favor of NationsBank, in its capacity as agent
for the benefit of the TROL Lenders, (ii) Receivables which are more
than 90 days past due (net of reserves for bad debts in connection with
any such Receivables), (iii) Receivables for which any Maxim Retail
Party is the account debtor and (iv) Receivables owing by an account
debtor located outside of the United States (unless payment for the
goods shipped is secured by an irrevocable letter of credit in a form
and from an institution acceptable to the Administrative Agent). It is
specifically understood and agreed that the accounts receivable and
receivables purchased or established by GE Capital under the GE Capital
Program and accounts receivable and receivables purchased or
established by Monogram under the Monogram Program are not owned or
owing to the Credit Parties, and therefore will not be included in the
definition of Eligible Receivables.
"Environmental Claim" means any investigation, written notice,
violation, written demand, written allegation, action, suit,
injunction, judgment, order, consent decree, penalty, fine, lien,
proceeding, or written claim whether administrative, judicial, or
private in nature arising (a) pursuant to, or in connection with, an
actual or alleged violation of, any Environmental Law, (b) in
connection with any Hazardous Material, (c) from any assessment,
abatement, removal, remedial, corrective, or other response action in
connection with an Environmental Law or other order of a Governmental
Authority or (d) from any actual or alleged damage, injury, threat, or
harm to health, safety, natural resources, or the environment.
"Environmental Laws" means any current or future legal
requirement of any Governmental Authority pertaining to (a) the
protection of health, safety, and the indoor or outdoor environment,
(b) the conservation, management, or use of natural resources and
wildlife, (c) the protection or use of surface water and groundwater or
(d) the management, manufacture, possession, presence, use, generation,
transportation, treatment, storage, disposal, release, threatened
release, abatement, removal, remediation or handling of, or exposure
to, any hazardous or toxic substance or material or (e) pollution
(including any release to land surface water and groundwater) and
includes, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as
8
<PAGE> 14
amended by the Superfund Amendments and Reauthorization Act of 1986, 42
USC 9601 et seq., Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act of 1976 and Hazardous and Solid Waste
Amendments of 1984, 42 USC 6901 et seq., Federal Water Pollution
Control Act, as amended by the Clean Water Act of 1977, 33 USC 1251 et
seq., Clean Air Act of 1966, as amended, 42 USC 7401 et seq., Toxic
Substances Control Act of 1976, 15 USC 2601 et seq., Hazardous
Materials Transportation Act, 49 USC App. 1801 et seq., Occupational
Safety and Health Act of 1970, as amended, 29 USC 651 et seq., Oil
Pollution Act of 1990, 33 USC 2701 et seq., Emergency Planning and
Community Right-to-Know Act of 1986, 42 USC 11001 et seq., National
Environmental Policy Act of 1969, 42 USC 4321 et seq., Safe Drinking
Water Act of 1974, as amended, 42 USC 300(f) et seq., any analogous
implementing or successor law, and any amendment, rule, regulation,
order, or directive issued thereunder.
"Equity Issuance" means any issuance by a Credit Party to any
Person of (a) shares of its capital stock or other equity interests,
(b) any shares of its capital stock or other equity interests pursuant
to the exercise of options or warrants or (c) any shares of its capital
stock or other equity interests pursuant to the conversion of any debt
securities to equity.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto, as interpreted by
the rules and regulations thereunder, all as the same may be in effect
from time to time. References to sections of ERISA shall be construed
also to refer to any successor sections.
"ERISA Affiliate" means an entity, whether or not
incorporated, which is under common control with any Credit Party or
any of its Subsidiaries within the meaning of Section 4001(a)(14) of
ERISA, or is a member of a group which includes any Credit Party or any
of its Subsidiaries and which is treated as a single employer under
Sections 414(b), (c), (m), or (o) of the Code.
"Eurodollar Loan" means a Loan bearing interest based at a
rate determined by reference to the Eurodollar Rate.
"Eurodollar Rate" means, for the Interest Period for each
Eurodollar Loan comprising part of the same borrowing (including
conversions, extensions and renewals), a per annum interest rate
determined pursuant to the following formula:
Eurodollar Rate = London Interbank Offered Rate
-----------------------------------------
1 - Eurodollar Reserve Percentage
"Eurodollar Reserve Percentage" means for any day, that
percentage (expressed as a decimal) which is in effect from time to
time under Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as such regulation may be amended
from time to time or any successor regulation, as the maximum reserve
requirement (including, without limitation, any basic, supplemental,
emergency, special, or marginal reserves) applicable with respect to
Eurocurrency liabilities as that term is defined in Regulation D
9
<PAGE> 15
(or against any other category of liabilities that includes deposits by
reference to which the interest rate of Eurodollar Loans is
determined), whether or not a Lender has any Eurocurrency liabilities
subject to such reserve requirement at that time. Eurodollar Loans
shall be deemed to constitute Eurocurrency liabilities and as such
shall be deemed subject to reserve requirements without benefits of
credits for proration, exceptions or offsets that may be available from
time to time to a Lender. The Eurodollar Rate shall be adjusted
automatically on and as of the effective date of any change in the
Eurodollar Reserve Percentage.
"Event of Default" means any of the events or circumstances
specified in Section 9.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder, as
amended, modified, succeeded or replaced from time to time.
"Executive Officer" means any chief executive officer, chief
operating officer, executive vice president of finance, chief financial
officer, president, vice president or treasurer of the Borrower.
"Existing Revolving Letters of Credit" means the letters of
credit described on Schedule 2.2(c).
"Existing Stand Alone Letter of Credit" means the letter of
credit described on Schedule 2.3(c).
"Extension of Credit" means, as to any Lender, the making of a
Loan by such Lender (or a participation therein by a Lender) or the
issuance of, or participation in, a Letter of Credit by such Lender.
"Federal Funds Rate" means for any day the rate per annum
(rounded upward, if necessary, to the nearest 1/100th of 1%) equal to
the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by
Federal funds brokers on such day, as published by the Federal Reserve
Bank of New York on the Business Day next succeeding such day; provided
that (a) if such day is not a Business Day, the Federal Funds Rate for
such day shall be such rate on such transactions on the next preceding
Business Day and (b) if no such rate is so published on such next
preceding Business Day, the Federal Funds Rate for such day shall be
the average rate quoted to the Administrative Agent on such day on such
transactions as determined by the Administrative Agent.
"Fee Letter" means that certain letter agreement among the
Borrower, NMS and the Administrative Agent dated as of August 4, 1998.
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<PAGE> 16
"First Tier Foreign Subsidiary" means each Foreign Subsidiary
which is owned directly by a Credit Party.
"Foreign Subsidiary" means any Subsidiary of the Borrower or
any other Credit Party that is not a Domestic Subsidiary.
"Funded Debt" means, with respect to any Person without
duplication, the sum of (a) all Indebtedness of such Person for
borrowed money, (b) all purchase money Indebtedness of such Person, (c)
the principal portion of all obligations of such Person under Capital
Leases, (d) all obligations, contingent or otherwise, relative to the
face amount of all letters of credit (other than letters of credit
supporting inventory purchases in the ordinary course of business),
whether or not drawn, and banker's acceptances issued for the account
of such Person (it being understood that, to the extent an undrawn
letter of credit supports another obligation consisting of
Indebtedness, in calculating aggregated Indebtedness only such other
obligation shall be included), (e) all Guaranty Obligations of such
Person with respect to Funded Debt of another Person, (f) all Funded
Debt of another entity secured by a Lien on any property of such Person
whether or not such Funded Debt has been assumed by such Person, (g)
all Funded Debt of any partnership or unincorporated joint venture to
the extent such Person is legally obligated or has a reasonable
expectation of being liable with respect thereto, net of any assets of
such partnership or joint venture and (h) the principal portion of all
obligations of such Person under Synthetic Leases (including without
limitation the principal portion of obligations due under the
Participation Agreement and the Operative Agreements (as defined in the
Participation Agreement)).
"GAAP" means generally accepted accounting principles in the
United States applied on a consistent basis and subject to Section 1.3.
"GE Capital" means General Electric Capital Corporation, a
New York corporation.
"GE Capital Dealer Agreement" means any Shaw Business
Revolving Credit Card Program Business Revolving Charge Dealer
Agreement by and among Maxim Retail, C&S Textiles, Inc., the Borrower
and GE Capital and any other credit card program revolving charge
dealer agreement entered into by and among Maxim Retail, C&S Textiles,
Borrower and GE Capital.
"GE Capital Program" means any program established by GE
Capital under which GE Capital extends credit to certain customers of
Maxim Retail and C&S Textiles, Inc. for the purchase of goods, services
and other products from Maxim Retail and C&S Textiles, Inc.
"Governmental Authority" means any Federal, state, local,
provincial or foreign court or governmental agency, authority,
instrumentality or regulatory body.
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<PAGE> 17
"Guarantor" means each of the Domestic Subsidiaries of the
Borrower and each Additional Credit Party which has executed a Joinder
Agreement or otherwise become a Guarantor hereunder, together with
their successors and assigns.
"Guaranty Obligations" means, with respect to any Person,
without duplication, any obligations (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or
collection) guaranteeing any Indebtedness of any other Person in any
manner, whether direct or indirect, and including without limitation
any obligation, whether or not contingent, (a) to purchase any such
Indebtedness or other obligation or any property constituting security
therefor, (b) to advance or provide funds or other support for the
payment or purchase of such Indebtedness or obligation or to maintain
working capital, solvency or other balance sheet condition of such
other Person (including, without limitation, maintenance agreements,
comfort letters, take or pay arrangements, put agreements or similar
agreements or arrangements) for the benefit of the holder of
Indebtedness of such other Person, (c) to lease or purchase property,
securities or services primarily for the purpose of assuring the owner
of such Indebtedness or (d) to otherwise assure or hold harmless the
owner of such Indebtedness or obligation against loss in respect
thereof. The amount of any Guaranty Obligation hereunder shall (subject
to any limitations set forth therein) be deemed to be an amount equal
to the outstanding principal amount (or maximum principal amount, if
larger) of the Indebtedness in respect of which such Guaranty
Obligation is made.
"Hazardous Materials" means any substance, material or waste
defined in or regulated under any Environmental Laws.
"Hedging Agreements" means any interest rate protection
agreements, foreign currency exchange agreements, or other interest or
exchange rate hedging agreements, in each case, entered into or
purchased by a Credit Party by or from any Lender or any Affiliate of
any Lender.
"Image Industries" means Image Industries, Inc., a Delaware
corporation.
"Indebtedness" of any Person means, without duplication, (a)
all obligations of such Person for borrowed money, (b) all obligations
of such Person evidenced by bonds, debentures, notes or similar
instruments, or upon which interest payments are customarily made (c)
all obligations of such Person under conditional sale or other title
retention agreements relating to property purchased by such Person to
the extent of the value of such property (other than customary
reservations or retentions of title under agreements with suppliers
entered into in the ordinary course of business), (d) all obligations,
other than intercompany items, of such Person issued or assumed as the
deferred purchase price of property or services purchased by such
Person which would appear as liabilities on a balance sheet of such
Person, (e) all Indebtedness of others secured by (or for which the
holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on, or payable out of the
proceeds of production from, property owned or acquired by such Person,
whether or not the obligations secured thereby have been assumed, (f)
all
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<PAGE> 18
Guaranty Obligations of such Person, (g) the principal portion of all
obligations of such Person under (i) Capital Leases and (ii) Synthetic
Leases, (h) all net obligations of such Person in respect of hedging
agreements, foreign currency exchange obligations, and commodity
futures agreements, (i) the maximum amount of all performance and
standby letters of credit issued or bankers' acceptances facilities
created for the account of such Person and, without duplication, all
drafts drawn thereunder (to the extent unreimbursed), (j) all preferred
stock issued by such Person and required by the terms thereof to be
redeemed, or for which mandatory sinking fund payments are due by a
fixed date, (k) the aggregate amount of uncollected accounts receivable
of such Person subject at such time to a sale of receivables (or
similar transaction) regardless of whether such transaction is effected
without recourse to such Person or in a manner that would not be
reflected on the balance sheet of such Person in accordance with GAAP,
and (l) all obligations of such Person to repurchase any securities
which repurchase obligation is related to the issuance thereof,
including, without limitation, obligations commonly known as residual
equity appreciation potential shares. The Indebtedness of any Person
shall include the Indebtedness of any partnership or unincorporated
joint venture in which such Person is legally obligated. The
Indebtedness of any Person shall not include any obligations of such
Person under Operating Leases which are not Capital Leases or Synthetic
Leases.
"Indenture" means that certain Indenture dated as of October
16, 1997 among the Borrower, as issuer, the Borrower and certain
Subsidiaries of the Borrower, as guarantors and State Street Bank and
Trust Company, as trustee, as the same may be modified, supplemented or
amended from time to time.
"Indenture Default" means the existing default by the Credit
Parties in the performance or observance of Section 1009 of the
Indenture described in Schedule 1.1(b), which default has been
disclosed to the Lenders prior to the Closing Date.
"Intercreditor Agreement" means that certain Intercreditor
Subordination Agreement dated as of the date hereof among the
Administrative Agent, NationsBank, in its capacity as agent under the
Participation Agreement, NationsBank, in its capacity as agent under
the Maxim Retail Credit Agreement, NationsBank, in its capacity as
collateral agent for the Lenders and TROL Lenders under the Pledge
Agreements and Security Agreements.
"Interest Coverage Ratio" means with respect to the Maxim
Group Parties on a consolidated basis for the twelve month period
ending on the last day of any fiscal quarter of the Borrower, the ratio
of (a) EBITDAR to (b) the sum of Interest Expense plus Rent Expense.
"Interest Expense" means, for any period, with respect to the
Maxim Group Parties on a consolidated basis, all interest expense,
including the interest component under Capital Leases, as determined in
accordance with GAAP.
"Interest Payment Date" means (a) as to Base Rate Loans, the
last day of each calendar month and the Maturity Date and (b) as to
Eurodollar Loans, the last day of each
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<PAGE> 19
applicable Interest Period and the Maturity Date, and in addition where
the applicable Interest Period for a Eurodollar Loan is greater than
three months, then also the date three months from the beginning of the
Interest Period and each three months thereafter.
"Interest Period" means, as to Eurodollar Loans, a period of
one, two, three or six months' duration, as the Borrower may elect,
commencing, in each case, on the date of the borrowing (including
continuations and conversions thereof); provided, however, (a) if any
Interest Period would end on a day which is not a Business Day, such
Interest Period shall be extended to the next succeeding Business Day
(except that where the next succeeding Business Day falls in the next
succeeding calendar month, then on the next preceding Business Day),
(b) no Interest Period shall extend beyond the Maturity Date and (c)
where an Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month in which the
Interest Period is to end, such Interest Period shall end on the last
Business Day of such calendar month.
"Investment" means (a) the acquisition (whether for cash,
property, services, assumption of Indebtedness, securities or
otherwise) of assets, shares of capital stock, bonds, notes,
debentures, partnership, joint ventures or other ownership interests or
other securities of any Person or (b) any deposit with, or advance,
loan or other extension of credit to, any Person (other than deposits
made in connection with the purchase of equipment or other assets in
the ordinary course of business) or (c) any other capital contribution
to or investment in any Person, including, without limitation, any
Guaranty Obligation (including any support for a Letter of Credit
issued on behalf of such Person) incurred for the benefit of such
Person.
"Issuing Lender" means NationsBank, N.A. or any successor
Administrative Agent.
"Issuing Lender Fees" has the meaning set forth in Section
3.4(d).
"Joinder Agreement" means a Joinder Agreement substantially
in the form of Exhibit 7.13.
"Lender" means any of the Persons identified as a "Lender" on
the signature pages hereto, and any Eligible Assignee which may become
a Lender by way of assignment in accordance with the terms hereof,
together with their successors and permitted assigns.
"Letter of Credit" means any standby or trade Letter of Credit
(including without limitation the Revolving Letters of Credit and Stand
Alone Letter of Credit) issued for the account of a Credit Party by the
Issuing Lender pursuant to Section 2.2 or 2.4 hereof or any Existing
Letter of Credit, as such letter of credit may be amended, modified,
extended, renewed or replaced.
"Leverage Ratio" means, with respect to the Maxim Group
Parties on a consolidated basis, as of the end of each fiscal quarter
of the Borrower, the ratio of (a) total Funded Debt on such date to (b)
EBITDA for the twelve month period ending on such date.
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<PAGE> 20
"Lien" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, security interest, encumbrance, lien (statutory or
otherwise), preference, priority or charge of any kind, including,
without limitation, any agreement to give any of the foregoing, any
conditional sale or other title retention agreement, and any lease in
the nature thereof.
"Loan" or "Loans" means the Revolving Loans (or a portion of
any Revolving Loan), individually or collectively, as appropriate.
"LOC Committed Amount" means FIVE MILLION DOLLARS
($5,000,000).
"LOC Commitment" means the commitment of the Issuing Lender to
issue Letters of Credit for the account of a Credit Party in an
aggregate face amount any time outstanding (together with the amounts
of any unreimbursed drawings thereon) of up to the LOC Committed
Amount.
"LOC Documents" means, with respect to any Letter of Credit,
such Letter of Credit, any amendments thereto, any documents delivered
in connection therewith, any application therefor, and any agreements,
instruments, guarantees or other documents (whether general in
application or applicable only to such Letter of Credit) governing or
providing for (a) the rights and obligations of the parties concerned
or at risk or (b) any collateral security for such obligations.
"LOC Obligations" means the Stand Alone LOC Obligations and
the Revolving LOC Obligations.
"LOC Participants" means the Lenders.
"London Interbank Offered Rate" means, with respect to any
Eurodollar Loan for the Interest Period applicable thereto, the rate of
interest per annum (rounded upwards, if necessary, to the nearest 1/100
of 1%) appearing on Telerate Page 3750 (or any successor page) as the
London interbank offered rate for deposits in Dollars at approximately
11:00 A.M. (London time) two Business Days prior to the first day of
such Interest Period for a term comparable to such Interest Period;
provided, however, if more than one rate is specified on Telerate Page
3750, the applicable rate shall be the arithmetic mean of all such
rates. If, for any reason, such rate is not available, the term "London
Interbank Offered Rate" shall mean, with respect to any Eurodollar Loan
for the Interest Period applicable thereto, the rate of interest per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Reuters Screen LIBO Page as the London interbank offered
rate for deposits in Dollars at approximately 11:00 A.M. (London time)
two Business Days prior to the first day of such Interest Period for a
term comparable to such Interest Period; provided, however, if more
than one rate is specified on Reuters Screen LIBO Page, the applicable
rate shall be the arithmetic mean of all such rates.
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<PAGE> 21
"Mandatory Borrowing" has the meaning set forth in Section
2.2(e).
"Material Adverse Effect" means a material adverse effect on
(a) the operations, financial condition, business or prospects of the
Credit Parties and their Subsidiaries taken as a whole, (b) the ability
of a Credit Party to perform its obligations under this Credit
Agreement or any of the other Credit Documents, or (c) the validity or
enforceability of this Credit Agreement, any of the other Credit
Documents, or the rights and remedies of the Lenders hereunder or
thereunder taken as a whole.
"Maturity Date" means November 25, 2003.
"Maxim Group Parties" means a collective reference to the
Borrower and its Subsidiaries (other than Maxim Retail and its
Subsidiaries) and "Maxim Group Party" means any one of them.
"Maxim Retail" means Maxim Retail Stores, Inc., a Georgia
corporation.
"Maxim Retail Credit Agreement" that certain Credit Agreement,
dated as of the date hereof, among Maxim Retail, certain subsidiaries
of Maxim Retail, the lenders party thereto and NationsBank, as agent,
as amended, modified, supplemented or restated from time to time.
"Maxim Retail Committed Amount" means the Revolving Committed
Amount (as defined in the Maxim Retail Credit Agreement).
"Maxim Retail Lenders" means the Lenders (as defined in the
Maxim Retail Credit Agreement).
"Maxim Retail Loans" means the Loans (as defined in the Maxim
Retail Credit Agreement).
"Maxim Retail LOC Obligations" means the LOC Obligations (as
defined in the Maxim Retail Credit Agreement).
"Maxim Retail Parties" means a collective reference to Maxim
Retail and its Subsidiaries and "Maxim Retail Party" means any one of
them.
"Monogram" means Monogram Credit Card Bank of Georgia.
"Monogram Program" means any program established by Monogram
under which Monogram may extend credit to certain customers of Maxim
Retail and C&S Textiles, Inc. for the purchase of goods, services and
other products from Maxim Retail and C&S Textiles, Inc.
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<PAGE> 22
"Moody's" means Moody's Investors Service, Inc., or any
successor or assignee of the business of such company in the business
of rating securities.
"Multiemployer Plan" means a Plan covered by Title IV of ERISA
which is a multiemployer plan as defined in Section 3(37) or 4001(a)(3)
of ERISA.
"Multiple Employer Plan" means a Plan covered by Title IV of
ERISA, other than a Multiemployer Plan, which any Credit Party or any
of its Subsidiaries or any ERISA Affiliate and at least one employer
other than a Credit Party or any of its Subsidiaries or any ERISA
Affiliate are contributing sponsors.
"NationsBank" means NationsBank, N.A. or any successor
thereto.
"Net Cash Proceeds" means the aggregate cash proceeds received
from an Asset Disposition, an Equity Issuance or a Debt Issuance net of
(a) reasonable transaction costs payable to third parties, and (b)
taxes paid or a good faith estimate of the taxes payable with respect
to such proceeds.
"Net Income" means, for any period, the net income after taxes
for such period of the Maxim Group Parties on a consolidated basis, as
determined in accordance with GAAP.
"Net Worth" means, as of any date, shareholders' equity or net
worth of the Maxim Group Parties on a consolidated basis, as determined
in accordance with GAAP.
"NMS" means NationsBanc Montgomery Securities LLC.
"Non-Excluded Taxes" has the meaning set forth in Section
3.13.
"Note" or "Notes" means the Revolving Notes, individually or
collectively, as appropriate.
"Notice of Borrowing" means a request by the Borrower for a
Revolving Loan, in the form of Exhibit 2.1(b).
"Notice of Continuation/Conversion" means a request by the
Borrower to continue an existing Eurodollar Loan to a new Interest
Period or to convert a Eurodollar Loan to a Base Rate Loan or a Base
Rate Loan to a Eurodollar Loan, in the form of Exhibit 2.5.
"Operating Lease" means, as applied to any Person, any lease
(including, without limitation, leases which may be terminated by the
lessee at any time) of any Property (whether real, personal or mixed)
which is not a Capital Lease other than any such lease in which that
Person is the lessor.
"Participation Agreement" means that certain Participation
Agreement dated as of November 25, 1998 among the Borrower, as
construction agent and lessee, the guarantors
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<PAGE> 23
party thereto, First Security Bank, National Association, as owner
trustee, the lenders identified therein, as holders, the lenders
identified therein, as lenders and NationsBank, as agent, as amended or
modified from time to time.
"Participation Interest" means the Extension of Credit by a
Lender by way of a purchase of a participation in Letters of Credit or
LOC Obligations as provided in Section 2.2 or in any Loans as provided
in Section 2.3 or Section 3.8.
"PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA and any
successor thereto.
"Permitted Acquisition" means the acquisition by a Maxim Group
Party of all or a majority of the capital stock of another Person or
all or substantially all of the business or a line of business of
another Person, provided that each of the following conditions are
satisfied: (a) prior to such acquisition, the Borrower shall deliver to
the Administrative Agent and Lenders evidence reasonably satisfactory
to the Administrative Agent and Required Lenders demonstrating that
after giving effect to such acquisition, including without limitation,
any Indebtedness incurred or assumed by such Maxim Group Party as a
result of such acquisition, on a pro forma basis, as if such
acquisition had occurred on the first day of the twelve month period
ending on the last day of the Borrower's most recently completed fiscal
quarter, the Maxim Group Parties would have been in compliance with all
the financial covenants set forth in Section 7.2, (b) simultaneously
with any such acquisition, the Borrower shall have taken all action
required under applicable law, or reasonably requested by the
Administrative Agent, to grant to the Administrative Agent, for the
benefit of the Lenders, a valid and perfected first-priority security
interest in all the assets acquired pursuant to such acquisition, (c)
the acquisition is consummated pursuant to a negotiated acquisition
agreement and involves the purchase of a company, business or property
in the same line of business as the Borrower or any Subsidiary of the
Borrower, (d) the cash consideration paid in any single acquisition
does not exceed $10,000,000 and the cash consideration paid in the
aggregate for all such acquisitions in any fiscal year of the Borrower
does not exceed $20,000,000, (e) the total cash and non-cash
consideration (including, without limitation, Indebtedness assumed in
connection with any single acquisition) paid in any single acquisition
does not exceed $20,000,000 and the total cash and non-cash
consideration (including, without limitation, Indebtedness assumed in
connection with any single acquisition) paid in the aggregate for all
such acquisitions in any fiscal year of the Borrower does not exceed
$40,000,000, (f) after giving effect to the acquisition, the
representations and warranties set forth in Section 6 hereof shall be
true and correct in all material respects on and as of the date of such
acquisition with the same effect as though made on and as of such date,
(g) no Default or Event of Default exists and is continuing or would
result from such acquisition.
"Permitted Investments" means Investments which are (a) cash
or Cash Equivalents, (b) accounts receivable created, acquired or made
in the ordinary course of business and payable or dischargeable in
accordance with customary trade terms, (c) inventory, raw materials,
furniture, fixtures, equipment and general intangibles acquired in the
ordinary
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<PAGE> 24
course of business, (d) subject to the terms of Section 8.14 and
Section 8.17, leasehold improvements acquired in the ordinary course of
business, (e) Investments by a Credit Party in any Maxim Group Party,
(f) loans to directors, officers or employees (i) of any Maxim Group
Party in the ordinary course of business for reasonable business
expenses, not to exceed, in the aggregate, $1,000,000 at any one time
and (ii) of any Maxim Retail Party in the ordinary course of business
for reasonable business expenses, not to exceed, in the aggregate,
$250,000 at any one time, (g) Permitted Acquisitions, (h) the purchase,
redemption, acquisition or retirement by the Borrower of any shares of
its capital stock of any class or any warrants or options to purchase
any such shares in an amount not to exceed, in the aggregate, the sum
of (i) $10,000,000 plus (ii) 50% of Net Income earned subsequent to
January 31, 1999, (i) loans to franchisees so long as (after giving
effect to such proposed loan) (i) the amount of any single such loan by
the Borrower or any Subsidiary does not exceed $2,000,000 and (ii) the
aggregate amount of such loans to franchisees by the Borrower and its
Subsidiaries does not exceed $12,000,000 in the aggregate during the
term of this Credit Agreement; (j) other Investments (in addition to
those set forth above) not to exceed, in the aggregate, $500,000 at any
one time.
"Permitted Liens" means (a) Liens securing Credit Party
Obligations, (b) Liens securing the obligations of the Maxim Retail
Parties under the Maxim Retail Credit Agreement and the Credit
Documents (as defined in the Maxim Retail Credit Agreement), (c) Liens
securing Indebtedness permitted by Section 8.1(j), (d) Liens for taxes
not yet due or Liens for taxes being contested in good faith by
appropriate proceedings for which adequate reserves determined in
accordance with GAAP have been established (and as to which the
property subject to any such Lien is not yet subject to foreclosure,
sale, collection, levy or loss on account thereof), (e) Liens in
respect of property imposed by law arising in the ordinary course of
business such as materialmen's, mechanics', warehousemen's, carrier's,
landlords' and other nonconsensual statutory Liens which are not yet
due and payable or which are being contested in good faith by
appropriate proceedings for which adequate reserves determined in
accordance with GAAP have been established (and as to which the
property subject to any such Lien is not yet subject to foreclosure,
sale or loss on account thereof), (f) pledges or deposits made in the
ordinary course of business to secure payment of worker's compensation
insurance, unemployment insurance, pensions or social security
programs, (g) Liens arising from good faith deposits in connection with
or to secure performance of tenders, bids, leases, government
contracts, performance and return-of-money bonds and other similar
obligations incurred in the ordinary course of business (other than
obligations in respect of the payment of borrowed money), (h) Liens
arising from good faith deposits in connection with or to secure
performance of statutory obligations and surety and appeal bonds, (i)
easements, rights-of-way, restrictions (including zoning restrictions),
matters of plat, minor defects or irregularities in title and other
similar charges or encumbrances not, in any material respect, impairing
the use of the encumbered property for its intended purposes, (j)
judgment Liens that would not constitute an Event of Default, (k) Liens
in connection with Indebtedness permitted by Section 8.1(e), (l) Liens
arising by virtue of any statutory or common law provision relating to
banker's liens, rights of setoff or similar rights as to deposit
accounts or other funds maintained with a creditor depository
institution and (m) Liens existing on
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<PAGE> 25
the date hereof and identified on Schedule 1.1(c); provided that no
such Lien shall extend to any property other than the property subject
thereto on the Closing Date.
"Person" means any individual, partnership, joint venture,
firm, corporation, limited liability company, association, trust or
other enterprise (whether or not incorporated), or any Governmental
Authority.
"Plan" means any employee benefit plan (as defined in Section
3(3) of ERISA) which is covered by ERISA and with respect to which any
Credit Party or any of its Subsidiaries or any ERISA Affiliate is (or,
if such plan were terminated at such time, would under Section 4069 of
ERISA be deemed to be) an "employer" within the meaning of Section 3(5)
of ERISA.
"Pledge Agreements" means any pledge agreement executed and
delivered by a Credit Party in favor of NationsBank, in its capacity as
agent, for the benefit of the Lenders and the TROL Lenders, to secure
its obligations under the Credit Documents, the Participation Agreement
and Operative Agreements (as defined in the Participation Agreement) as
amended, modified, extended, renewed or replaced from time to time.
"Prime Rate" means the per annum rate of interest established
from time to time by the Administrative Agent at its principal office
in Charlotte, North Carolina (or such other principal office of the
Administrative Agent as communicated in writing to the Borrower and the
Lenders) as its Prime Rate. Any change in the interest rate resulting
from a change in the Prime Rate shall become effective as of 12:01 a.m.
of the Business Day on which each change in the Prime Rate is announced
by the Administrative Agent. The Prime Rate is a reference rate used by
the Administrative Agent in determining interest rates on certain loans
and is not intended to be the lowest rate of interest charged on any
extension of credit to any debtor.
"Prior Credit Agreement" means that certain Credit Agreement,
dated as of August 26, 1997, by and among the Borrower and certain of
its subsidiaries, as borrowers, the lenders referred to therein and
NationsBank, N.A., as administrative agent (as assignee in interest of
First Union National Bank), as amended or modified from time to time.
"Purchase Agreement" means that certain Agreement and Plan of
Merger dated as of June 23, 1998 between the Borrower, CMAX
Acquisition, Inc., a Georgia corporation, Shaw Industries, Inc., a
Georgia corporation and Shaw Carpet Showplace, Inc., a Georgia
corporation.
"Real Properties" means the real properties that the Credit
Parties may own or lease (as lessee or sublessee) from third parties
from time to time.
"Regulation D, U, or X" means Regulation D, U or X,
respectively, of the Board of Governors of the Federal Reserve System
as from time to time in effect and any successor to all or a portion
thereof.
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"Rent Expense" means, for any period, with respect to the
Maxim Group Parties on a consolidated basis, all rent payable under an
Operating Lease (whether a lease of real property, personal property or
mixed), as determined in accordance with GAAP.
"Reportable Event" means a "reportable event" as defined in
Section 4043 of ERISA with respect to which the notice requirements to
the PBGC have not been waived.
"Required Lenders" means Lenders whose aggregate Credit
Exposure (as hereinafter defined) constitutes more than 50% of the
Credit Exposure of all Lenders at such time; provided, however, that if
any Lender shall be a Defaulting Lender at such time then there shall
be excluded from the determination of Required Lenders the aggregate
principal amount of Credit Exposure of such Lender at such time. For
purposes of the preceding sentence, the term "Credit Exposure" as
applied to each Lender shall mean (a) at any time prior to the
termination of the Commitments, the sum of (i) the Revolving Loan
Commitment Percentage of such Lender multiplied by the Revolving
Committed Amount plus (ii) the Stand Alone LOC Commitment Percentage of
such Lender multiplied by the Stand Alone LOC Committed Amount and (b)
at any time after the termination of the Commitments, the sum of (i)
the principal balance of the outstanding Loans of such Lender plus (ii)
such Lender's Participation Interests in the face amount of the
outstanding Letters of Credit.
"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, treaty, rule or
regulation or final, non-appealable determination of an arbitrator or a
court or other Governmental Authority, in each case applicable to or
binding upon such Person or to which any of its material property is
subject.
"Revolving Committed Amount" means NINETY FIVE MILLION DOLLARS
($95,000,000) or such lesser amount as the Revolving Committed Amount
may be reduced pursuant to Section 2.1(d) or 3.3(c).
"Revolving Letters of Credit" means the Existing Revolving
Letters of Credit and any Revolving Letter of Credit issued for the
account of a Credit Party by the Issuing Lender pursuant to Section 2.2
hereof, as such Revolving Letters of Credit may be amended, modified,
extended, renewed or replaced.
"Revolving Loan Commitment" means, with respect to each
Lender, the commitment of such Lender to make its portion of the
Revolving Loans in a principal amount equal to such Lender's Revolving
Loan Commitment Percentage of the Revolving Committed Amount.
"Revolving Loan Commitment Percentage" means, for each Lender,
the percentage identified as its Revolving Loan Commitment Percentage
on Schedule 1.1(a), as such
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percentage may be modified in connection with any assignment made in
accordance with the provisions of Section 11.3.
"Revolving Loan Unused Commitment" means, for any period, the
amount by which (a) the then applicable aggregate Revolving Committed
Amount exceeds (b) the daily average sum for such period of the
outstanding aggregate principal amount of all Revolving Loans plus the
aggregate amount of Revolving LOC Obligations outstanding.
"Revolving Loans" means the Revolving Loans made to the
Borrower pursuant to Section 2.1.
"Revolving LOC Obligations" means, at any time, the sum of (a)
the maximum amount which is, or at any time thereafter may become,
available to be drawn under Revolving Letters of Credit (including the
Existing Revolving Letters of Credit) then outstanding, assuming
compliance with all requirements for drawings referred to in such
Revolving Letters of Credit plus (b) the aggregate amount of all
drawings under Revolving Letters of Credit honored by the Issuing
Lender but not theretofore reimbursed.
"Revolving Note" or "Revolving Notes" means the promissory
notes of the Borrower in favor of each of the Lenders evidencing the
Revolving Loans provided pursuant to Section 2.1, individually or
collectively, as appropriate, as such promissory notes may be amended,
modified, supplemented, extended, renewed or replaced from time to time
and as evidenced in the form of Exhibit 2.1(f).
"S&P" means Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc. or any successor or assignee of the
business of such division in the business of rating securities.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Security Agreements" means any security agreement executed
and delivered by a Credit Party in favor of NationsBank, in its
capacity as agent for the benefit of the Lenders and the TROL Lenders
to secure its obligations under the Credit Documents, the Participation
Agreement and the Operative Agreements (as defined in the Participation
Agreement) as such may be amended, modified, extended, renewed,
restated or replaced from time to time.
"Shaw Merger Agreement" means that certain Agreement and Plan
of Merger dated as of June 23, 1998 by and among the Borrower, CMAX
Acquisition, Inc., a Georgia corporation, Shaw Industries, Inc., a
Georgia corporation and Shaw Carpet Showplace, Inc., a Georgia
corporation.
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"Shaw Promissory Note" means that certain Subordinated
Promissory Note dated August 9, 1998 issued by the Borrower in favor of
Shaw Industries, Inc. in the amount of $18,048,000.
"Shaw Transaction" means the merger of CMAX Acquisition, Inc.,
a Subsidiary of the Borrower, with and into Shaw Carpet Showplace, Inc.
in accordance with the Shaw Merger Agreement and the Georgia Business
Corporation Code.
"Single Employer Plan" means any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan.
"Solvent" means, with respect to any Person as of a particular
date, that on such date (a) such Person is able to pay its debts and
other liabilities, contingent obligations and other commitments as they
mature in the normal course of business, (b) such Person does not
intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and
liabilities mature in their ordinary course, (c) such Person is not
engaged in a business or a transaction, and is not about to engage in a
business or a transaction, for which such Person's assets would
constitute unreasonably small capital after giving due consideration to
the prevailing practice in the industry in which such Person is engaged
or is to engage, (d) the fair value of the assets of such Person is
greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person and (e) the present
fair saleable value of the assets of such Person is not less than the
amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured. In computing
the amount of contingent liabilities at any time, it is intended that
such liabilities will be computed at the amount which, in light of all
the facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual or matured
liability.
"Stand Alone Letter of Credit" means (a) the Existing Stand
Alone Letter of Credit or (b) any letter of credit issued for the
account of the Borrower or Image Industries by the Issuing Lender
pursuant to Section 2.3, as such Stand Alone Letter of Credit may be
amended, modified, extended, renewed or replaced.
"Stand Alone LOC Committed Amount" means THIRTY ONE MILLION
DOLLARS ($31,000,000).
"Stand Alone LOC Commitment" means the commitment of the
Issuing Lender to issue the Stand Alone Letter of Credit in an amount
at any time outstanding (together with the amounts of unreimbursed
drawings thereon) of up to the Stand Alone LOC Committed Amount.
"Stand Alone LOC Commitment Percentage" means, for each
Lender, the percentage identified as its Stand Alone LOC Commitment
Percentage on Schedule 1.1(a) attached hereto, as such percentage may
be modified in connection with any assignment made in accordance with
the terms of Section 11.3 hereof.
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"Stand Alone LOC Obligations" means, at any time, the sum of
(i) the maximum amount which is, or at any time thereafter may become,
available to be drawn under the Stand Alone Letter of Credit then
outstanding, assuming compliance with all requirements for drawings
referred to in such Stand Alone Letter of Credit plus (ii) the
aggregate amount of all drawings under the Stand Alone Letter of Credit
honored by the Issuing Lender but not theretofore reimbursed.
"Stand Alone LOC Unused Commitment" means, for any period, the
amount by which (i) the Stand Alone LOC Committed Amount exceeds (ii)
the daily average sum for such period of outstanding Stand Alone LOC
Obligations.
"Standby Letter of Credit Fees" has the meaning set forth in
Section 3.4(b).
"Subordinated Debt" means the Indebtedness evidenced by the
Indenture or by the guarantees thereof in an aggregate amount not to
exceed $100,000,000.
"Subsidiary" means, as to any Person, (a) any corporation more
than 50% of whose stock of any class or classes having by the terms
thereof ordinary voting power to elect a majority of the directors of
such corporation (irrespective of whether or not at the time, any class
or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time owned by
such Person directly or indirectly through Subsidiaries, and (b) any
partnership, association, joint venture or other entity in which such
person directly or indirectly through Subsidiaries has more than a 50%
equity interest at any time.
"Synthetic Lease" means any synthetic lease, tax retention
operating lease, off-balance sheet loan or similar off-balance sheet
financing product where such transaction is considered borrowed money
indebtedness for tax purposes, but is classified as an Operating Lease.
"Synthetic Lease Obligations" means any and all obligations of
the Borrower, non-existing or hereafter arising under the Participation
Agreement and/or any other Operative Agreement (as defined in the
Participation Agreement).
"Termination Event" means (a) with respect to any Single
Employer Plan, the occurrence of a Reportable Event or the substantial
cessation of operations (within the meaning of Section 4062(e) of
ERISA); (b) the withdrawal of any Credit Party or any of its
Subsidiaries or any ERISA Affiliate from a Multiple Employer Plan
during a plan year in which it was a substantial employer (as such term
is defined in Section 4001(a)(2) of ERISA), or the termination of a
Multiple Employer Plan; (c) the distribution of a notice of intent to
terminate or the actual termination of a Plan pursuant to Section
4041(a)(2) or 4041A of ERISA; (d) the institution of proceedings to
terminate or the actual termination of a Plan by the PBGC under Section
4042 of ERISA; (e) any event or condition which might reasonably
constitute grounds under Section 4042 of ERISA for the termination of,
or the
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appointment of a trustee to administer, any Plan; or (f) the complete
or partial withdrawal of any Credit Party or any of its Subsidiaries or
any ERISA Affiliate from a Multiemployer Plan.
"Total Assets" means all items which in accordance with GAAP
would be classified as assets of the Borrower and its Subsidiaries on a
consolidated basis.
"TROL Lenders" means the lenders, holders and other Financing
Parties (as defined in the Participation Agreement) from time to time
party to the Participation Agreement.
"UCP" has the meaning set forth in Section 2.2(g).
"Trade Letter of Credit Fees" has the meaning set forth in
Section 3.4(c).
"Voting Stock" of a corporation means all classes of the
capital stock of such corporation then outstanding and normally
entitled to vote in the election of directors.
"Year 2000 Problem" means any risk that any computer hardware,
software or other equipment used by a Credit Party or any of its
Subsidiaries will not function as effectively and reliably on and after
January 1, 2000 as it does prior to January 1, 2000, to the extent such
risk would cause or be reasonably expected to cause a Material Adverse
Effect.
1.2 Computation of Time Periods and Other Definitional Provisions.
For purposes of computation of periods of time hereunder, the word
"from" means "from and including" and the words "to" and "until" each mean "to
but excluding." References in this Agreement to "Articles", "Sections",
"Schedules" or "Exhibits" shall be to Articles, Sections, Schedules or Exhibits
of or to this Agreement unless otherwise specifically provided.
1.3 Accounting Terms.
Except as otherwise expressly provided herein, all accounting terms
used herein shall be interpreted, and all financial statements and certificates
and reports as to financial matters required to be delivered to the Lenders
hereunder shall be prepared, in accordance with GAAP applied on a consistent
basis. All calculations made for the purposes of determining compliance with
this Credit Agreement shall (except as otherwise expressly provided herein) be
made by application of GAAP applied on a basis consistent with the most recent
annual or quarterly financial statements delivered pursuant to Section 7.1 (or,
prior to the delivery of the first financial statements pursuant to Section 7.1,
consistent with the financial statements described in Section 5.1(d); provided,
however, if (a) the Borrower shall object to determining such compliance on such
basis at the time of delivery of such financial statements due to any change in
GAAP or the rules promulgated with respect thereto or (b) the Administrative
Agent or the Required Lenders shall so object in writing within 30 days after
delivery of such financial statements, then such calculations shall be made on a
basis consistent with GAAP as in effect as
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of the date of the most recent financial statements delivered by the Borrower to
the Lenders to which no such objection shall have been made.
SECTION 2
CREDIT FACILITIES
2.1 Revolving Loans.
(a) Revolving Loan Commitment. Subject to the terms and
conditions set forth herein, each Lender severally agrees to make
revolving loans (each a "Revolving Loan" and collectively the
"Revolving Loans") to the Borrower, in Dollars, at any time and from
time to time, during the period from and including the Effective Date
to but not including the Maturity Date (or such earlier date if the
Revolving Committed Amount has been terminated as provided herein);
provided, however, that (i) the sum of the aggregate amount of
Revolving Loans outstanding plus the aggregate amount of Revolving LOC
Obligations outstanding plus the aggregate amount of Synthetic Lease
Obligations outstanding shall not exceed the Revolving Committed Amount
and (ii) with respect to each individual Lender, the Lender's pro rata
share of outstanding Revolving Loans plus such Lender's pro rata share
of outstanding Revolving LOC Obligations plus such Lender's pro rata
share of the aggregate amount of the outstanding Synthetic Lease
Obligations shall not exceed such Lender's Revolving Loan Commitment
Percentage of the Revolving Committed Amount. Subject to the terms of
this Credit Agreement (including Section 3.3), the Borrower may borrow,
repay and reborrow Revolving Loans.
(b) Method of Borrowing for Revolving Loans. By no later than
11:00 a.m. (i) on the date of the requested borrowing of Revolving
Loans that will be Base Rate Loans or (ii) three Business Days prior to
the date of the requested borrowing of Revolving Loans that will be
Eurodollar Loans, the Borrower shall telephone the Administrative Agent
with the information described below as well as submit a written Notice
of Borrowing in the form of Exhibit 2.1(b) to the Administrative Agent
setting forth (A) the amount requested, (B) whether such Revolving
Loans shall accrue interest at the Adjusted Base Rate or the Adjusted
Eurodollar Rate, (C) with respect to Revolving Loans that will be
Eurodollar Loans, the Interest Period applicable thereto and (D)
certification that the Borrower has complied in all respects with
Section 5.2. All Revolving Loans made on the Effective Date shall be
Base Rate Loans. Thereafter, all or any portion of such Revolving Loans
may be converted into Eurodollar Loans in accordance with the terms of
Section 2.5.
(c) Funding of Revolving Loans. Upon receipt of a Notice of
Borrowing, the Administrative Agent shall promptly inform the Lenders
as to the terms thereof. Each Lender shall make its Revolving Loan
Commitment Percentage of the requested Revolving Loans available to the
Administrative Agent by 1:00 p.m. on the date specified in the Notice
of Borrowing by deposit, in Dollars, of immediately available funds at
the offices of the Administrative Agent at its principal office in
Charlotte, North Carolina or at such other
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address as the Administrative Agent may designate in writing. The
amount of the requested Revolving Loans will then be made available to
the Borrower by the Administrative Agent by crediting the account of
the Borrower on the books of such office of the Administrative Agent,
to the extent the amount of such Revolving Loans are made available to
the Administrative Agent.
No Lender shall be responsible for the failure or delay by any
other Lender in its obligation to make Revolving Loans hereunder;
provided, however, that the failure of any Lender to fulfill its
obligations hereunder shall not relieve any other Lender of its
obligations hereunder. Unless the Administrative Agent shall have been
notified by any Lender prior to the date of any such Revolving Loan
that such Lender does not intend to make available to the
Administrative Agent its portion of the Revolving Loans to be made on
such date, the Administrative Agent may assume that such Lender has
made such amount available to the Administrative Agent on the date of
such Revolving Loans, and the Administrative Agent in reliance upon
such assumption, may (in its sole discretion but without any obligation
to do so) make available to the Borrower a corresponding amount. If
such corresponding amount is not in fact made available to the
Administrative Agent, the Administrative Agent shall be able to recover
such corresponding amount from such Lender. If such Lender does not pay
such corresponding amount forthwith upon the Administrative Agent's
demand therefor, the Administrative Agent will promptly notify the
Borrower, and the Borrower shall immediately pay such corresponding
amount to the Administrative Agent. The Administrative Agent shall also
be entitled to recover from the Lender or the Borrower, as the case may
be, interest on such corresponding amount in respect of each day from
the date such corresponding amount was made available by the
Administrative Agent to the Borrower to the date such corresponding
amount is recovered by the Administrative Agent at a per annum rate
equal to (i) from the Borrower at the applicable rate for such
Revolving Loan pursuant to the Notice of Borrowing and (ii) from a
Lender at the Federal Funds Rate.
(d) Reductions of Revolving Committed Amount. Upon at least
three Business Days' notice, the Borrower shall have the right to
permanently reduce, without premium or penalty, all or part of the
aggregate unused amount of the Revolving Committed Amount at any time
or from time to time; provided that (i) each partial reduction shall be
in an aggregate amount at least equal to $1,000,000 and in integral
multiples of $500,000 above such amount and (ii) no reduction shall be
made which would reduce the Revolving Committed Amount to an amount
less than the aggregate amount of outstanding Revolving Loans plus the
aggregate amount of outstanding Revolving LOC Obligations plus the
aggregate amount of outstanding Synthetic Lease Obligations. Any
reduction in (or termination of) the Revolving Committed Amount shall
be permanent and may not be reinstated. The Administrative Agent shall
immediately notify the Lenders of any reduction in the Revolving
Committed Amount.
(e) Interest. Subject to the provisions of Section 3.1,
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(i) Base Rate Loans. During such periods as Revolving
Loans shall be comprised in whole or in part of Base Rate
Loans, such Base Rate Loans shall bear interest at a per annum
rate equal to the Adjusted Base Rate.
(ii) Eurodollar Loans. During such periods as
Revolving Loans shall be comprised in whole or in part of
Eurodollar Loans, such Eurodollar Loans shall bear interest at
a per annum rate equal to the Adjusted Eurodollar Rate.
(f) Revolving Notes. The Revolving Loans made by each Lender
shall be evidenced by a duly executed promissory note of the Borrower
to such Lender in an original principal amount equal to such Lender's
Revolving Loan Commitment Percentage of the Revolving Committed Amount
and in substantially the form of Exhibit 2.1(f).
2.2 Letter of Credit Subfacility.
(a) Issuance. Subject to the terms and conditions hereof and
of the LOC Documents, if any, and any other terms and conditions which
the Issuing Lender may reasonably require and in reliance upon the
representations and warranties set forth herein, the Issuing Lender
shall from time to time upon request issue (from the Effective Date to
the Maturity Date and in a form reasonably acceptable to the Issuing
Lender), in Dollars, and the LOC Participants shall participate in,
Revolving Letters of Credit for the account of a Maxim Group Party;
provided, however, that (i) the aggregate amount of LOC Obligations
shall not at any time exceed the LOC Committed Amount, (ii) the sum of
the aggregate amount of Revolving LOC Obligations outstanding plus the
Revolving Loans outstanding plus the Synthetic Lease Obligations
outstanding shall not exceed the Revolving Committed Amount and (iii)
with respect to each individual LOC Participant, the LOC Participant's
pro rata share of outstanding Revolving Loans plus its pro rata share
of outstanding Revolving LOC Obligations plus its pro rata share of
Synthetic Lease Obligations shall not exceed such LOC Participant's
Revolving Loan Commitment Percentage of the Revolving Committed Amount.
The Issuing Lender may require the issuance and expiry date of each
Revolving Letter of Credit to be a Business Day. Each Revolving Letter
of Credit shall be a standby letter of credit issued to support the
obligations (including pension or insurance obligations), contingent or
otherwise, of a Maxim Group Party or a commercial trade letter of
credit in respect of the purchase of goods and services by a Maxim
Group Party in the ordinary course of business. Except as otherwise
expressly agreed upon by all the LOC Participants, no Revolving Letter
of Credit shall have an original expiry date more than one year from
the date of issuance, or as extended, shall have an expiry date
extending beyond the Maturity Date. Each Revolving Letter of Credit
shall comply with the related LOC Documents.
(b) Notice and Reports. The request for the issuance of a
Revolving Letter of Credit shall be submitted to the Issuing Lender at
least three Business Days prior to the requested date of issuance. The
Issuing Lender will, at least quarterly and more frequently upon
request, provide to the Administrative Agent for dissemination to the
Lenders a detailed report specifying the Revolving Letters of Credit
which are then issued and
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outstanding and any activity with respect thereto which may have
occurred since the date of the prior report, and including therein,
among other things, the account party, the beneficiary, the face
amount, and the expiry date as well as any payments or expirations
which may have occurred. The Issuing Lender will further provide to the
Administrative Agent, promptly upon request, copies of the Revolving
Letters of Credit and the other LOC Documents. Notwithstanding anything
to the contrary set forth in this Credit Agreement, with respect to any
Letter of Credit issued for the account of a Maxim Group Party other
than the Borrower, the Borrower shall be the actual account party for
all purposes of this Credit Agreement for such Letter of Credit and the
Borrower shall have the reimbursement obligations hereunder with
respect to such Letter of Credit.
(c) Participations.
(i) Each LOC Participant acknowledges and confirms
that it has a Participation Interest in the liability of the
Issuing Lender under each Existing Revolving Letter of Credit
in an amount equal to its Revolving Loan Commitment Percentage
of such Existing Revolving Letters of Credit. The Borrower's
reimbursement obligations in respect of each Existing
Revolving Letter of Credit, and each LOC Participant's
obligations in connection therewith, shall be governed by the
terms of this Credit Agreement.
(ii) Each LOC Participant, upon issuance of a
Revolving Letter of Credit, shall be deemed to have purchased
without recourse a risk participation from the Issuing Lender
in such Revolving Letter of Credit and each LOC Document
related thereto and the rights and obligations arising
thereunder and any collateral relating thereto, in each case
in an amount equal to its Revolving Loan Commitment Percentage
of the obligations under such Revolving Letter of Credit, and
shall absolutely, unconditionally and irrevocably assume, as
primary obligor and not as surety, and be obligated to pay to
the Issuing Lender therefor and discharge when due, its
Revolving Loan Commitment Percentage of the obligations
arising under such Revolving Letter of Credit. Without
limiting the scope and nature of each LOC Participant's
participation in any Revolving Letter of Credit, to the extent
that the Issuing Lender has not been reimbursed as required
hereunder or under any such Revolving Letter of Credit, each
such LOC Participant shall pay to the Issuing Lender its
Revolving Loan Commitment Percentage of such unreimbursed
drawing in same day funds on the day of notification by the
Issuing Lender of an unreimbursed drawing pursuant to the
provisions of subsection (d) or (e) hereof. The obligation of
each LOC Participant to so reimburse the Issuing Lender shall
be absolute and unconditional and shall not be affected by the
occurrence of a Default, an Event of Default or any other
occurrence or event. Any such reimbursement shall not relieve
or otherwise impair the obligation of the Borrower or any
other Credit Party to reimburse the Issuing Lender under any
Revolving Letter of Credit, together with interest as
hereinafter provided.
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(d) Reimbursement. In the event of any drawing under any
Revolving Letter of Credit, the Issuing Lender will promptly notify the
Borrower. Unless the Borrower shall immediately notify the Issuing
Lender of its intent to otherwise reimburse the Issuing Lender, the
Borrower shall be deemed to have requested that the Lenders make a
Revolving Loan in the amount of the drawing as provided in subsection
(e) below on the related Revolving Letter of Credit, the proceeds of
which will be used to satisfy the related reimbursement obligations.
The Borrower shall reimburse the Issuing Lender on the day of drawing
under any Revolving Letter of Credit with the proceeds of such
Revolving Loan obtained hereunder or otherwise in same day funds as
provided herein or in the LOC Documents. If the Borrower shall fail to
reimburse the Issuing Lender as provided hereinabove, the unreimbursed
amount of such drawing shall bear interest at a per annum rate equal to
the Base Rate plus the Applicable Percentage for the Base Rate Loans
that are Revolving Loans plus two percent (2%). The Borrower's
reimbursement obligations hereunder shall be absolute and unconditional
under all circumstances irrespective of (but without waiver of) any
rights of set-off, counterclaim or defense to payment the applicable
account party or the Borrower may claim or have against an Issuing
Lender, the Administrative Agent, the Lenders, the beneficiary of the
Revolving Letter of Credit drawn upon or any other Person, including
without limitation, any defense based on any failure of the applicable
account party, the Borrower or any other Credit Party to receive
consideration or the legality, validity, regularity or unenforceability
of the Revolving Letter of Credit. The Issuing Lender will promptly
notify the LOC Participants of the amount of any unreimbursed drawing
and each LOC Participant shall promptly pay to the Issuing Lender, in
Dollars and in immediately available funds, the amount of such LOC
Participant's Revolving Loan Commitment Percentage of such unreimbursed
drawing. Such payment shall be made on the day such notice is received
by such Lender from the Issuing Lender if such notice is received at or
before 12:00 Noon, otherwise such payment shall be made at or before
12:00 Noon on the Business Day next succeeding the day such notice is
received. If such LOC Participant does not pay such amount to the
Issuing Lender in full upon such request, such LOC Participant shall,
on demand, pay to the Issuing Lender interest on the unpaid amount
during the period from the date the LOC Participant received the notice
regarding the unreimbursed drawing until such LOC Participant pays such
amount to the Issuing Lender in full at a rate per annum equal to, if
paid within two Business Days of the date of drawing, the Federal Funds
Rate and thereafter at a rate equal to the Base Rate. Each LOC
Participant's obligation to make such payment to the Issuing Lender,
and the right of the Issuing Lender to receive the same, shall be
absolute and unconditional, shall not be affected by any circumstance
whatsoever and without regard to the termination of this Credit
Agreement or the Commitments hereunder, the existence of a Default or
Event of Default or the acceleration of the obligations hereunder and
shall be made without any offset, abatement, withholding or reduction
whatsoever. Simultaneously with the making of each such payment by a
LOC Participant to the Issuing Lender, such LOC Participant shall,
automatically and without any further action on the part of the Issuing
Lender or such LOC Participant, acquire a participation in an amount
equal to such payment (excluding the portion of such payment
constituting interest owing to the Issuing Lender) in the related
unreimbursed drawing portion of the LOC Obligation and in the
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interest thereon and in the related LOC Documents, and shall have a
claim against the Borrower and the other Credit Parties with respect
thereto.
(e) Repayment with Revolving Loans. On any day on which the
Borrower shall have requested, or been deemed to have requested, a
Revolving Loan borrowing to reimburse a drawing under a Revolving
Letter of Credit (as set forth in clause (d) above), the Administrative
Agent shall give notice to the applicable Lenders that a Revolving Loan
has been requested or deemed requested in connection with a drawing
under a Revolving Letter of Credit, in which case a Revolving Loan
borrowing comprised solely of Base Rate Loans (each such borrowing, a
"Mandatory Borrowing") shall be immediately made from all applicable
Lenders (without giving effect to any termination of the Commitments
pursuant to Section 9.2) pro rata based on each Lender's respective
Revolving Loan Commitment Percentage and the proceeds thereof shall be
paid directly to the Issuing Lender for application to the respective
Revolving LOC Obligations. Each such Lender hereby irrevocably agrees
to make such Revolving Loans immediately upon any such request or
deemed request on account of each such Mandatory Borrowing in the
amount and in the manner specified in the preceding sentence and on the
same such date notwithstanding (i) the amount of Mandatory Borrowing
may not comply with the minimum amount for borrowings of Revolving
Loans otherwise required hereunder, (ii) whether any conditions
specified in Section 5.2 are then satisfied, (iii) whether a Default or
Event of Default then exists, (iv) failure of any such request or
deemed request for Revolving Loans to be made by the time otherwise
required hereunder, (v) the date of such Mandatory Borrowing, or (vi)
any reduction in the Revolving Committed Amount or any termination of
the Commitments. In the event that any Mandatory Borrowing cannot for
any reason be made on the date otherwise required above (including,
without limitation, as a result of the commencement of a proceeding
under the Bankruptcy Code with respect to the Borrower or any other
Credit Party), then each such Lender hereby agrees that it shall
forthwith fund (as of the date the Mandatory Borrowing would otherwise
have occurred, but adjusted for any payments received from the Borrower
on or after such date and prior to such purchase) its Participation
Interest in the outstanding Revolving LOC Obligations; provided,
further, that in the event any Lender shall fail to fund its
Participation Interest on the day the Mandatory Borrowing would
otherwise have occurred, then the amount of such Lender's unfunded
Participation Interest therein shall bear interest payable to the
Issuing Lender upon demand, at the rate equal to, if paid within two
Business Days of such date, the Federal Funds Rate, and thereafter at a
rate equal to the Base Rate.
(f) Modification and Extension. The issuance of any
supplement, modification, amendment, renewal, or extensions to any
Revolving Letter of Credit shall, for purposes hereof, be treated in
all respects the same as the issuance of a new Revolving Letter of
Credit hereunder.
(g) Uniform Customs and Practices. The Issuing Lender may have
the Revolving Letters of Credit be subject to The Uniform Customs and
Practice for Documentary Credits, as published as of the date of issue
by the International Chamber of
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Commerce (Publication No. 500 or the most recent publication, the
"UCP"), in which case the UCP may be incorporated therein and deemed in
all respects to be a part thereof.
(h) Responsibility of Issuing Lender. It is expressly
understood and agreed as between the Lenders that the obligations of
the Issuing Lender hereunder to the LOC Participants are only those
expressly set forth in this Credit Agreement and that the Issuing
Lender shall be entitled to assume that the conditions precedent set
forth in Section 5.2 have been satisfied unless it shall have acquired
actual knowledge that any such condition precedent has not been
satisfied; provided, however, that nothing set forth in this Section
2.2 shall be deemed to prejudice the right of any LOC Participant to
recover from the Issuing Lender any amounts made available by such LOC
Participant to the Issuing Lender pursuant to this Section 2.2 in the
event that it is determined by a court of competent jurisdiction that
the payment with respect to a Revolving Letter of Credit constituted
gross negligence or willful misconduct on the part of the Issuing
Lender.
(i) Conflict with LOC Documents. In the event of any conflict
between this Credit Agreement and any LOC Document, this Credit
Agreement shall govern.
2.3 Stand Alone Letter of Credit Facility.
(a) Issuance. Subject to the terms and conditions hereof and
of the LOC Documents, if any, and any other terms and conditions which
the Issuing Lender may reasonably require and in reliance upon the
representations and warranties set forth herein (and subject to the
provisions of Section 2.3(c)(i) below), the Issuing Lender shall issue
(from the Effective Date to the Maturity Date and in a form reasonably
acceptable to the Issuing Lender), in Dollars and the Lenders shall
participate in, the Stand Alone Letter of Credit for the account of the
Borrower and Image Industries; provided, however, that the aggregate
amount of the Stand Alone LOC Obligations shall not at any time exceed
the Stand Alone LOC Committed Amount. The Stand Alone Letter of Credit
shall be issued to provide a liquidity facility for payment of the
principal and interest on the Bonds. Except as otherwise expressly
agreed upon by all the LOC Participants, the Stand Alone Letter of
Credit shall not have an expiry date extending beyond 30 days prior to
the Maturity Date. The Stand Alone Letter of Credit shall comply with
the related LOC Documents. The issuance and expiry date of the Stand
Alone Letter of Credit shall be a Business Day.
(b) Request and Reports. The request for the issuance of the
Stand Alone Letter of Credit shall be submitted to the Issuing Lender
at least three Business Days prior to the requested date of issuance.
The Issuing Lender will, at least quarterly and more frequently upon
request, provide to the Administrative Agent for dissemination to the
Lenders a detailed report specifying the activity with respect to the
Stand Alone Letter of Credit which may have occurred since the date of
the prior report, and including therein, among other things, the
account party, the beneficiary, the outstanding balance, and the expiry
date as well as any payments or expirations which may have occurred.
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The Issuing Lender will further provide to the Administrative Agent,
promptly upon request, copies of the Stand Alone Letter of Credit and
the other LOC Documents.
(c) Participations.
(i) Each LOC Participant acknowledges and
confirms that it has a Participation Interest in the liability
of the Issuing Lender under the Stand Alone Letter of Credit
in an amount equal to such Lender's Stand Alone LOC Commitment
Percentage of the Stand Alone Committed Amount. The Stand
Alone Letter of Credit shall be governed by the terms of this
Credit Agreement.
(ii) Each LOC Participant, upon issuance of
the Stand Alone Letter of Credit, shall be deemed to have
purchased without recourse a risk participation from the
Issuing Lender in the Stand Alone Letter of Credit and each
LOC Document related thereto and the rights and obligations
arising thereunder and any collateral relating thereto, in
each case in an amount equal to its Stand Alone LOC Commitment
Percentage of the obligations under the Stand Alone Letter of
Credit and shall absolutely, unconditionally and irrevocably
assume, as primary obligor and not as surety, and be obligated
to pay to the Issuing Lender therefor and discharge when due,
its Stand Alone LOC Commitment Percentage of the obligations
arising under the Stand Alone Letter of Credit. Without
limiting the scope and nature of each LOC Participant's
participation in the Stand Alone Letter of Credit, to the
extent that the Issuing Lender has not been reimbursed as
required hereunder, each such LOC Participant shall pay to the
Issuing Lender its Stand Alone LOC Commitment Percentage of
such unreimbursed drawing in same day funds on the day of
notification by the Issuing Lender of an unreimbursed drawing
pursuant to the provisions of subsection (d) or (e) hereof.
The obligation of each LOC Participant to so reimburse the
Issuing Lender shall be absolute and unconditional and shall
not be affected by the occurrence of a Default, an Event of
Default or any other occurrence or event. Any such
reimbursement shall not relieve or otherwise impair the
obligation of the Borrower or any other Credit Party to
reimburse the Issuing Lender under the Stand Alone Letter of
Credit, together with interest as hereinafter provided.
(d) Reimbursement. In the event of any drawing under the Stand
Alone Letter of Credit, the Issuing Lender will promptly notify the
Borrower. The Borrower shall reimburse the Issuing Lender on the day
the Issuing Lender pays a drawing under the Stand Alone Letter of
Credit in same day funds as provided herein or in the LOC Documents;
provided, however, if, pursuant to the terms of the corresponding LOC
Documents, any reimbursement obligation with respect to a draw under
the Stand Alone Letter of Credit is not required to be immediately
paid, such reimbursement obligation will be payable in accordance with
the related LOC Documents and will accrue interest, fees, and other
charges as if such
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reimbursement obligation constituted a Base Rate Loan in accordance
with the terms of this Credit Agreement; and provided further that,
notwithstanding anything to the contrary in such LOC Documents, if any
such reimbursement obligation is not immediately due and payable, the
same shall nonetheless be paid in full on or before the Maturity Date.
If the Borrower shall fail to reimburse the Issuing Lender as provided
hereinabove, the unreimbursed amount of such drawing shall bear
interest at a per annum rate equal to the Base Rate plus four percent
(4%) and shall constitute an Event of Default. The Borrower's
reimbursement obligations hereunder shall be absolute and unconditional
under all circumstances irrespective of any rights of set-off,
counterclaim or defense to payment the Borrower may claim or have
against the Issuing Lender, the Administrative Agent, the Lenders, the
beneficiary of the Stand Alone Letter of Credit drawn upon or any other
Person, including without limitation any defense based on any failure
of the Borrower to receive consideration or the legality, validity,
regularity or unenforceability of the Stand Alone Letter of Credit;
provided, however, that the Borrower may have a claim against the
Issuing Lender, and the Issuing Lender may be liable to the Borrower,
to the extent of any actual damages suffered by the Borrower as a
result of the Issuing Lender's gross negligence or willful misconduct
in failing to pay a drawing under the Stand Alone Letter of Credit
presented in strict conformity therewith. The Issuing Lender will
promptly notify the other LOC Participants of the amount of any
unreimbursed drawing and each LOC Participant shall promptly pay to the
Administrative Agent for the account of the Issuing Lender in Dollars
and in immediately available funds, the amount of such LOC
Participant's Stand Alone LOC Commitment Percentage of such
unreimbursed drawing. Such payment shall be made on the day such notice
is received by such LOC Participant from the Issuing Lender if such
notice is received at or before 2:00 p.m., otherwise such payment shall
be made at or before 12:00 Noon on the Business Day next succeeding the
day such notice is received. If such LOC Participant does not pay such
amount to the Issuing Lender in full upon such request, such LOC
Participant shall, on demand, pay to the Administrative Agent for the
account of the Issuing Lender interest on the unpaid amount during the
period from the date of payment by the Issuing Lender of such drawing
until such Lender pays such amount to the Issuing Lender in full at a
rate per annum equal to, if paid within two Business Days of the date
of payment of such drawing, the Federal Funds Rate and thereafter at a
rate equal to the Base Rate. Each LOC Participant's obligation to make
such payment to the Issuing Lender, and the right of the Issuing Lender
to receive the same, shall be absolute and unconditional, shall not be
affected by any circumstance whatsoever and without regard to the
termination of this Credit Agreement or the Commitments hereunder, the
existence of a Default or Event of Default or the acceleration of the
obligations hereunder and shall be made without any offset, abatement,
withholding or reduction whatsoever.
(e) Modification, Extension. The issuance of any supplement,
modification, amendment, renewal, or extensions to the Stand Alone
Letter of Credit shall, for purposes hereof, be treated in all respects
the same as the issuance of a new Stand Alone Letter of Credit
hereunder.
(f) Uniform Customs and Practices. The Issuing Lender may have
the Stand Alone Letter of Credit be subject to the UCP, in which case
the UCP may be incorporated therein and deemed in all respects to be a
part thereof.
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2.4 Indemnification of Issuing Lender.
(a) In addition to its other obligations under this
Credit Agreement, the Borrower hereby agrees to protect,
indemnify, pay and save the Issuing Lender harmless from and
against any and all claims, demands, liabilities, damages,
losses, costs, charges and expenses (including reasonable
attorneys' fees) that the Issuing Lender may incur or be
subject to as a consequence, direct or indirect, of (A) the
issuance of any Letter of Credit or (B) the failure of the
Issuing Lender to honor a drawing under a Letter of Credit as
a result of any act or omission, whether rightful or wrongful,
of any present or future de jure or de facto Governmental
Authority (all such acts or omissions, herein called
"Government Acts").
(b) As between the Borrower and the Issuing Lender,
the Borrower shall assume all risks of the acts, omissions or
misuse of any Letter of Credit by the beneficiary thereof. The
Issuing Lender shall not be responsible for: (A) the form,
validity, sufficiency, accuracy, genuineness or legal effect
of any document submitted by any party in connection with the
application for and issuance of any Letter of Credit, even if
it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (B) the
validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign any Letter of
Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, that may prove to be invalid or
ineffective for any reason; (C) failure of the beneficiary of
a Letter of Credit to comply fully with conditions required in
order to draw upon a Letter of Credit; (D) errors, omissions,
interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex or otherwise,
whether or not they be in cipher; (E) errors in interpretation
of technical terms; (F) any loss or delay in the transmission
or otherwise of any document required in order to make a
drawing under a Letter of Credit or of the proceeds thereof;
and (G) any consequences arising from causes beyond the
control of the Issuing Lender, including, without limitation,
any Government Acts. None of the above shall affect, impair,
or prevent the vesting of the Issuing Lender's rights or
powers hereunder.
(c) In furtherance and extension and not in
limitation of the specific provisions hereinabove set forth,
any action taken or omitted by the Issuing Lender, under or in
connection with any Letter of Credit or the related
certificates, if taken or omitted in good faith, shall not put
the Issuing Lender under any resulting liability to the
Borrower or any other Credit Party. It is the intention of the
parties that this Credit Agreement shall be construed and
applied to protect and indemnify the Issuing Lender against
any and all risks involved in the issuance of the Letters of
Credit, all of which risks are hereby assumed by the Borrower,
including, without limitation, any and all risks of the acts
or omissions, whether rightful or wrongful, of any present or
future Government Acts. The Issuing Lender shall not, in any
way, be liable for any failure by the Issuing Lender or anyone
else to pay any
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drawing under any Letter of Credit as a result of any
Government Acts or any other cause beyond the control of the
Issuing Lender.
(d) Nothing in this Section 2.4 is intended to limit
the reimbursement obligation of the Borrower contained in
Sections 2.2 or 2.3. The obligations of the Borrower under
this Section 2.4 shall survive the termination of this Credit
Agreement. No act or omission of any current or prior
beneficiary of a Letter of Credit shall in any way affect or
impair the rights of the Issuing Lender to enforce any right,
power or benefit under this Credit Agreement.
(e) Notwithstanding anything to the contrary
contained in this Section 2.4, the Borrower shall have no
obligation to indemnify the Issuing Lender in respect of any
liability incurred by the Issuing Lender arising solely out of
the gross negligence or willful misconduct of the Issuing
Lender, as determined by a court of competent jurisdiction.
(f) To the extent the Borrower does not fulfill any
or all of its obligations under this Section 2.4, each LOC
Participant agrees to reimburse the Issuing Lender for any
losses incurred thereby ratably in accordance with each such
LOC Participant's Stand Alone LOC Commitment Percentage and
Revolving Loan Commitment Percentage, as applicable.
2.5 Continuations and Conversions.
The Borrower shall have the option, on any Business Day, to continue
existing Eurodollar Loans for a subsequent Interest Period, to convert Base Rate
Loans into Eurodollar Loans or to convert Eurodollar Loans into Base Rate Loans;
provided, however, that (i) each such continuation or conversion must be
requested by the Borrower pursuant to a written Notice of
Continuation/Conversion, in the form of Exhibit 2.5, in compliance with the
terms set forth below, (ii) except as provided in Section 3.11, Eurodollar Loans
may only be continued or converted into Base Rate Loans on the last day of the
Interest Period applicable thereto, (iii) Eurodollar Loans may not be continued
nor may Base Rate Loans be converted into Eurodollar Loans during the existence
and continuation of a Default or an Event of Default and (iv) any request to
continue a Eurodollar Loan that fails to comply with the terms hereof or any
failure to request a continuation of a Eurodollar Loan at the end of an Interest
Period shall constitute a conversion to a Base Rate Loan on the last day of the
applicable Interest Period. Each continuation or conversion must be requested by
the Borrower no later than 11:00 a.m. (A) on the date for a requested conversion
of a Eurodollar Loan to a Base Rate Loan or (B) three Business Days prior to the
date for a requested continuation of a Eurodollar Loan or conversion of a Base
Rate Loan to a Eurodollar Loan, in each case pursuant to a written Notice of
Continuation/Conversion submitted to the Administrative Agent which shall set
forth (x) whether the Borrower wishes to continue or convert such Loans and (y)
if the request is to continue a Eurodollar Loan or convert a Base Rate Loan to a
Eurodollar Loan, the Interest Period applicable thereto.
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2.6 Minimum Amounts.
Each request for a borrowing, conversion or continuation shall be
subject to the requirements that (a) each Eurodollar Loan shall be in a minimum
amount of $3,000,000 and in integral multiples of $100,000 in excess thereof,
(b) each Base Rate Loan shall be in a minimum amount of the lesser of $500,000
(and integral multiples of $100,000 in excess thereof) or the remaining amount
available under the Revolving Committed Amount and (c) no more than six (6)
Eurodollar Loans shall be outstanding hereunder at any one time. For the
purposes of this Section, all Eurodollar Loans with the same Interest Periods
that begin and end on the same date shall be considered as one Eurodollar Loan,
but Eurodollar Loans with different Interest Periods, even if they begin on the
same date, shall be considered as separate Eurodollar Loans.
SECTION 3
GENERAL PROVISIONS APPLICABLE TO LOANS AND LETTERS OF CREDIT
3.1 Interest.
(a) Default Rate of Interest. Upon the occurrence, and during
the continuance, of an Event of Default, the principal of and, to the
extent permitted by law, interest on the Loans and any other amounts
owing hereunder or under the other Credit Documents (including without
limitation fees and expenses) shall bear interest, payable on demand,
at a per annum rate equal to 2% plus the rate which would otherwise be
applicable (or if no rate is applicable, then the rate for Revolving
Loans that are Base Rate Loans plus two percent (2%) per annum).
(b) Interest Payments. Interest on Loans shall be due and
payable in arrears on each Interest Payment Date. If an Interest
Payment Date falls on a date which is not a Business Day, such Interest
Payment Date shall be deemed to be the next succeeding Business Day,
except that in the case of Eurodollar Loans where the next succeeding
Business Day falls in the next succeeding calendar month, then on the
next preceding day.
3.2 Place and Manner of Payments.
All payments of principal, interest, fees, expenses and other amounts
to be made by a Credit Party under this Credit Agreement shall be received not
later than 2:00 p.m. on the date when due, in Dollars and in immediately
available funds, by the Administrative Agent at its offices in Charlotte, North
Carolina. Payments received after such time shall be deemed to have been
received on the next Business Day. The Borrower shall, at the time it makes any
payment under this Credit Agreement, specify to the Administrative Agent, the
Loans, Letters of Credit, fees or other amounts payable by the Borrower
hereunder to which such payment is to be applied (and in the event that it fails
to specify, or if such application would be inconsistent with the terms hereof,
the Administrative Agent shall, subject to Section 3.7, distribute such payment
to the Lenders in such manner as the Administrative Agent may deem appropriate).
The Administrative Agent will
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distribute such payments to the applicable Lenders on the same Business Day if
any such payment is received prior to 2:00 p.m.; otherwise the Administrative
Agent will distribute such payment to the applicable Lenders on the next
succeeding Business Day. Whenever any payment hereunder shall be stated to be
due on a day which is not a Business Day, the due date thereof shall be extended
to the next succeeding Business Day (subject to accrual of interest and fees for
the period of such extension), except that in the case of Eurodollar Loans, if
the extension would cause the payment to be made in the next following calendar
month, then such payment shall instead be made on the next preceding Business
Day.
3.3 Prepayments.
(a) Voluntary Prepayments. The Borrower shall have the right
to prepay Loans in whole or in part from time to time without premium
or penalty; provided, however, that (i) Eurodollar Loans may only be
prepaid on three Business Days' prior written notice to the
Administrative Agent and (ii) each such partial prepayment of Loans
shall be in the minimum principal amount of $1,000,000 and integral
multiples of $500,000 in excess thereof. All prepayments under this
Section shall be subject to Section 3.14 and be accompanied by interest
on the principal amount prepaid through the date of prepayment.
(b) Mandatory Prepayments.
(i) Revolving Committed Amount. If at any time
the sum of the aggregate amount of Revolving Loans outstanding
plus Revolving LOC Obligations outstanding plus the Synthetic
Lease Obligations outstanding exceeds the Revolving Committed
Amount, the Borrower shall immediately make a principal
payment to the Administrative Agent in the manner and in an
amount such that the sum of the aggregate amount of Revolving
Loans outstanding plus Revolving LOC Obligations outstanding
plus the Synthetic Lease Obligations outstanding is less than
or equal to the Revolving Committed Amount (to be applied as
set forth in Section 3.3(c) below).
(ii) Asset Sales. Immediately upon receipt by a
Credit Party or any of its Subsidiaries of proceeds from any
Asset Disposition, the Borrower shall forward an amount equal
to 100% of the Net Cash Proceeds of such Asset Disposition to
the Lenders and the Maxim Retail Lenders as a prepayment of
the Loans and Maxim Retail Loans (to be applied as set forth
in Section 3.3(c) below).
(iii) Issuances of Equity. Immediately upon
receipt by a Credit Party or any of its Subsidiaries of cash
proceeds from any Equity Issuance, the Borrower shall forward
100% of the Net Cash Proceeds of such Equity Issuance to the
Lenders and the Maxim Retail Lenders as a prepayment of the
Loans and Maxim Retail Loans (to be applied as set forth in
Section 3.3(c) below).
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(iv) Issuance of Debt. Immediately upon receipt
by a Credit Party or any of its Subsidiaries of proceeds from
any Debt Issuance, the Borrower shall forward 100% of the Net
Cash Proceeds of such Debt Issuance to the Lenders and the
Maxim Retail Lenders as a prepayment of the Loans and Maxim
Retail Loans (to be applied as set forth in Section 3.3(c)
below).
(c) Application of Prepayments. All amounts required to be
paid pursuant to Section 3.3(b)(i) shall be applied first to Revolving
Loans and second to a cash collateral account in respect of Revolving
LOC Obligations. All amounts required to be paid pursuant to Sections
3.3(b)(ii), (iii) and (iv) above shall be applied first pro rata among
to the Revolving Loans (with a corresponding permanent reduction in the
Revolving Committed Amount) and the Maxim Retail Loans (with a
corresponding permanent reduction in the Maxim Retail Committed
Amount), and second, pro rata to a cash collateral account in respect
of Revolving LOC Obligations and the Stand Alone LOC Obligations and a
cash collateral account in respect of the Maxim Retail LOC Obligations.
Within the parameters of the applications set forth above, prepayments
shall be applied first to Base Rate Loans and then to Eurodollar Loans
in direct order of Interest Period maturities. All prepayments
hereunder shall be subject to Section 3.14 and shall be accompanied by
interest on the principal amount prepaid through the date of
prepayment.
3.4 Fees.
(a) Commitment Fees. In consideration of the Revolving
Committed Amount and the Stand Alone LOC Committed Amount being made
available by the Lenders hereunder, the Borrower agrees to pay to the
Administrative Agent, for the pro rata benefit of each Lender (based on
each Lender's Revolving Loan Commitment Percentage of the Revolving
Committed Amount and each Lender's Stand Alone LOC Commitment
Percentage of the Stand Alone LOC Committed Amount), a per annum fee
equal to the Applicable Percentage for Commitment Fees multiplied by
the Revolving Loan Unused Commitment and a fee equal to the Applicable
Percentage for Commitment Fees multiplied by the Stand Alone LOC Unused
Commitment (the "Commitment Fees"). The Commitment Fees shall commence
to accrue on the Effective Date and shall be due and payable in arrears
on the last day of each fiscal quarter of the Borrower (as well as on
the Maturity Date and on any date that the Revolving Committed Amount
or the Stand Alone LOC Committed Amount is reduced) for the immediately
preceding fiscal quarter (or portion thereof), beginning with the first
of such dates to occur after the Closing Date.
(b) Standby Letter of Credit Fee. In consideration of the
issuance of standby Letters of Credit hereunder, the Borrower agrees to
pay to the Issuing Lender for the pro rata benefit of each Lender
(based on each Lender's Revolving Loan Commitment Percentage of the
Revolving Committed Amount), a per annum fee (the "Standby Letter of
Credit Fees") equal to the Applicable Percentage for the Standby Letter
of Credit Fees on the average daily maximum amount available to be
drawn under each such Letter of Credit from the date of issuance to the
date of expiration. The Standby Letter of Credit Fees will
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be payable in arrears on the last day of each fiscal quarter of the
Borrower (as well as on the Maturity Date) for the immediately
preceding fiscal quarter (or portion thereof), beginning with the first
of such dates to occur after the Closing Date.
(c) Trade Letter of Credit Fee. In consideration of the
issuance of trade Letters of Credit hereunder, the Borrower agrees to
pay to the Issuing Lender for the pro rata benefit of each Lender
(based on each Lender's Revolving Loan Commitment Percentage of the
Revolving Committed Amount) a per annum fee (the "Trade Letter of
Credit Fees") equal to the Applicable Percentage for the Trade Letter
of Credit Fees on the average daily maximum amount available to be
drawn under each such Letter of Credit from the date of issuance to the
date of expiration. The Trade Letter of Credit Fees will be payable in
arrears on the last day of each fiscal quarter of the Borrower (as well
as on the Maturity Date) for the immediately preceding fiscal quarter
(or portion thereof), beginning with the first of such dates to occur
after the Closing Date.
(d) Issuing Lender Fees. In addition to the Standby Letter of
Credit Fees payable pursuant to clause (b) above and the Trade Letter
of Credit Fees payable pursuant to clause (c) above, the Borrower shall
pay to the Issuing Lender for its own account, without sharing by the
other Lenders, (i) the customary charges from time to time to the
Issuing Lender for its services in connection with the issuance,
amendment, payment, transfer, administration, cancellation and
conversion of, and drawings under, Letters of Credit, and (ii) a letter
of credit fronting fee of 0.125% of the face amount of each Letter of
Credit (collectively, the "Issuing Lender Fees").
(e) Administrative Fees. The Borrower agrees to pay to the
Administrative Agent, for its own account, an annual fee in accordance
with the terms of the Fee Letter.
3.5 Payment in full at Maturity.
On the Maturity Date, the entire outstanding principal balance of all
Loans and all LOC Obligations, together with accrued but unpaid interest and all
other sums owing with respect thereto, shall be due and payable in full, unless
accelerated sooner pursuant to Section 9.2.
3.6 Computations of Interest and Fees.
(a) Except for Base Rate Loans, in which case interest shall
be computed on the basis of a 365 or 366 day year as the case may be,
all computations of interest and fees hereunder shall be made on the
basis of the actual number of days elapsed over a year of 360 days.
Interest shall accrue from and include the date of borrowing (or
continuation or conversion) but exclude the date of payment.
(b) It is the intent of the Lenders and the Credit Parties to
conform to and contract in strict compliance with applicable usury law
from time to time in effect. All agreements between the Lenders and the
Credit Parties are hereby limited by the provisions of this paragraph
which shall override and control all such agreements, whether now
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existing or hereafter arising and whether written or oral. In no way,
nor in any event or contingency (including but not limited to
prepayment or acceleration of the maturity of any obligation), shall
the interest taken, reserved, contracted for, charged, or received
under this Credit Agreement, under the Notes or otherwise, exceed the
maximum nonusurious amount permissible under applicable law. If, from
any possible construction of any of the Credit Documents or any other
document, interest would otherwise be payable in excess of the maximum
nonusurious amount, any such construction shall be subject to the
provisions of this paragraph and such documents shall be automatically
reduced to the maximum nonusurious amount permitted under applicable
law, without the necessity of execution of any amendment or new
document. If any Lender shall ever receive anything of value which is
characterized as interest on the Loans under applicable law and which
would, apart from this provision, be in excess of the maximum lawful
amount, an amount equal to the amount which would have been excessive
interest shall, without penalty, be applied to the reduction of the
principal amount owing on the Loans and not to the payment of interest,
or refunded to the Borrower or the other payor thereof if and to the
extent such amount which would have been excessive exceeds such unpaid
principal amount of the Loans. The right to demand payment of the Loans
or any other indebtedness evidenced by any of the Credit Documents does
not include the right to accelerate the payment of any interest which
has not otherwise accrued on the date of such demand, and the Lenders
do not intend to charge or receive any unearned interest in the event
of such demand. All interest paid or agreed to be paid to the Lenders
with respect to the Loans shall, to the extent permitted by applicable
law, be amortized, prorated, allocated, and spread throughout the full
stated term (including any renewal or extension) of the Loans so that
the amount of interest on account of such indebtedness does not exceed
the maximum nonusurious amount permitted by applicable law.
3.7 Pro Rata Treatment.
Except to the extent otherwise provided herein:
(a) Loans. Each Revolving Loan borrowing (including, without
limitation, each Mandatory Borrowing), each payment or prepayment of
principal of any Loan, each payment of fees (other than the Issuing
Lender Fees retained by the Issuing Lender for its own account and the
fees retained by the Administrative Agent for its own account), each
reduction of the Revolving Committed Amount and/or Stand Alone LOC
Committed Amount, and each conversion or continuation of any Loan,
shall (except as otherwise provided in Section 3.11) be allocated pro
rata among the relevant Lenders in accordance with the respective
Revolving Loan Commitment Percentages of such Lenders (or, if the
Commitments of such Lenders have expired or been terminated, in
accordance with the respective principal amounts of the outstanding
Loans and Participation Interests of such Lenders); provided that, if
any Lender shall have failed to pay its applicable pro rata share of
any Revolving Loan, then any amount to which such Lender would
otherwise be entitled pursuant to this subsection (a) shall instead be
payable to the Administrative Agent until the share of such Loan not
funded by such Lender has been repaid; provided further, that in the
event any amount paid to any Lender pursuant to this subsection (a) is
rescinded or must
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otherwise be returned by the Administrative Agent, each Lender shall,
upon the request of the Administrative Agent, repay to the
Administrative Agent the amount so paid to such Lender, with interest
for the period commencing on the date such payment is returned by the
Administrative Agent until the date the Administrative Agent receives
such repayment at a rate per annum equal to, during the period to but
excluding the date two Business Days after such request, the Federal
Funds Rate, and thereafter, the Base Rate plus two percent (2%) per
annum; and
(b) Letters of Credit. Each payment of unreimbursed drawings
in respect of Revolving LOC Obligations and Stand Alone LOC Obligations
shall be allocated to each LOC Participant pro rata in accordance with
its Revolving Loan Commitment Percentage or Stand Alone LOC Commitment
Percentage, as applicable; provided that, if any LOC Participant shall
have failed to pay its applicable pro rata share of any drawing under
any Letter of Credit, then any amount to which such LOC Participant
would otherwise be entitled pursuant to this subsection (b) shall
instead be payable to the Issuing Lender until the share of such
unreimbursed drawing not funded by such Lender has been repaid;
provided further, that in the event any amount paid to any LOC
Participant pursuant to this subsection (b) is rescinded or must
otherwise be returned by the Issuing Lender, each LOC Participant
shall, upon the request of the Issuing Lender, repay to the
Administrative Agent for the account of the Issuing Lender the amount
so paid to such LOC Participant, with interest for the period
commencing on the date such payment is returned by the Issuing Lender
until the date the Issuing Lender receives such repayment at a rate per
annum equal to, during the period to but excluding the date two
Business Days after such request, the Federal Funds Rate, and
thereafter, the Base Rate plus two percent (2%) per annum.
3.8 Sharing of Payments.
The Lenders agree among themselves that, except to the extent otherwise
provided herein, in the event that any Lender shall obtain payment in respect of
any Loan, unreimbursed drawing with respect to any LOC Obligations or any other
obligation owing to such Lender under this Credit Agreement through the exercise
of a right of setoff, banker's lien or counterclaim, or pursuant to a secured
claim under Section 506 of the Bankruptcy Code or other security or interest
arising from, or in lieu of, such secured claim, received by such Lender under
any applicable bankruptcy, insolvency or other similar law or otherwise, or by
any other means, in excess of its pro rata share of such payment as provided for
in this Credit Agreement, such Lender shall promptly pay in cash or purchase
from the other Lenders a participation in such Loans, LOC Obligations, and other
obligations in such amounts, and make such other adjustments from time to time,
as shall be equitable to the end that all Lenders share such payment in
accordance with their respective ratable shares as provided for in this Credit
Agreement. The Lenders further agree among themselves that if payment to a
Lender obtained by such Lender through the exercise of a right of setoff,
banker's lien, counterclaim or other event as aforesaid shall be rescinded or
must otherwise be restored, each Lender which shall have shared the benefit of
such payment shall, by payment in cash or a repurchase of a participation
theretofore sold, return its share of that benefit (together with its share of
any accrued interest payable with respect thereto) to each Lender whose payment
shall have been rescinded or otherwise restored. The Borrower agrees that any
Lender so purchasing such a
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participation may, to the fullest extent permitted by law, exercise all rights
of payment, including setoff, banker's lien or counterclaim, with respect to
such participation as fully as if such Lender were a holder of such Loan, LOC
Obligation or other obligation in the amount of such participation. Except as
otherwise expressly provided in this Credit Agreement, if any Lender or the
Administrative Agent shall fail to remit to the Administrative Agent or any
other Lender an amount payable by such Lender or such Administrative Agent to
the Administrative Agent or such other Lender pursuant to this Credit Agreement
on the date when such amount is due, such payments shall be made together with
interest thereon for each date from the date such amount is due until the date
such amount is paid to the Administrative Agent or such other Lender at a rate
per annum equal to the Federal Funds Rate. If under any applicable bankruptcy,
insolvency or other similar law, any Lender receives a secured claim in lieu of
a setoff to which this Section 3.8 applies, such Lender shall, to the extent
practicable, exercise its rights in respect of such secured claim in a manner
consistent with the rights of the Lenders under this Section 3.8 to share in the
benefits of any recovery on such secured claim.
3.9 Capital Adequacy.
If, after the date hereof, any Lender has determined that the adoption
or the becoming effective of, or any change in, or any change by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof in the interpretation or administration
of, any applicable law, rule or regulation regarding capital adequacy, or
compliance by such Lender, or its parent corporation, with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Lender's (or parent corporation's)
capital or assets as a consequence of its commitments or obligations hereunder
to a level below that which such Lender, or its parent corporation, could have
achieved but for such adoption, effectiveness, change or compliance (taking into
consideration such Lender's (or parent corporation's) policies with respect to
capital adequacy), then, upon notice from such Lender to the Borrower, the
Borrower shall be obligated to pay to such Lender such additional amount or
amounts as will compensate such Lender on an after-tax basis (after taking into
account applicable deductions and credits in respect of the amount indemnified)
for such reduction. Each determination by any such Lender of amounts owing under
this Section shall, absent manifest error, be conclusive and binding on the
parties hereto. This covenant shall survive the termination of this Credit
Agreement and the payment of the Loans and all other amounts payable hereunder.
3.10 Inability To Determine Interest Rate.
If prior to the first day of any Interest Period, the Administrative
Agent shall have determined in good faith (which determination shall be
conclusive and binding upon the Borrower) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for such Interest Period, the Administrative
Agent shall give telecopy or telephonic notice thereof to the Borrower and the
Lenders as soon as practicable thereafter, and will also give prompt written
notice to the Borrower when such conditions no longer exist. If such notice is
given (a) any Eurodollar Loans requested to be made on the first day of such
Interest Period shall be made as Base Rate Loans, (b) any Loans that were
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to have been converted on the first day of such Interest Period to or continued
as Eurodollar Loans shall be converted to or continued as Base Rate Loans and
(c) any outstanding Eurodollar Loans shall be converted, on the first day of
such Interest Period, to Base Rate Loans. Until such notice is withdrawn by the
Administrative Agent, no further Eurodollar Loans shall be made or continued as
such, nor shall the Borrower have the right to convert Base Rate Loans to
Eurodollar Loans.
3.11 Illegality.
Notwithstanding any other provision herein, if the adoption of or any
change in any Requirement of Law or in the interpretation or application thereof
occurring after the Closing Date shall make it unlawful for any Lender to make
or maintain Eurodollar Loans as contemplated by this Credit Agreement, (a) such
Lender shall promptly give written notice of such circumstances to the Borrower
and the Administrative Agent (which notice shall be withdrawn whenever such
circumstances no longer exist), (b) the commitment of such Lender hereunder to
make Eurodollar Loans, continue Eurodollar Loans as such and convert a Base Rate
Loan to Eurodollar Loans shall forthwith be canceled and, until such time as it
shall no longer be unlawful for such Lender to make or maintain Eurodollar
Loans, such Lender shall then have a commitment only to make a Base Rate Loan
when a Eurodollar Loan is requested and (c) such Lender's Loans then outstanding
as Eurodollar Loans, if any, shall be converted automatically to Base Rate Loans
on the respective last days or the then current Interest Periods with respect to
such Loans or within such earlier period as required by law. If any such
conversion of a Eurodollar Loan occurs on a day which is not the last day of the
then current Interest Period with respect thereto, the Borrower shall pay to
such Lender such amounts, if any, as may be required pursuant to Section 3.14.
3.12 Requirements of Law.
If the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof applicable to any Lender, or compliance by
any Lender with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority, in each case made
subsequent to the Closing Date (or, if later, the date on which such Lender
becomes a Lender):
(a) shall subject such Lender to any tax of any kind
whatsoever with respect to any Letter of Credit, any Eurodollar Loans
made by it or its obligation to make Eurodollar Loans, or change the
basis of taxation of payments to such Lender in respect thereof (except
for Non-Excluded Taxes covered by Section 3.13 (including Non-Excluded
Taxes imposed solely by reason of any failure of such Lender to comply
with its obligations under Section 3.13(b)) and changes in taxes
measured by or imposed upon the overall net income, or franchise tax
(imposed in lieu of such net income tax), of such Lender or its
applicable lending office, branch, or any affiliate thereof);
(b) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other
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acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of the Eurodollar Rate
hereunder; or
(c) shall impose on such Lender any other condition (excluding
any tax of any kind whatsoever);
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, upon notice to the Borrower from such Lender,
through the Administrative Agent, in accordance herewith, the Borrower shall be
obligated to promptly pay such Lender, upon its demand, any additional amounts
necessary to compensate such Lender on an after-tax basis (after taking into
account applicable deductions and credits in respect of the amount indemnified)
for such increased cost or reduced amount receivable, provided that, in any such
case, the Borrower may elect to convert the Eurodollar Loans made by such Lender
hereunder to Base Rate Loans by giving the Administrative Agent at least one
Business Day's notice of such election, in which case the Borrower shall
promptly pay to such Lender, upon demand, without duplication, such amounts, if
any, as may be required pursuant to Section 3.14. If any Lender becomes entitled
to claim any additional amounts pursuant to this Section 3.12, it shall provide
prompt notice thereof to the Borrower, through the Administrative Agent,
certifying (x) that one of the events described in this Section 3.12 has
occurred and describing in reasonable detail the nature of such event, (y) as to
the increased cost or reduced amount resulting from such event and (z) as to the
additional amount demanded by such Lender and a reasonably detailed explanation
of the calculation thereof. Such a certificate as to any additional amounts
payable pursuant to this Section 3.12 submitted by such Lender, through the
Administrative Agent, to the Borrower shall be conclusive and binding on the
parties hereto in the absence of manifest error. This covenant shall survive the
termination of this Credit Agreement and the payment of the Loans and all other
amounts payable hereunder.
3.13 Taxes.
(a) Except as provided below in this Section 3.13, all
payments made by the Borrower under this Credit Agreement and any Notes
shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any court, or governmental body, agency or other official,
excluding taxes measured by or imposed upon the net income of any
Lender or its applicable lending office, or any branch or affiliate
thereof, and all franchise taxes, branch taxes, taxes on doing business
or taxes on the capital or net worth of any Lender or its applicable
lending office, or any branch or affiliate thereof, in each case
imposed in lieu of net income taxes: (i) by the jurisdiction under the
laws of which such Lender, applicable lending office, branch or
affiliate is organized or is located, or in which its principal
executive office is located, or any nation within which such
jurisdiction is located or any political subdivision thereof; or (ii)
by reason of any connection between the jurisdiction imposing such tax
and such Lender, applicable lending office, branch or
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affiliate other than a connection arising solely from such Lender
having executed, delivered or performed its obligations, or received
payment under or enforced, this Credit Agreement or any Notes. If any
such non-excluded taxes, levies, imposts, duties, charges, fees,
deductions or withholdings ("Non-Excluded Taxes") are required to be
withheld from any amounts payable to the Administrative Agent or any
Lender hereunder or under any Notes, (A) the amounts so payable to the
Administrative Agent or such Lender shall be increased to the extent
necessary to yield to the Administrative Agent or such Lender (after
payment of all Non-Excluded Taxes) interest or any such other amounts
payable hereunder at the rates or in the amounts specified in this
Credit Agreement and any Notes, provided, however, that the Borrower
shall be entitled to deduct and withhold any Non-Excluded Taxes and
shall not be required to increase any such amounts payable to any
Lender that is not organized under the laws of the United States of
America or a state thereof if such Lender fails to comply with the
requirements of paragraph (b) of this Section 3.13 whenever any
Non-Excluded Taxes are payable by the Borrower, and (B) as promptly as
possible after requested the Borrower shall send to the Administrative
Agent for its own account or for the account of such Lender, as the
case may be, a certified copy of an original official receipt received
by the Borrower showing payment thereof. If the Borrower fails to pay
any Non-Excluded Taxes when due to the appropriate taxing authority or
fails to remit to the Administrative Agent the required receipts or
other required documentary evidence, the Borrower shall indemnify the
Administrative Agent and any Lender for any incremental Non-Excluded
Taxes, interest or penalties that may become payable by the
Administrative Agent or any Lender as a result of any such failure. The
agreements in this subsection shall survive the termination of this
Credit Agreement and the payment of the Loans and all other amounts
payable hereunder.
(b) Each Lender that is not incorporated under the laws of the
United States of America or a state thereof shall:
(i)(A) on or before the date of any payment by the
Borrower under this Credit Agreement or Notes to such Lender,
deliver to the Borrower and the Administrative Agent (x) two
duly completed copies of United States Internal Revenue
Service Form 1001 or 4224, or successor applicable form, as
the case may be, certifying that it is entitled to receive
payments under this Credit Agreement and any Notes without
deduction or withholding of any United States federal income
taxes and (y) an Internal Revenue Service Form W-8 or W-9, or
successor applicable form, as the case may be, certifying that
it is entitled to an exemption from United States backup
withholding tax;
(B) deliver to the Borrower and the Administrative
Agent two further copies of any such form or certification on
or before the date that any such form or certification expires
or becomes obsolete and after the occurrence of any event
requiring a change in the most recent form previously
delivered by it to the Borrower; and
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(C) obtain such extensions of time for
filing and complete such forms or certifications as may
reasonably be requested by the Borrower or the Administrative
Agent; or
(ii) in the case of any such Lender that is not a
"bank" within the meaning of Section 881(c)(3)(A) of the
Internal Revenue Code, (A) represent to the Borrower (for the
benefit of the Borrower and the Administrative Agent) that it
is not a bank within the meaning of Section 881(c)(3)(A) of
the Internal Revenue Code, (B) agree to furnish to the
Borrower, on or before the date of any payment by the
Borrower, with a copy to the Administrative Agent, two
accurate and complete original signed copies of Internal
Revenue Service Form W-8, or successor applicable form
certifying to such Lender's legal entitlement at the date of
such certificate to an exemption from U.S. withholding tax
under the provisions of Section 881(c) of the Internal Revenue
Code with respect to payments to be made under this Credit
Agreement and any Notes (and to deliver to the Borrower and
the Administrative Agent two further copies of such form on or
before the date it expires or becomes obsolete and after the
occurrence of any event requiring a change in the most
recently provided form and, if necessary, obtain any
extensions of time reasonably requested by the Borrower or the
Administrative Agent for filing and completing such forms),
and (C) agree, to the extent legally entitled to do so, upon
reasonable request by the Borrower, to provide to the Borrower
(for the benefit of the Borrower and the Administrative Agent)
such other forms as may be reasonably required in order to
establish the legal entitlement of such Lender to an exemption
from withholding with respect to payments under this Credit
Agreement and any Notes.
Notwithstanding the above, if any change in treaty, law or regulation
has occurred after the date such Person becomes a Lender hereunder
which renders all such forms inapplicable or which would prevent such
Lender from duly completing and delivering any such form with respect
to it and such Lender so advises the Borrower and the Administrative
Agent, then such Lender shall be exempt from such requirements. Each
Person that shall become a Lender or a participant of a Lender pursuant
to Section 11.3 shall, upon the effectiveness of the related transfer,
be required to provide all of the forms, certifications and statements
required pursuant to this subsection (b); provided that in the case of
a participant of a Lender, the obligations of such participant of a
Lender pursuant to this subsection (b) shall be determined as if the
participant of a Lender were a Lender except that such participant of a
Lender shall furnish all such required forms, certifications and
statements to the Lender from which the related participation shall
have been purchased.
3.14 Compensation.
The Borrower promises to indemnify each Lender and to hold each Lender
harmless from any loss or expense which such Lender may sustain or incur as a
consequence of (a) default by the Borrower in making a borrowing of, conversion
into or continuation of Eurodollar Loans after the Borrower has given a notice
requesting the same in accordance with the provisions of this Credit
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Agreement, (b) default by the Borrower in making any prepayment of a Eurodollar
Loan after the Borrower has given a notice thereof in accordance with the
provisions of this Credit Agreement and (c) the making of a prepayment of
Eurodollar Loans on a day which is not the last day of an Interest Period with
respect thereto. Such indemnification may include an amount equal to (i) the
amount of interest which would have accrued on the amount so prepaid, or not so
borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
the applicable Interest Period (or, in the case of a failure to borrow, convert
or continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Eurodollar
Loans provided for herein (excluding, however, the Applicable Percentage
included therein, if any) minus (ii) the amount of interest (as reasonably
determined by such Lender) which would have accrued to such Lender on such
amount by placing such amount on deposit for a comparable period with leading
banks in the interbank Eurodollar market. The agreements in this Section shall
survive the termination of this Credit Agreement and the payment of the Loans
and all other amounts payable hereunder.
3.15 Evidence of Debt.
(a) Each Lender shall maintain an account or accounts evidencing each
Loan made by such Lender to the Borrower from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Credit Agreement. Each Lender will make reasonable efforts to
maintain the accuracy of its account or accounts and to promptly update its
account or accounts from time to time, as necessary.
(b) The Administrative Agent shall maintain the Register pursuant to
Section 11.3(c), and a subaccount for each Lender, in which Register and
subaccounts (taken together) shall be recorded (i) the amount, type and Interest
Period of each such Loan hereunder, (ii) the amount of any principal or interest
due and payable or to become due and payable to each Lender hereunder, and (iii)
the amount of any sum received by the Administrative Agent hereunder from or for
the account of the Borrower and each Lender's share thereof, if any. The
Administrative Agent will make reasonable efforts to maintain the accuracy of
the subaccounts referred to in the preceding sentence and to promptly update
such subaccounts from time to time, as necessary.
(c) The entries made in the accounts, Register and subaccounts
maintained pursuant to subsection (b) of this Section 3.16 (and, if consistent
with the entries of the Administrative Agent, subsection (a)) shall be prima
facie evidence of the existence and amounts of the obligations of the Borrower
therein recorded; provided, however, that the failure of any Lender or the
Administrative Agent to maintain such account, such Register, or such
subaccount, as applicable, or any error therein, shall not in any manner affect
the obligation of the Borrower to repay the Loans made by such Lender in
accordance with the terms hereof.
3.16 Replacement of Lenders.
In the event any Lender delivers to the Borrower any notice in
accordance with Section 3.9, 3.11 or 3.12, then the Borrower shall have the
right, if no Default or Event of Default then exists, to replace such Lender
(the "Replaced Lender") with one or more additional banks
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or financial institutions (collectively, the "Replacement Lender"), provided,
that (a) the Replacement Lender is acceptable to the Administrative Agent, (b)
at the time of any replacement pursuant to this Section 3.16, the Replacement
Lender shall enter into one or more Assignment and Acceptance agreements
pursuant to, and in accordance with the terms of, Section 11.3(b) (and with all
processing and recordation fees payable pursuant to said Section 11.3(b) to be
paid by the Replacement Lender or, at its option, the Borrower) pursuant to
which the Replacement Lender shall acquire all of the rights and obligations of
the Replaced Lender hereunder and, in connection therewith, shall pay to the
Replaced Lender in respect thereof an amount equal to the sum of (i) the
principal of, and all accrued interest on, all outstanding Loans of the Replaced
Lender, and (ii) all accrued, but theretofore unpaid, fees owing to the Replaced
Lender pursuant to Section 3.4, (c) all other obligations of the Borrower owing
to the Replaced Lender (including all other obligations, if any, owing pursuant
to Sections 3.9, 3.11 and 3.12) shall be paid in full to such Replaced Lender
concurrently with such replacement and (d) the Administrative Agent and the
Lenders shall not be obligated to assist the Borrower in identifying any
Replacement Lender.
SECTION 4
GUARANTY
4.1 Guaranty of Payment.
Subject to Section 4.7 below, each of the Guarantors hereby, jointly
and severally, unconditionally guarantees to each Lender, each Affiliate of
Lender that enters into a Hedging Agreement and the Administrative Agent the
prompt payment of the Credit Party Obligations in full when due (whether at
stated maturity, as a mandatory prepayment, by acceleration or otherwise). This
Guaranty is a guaranty of payment and not of collection and is a continuing
guaranty and shall apply to all Credit Party Obligations whenever arising.
4.2 Obligations Unconditional.
The obligations of the Guarantors hereunder are absolute and
unconditional, irrespective of the value, genuineness, validity, regularity or
enforceability of any of the Credit Documents or the Hedging Agreements, or any
other agreement or instrument referred to therein, to the fullest extent
permitted by applicable law, irrespective of any other circumstance whatsoever
which might otherwise constitute a legal or equitable discharge or defense of a
surety or guarantor. Each Guarantor agrees that this Guaranty may be enforced by
the Lenders without the necessity at any time of resorting to or exhausting any
other security or collateral and without the necessity at any time of having
recourse to the Notes or any other of the Credit Documents or any collateral, if
any, hereafter securing the Credit Party Obligations or otherwise and each
Guarantor hereby waives the right to require the Lenders to proceed against the
Borrower or any other Person (including a co-guarantor) or to require the
Lenders to pursue any other remedy or enforce any other right. Each Guarantor
further agrees that it shall have no right of subrogation, indemnity,
reimbursement or contribution against the Borrower or any other Guarantor of the
Credit Party Obligations for
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amounts paid under this Guaranty until such time as the Lenders (and any
Affiliates of Lenders entering into Hedging Agreements) have been paid in full,
all Commitments under the Credit Agreement have been terminated and no Person or
Governmental Authority shall have any right to request any return or
reimbursement of funds from the Lenders in connection with monies received under
the Credit Documents. Each Guarantor further agrees that nothing contained
herein shall prevent the Lenders from suing on the Notes or any of the other
Credit Documents or any of the Hedging Agreements or foreclosing its security
interest in or Lien on any collateral, if any, securing the Credit Party
Obligations or from exercising any other rights available to it under this
Credit Agreement, the Notes, any other of the Credit Documents, or any other
instrument of security, if any, and the exercise of any of the aforesaid rights
and the completion of any foreclosure proceedings shall not constitute a
discharge of any of any Guarantor's obligations hereunder; it being the purpose
and intent of each Guarantor that its obligations hereunder shall be absolute,
independent and unconditional under any and all circumstances. Neither any
Guarantor's obligations under this Guaranty nor any remedy for the enforcement
thereof shall be impaired, modified, changed or released in any manner
whatsoever by an impairment, modification, change, release or limitation of the
liability of the Borrower or by reason of the bankruptcy or insolvency of the
Borrower. Each Guarantor waives any and all notice of the creation, renewal,
extension or accrual of any of the Credit Party Obligations and notice of or
proof of reliance of by the Administrative Agent or any Lender upon this
Guarantee or acceptance of this Guarantee. The Credit Party Obligations, and any
of them, shall conclusively be deemed to have been created, contracted or
incurred, or renewed, extended, amended or waived, in reliance upon this
Guarantee. All dealings between the Borrower and any of the Guarantors, on the
one hand, and the Administrative Agent and the Lenders, on the other hand,
likewise shall be conclusively presumed to have been had or consummated in
reliance upon this Guarantee. The Guarantors further agree to all rights of
set-off as set forth in Section 11.2.
4.3 Modifications.
Each Guarantor agrees that (a) all or any part of the Collateral now or
hereafter held for the Credit Party Obligations, if any, may be exchanged,
compromised or surrendered from time to time; (b) the Lenders shall not have any
obligation to protect, perfect, secure or insure any such security interests,
liens or encumbrances now or hereafter held, if any, for the Credit Party
Obligations or the properties subject thereto; (c) the time or place of payment
of the Credit Party Obligations may be changed or extended, in whole or in part,
to a time certain or otherwise, and may be renewed or accelerated, in whole or
in part; (d) the Borrower and any other party liable for payment under the
Credit Documents may be granted indulgences generally; (e) any of the provisions
of the Notes or any of the other Credit Documents may be modified, amended or
waived; (f) any party (including any co-guarantor) liable for the payment
thereof may be granted indulgences or be released; and (g) any deposit balance
for the credit of the Borrower or any other party liable for the payment of the
Credit Party Obligations or liable upon any security therefor may be released,
in whole or in part, at, before or after the stated, extended or accelerated
maturity of the Credit Party Obligations, all without notice to or further
assent by such Guarantor, which shall remain bound thereon, notwithstanding any
such exchange, compromise, surrender, extension, renewal, acceleration,
modification, indulgence or release.
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4.4 Waiver of Rights.
Each Guarantor expressly waives to the fullest extent permitted by
applicable law: (a) notice of acceptance of this Guaranty by the Lenders and of
all extensions of credit to the Borrower by the Lenders; (b) presentment and
demand for payment or performance of any of the Credit Party Obligations; (c)
protest and notice of dishonor or of default (except as specifically required in
the Credit Agreement) with respect to the Credit Party Obligations or with
respect to any security therefor; (d) notice of the Lenders obtaining, amending,
substituting for, releasing, waiving or modifying any security interest, lien or
encumbrance, if any, hereafter securing the Credit Party Obligations, or the
Lenders' subordinating, compromising, discharging or releasing such security
interests, liens or encumbrances, if any; (e) all other notices to which such
Guarantor might otherwise be entitled; and (f) demand for payment under this
Guaranty.
4.5 Reinstatement.
The obligations of the Guarantors under this Section 4 shall be
automatically reinstated if and to the extent that for any reason any payment by
or on behalf of any Person in respect of the Credit Party Obligations is
rescinded or must be otherwise restored by any holder of any of the Credit Party
Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it will indemnify
the Administrative Agent and each Lender on demand for all reasonable costs and
expenses (including, without limitation, reasonable fees of counsel) incurred by
the Administrative Agent or such Lender in connection with such rescission or
restoration, including any such costs and expenses incurred in defending against
any claim alleging that such payment constituted a preference, fraudulent
transfer or similar payment under any bankruptcy, insolvency or similar law.
4.6 Remedies.
The Guarantors agree that, as between the Guarantors, on the one hand,
and the Administrative Agent and the Lenders, on the other hand, the Credit
Party Obligations may be declared to be forthwith due and payable as provided in
Section 9 (and shall be deemed to have become automatically due and payable in
the circumstances provided in Section 9) notwithstanding any stay, injunction or
other prohibition preventing such declaration (or preventing such Credit Party
Obligations from becoming automatically due and payable) as against any other
Person and that, in the event of such declaration (or such Credit Party
Obligations being deemed to have become automatically due and payable), such
Credit Party Obligations (whether or not due and payable by any other Person)
shall forthwith become due and payable by the Guarantors. The Guarantors
acknowledge and agree that their obligations hereunder are secured in accordance
with the terms of the Security Agreements and the other Collateral Documents and
that the Lenders may exercise their remedies thereunder in accordance with the
terms thereof.
4.7 Limitation of Guaranty.
Notwithstanding any provision to the contrary contained herein or in
any of the other Credit Documents, to the extent the obligations of any
Guarantor shall be adjudicated to be invalid or
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unenforceable for any reason (including, without limitation, because of any
applicable state or federal law relating to fraudulent conveyances or transfers)
then the obligations of such Guarantor hereunder shall be limited to the maximum
amount that is permissible under applicable law (whether federal or state and
including, without limitation, the Bankruptcy Code).
4.8 Rights of Contribution.
The Credit Parties agree among themselves that, in connection with
payments made hereunder, each Credit Party shall have contribution rights
against the other Credit Parties as permitted under applicable law. Such
contribution rights shall be subordinate and subject in right of payment to the
obligations of the Credit Parties under the Credit Documents and no Credit Party
shall exercise such rights of contribution until all Credit Party Obligations
have been paid in full and the Commitments terminated.
SECTION 5
CONDITIONS PRECEDENT
5.1 Closing Conditions.
The obligation of the Lenders to enter into this Credit Agreement and
make the initial Extension of Credit is subject to satisfaction (or waiver by
each of the Lenders) of the following conditions:
(a) Executed Credit Documents. Receipt by the Administrative
Agent of duly executed copies of: (i) this Credit Agreement; (ii) the
Notes; (iii) the Collateral Documents; and (iv) all other Credit
Documents, each in form and substance reasonably acceptable to the
Administrative Agent.
(b) Corporate Documents. With respect to each Credit Party
that is a corporation, receipt by the Administrative Agent of the
following:
(i) Charter Documents. Copies of the articles or
certificates of incorporation or other charter documents of
each Credit Party certified to be true and complete as of a
recent date by the appropriate Governmental Authority of the
state or other jurisdiction of its incorporation and certified
by a secretary or assistant secretary of such Credit Party to
be true and correct as of the Effective Date.
(ii) Bylaws. A copy of the bylaws of each Credit
Party certified by a secretary or assistant secretary of such
Credit Party to be true and correct as of the Effective Date.
(iii) Resolutions. Copies of resolutions of the Board
of Directors of each Credit Party approving and adopting the
Credit Documents to which it is a party, the
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transactions contemplated therein and authorizing execution
and delivery thereof, certified by a secretary or assistant
secretary of such Credit Party to be true and correct and in
force and effect as of the Effective Date.
(iv) Good Standing. Copies of certificates of good
standing, existence or its equivalent with respect to each
Credit Party certified as of a recent date by the appropriate
Governmental Authorities of the state or other jurisdiction of
incorporation and each other jurisdiction in which the failure
to so qualify and be in good standing would have a Material
Adverse Effect on the business or operations of a Credit Party
in such jurisdiction.
(v) Incumbency. An incumbency certificate of each
Credit Party certified by a secretary or assistant secretary
to be true and correct as of the Effective Date.
(c) Partnership Documents. With respect to each Credit Party
that is a partnership, receipt by the Administrative Agent of the
following:
(i) Authorization. Authorization of the general
partner(s) of such Credit Party, as of the Closing Date,
approving and adopting the Credit Documents to be executed by
such Credit Party and authorizing the execution and delivery
thereof.
(ii) Partnership Agreements. Certified copies of the
partnership agreement of such Credit Party, together with all
amendments thereto.
(iii) Certificates of Good Standing or Existence.
Certificate of good standing or existence for such Credit
Party issued as of a recent date by its state of organization
and each other state where the failure to qualify or be in
good standing could have a Material Adverse Effect.
(iv) Incumbency. An incumbency certificate of the
general partner(s) of such Credit Party, certified by a
secretary or assistant secretary of such general partner to be
true and correct as of the Closing Date.
(d) Opinion of Counsel. Receipt by the Administrative Agent of
an opinion or opinions (which shall cover, among other things,
authority, legality, validity, binding effect, and enforceability of
the Credit Documents and the attachment, perfection, and validity of
liens), reasonably satisfactory to the Administrative Agent, addressed
to the Administrative Agent and the Lenders and dated as of the
Effective Date, from legal counsel to the Credit Parties.
(e) Financial Statements. Receipt by the Lenders of such
financial information regarding the Maxim Group Parties as they may
request, including, but not limited to, (i) the consolidated financial
statements of the Maxim Group Parties for the fiscal years 1997 and
1998, including balance sheets, income statements and cash flow
statements audited by
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independent public accountants of recognized national standing and
prepared in accordance with GAAP, (ii) interim unaudited monthly
financial statements for the Maxim Group Parties, prepared in
accordance with GAAP, and (iii) monthly working capital detail for the
trailing twelve months of the Maxim Group Parties and the first
projected year for the Maxim Group Parties.
(f) Personal Property Collateral. The Administrative Agent
shall have received, in form and substance reasonably satisfactory to
the Administrative Agent:
(i) searches of Uniform Commercial Code ("UCC")
filings in the jurisdiction of the chief executive office of
each Credit Party and each jurisdiction where any Collateral
is located or where a filing would need to be made in order to
perfect the Administrative Agent's security interest in the
Collateral, copies of the financing statements on file in such
jurisdictions and evidence that no Liens exist other than
Permitted Liens;
(ii) duly executed UCC financing statements for each
appropriate jurisdiction as is necessary, in the
Administrative Agent's sole discretion, to perfect the
Administrative Agent's security interest in the Collateral;
(iii) searches of ownership of intellectual property
in the appropriate governmental offices as requested by the
Administrative Agent and such patent, trademark and copyright
filings as requested by the Administrative Agent;
(iv) all stock certificates evidencing the stock
pledged to the Administrative Agent pursuant to the Pledge
Agreements, together with duly executed in blank undated stock
powers attached thereto; and
(v) all instruments and chattel paper in the
possession of a Credit Party, as required by the Security
Agreements, together with allonges or assignments as may be
necessary to perfect the Administrative Agent's security
interest in such Collateral.
(g) Evidence of Insurance. Receipt by the Administrative Agent
of copies of insurance policies or certificates of insurance of the
Credit Parties evidencing liability and casualty insurance meeting the
requirements set forth in the Credit Documents, including, but not
limited to, naming the Administrative Agent as additional insured or
loss payee on behalf of the Lenders.
(h) Material Adverse Effect. No material adverse change shall
have occurred since January 31, 1998 in the condition (financial or
otherwise), business, management or prospects of the Borrower and its
Subsidiaries taken as a whole.
(i) Litigation. There shall not exist any pending or, to the
knowledge of any Credit Party, threatened action, suit, investigation
or proceeding against a Credit Party or
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any of their Subsidiaries that would have or would reasonably be
expected to have a Material Adverse Effect.
(j) Landlord Waiver. With respect to each leased location of a
Credit Party (i) on which such Credit Party maintains in excess of
$400,000 of inventory and (ii) for which the Administrative Agent in
its sole discretion determines that a landlord consent is required,
receipt by the Administrative Agent of a landlord consent from the
respective landlord in form and substance satisfactory to the
Administrative Agent.
(k) Officer's Certificates. The Administrative Agent shall
have received a certificate or certificates executed by an Executive
Officer of the Borrower as of the Effective Date stating that (i)
except for the Indenture Default under the Indenture, the Borrower and
each of its Subsidiaries are in compliance with all existing financial
obligations, (ii) no action, suit, investigation or proceeding is
pending or, to the knowledge of any Credit Party, threatened in any
court or before any arbitrator or governmental instrumentality that
purports to effect the Borrower, any of the its Subsidiaries or any
transaction contemplated by the Credit Documents, if such action, suit,
investigation or proceeding would have or might reasonably be expected
to have a Material Adverse Effect, (iii) the financial statements and
information delivered to the Administrative Agent on or before the
Effective Date were prepared in good faith and in accordance with GAAP
and (iv) immediately after giving effect to this Credit Agreement, the
other Credit Documents and all the transactions contemplated therein to
occur on such date, (A) the Borrower and each of its Subsidiaries is
Solvent, (B) no Default or Event of Default exists, (C) all
representations and warranties contained herein and in the other Credit
Documents are true and correct in all material respects, and (D) the
Credit Parties are in compliance with each of the financial covenants
set forth in Section 7.2.
(l) Prior Credit Agreement. Receipt by the Administrative
Agent of evidence that: (i) Prior Credit Agreement and all documents
executed or delivered in connection therewith, have been terminated,
and (ii) all amounts owing in connection with the Prior Credit
Agreement have been paid in full and all liens granted in connection
therewith have been or are agreed to be released.
(m) Fees and Expenses. Payment by the Credit Parties of the
fees and expenses owed by them to the Administrative Agent, as set
forth in the Fee Letter.
(n) Priority of Liens. The Administrative Agent shall have
received satisfactory evidence that none of the Collateral is subject
to any Liens other than Permitted Liens.
(o) Year 2000. Receipt by the Administrative Agent of evidence
that (a) the Borrower and its Subsidiaries are taking all necessary and
appropriate steps to ascertain the extent of, and to quantify and
successfully address, business and financial risks facing the Borrower
and such Subsidiary as a result of what is commonly referred to as the
`Year 2000 problem' (i.e., the inability of certain computer
applications to recognize correctly and perform date-sensitive
functions involving certain dates prior to and after December 31,
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1999), including risks resulting from the failure of key vendors and
customers of the Borrower or any Subsidiary to successfully address the
Year 2000 problem, and (b) the Borrower and each Subsidiary's material
computer applications and those of its key vendors and customers will,
on a timely basis, adequately address the Year 2000 problem in all
material respects.
(p) Maxim Retail. Receipt by the Administrative Agent of
evidence that all conditions precedent to the effectiveness of the
Maxim Retail Credit Agreement shall have been satisfied.
(q) Synthetic Lease. Receipt by the Administrative Agent of
evidence that all conditions precedent to the effectiveness of the
Participation Agreement shall have been satisfied.
(r) Other. Receipt and satisfactory review by the
Administrative Agent of such other documents, instruments, agreements
or information as reasonably and timely requested by the Administrative
Agent or any Lender, including, but not limited to, information
regarding litigation, tax, accounting, labor, insurance, pension
liabilities (actual or contingent), real estate leases, material
contracts, debt agreements, property ownership and contingent
liabilities of the Borrower and its Subsidiaries.
5.2 Conditions to All Extensions of Credit.
In addition to the conditions precedent stated elsewhere herein, the
Lenders shall not be obligated to make Loans nor shall an Issuing Lender be
required to issue or extend a Letter of Credit unless:
(a) Notice. The Borrower shall have delivered (i) in the case
of any new Revolving Loan, a Notice of Borrowing, duly executed and
completed, by the time specified in Section 2.1 and (ii) in the case of
any Letter of Credit, the Issuing Lender shall have received an
appropriate request for issuance in accordance with the provisions of
Section 2.2 or Section 2.3, as applicable;
(b) Representations and Warranties. The representations and
warranties made by the Credit Parties in any Credit Document are true
and correct in all material respects at and as if made as of such date
except to the extent they expressly relate to an earlier date;
(c) No Default. No Default or Event of Default shall exist or
be continuing either prior to or after giving effect thereto; and
(d) Availability. Immediately after giving effect to the
making of a Loan (and the application of the proceeds thereof) or to
the issuance of a Letter of Credit, as the case may be, the sum of the
Revolving Loans outstanding plus Revolving LOC Obligations outstanding
plus the aggregate amount of Synthetic Lease Obligations outstanding
shall not
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exceed the Revolving Committed Amount and the Stand Alone LOC
Obligations outstanding shall not exceed the Stand Alone LOC Committed
Amount.
The delivery of each Notice of Borrowing and each request for a Letter of Credit
shall constitute a representation and warranty by the Borrower of the
correctness of the matters specified in subsections (b), (c), and (d) above.
SECTION 6
REPRESENTATIONS AND WARRANTIES
The Credit Parties hereby represent to the Administrative Agent and
each Lender that:
6.1 Financial Condition.
(a) The financial statements delivered to the Lenders prior to
the Effective Date and pursuant to Section 7.1(a) and (b): (i) have
been prepared in accordance with GAAP and (ii) present fairly the
consolidated and consolidating (as applicable) financial condition,
results of operations and cash flows of the Credit Parties and their
Subsidiaries as of such date and for such periods.
(b) Since January 31, 1998, (i) there has been no sale,
transfer or other disposition by any Credit Party or any of their
Subsidiaries of any material part of the business or property of the
Credit Parties, taken as a whole, and (ii) other than the Shaw
Transaction, there has been no purchase or other acquisition by any
Credit Party or any of their Subsidiaries of any business or property
(including any capital stock of any other Person) material in relation
to the consolidated financial condition of the Credit Parties, taken as
a whole, in each case, which, is not (A) reflected in the most recent
financial statements delivered to the Lenders pursuant to Section 7.1
or in the notes thereto or (B) otherwise permitted by the terms of this
Credit Agreement and communicated to the Administrative Agent.
6.2 No Material Change.
Since the Effective Date, there has been no development or event
relating to or affecting a Credit Party or any of their Subsidiaries which has
had or would be reasonably expected to have a Material Adverse Effect. To the
knowledge of any Credit Party, since January 31, 1998, there has been no
development or event relating to or affecting a Credit Party or any of their
Subsidiaries which has had or would be reasonably expected to have a Material
Adverse Effect.
6.3 Organization and Good Standing.
Each Credit Party (a) is duly organized, validly existing and in good
standing under the laws of the State (or other jurisdiction) of its
incorporation or formation, (b) is duly qualified and in
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good standing and authorized to do business in every jurisdiction unless the
failure to be so qualified, in good standing or authorized would have a Material
Adverse Effect and (c) has the right, power and authority to own its properties
and to carry on its business as now conducted and as proposed to be conducted.
6.4 Due Authorization.
Each Credit Party (a) has the right, power and authority to execute,
deliver and perform this Credit Agreement and the other Credit Documents to
which it is a party and to incur the obligations herein and therein provided for
and (b) is duly authorized to, and has been authorized by all necessary
corporate and other action, to execute, deliver and perform this Credit
Agreement and the other Credit Documents to which it is a party.
6.5 No Conflicts.
Neither the execution and delivery of the Credit Documents, nor the
consummation of the transactions contemplated therein, nor performance of and
compliance with the terms and provisions thereof by such Credit Party will (a)
violate or conflict with any provision of the articles or certificate of
incorporation, bylaws or other organizational documents of the Borrower or any
of its Subsidiaries, (b) violate, contravene or materially conflict with any
Requirement of Law or any other law, regulation (including, without limitation,
Regulation U or Regulation X), order, writ, judgment, injunction, decree or
permit applicable to it, (c) violate, contravene or conflict with contractual
provisions of, or cause an event of default under, any indenture, loan
agreement, mortgage, deed of trust, contract or other agreement or instrument to
which it is a party or by which it may be bound, the violation of which could
have or might be reasonably expected to have a Material Adverse Effect, or (d)
result in or require the creation of any Lien (other than those contemplated in
or created in connection with the Credit Documents) upon or with respect to its
properties.
6.6 Consents.
Except for consents, approvals and authorizations which have been
obtained, no consent, approval, authorization or order of, or filing,
registration or qualification with, any court or Governmental Authority or third
party in respect of any Credit Party is required in connection with the
execution, delivery or performance of this Credit Agreement or any of the other
Credit Documents by such Credit Party.
6.7 Enforceable Obligations.
This Credit Agreement and the other Credit Documents have been duly
executed and delivered and constitute legal, valid and binding obligations of
each Credit Party enforceable against such Credit Party in accordance with their
respective terms, except as may be limited by bankruptcy, insolvency,
reorganization or moratorium laws or similar laws relating to or affecting
creditors' rights generally or by general equitable principles.
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6.8 No Default.
Except for the Indenture Default, no Credit Party, nor any of their
Subsidiaries, is in default in any respect under any contract, lease, loan
agreement, indenture, mortgage, security agreement or other agreement or
obligation to which it is a party or by which any of its properties is bound
which default would have or would be reasonably expected to have a Material
Adverse Effect. No Default or Event of Default exists except as previously
disclosed in writing to the Lenders.
6.9 Ownership.
Each Credit Party, and each of its Subsidiaries, is the owner of, and
has good and marketable title to, or has a valid license to use all of its
respective assets and none of such assets is subject to any Lien other than
Permitted Liens.
6.10 Indebtedness.
The Credit Parties and their Subsidiaries have no Indebtedness except
(a) as disclosed in the financial statements referenced in Section 6.1, (b) as
set forth on Schedule 6.10 and (c) as otherwise permitted by this Credit
Agreement.
6.11 Litigation.
There are no actions, suits or legal, equitable, arbitration or
administrative proceedings, pending or, to the knowledge of any Credit Party,
threatened against, any Credit Party or any of its Subsidiaries which could have
or might be reasonably expected to have a Material Adverse Effect.
6.12 Taxes.
Each Credit Party, and each of its Subsidiaries, has filed, or caused
to be filed, all material tax returns (federal, state, local and foreign)
required to be filed and paid (a) all material amounts of taxes shown thereon to
be due and payable (including interest and penalties) and (b) all material other
taxes, fees, assessments and other governmental charges (including documentary
stamp taxes and intangibles taxes) that are due and payable, except for such
taxes (i) which are not yet delinquent or (ii) that are being contested in good
faith and by proper proceedings, and against which adequate reserves are being
maintained in accordance with GAAP. To the knowledge of the Credit Parties,
there are no material amounts claimed to be due against any of them by any
Governmental Authority.
6.13 Compliance with Law.
Each Credit Party, and each of its Subsidiaries, is in compliance with
all Requirements of Law and all other laws, rules, regulations, orders and
decrees (including without limitation Environmental Laws) applicable to it, or
to its properties, unless such failure to comply would not have or would not be
reasonably expected to have a Material Adverse Effect.
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6.14 ERISA.
Except as would not result or be reasonably expected to result in a
Material Adverse Effect:
(a) During the five-year period prior to the date on which
this representation is made or deemed made: (i) no Termination Event
has occurred, and, to the knowledge of the Credit Parties, no event or
condition has occurred or exists as a result of which any Termination
Event could reasonably be expected to occur, with respect to any Plan;
(ii) no "accumulated funding deficiency," as such term is defined in
Section 302 of ERISA and Section 412 of the Code, whether or not
waived, has occurred with respect to any Plan; (iii) each Plan has been
maintained, operated, and funded in compliance with its own terms and
in material compliance with the provisions of ERISA, the Code, and any
other applicable federal or state laws; and (iv) no lien in favor or
the PBGC or a Plan has arisen or is reasonably likely to arise on
account of any Plan.
(b) The actuarial present value of all "benefit liabilities"
under each Single Employer Plan (determined within the meaning of
Section 401(a)(2) of the Code, utilizing the actuarial assumptions used
to fund such Plans), whether or not vested, did not, as of the last
annual valuation date prior to the date on which this representation is
made or deemed made, exceed the current value of the assets of such
Plan allocable to such accrued liabilities.
(c) Neither the Borrower, nor any of its Subsidiaries nor any
ERISA Affiliate has incurred, or, to the knowledge of the Credit
Parties, are reasonably expected to incur, any withdrawal liability
under ERISA to any Multiemployer Plan or Multiple Employer Plan.
Neither the Borrower, any of its Subsidiaries nor any ERISA Affiliate
has received any notification that any Multiemployer Plan is in
reorganization (within the meaning of Section 4241 of ERISA), is
insolvent (within the meaning of Section 4245 of ERISA), or has been
terminated (within the meaning of Title IV of ERISA), and no
Multiemployer Plan is, to the best knowledge of the Credit Parties,
reasonably expected to be in reorganization, insolvent, or terminated.
(d) No prohibited transaction (within the meaning of Section
406 of ERISA or Section 4975 of the Code) or breach of fiduciary
responsibility has occurred with respect to a Plan which has subjected
or is reasonably likely to subject the Borrower or any of its
Subsidiaries or any ERISA Affiliate to any liability under Sections
406, 409, 502(i), or 502(l) of ERISA or Section 4975 of the Code, or
under any agreement or other instrument pursuant to which the Borrower
or any of its Subsidiaries or any ERISA Affiliate has agreed or is
required to indemnify any person against any such liability.
(e) The present value (determined using actuarial and other
assumptions which are reasonable with respect to the benefits provided
and the employees participating) of the liability of the Borrower and
its Subsidiaries and each ERISA Affiliate for post-retirement welfare
benefits to be provided to their current and former employees under
Plans which are welfare benefit plans (as defined in Section 3(1) of
ERISA), net of all assets under all such Plans allocable to such
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benefits, are reflected on the Financial Statements in accordance with
FASB 106.
(f) Each Plan which is a welfare plan (as defined in Section
3(1) of ERISA) to which Sections 601-609 of ERISA and Section 4980B of
the Code apply has been administered in material compliance with such
sections.
6.15 Subsidiaries.
Set forth on Schedule 6.15 is a complete and accurate list of all
Subsidiaries of each Credit Party. Information on Schedule 6.15 includes
jurisdiction of incorporation or organization, the number of shares of each
class of capital stock or other equity interests outstanding, the number and
percentage of outstanding shares of each class owned (directly or indirectly) by
such Credit Party; and the number and effect, if exercised, of all outstanding
options, warrants, rights of conversion or purchase and all other similar rights
with respect thereto. The outstanding capital stock and other equity interests
of all such Subsidiaries is validly issued, fully paid and non-assessable and is
owned by each such Credit Party, directly or indirectly, free and clear of all
Liens (other than those arising under or contemplated in connection with the
Credit Documents). Other than as set forth in Schedule 6.15, neither any Credit
Party nor any Subsidiary thereof has outstanding any securities convertible into
or exchangeable for its capital stock nor does any such Person have outstanding
any rights to subscribe for or to purchase or any options for the purchase of,
or any agreements providing for the issuance (contingent or otherwise) of, or
any calls, commitments or claims of any character relating to its capital stock.
Schedule 6.15 may be updated from time to time by the Borrower by giving written
notice thereof to the Administrative Agent. As of the Closing Date, none of the
Credit Parties owns any shares of capital stock in any Foreign Subsidiaries.
6.16 Use of Proceeds.
The proceeds of the Loans hereunder will be used solely for the
purposes specified in Section 7.11. No proceeds of the Loans hereunder have been
or will be used (a) to acquire, directly or indirectly, any security in any
transaction which is subject to Sections 13 or 14 of the Securities Exchange Act
of 1934, as amended, (including, without limitation, Sections 13(d) and 14(d)
thereof) or to refinance any Indebtedness used to acquire any such securities or
(b) for the acquisition of another Person unless the board of directors (or
other comparable governing body) or stockholders, as appropriate, of such Person
has approved such acquisition.
6.17 Government Regulation.
(a) No part of the Letters of Credit or proceeds of the Loans
will be used, directly or indirectly, for the purpose of purchasing or
carrying any "margin stock" within the meaning of Regulation U, or for
the purpose of purchasing or carrying or trading in any securities. If
requested by any Lender or the Administrative Agent, the Borrower will
furnish to the Administrative Agent and each Lender a statement to the
foregoing effect in conformity with the requirements of FR Form U-1
referred to in Regulation U. No Indebtedness being reduced or retired
out of the proceeds of the Loans was or will be
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incurred for the purpose of purchasing or carrying any margin stock
within the meaning of Regulation U or any "margin security" within the
meaning of Regulation T. "Margin stock" within the meaning of
Regulation U does not constitute more than 25% of the value of the
consolidated assets of the Credit Parties and their Subsidiaries. None
of the transactions contemplated by the Credit Documents (including,
without limitation, the direct or indirect use of the proceeds of the
Loans) will violate or result in a violation of the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as amended,
or regulations issued pursuant thereto, or Regulation T, U or X.
(b) No Credit Party, nor any of their Subsidiaries, is subject
to regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act or the Investment Company Act of 1940, each as
amended. In addition, no Credit Party, nor any of their Subsidiaries,
is (i) an "investment company" registered or required to be registered
under the Investment Company Act of 1940, as amended, and is not
controlled by such a company, or (ii) a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of a
"holding company" or of a "subsidiary" of a "holding company", within
the meaning of the Public Utility Holding Company Act of 1935, as
amended.
(c) No director, executive officer or principal shareholder of
any Credit Party or any of their Subsidiaries is a director, executive
officer or principal shareholder of any Lender. For the purposes hereof
the terms "director", "executive officer" and "principal shareholder"
(when used with reference to any Lender) have the respective meanings
assigned thereto in Regulation O issued by the Board of Governors of
the Federal Reserve System.
6.18 Environmental Matters.
(a) Except as would not cause or reasonably be expected to
cause a Material Adverse Effect:
(i) Each of the Real Properties and all operations at
the Real Properties are in compliance with all applicable
Environmental Laws, and there is no violation of any
Environmental Law with respect to the Real Properties or the
businesses operated by the Credit Parties or any of their
Subsidiaries (the "Businesses"), and there are no conditions
relating to the Businesses or Real Properties that would
reasonably be expected to give rise to liability under any
applicable Environmental Laws.
(ii) No Credit Party has received any written notice
of, or inquiry from any Governmental Authority regarding, any
violation, alleged violation, non-compliance, liability or
potential liability regarding Hazardous Materials or
compliance with Environmental Laws with regard to any of the
Real Properties or the Businesses, nor, to the knowledge of a
Credit Party or any of its Subsidiaries, is any such notice
being threatened.
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(iii) Hazardous Materials have not been transported
or disposed of from the Real Properties, or generated,
treated, stored or disposed of at, on or under any of the Real
Properties or any other location, in each case by, or on
behalf or with the permission of, a Credit Party or any of its
Subsidiaries in a manner that would give rise to liability
under any applicable Environmental Laws.
(iv) No judicial proceeding or governmental or
administrative action is pending or, to the knowledge of a
Credit Party or any of its Subsidiaries, threatened, under any
Environmental Law to which a Credit Party or any of its
Subsidiaries is or will be named as a party, nor are there any
consent decrees or other decrees, consent orders,
administrative orders or other orders, or other administrative
or judicial requirements outstanding under any Environmental
Law with respect to a Credit Party or any of its Subsidiaries,
the Real Properties or the Businesses.
(v) There has been no release (including, without
limitation, disposal) or threat of release of Hazardous
Materials at or from the Real Properties, or arising from or
related to the operations of a Credit Party or any of its
Subsidiaries in connection with the Real Properties or
otherwise in connection with the Businesses where such release
constituted a violation of, or would give rise to liability
under, any applicable Environmental Laws.
(vi) None of the Real Properties contains, or has
previously contained, any Hazardous Materials at, on or under
the Real Properties in amounts or concentrations that, if
released, constitute or constituted a violation of, or could
give rise to liability under, Environmental Laws.
(vii) No Credit Party, nor any of its Subsidiaries,
has assumed any liability of any Person (other than another
Credit Party, or one of its Subsidiaries) under any
Environmental Law.
(b) The Credit Parties have adopted procedures that are
designed to (i) ensure that each Credit Party, any of its operations
and each of the properties owned or leased by each Credit Party
complies with applicable Environmental Laws and (ii) minimize any
liabilities or potential liabilities that each Credit Party, any of its
operations and each of the properties owned or leased by each Credit
Party may have under applicable Environmental Laws.
6.19 Intellectual Property.
Each Credit Party owns, or has the legal right to use, all patents,
trademarks, tradenames, copyrights, technology, know-how and processes (the
"Intellectual Property") necessary for each of them to conduct its business as
currently conducted except for those the failure to own or have such legal right
to use would not have or be reasonably expected to have a Material Adverse
Effect. Set forth on Schedule 6.19 is a list of all patents, registered and
material unregistered trademarks,
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tradenames and registered copyrights owned by each Credit Party or that any
Credit Party has the right to use. Except as provided on Schedule 6.19, none of
the Intellectual Property is subject to any licensing or franchise agreement.
Furthermore, except as provided on Schedule 6.19, no claim been asserted against
any Credit Party or its Subsidiaries in writing and is pending by any Person
challenging or questioning the use of any Intellectual Property owned by a
Credit Party or that any Credit Party has a right to use or the validity or
effectiveness of any such Intellectual Property, nor does any Credit Party have
knowledge of any such claim, and to the Credit Parties' knowledge the use of any
Intellectual Property by the Credit Parties or any of their Subsidiaries does
not infringe on the rights of any Person, except for such claims and
infringements that in the aggregate, would not have or be reasonably expected to
have a Material Adverse Effect. Image Industries does not own, or have the legal
right to use, any registered copyrights. Schedule 6.19 may be updated from time
to time by the Borrower by giving written notice thereof to the Administrative
Agent.
6.20 Solvency.
Each Credit Party is and, after consummation of the transactions
contemplated by this Credit Agreement, will be Solvent.
6.21 Investments.
All Investments of each Credit Party and its Subsidiaries are Permitted
Investments.
6.22 Location of Collateral.
Set forth on Schedule 6.22(a) is a list of all Real Properties with
street address, county and state where located. Set forth on Schedule 6.22(b) is
a list of all locations where any personal property of a Credit Party is
located, including county and state where located. Set forth on Schedule 6.22(c)
is the chief executive office and principal place of business of each Credit
Party. Schedules 6.22(a), 6.22(b) and 6.22(c) may be updated from time to time
by the Borrower by giving written notice thereof to the Administrative Agent.
6.23 Disclosure.
Neither this Credit Agreement nor any financial statements delivered to
the Lenders nor any other document, certificate or statement furnished to the
Lenders by or on behalf of any Credit Party in connection with the transactions
contemplated hereby contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained
therein or herein, taken as a whole, not misleading.
6.24 Licenses, etc.
The Credit Parties have obtained and hold in full force and effect, all
franchises, licenses, permits, certificates, authorizations, qualifications,
accreditations, easements, rights of way and other rights, consents and
approvals which are necessary for the operation of their respective
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businesses as presently conducted, except where the failure to obtain same would
not have a Material Adverse Effect.
6.25 Collateral Documents.
The Collateral Documents create valid security interests in, and Liens
on, the Collateral purported to be covered thereby, which security interests and
Liens are prior to all other Liens other than Permitted Liens.
6.26 Burdensome Restrictions.
No Credit Party, nor any of this Subsidiaries, is a party to any
agreement or instrument or subject to any other obligation or any charter or
corporate restriction or any provision of any applicable law, rule or regulation
which, individually or in the aggregate, would have or be reasonably expected to
have a Material Adverse Effect.
6.27 Year 2000 Compliance.
Each Credit Party has (i) initiated a review and assessment of
all areas within its and each of its Subsidiaries' business and operations
(including those affected by suppliers, vendors and customers) that could be
adversely affected by the "Year 2000 Problem" (that is, the risk that computer
applications used by such Credit Party or any of its Subsidiaries may be unable
to recognize and perform properly date-sensitive functions involving certain
dates prior to and any date after December 31, 1999), (ii) developed a plan and
timeline for addressing the Year 2000 Problem on a timely basis, and (iii) to
date, implemented that plan in accordance with the timetable. Based on the
foregoing, each Credit Party believes that all computer applications (including
those of its suppliers, vendors and customers) that are material to its and any
of its Subsidiaries' business and operations are reasonably expected on a timely
basis to be able to perform properly date-sensitive functions for all dates
before and after January 1, 2000 (that is, be "Year 2000 Compliant"), except to
the extent that a failure to do so could not reasonably be expected to have
Material Adverse Effect.
6.28 Labor Contracts and Disputes.
(i) There is no collective bargaining agreement or other labor contract
covering employees of any Credit Party; (ii) no union or other labor
organization is seeking to organize, or be recognized as, a collective
bargaining unit of employees of any Credit Party; (iii) there is no pending, or
to any Credit Party's knowledge, threatened, strike, work stoppage, material
unfair lease practice claim or other material labor dispute against or effecting
any Credit Party or its employees.
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SECTION 7
AFFIRMATIVE COVENANTS
Each Credit Party hereby covenants and agrees that so long as this
Credit Agreement is in effect and until the Loans and LOC Obligations, together
with interest and fees and other obligations then due and payable hereunder,
have been paid in full and the Commitments and Letters of Credit hereunder shall
have terminated:
7.1 Information Covenants.
The Credit Parties will furnish, or cause to be furnished, to the
Administrative Agent and each of the Lenders:
(a) Annual Financial Statements. As soon as available, and in
any event within 90 days after the close of each fiscal year of the
Borrower, (i) a consolidated and consolidating balance sheet and income
statement of the Borrower and its Subsidiaries, as of the end of such
fiscal year, together with related consolidated and consolidating
statements of operations and retained earnings and of cash flows for
such fiscal year, setting forth in comparative form consolidated and
consolidating figures for the preceding fiscal year, all such
consolidated financial information described above to be in reasonable
form and detail and audited by independent certified public accountants
of recognized national standing reasonably acceptable to the
Administrative Agent and whose opinion shall be to the effect that such
financial statements have been prepared in accordance with GAAP (except
for changes with which such accountants concur) and shall not be
limited as to the scope of the audit or qualified in any manner and
(ii) a consolidated and consolidating balance sheet and income
statement of the Maxim Group Parties, as of the end of such fiscal
year, together with related consolidated and consolidating statements
of operations and retained earnings and of cash flows for such fiscal
year, setting forth in comparative form consolidated and consolidating
figures for the preceding fiscal year, all such consolidated financial
information described above to be in reasonable form and detail and
audited by independent certified public accountants of recognized
national standing reasonably acceptable to the Administrative Agent and
whose opinion shall be to the effect that such financial statements
have been prepared in accordance with GAAP (except for changes with
which such accountants concur) and shall not be limited as to the scope
of the audit or qualified in any manner.
(b) Quarterly Financial Statements. As soon as available, and
in any event within 45 days after the close of each fiscal quarter of
the Borrower, (i) a consolidated and consolidating balance sheet and
income statement of the Borrower and its Subsidiaries, as of the end of
such fiscal quarter, together with related consolidated and
consolidating statements of operations and retained earnings and of
cash flows for such fiscal quarter in each case setting forth in
comparative form consolidated and consolidating figures for the
corresponding period of the preceding fiscal year, all such financial
information described above to be in reasonable form and detail and
reasonably acceptable to the Administrative
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Agent, and accompanied by a certificate of the chief financial officer
of the Borrower to the effect that such quarterly financial statements
fairly present in all material respects the financial condition of the
Borrower and its Subsidiaries and have been prepared in accordance with
GAAP, subject to changes resulting from audit and normal year-end audit
adjustments and (ii) a consolidated and consolidating balance sheet and
income statement of the Maxim Group Parties, as of the end of such
fiscal quarter, together with related consolidated and consolidating
statements of operations and retained earnings and of cash flows for
such fiscal quarter in each case setting forth in comparative form
consolidated and consolidating figures for the corresponding period of
the preceding fiscal year, all such financial information described
above to be in reasonable form and detail and reasonably acceptable to
the Administrative Agent, and accompanied by a certificate of the chief
financial officer of the Borrower to the effect that such quarterly
financial statements fairly present in all material respects the
financial condition of the Maxim Group Parties and have been prepared
in accordance with GAAP, subject to changes resulting from audit and
normal year-end audit adjustments.
(c) Officer's Certificate. At the time of delivery of the
financial statements provided for in Sections 7.1(a) and 7.1(b) above,
a certificate of an Executive Officer of the Borrower substantially in
the form of Exhibit 7.1(c), (i) demonstrating compliance with the
financial covenants contained in Section 7.2 by calculation thereof as
of the end of each such fiscal period, (ii) demonstrating compliance
with any other terms of this Credit Agreement as requested by the
Administrative Agent and (iii) stating that no Default or Event of
Default exists, or if any Default or Event of Default does exist,
specifying the nature and extent thereof and what action the Borrower
proposes to take with respect thereto.
(d) Annual Business Plan and Budgets. Prior to the end of each
fiscal year of the Borrower, (i) an annual business plan and budget of
the Borrower and its Subsidiaries on a consolidated basis containing,
among other things, pro forma financial projections (including without
limitation, income statement, balance sheet and statement of cash
flows) for the next fiscal year and (ii) an annual business plan and
budget of the Maxim Group Parties on a consolidated basis containing,
among other things, pro forma financial projections (including without
limitation income statement, balance sheet and statement of cash flows)
for the next fiscal year.
(e) Accountant's Certificate. Within the period for delivery
of the annual financial statements provided in Section 7.1(a), a
certificate of the accountants conducting the annual audit stating that
they have reviewed this Credit Agreement and stating further whether,
in the course of their audit, they have become aware of any Default or
Event of Default and, if any such Default or Event of Default exists,
specifying the nature and extent thereof.
(f) Auditor's Reports. Promptly upon receipt thereof, a copy
of any "management letter" submitted by independent accountants to the
Borrower or any of its
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Subsidiaries in connection with any annual, interim or special audit of
the books of the Borrower or any of its Subsidiaries.
(g) Reports. Promptly upon transmission or receipt thereof,
(a) copies of any public filings and registrations with, and reports to
or from, the Securities and Exchange Commission, or any successor
agency, and copies of all financial statements, proxy statements,
notices and reports as the Borrower or any of its Subsidiaries shall
send to its shareholders generally and (b) upon the written request of
the Administrative Agent, all reports and written information to and
from the United States Environmental Protection Agency, or any state or
local agency responsible for environmental matters, the United States
Occupational Health and Safety Administration, or any state or local
agency responsible for health and safety matters, or any successor
agencies or authorities concerning environmental, health or safety
matters.
(h) Notices. Upon an officer of a Credit Party obtaining
knowledge thereof, the Borrower will give written notice to the
Administrative Agent promptly (and in any event within two Business
Days) of (a) the occurrence of an event or condition consisting of a
Default or Event of Default, specifying the nature and existence
thereof and what action the Borrower proposes to take with respect
thereto, and (b) the occurrence of any of the following with respect to
the Borrower or any of its Subsidiaries: (i) the pendency or
commencement of any litigation, arbitral or governmental proceeding
against a Credit Party or any of its Subsidiaries which if adversely
determined would have or would be reasonably expected to have a
Material Adverse Effect, (ii) the institution of any proceedings
against a Credit Party or any of its Subsidiaries with respect to, or
the receipt of written notice by such Person of potential liability or
responsibility for violation, or alleged violation of any federal,
state or local law, rule or regulation, (including but not limited to,
Environmental Laws) the violation of which would have or would be
reasonably expected to have a Material Adverse Effect, or (iii) any
information that a Credit Party may have a Year 2000 Problem on or
after January 1, 2000.
(i) ERISA. Upon any of the Credit Parties or any ERISA
Affiliate obtaining knowledge thereof, the Borrower will give written
notice to the Administrative Agent promptly (and in any event within
two Business Days) of: (i) any event or condition, including, but not
limited to, any Reportable Event, that constitutes, or might reasonably
lead to, a Termination Event; (ii) with respect to any Multiemployer
Plan, the receipt of notice as prescribed in ERISA or otherwise of any
withdrawal liability assessed against the Credit Parties or any of
their ERISA Affiliates, or of a determination that any Multiemployer
Plan is in reorganization or insolvent (both within the meaning of
Title IV of ERISA); (iii) the failure to make full payment on or before
the due date (including extensions) thereof of all amounts which a
Credit Party or any of its Subsidiaries or ERISA Affiliates is required
to contribute to each Plan pursuant to its terms and as required to
meet the minimum funding standard set forth in ERISA and the Code with
respect thereto; or (iv) any change in the funding status of any Plan
that could have a Material Adverse Effect; together, with a description
of any such event or condition or a copy of any such notice and a
statement by the principal financial officer of the Borrower briefly
setting forth the details
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regarding such event, condition, or notice, and the action, if any,
which has been or is being taken or is proposed to be taken by the
Credit Parties with respect thereto. Promptly upon request, a Credit
Party shall furnish the Administrative Agent and each of the Lenders
with such additional information concerning any Plan as may be
reasonably requested, including, but not limited to, copies of each
annual report/return (Form 5500 series), as well as all schedules and
attachments thereto required to be filed with the Department of Labor
and/or the Internal Revenue Service pursuant to ERISA and the Code,
respectively, for each "plan year" (within the meaning of Section 3(39)
of ERISA).
(j) Environmental.
(i) Subsequent to a notice from any Governmental
Authority where the subject matter of such notice would
reasonably cause concern, or during the existence of an Event
of Default, and upon the written request of Administrative
Agent, the Credit Parties will furnish or cause to be
furnished to the Administrative Agent, at the Credit Parties'
expense, a report of an environmental assessment of reasonable
scope, form and depth, including, where appropriate, invasive
soil or groundwater sampling, by a consultant reasonably
acceptable to the Administrative Agent addressing the subject
of such notice or, if during the existence of an Event of
Default, regarding any release or threat of release of
Hazardous Materials on any property owned, leased or operated
by a Credit Party and the compliance by the Credit Parties
with Environmental Laws. If the Credit Parties fail to deliver
such an environmental report within sixty (60) days after
receipt of such written request, then the Administrative Agent
may arrange for same, and the Credit Parties hereby grant to
the Administrative Agent and its representatives access to the
Real Properties and a license of a scope reasonably necessary
to undertake such an assessment (including, where appropriate,
invasive soil or groundwater sampling). The reasonable cost of
any assessment arranged for by the Administrative Agent
pursuant to this provision will be payable by the Credit
Parties on demand and added to the obligations secured by the
Collateral Documents.
(ii) Each Credit Party will conduct and complete all
investigations, studies, sampling, and testing and all
remedial, removal, and other actions necessary to address all
Hazardous Materials on, from, or affecting any real property
owned or leased by a Credit Party to the extent necessary to
be in compliance with all Environmental Laws and all other
applicable federal, state, and local laws, regulations, rules
and policies and with the orders and directives of all
Governmental Authorities exercising jurisdiction over such
real property to the extent any failure would have or be
reasonably expected to have a Material Adverse Effect.
(k) Other Information. With reasonable promptness upon any
such request, such other information regarding the business, properties
or financial condition of the Credit Parties and their Subsidiaries as
the Administrative Agent may reasonably request.
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7.2 Financial Covenants.
(a) Leverage Ratio. The Leverage Ratio, measured as of the
last day of each fiscal quarter of the Maxim Group Parties, shall be
less than or equal to:
<TABLE>
<CAPTION>
Period Leverage Ratio
------ --------------
<S> <C>
October 31, 1998 through and including January 30, 1999 4.75 to 1.0
January 31, 1999 through and including April 29, 1999 4.50 to 1.0
April 30, 1999 through and including July 30, 1999 4.25 to 1.0
July 31, 1999 through and including October 30, 1999 4.0 to 1.0
October 31, 1999 and thereafter 3.75 to 1.0
</TABLE>
(b) Interest Coverage Ratio. The Interest Coverage Ratio,
measured as of the last day of each fiscal quarter of the Maxim Group
Parties, shall be greater than or equal to 2.25 to 1.0.
(c) Net Worth. As of the last day of each fiscal quarter of
the Maxim Group Parties, the Net Worth shall be greater than or equal
to the sum of (i) $150 million plus (ii) 50% of the cumulative Net
Income (without deduction for losses) earned for each completed fiscal
quarter subsequent to the Closing Date to the date of determination
plus (iii) 100% of the amount of Net Cash Proceeds from any Equity
Issuance.
(d) Asset Coverage Ratio. The Asset Coverage Ratio, measured
as of the last day of each fiscal quarter of the Maxim Group Parties,
shall be greater than or equal to 1.5 to 1.0.
7.3 Preservation of Existence and Franchises.
Each of the Credit Parties will do all things necessary to (a) preserve
and keep in full force and effect its existence and (b) take all reasonable
action to maintain all rights, franchises and authority necessary or desirable
in the normal conduct of its business, except as permitted by Section 8.4.
7.4 Books and Records.
Each of the Credit Parties will, and cause its Subsidiaries to, keep
complete and accurate books and records of its transactions in accordance with
GAAP (including the establishment and maintenance of appropriate reserves).
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7.5 Compliance with Law.
Each of the Credit Parties will, and cause its Subsidiaries to, comply
with all material laws, rules, regulations and orders, and all applicable
material restrictions imposed by all Governmental Authorities, applicable to it
and its property (including, without limitation, Environmental Laws).
7.6 Payment of Taxes and Other Indebtedness.
Each of the Credit Parties will pay, settle or discharge (a) all taxes,
assessments and governmental charges or levies imposed upon it, or upon its
income or profits, or upon any of its properties, before they shall become
delinquent, (b) all lawful claims (including claims for labor, materials and
supplies) which, if unpaid, might give rise to a Lien upon any of its
properties, and (c) all of its other Indebtedness as it shall become due (to the
extent such repayment is not otherwise prohibited by this Credit Agreement);
provided, however, that a Credit Party shall not be required to pay any such
tax, assessment, charge, levy, claim or Indebtedness which is being contested in
good faith by appropriate proceedings and as to which adequate reserves therefor
have been established in accordance with GAAP, unless the failure to make any
such payment (i) would give rise to an immediate right to foreclose or collect
on a Lien securing such amounts or (ii) would have or reasonably be expected to
have a Material Adverse Effect.
7.7 Insurance.
Each of the Credit Parties will at all times maintain in full force and
effect insurance (including worker's compensation insurance, liability
insurance, casualty insurance and business interruption insurance) in such
amounts, covering such risks and liabilities and with such deductibles or
self-insurance retentions as are in accordance with normal industry practice.
All policies shall have the Administrative Agent, on behalf of the Lenders,
named as an additional insured and loss payee.
In the event there occurs any material loss, damage to or destruction of the
Collateral of any Credit Party or any part thereof, such Credit Party shall
promptly give written notice thereof to the Administrative Agent generally
describing the nature and extent of such damage or destruction. Subsequent to
any loss, damage to or destruction of the Collateral of any Credit Party or any
part thereof, such Credit Party, whether or not the insurance proceeds, if any,
received on account of such damage or destruction shall be sufficient for that
purpose, at such Credit Party's cost and expense, will promptly repair or
replace the Collateral of such Credit Party so lost, damaged or destroyed;
provided, however, that such Credit Party need not repair or replace the
Collateral of such Credit Party so lost, damaged or destroyed to the extent the
failure to make such repair or replacement (a) is desirable to the proper
conduct of the business of such Credit Party in the ordinary course and
otherwise is in the best interest of such Credit Party and (b) would not
materially impair the rights and benefits of the Administrative Agent or the
Lenders under this Credit Agreement or any other Credit Document. In the event a
Credit Party shall receive any insurance proceeds, as a result of any loss,
damage or destruction of Collateral, in a net amount in excess of $1,000,000,
such Credit Party will immediately pay over such proceeds to the Administrative
Agent as cash collateral for the Credit Party Obligations. The Administrative
Agent
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agrees to release such insurance proceeds to such Credit Party for replacement
or restoration of the portion of the Collateral of such Credit Party lost,
damaged or destroyed if (A) within 30 days from the date the Administrative
Agent receives such insurance proceeds, the Administrative Agent has received
written application for such release from such Credit Party together with
evidence reasonably satisfactory to it that the Collateral lost, damaged or
destroyed has been or will be replaced or restored to its condition (or by
Collateral having a value at least equal to the condition of the asset subject
to the loss, damage or destruction) immediately prior to the loss, destruction
or other event giving rise to the payment of such insurance proceeds and (B) on
the date of such release no Default or Event of Default exists. If the
conditions in the preceding sentence are not met, the Administrative Agent may
or, upon the request of the Required Lenders, shall at any time after the first
Business Day subsequent to the date 30 days after it received such insurance
proceeds, apply such insurance proceeds as a mandatory prepayment of the Credit
Party Obligations for application in accordance with the terms of Section
3.3(b)(iii). All insurance proceeds shall be subject to the security interest of
the Lenders under the Collateral Documents.
The present insurance coverage of the Credit Parties and their Subsidiaries is
outlined as to carrier, policy number, expiration date, type and amount on
Schedule 7.7. Schedule 7.7 shall be amended and updated by the Credit Parties on
an at least annual basis or upon the request of the Administrative Agent.
7.8 Maintenance of Property.
Each of the Credit Parties will maintain and preserve its properties
and equipment in good repair, working order and condition, normal wear and tear
excepted, and will make, or cause to be made, in such properties and equipment
from time to time all repairs, renewals, replacements, extensions, additions,
betterments and improvements thereto as may be needed or proper, to the extent
and in the manner customary for companies in similar businesses.
7.9 Performance of Obligations.
Each of the Credit Parties will perform in all material respects all of
its obligations under the terms of all material agreements, indentures,
mortgages, security agreements or other debt instruments to which it is a party
or by which it is bound.
7.10 Collateral.
If, subsequent to the Closing Date, a Credit Party shall (a) acquire
any patented, registered or applied for intellectual property or any securities
or (b) acquire any other personal property required to be delivered to the
Administrative Agent as Collateral hereunder or under any of the Collateral
Documents, the Borrower shall immediately notify the Administrative Agent of
same. Each Credit Party shall take such action (including, but not limited to,
the actions set forth in Sections 5.1(f)), as reasonably requested by the
Administrative Agent and at its own expense, to ensure that the Administrative
Agent has a perfected Lien in all owned personal property of the Credit Parties
as set forth in the Security Agreements and the Pledge Agreements (whether now
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owned or hereafter acquired), subject only to Permitted Liens. Each Credit Party
shall adhere to the covenants regarding the location of personal property as set
forth in the Security Agreements.
7.11 Use of Proceeds.
The Maxim Group Parties will use the proceeds of the Loans solely (a)
to repay Indebtedness owing under the Prior Credit Agreement, (b) to provide
working capital, (c) to make Capital Expenditures, (d) to make Permitted
Acquisitions and (e) for general corporate purposes. The Maxim Group Parties
will use the Revolving Letters of Credit solely for the purposes set forth in
Section 2.2(a). The Stand Alone Letter of Credit shall be used solely for the
purposes set forth in Section 2.3(a).
7.12 Audits/Inspections.
Upon reasonable notice and during normal business hours, each Credit
Party will permit representatives appointed by the Administrative Agent or any
Lender, including, without limitation, independent accountants, agents,
attorneys and appraisers to visit and inspect such Credit Party's property,
including its books and records, its accounts receivable and inventory, its
facilities and its other business assets, and to make photocopies or photographs
thereof and to write down and record any information such representative obtains
and shall permit the Administrative Agent or its representatives or any Lender
or its representatives to investigate and verify the accuracy of information
provided to the Lenders, and to discuss all such matters with the officers,
employees and representatives of the Credit Parties. The Credit Parties agree
that the Administrative Agent may conduct such collateral reviews, at the Credit
Parties' expense, as it reasonably deems appropriate.
7.13 Additional Credit Parties.
At the time any Person becomes a Subsidiary of a Credit Party, the
Borrower shall so notify the Administrative Agent and promptly thereafter (but
in any event within 30 days after the date thereof) shall cause such Person to
(a) if it is a Domestic Subsidiary, execute a Joinder Agreement in substantially
the same form as Exhibit 7.13, (b) cause all of the capital stock of such Person
(if it is a Domestic Subsidiary) or 65% of the capital stock of such Person (if
it is a First Tier Foreign Subsidiary) to be delivered to the Administrative
Agent (together with undated stock powers signed in blank) and pledged to the
Administrative Agent pursuant to an appropriate pledge agreement in
substantially the form of the Pledge Agreement (or a joinder to the existing
Pledge Agreement) and otherwise in a form reasonably acceptable to the
Administrative Agent, (c) if such Person is a Domestic Subsidiary, pledge all of
its assets to the Administrative Agent pursuant to a security agreement in
substantially the form of the Security Agreement (or a joinder to the existing
Security Agreement) and otherwise in a form reasonably acceptable to the
Administrative Agent, and (d) if such Person is a Domestic Subsidiary and has
any Subsidiaries, (A) deliver all of the capital stock of such Domestic
Subsidiaries owned by it and 65% of the stock of the First Tier Foreign
Subsidiaries owned by it (together with undated stock powers signed in blank) to
the Administrative Agent and (B) execute a pledge agreement in substantially the
form of the Pledge Agreement (or a joinder to the existing Pledge Agreement)
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and otherwise in a form acceptable to the Administrative Agent, (e) if such
Person is a Domestic Subsidiary and leases any real property, cause to be
delivered in a commercially reasonable manner a landlord waiver or estoppel
letter with respect thereto in a form acceptable to the Administrative Agent)
and (f) deliver such other documentation as the Administrative Agent may
reasonably request in connection with the foregoing, including, without
limitation, appropriate UCC-1 financing statements, environmental reports,
landlord's waivers, certified resolutions and other organizational and
authorizing documents of such Person and favorable opinions of counsel to such
Person (which shall cover, among other things, the legality, validity, binding
effect and enforceability of the documentation referred to above), all in form,
content and scope reasonably satisfactory to the Administrative Agent.
7.14 Purchase Agreement.
The Credit Parties agree to diligently enforce their rights with
respect to the indemnification provisions set forth in the Purchase Agreement in
accordance with prudent business practices.
7.15 Year 2000 Compliance.
Each Credit Party will promptly notify the Administrative Agent in the
event such Credit Party discovers or determines that any computer application
that is material to its or any of its Subsidiaries' business and operations will
not be Year 2000 Compliant, except to the extent that such failure could
reasonably be expected to have a Material Adverse Effect.
SECTION 8
NEGATIVE COVENANTS
Each Credit Party hereby covenants and agrees that so long as this
Credit Agreement is in effect and until the Loans and LOC Obligations, together
with interest, fees and other obligations then due and payable hereunder, have
been paid in full and the Commitments and Letters of Credit hereunder shall have
terminated:
8.1 Indebtedness.
No Credit Party will, nor will it permit any of its Subsidiaries to,
contract, create, incur, assume or permit to exist any Indebtedness, except:
(a) Indebtedness arising (i) under this Credit Agreement and
the other Credit Documents and (ii) under the Maxim Retail Credit
Agreement and the other Credit Documents (as defined in the Maxim
Retail Credit Agreement);
(b) Indebtedness existing as of the Closing Date as referenced
in Section 6.10 (and renewals, refinancings, replacements or extensions
thereof on terms and conditions no more favorable, in the aggregate, to
such creditor than such existing Indebtedness and in a
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principal amount not in excess of that outstanding as of the date of
such renewal, refinancing, replacement or extension);
(c) Indebtedness in respect of current accounts payable and
accrued expenses incurred in the ordinary course of business and to the
extent not current, accounts payable and accrued expenses that are
subject to bona fide dispute;
(d) Indebtedness owing (i) by a Maxim Group Party to another
Maxim Group Party, (ii) by a Maxim Retail Party to another Maxim Retail
Party and (iii) by one or more of the Maxim Group Parties to one or
more of the Maxim Retail Parties in an amount not to exceed, in the
aggregate, $5,000,000 at any one time;
(e) purchase money Indebtedness (including obligations in
respect of Capital Leases or Synthetic Leases) to finance the purchase
of fixed assets (including equipment); provided that (i) the total of
all such Indebtedness (including any such Indebtedness referred to in
subsection (b) above) for all such Persons taken together shall not
exceed at any one time outstanding the sum of (A) an aggregate
principal amount of $5,000,000 plus (B) the principal amount of
Indebtedness outstanding under the Participation Agreement and
Operative Agreements; (ii) such Indebtedness when incurred shall not
exceed the purchase price of the asset(s) financed; and (iii) no such
Indebtedness shall be refinanced for a principal amount in excess of
the principal balance outstanding thereon at the time of such
refinancing;
(f) Indebtedness assumed in connection with Permitted
Acquisitions permitted by Section 8.7 (so long as such Indebtedness was
not incurred in anticipation of the respective Permitted Acquisition);
(g) Indebtedness arising from Hedging Agreements entered into
in the ordinary course of business and not for speculative purposes;
(h) the Subordinated Debt;
(i) the Bonds;
(j) Indebtedness up to $10,000,000 under the Participation
Agreement and the Operative Agreements (as defined in the Participation
Agreement);
(k) Indebtedness up to $18,048,000 under the Shaw Promissory
Note; and
(l) other unsecured Indebtedness up to $2,000,000, in the
aggregate, at any one time outstanding.
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8.2 Liens.
No Credit Party will, nor will it permit its Subsidiaries to, contract,
create, incur, assume or permit to exist any Lien with respect to any of its
property or assets of any kind (whether real or personal, tangible or
intangible), whether now owned or after acquired, except for Permitted Liens.
8.3 Nature of Business.
No Credit Party will, nor will it permit its Subsidiaries to, alter the
character of its business from that conducted as of the Effective Date or engage
in any business other than the business conducted as of the Effective Date and
activities which are substantially similar or related thereto or logical
extensions thereof.
8.4 Consolidation and Merger.
No Credit Party will, nor will it permit any Subsidiary to, enter into
any transaction of merger or consolidation or liquidate, wind up or dissolve
itself; provided that (i) any Maxim Group Party may merge or consolidate with or
into another Maxim Group Party and (ii) any Maxim Retail Party may merge or
consolidate with or into another Maxim Retail Party, if the following conditions
are satisfied:
(a) the Administrative Agent is given prior written
notice of such action;
(b) (i) if the merger or consolidation involves a Maxim Group
Party, the Person formed by such consolidation or into which a Maxim
Group Party is merged shall either (A) be such Maxim Group Party or (B)
be a Domestic Subsidiary of such Maxim Group Party and expressly assume
in writing all of the obligations of such Maxim Group Party under the
Credit Documents; provided that if the transaction is between the
Borrower and another Person, the Borrower must be the surviving entity
or (ii) if a merger or consolidation involves a Maxim Retail Party, the
Person formed by such consolidation or into which a Maxim Retail Party
is merged shall either (A) be such Maxim Retail Party or (B) be a
Domestic Subsidiary of such Maxim Retail Party and expressly assume in
writing all of the obligations of such Maxim Retail Party under the
Credit Documents; provided that if the transaction is between Maxim
Retail and another Person, Maxim Retail must be the surviving entity;
(c) the Credit Parties execute and deliver such documents,
instruments and certificates as the Administrative Agent may request
(including, if necessary, to maintain its perfection and priority in
the Collateral pledged pursuant to the Collateral Documents);
(d) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing; and
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(e) the Borrower delivers to the Administrative Agent an
officer's certificate demonstrating compliance with clause (b) or (c)
above, as applicable, and an opinion of counsel stating that such
consolidation or merger and any written agreement entered into in
connection therewith, comply with this Section 8.4.
8.5 Sale or Lease of Assets.
No Credit Party will, nor will it permit its Subsidiaries to, convey,
sell, lease, transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any part of its business or assets whether now owned or
hereafter acquired, including, without limitation, inventory, receivables,
equipment, real property interests (whether owned or leasehold), and securities,
other than (a) any inventory sold or otherwise disposed of in the ordinary
course of business; (b) (i) the sale, lease, transfer or other disposal by a
Maxim Group Party (other than the Borrower) of any or all of its assets to
another Maxim Group Party and (ii) the sale, lease, transfer or other disposal
by a Maxim Retail Party (other than Maxim Retail) of any or all of its assets to
another Maxim Retail Party; (c) obsolete, slow-moving, idle or worn-out assets
no longer used or useful in its business or the trade in of equipment for
equipment in better condition or of better quality; (d) the transfer of assets
which constitute a Permitted Investment; (e) the lease or sublease of real
property interests in the ordinary course of business; (f) accounts receivable
and related rights and interests sold to GE Capital pursuant to the terms of the
GE Capital Dealer Agreement; (g) the sale by the Maxim Group Parties of assets
in an amount not to exceed $35,000,000 pursuant to a sale leaseback transaction
on terms and conditions satisfactory in form and substance to the Administrative
Agent and (h) other sales of assets not to exceed $2,500,000, in the aggregate,
during the term of this Credit Agreement in connection with the closing and
liquidation of retail stores.
Upon a sale of assets permitted by this Section 8.5, the Administrative
Agent shall promptly deliver to the Borrower, upon the Borrower's request and at
the Borrower's expense, such documentation as is reasonably necessary to
evidence the release of the Administrative Agent's security interest in such
assets, including, without limitation, amendments or terminations of UCC
financing statements.
8.6 Sale Leasebacks.
No Credit Party will, nor will it permit its Subsidiaries to, directly
or indirectly become or remain liable as lessee or as guarantor or other surety
with respect to any lease of any property (whether real or personal or mixed),
whether now owned or hereafter acquired, (a) which such Credit Party or its
Subsidiary has sold or transferred or is to sell or transfer to any other Person
other than (i) with respect to any Maxim Group Party, another Maxim Group Party
and (ii) with respect to any Maxim Retail Party, another Maxim Retail Party or
(b) which such Credit Party or its Subsidiary intends to use for substantially
the same purpose as any other property which has been sold or is to be sold or
transferred by such Credit Party to any Person in connection with such lease;
provided, however, that the Maxim Group Parties may enter into a sale leaseback
transaction on terms and conditions satisfactory in form and substance to the
Administrative Agent; provided, further, such sale leaseback transaction does
not exceed $35,000,000 in the aggregate.
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8.7 Advances, Investments and Loans.
No Credit Party will, nor will it permit its Subsidiaries to, make any
Investments except for Permitted Investments.
8.8 Restricted Payments.
No Credit Party will, nor will it permit its Subsidiaries to, directly
or indirectly, (a) declare or pay any dividends or make any other distribution
upon any shares of its capital stock of any class other than payment of
dividends by any Subsidiary of the Borrower to its parent or (b) purchase,
redeem or otherwise acquire or retire or make any provisions for redemption,
acquisition or retirement of any shares of its capital stock of any class or any
warrants or options to purchase any such shares other than the purchase of
shares by the Borrower permitted pursuant to clause (g) of the definition of
Permitted Investments.
8.9 Transactions with Affiliates.
No Credit Party will, nor will it permit its Subsidiaries to, enter
into any transaction or series of transactions, whether or not in the ordinary
course of business, with any officer, director, shareholder, Subsidiary or
Affiliate other than on terms and conditions substantially as favorable as would
be obtainable in a comparable arm's-length transaction with a Person other than
an officer, director, shareholder, Subsidiary or Affiliate; it being understood
and agreed by the Credit Parties that any transaction between a Maxim Group
Party and a Maxim Retail Party shall be an arm's length transaction and
otherwise on terms and conditions substantially similar as would be obtainable
in a comparable non-affiliated transaction. Furthermore, the Maxim Group Parties
hereby agree that the aggregate book value of all Receivables owned by or owing
to any Maxim Group Party for which any Maxim Retail Party is the account debtor
shall not exceed $10,000,000 in the aggregate at any one time.
8.10 Fiscal Year; Organizational Documents.
No Credit Party will, nor will it permit its Subsidiaries to, (a)
change its fiscal year or (b) in any manner that would reasonably be likely to
adversely affect the rights of the Lenders, change its articles or certificate
of incorporation or its bylaws.
8.11 No Limitations.
No Credit Party will, nor will it permit its Subsidiaries to, directly
or indirectly, create or otherwise cause, incur, assume, suffer or permit to
exist or become effective any consensual encumbrance or restriction of any kind
on the ability of any such Person to (a) pay dividends or make any other
distribution on any of such Person's capital stock, (b) pay any Indebtedness
owed to any other Credit Party, (c) make loans or advances to any other Credit
Party or (d) transfer any of its property to any other Credit Party, except for
encumbrances or restrictions existing under or by reason of (i) customary
non-assignment or net worth provisions in any lease governing a leasehold
interest, (ii) any agreement or other instrument of a Person existing at the
time it becomes a
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Subsidiary of a Credit Party; provided that such encumbrance or restriction is
not applicable to any other Person, or any property of any other Person, other
than such Person becoming a Subsidiary of a Credit Party and was not entered
into in contemplation of such Person becoming a Subsidiary of a Credit Party,
(iii) this Credit Agreement and the other Credit Documents, (iv) the Maxim
Retail Credit Agreement and the other Credit Documents (as defined in the Maxim
Retail Credit Agreement) and (v) the Indenture.
8.12 No Other Negative Pledges.
No Credit Party will, nor will it permit its Subsidiaries to, enter
into, assume or become subject to any agreement prohibiting or otherwise
restricting the creation or assumption of any Lien upon its properties or
assets, whether now owned or hereafter acquired, or requiring the grant of any
security for such obligation if security is given for some other obligation
except as set forth in (a) the Credit Documents, (b) the Credit Documents (as
defined in the Maxim Retail Credit Agreement) and (c) the Indenture.
8.13 Limitation on Foreign Operations.
The Credit Parties will not, nor will they permit any of their
Subsidiaries to, allow the Foreign Subsidiaries to have assets which in the
aggregate constitute more than 5% of Total Assets at any time.
8.14 Capital Expenditures.
The Maxim Group Parties shall not make Capital Expenditures of more
than (i) $50,000,000 in the aggregate in fiscal year 1999, (ii) $50,000,000 in
the aggregate in fiscal year 2000 and (iii) $40,000,000 in the aggregate in any
fiscal year of the Borrower subsequent to fiscal year 2000. The Maxim Retail
Parties shall not make any Capital Expenditures of more than (i) $15,000,000 in
the aggregate in fiscal year 1999, (ii) $15,000,000 in the aggregate in fiscal
year 2000 and (iii) $10,000,000 in the aggregate in any fiscal year of Maxim
Retail subsequent to fiscal year 2000.
8.15 Prepayments of Indebtedness.
No Credit Party will, nor will it permit any of its Subsidiaries to,
(a) amend or modify (or permit the amendment or modification of) any of the
terms of any Indebtedness if such amendment or modification would add or change
any terms in a manner adverse to the Lenders, including but not limited to,
shortening final maturity or average life to maturity of such Indebtedness or
requiring any payment to be made sooner than originally scheduled or increasing
the interest rate applicable thereto or change any subordination provision
thereof, (b) during the existence of a Default or Event of Default, or if a
Default or Event of Default would be caused as a result thereof make (or give
any notice with respect thereto) any voluntary or optional payment or prepayment
or redemption or acquisition for value of (including, without limitation, by way
of depositing money or securities with the trustee with respect thereto before
due for the purpose of paying when due), refund, refinance or exchange of any
other Indebtedness.
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8.16 Subordinated Debt.
No Credit Party will (a) make or offer to make any principal payments
with respect to the Subordinated Debt, (b) redeem or offer to redeem any of the
Subordinated Debt, or (c) deposit any funds intended to discharge or defease any
or all of the Subordinated Debt. The Subordinated Debt may not be amended or
modified in any material manner without the prior written consent of the
Required Lenders.
8.17 Limitation on Store Openings.
The Credit Parties will not, nor will they permit their Subsidiaries
to, open or start up, in the aggregate, more than fifty (50) new stores in any
fiscal year of the Borrower.
SECTION 9
EVENTS OF DEFAULT
9.1 Events of Default.
An Event of Default shall exist upon the occurrence, and during the
continuance, of any of the following specified events (each an "Event of
Default"):
(a) Payment. Any Credit Party shall default in the payment (i)
when due of any principal of any of the Loans or any reimbursement
obligation arising from drawings under Letters of Credit or (ii) within
three Business Days of when due of any interest on the Loans or any
fees or other amounts owing hereunder, under any of the other Credit
Documents or in connection herewith.
(b) Representations. Any representation, warranty or statement
made or deemed to be made by any Credit Party herein, in any of the
other Credit Documents, or in any statement or certificate delivered or
required to be delivered pursuant hereto or thereto shall prove untrue
in any material respect on the date as of which it was made or deemed
to have been made.
(c) Covenants. Any Credit Party shall:
(i) default in the due performance or observance of
any term, covenant or agreement contained in Sections 7.2,
7.3, 7.5, 7.11, 7.12, or 8.1 through 8.17 inclusive;
(ii) default in the due performance or observance by
it of any term, covenant or agreement contained in Sections
7.1 and such default shall continue unremedied for a period of
five Business Days;
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(iii) default in the due performance or observance by
it of any term, covenant or agreement (other than those
referred to in subsections (a), (b) or (c)(i) or (ii) of this
Section 9.1) contained in this Credit Agreement and such
default shall continue unremedied for a period of at least 30
days after the earlier of a Credit Party becoming aware of
such default or notice thereof given by the Administrative
Agent.
(d) Other Credit Documents. (i) Any Credit Party shall default
in the due performance or observance of any term, covenant or agreement
in any of the other Credit Documents and such default shall continue
unremedied for a period of at least 30 days after the earlier of a
Credit Party becoming aware of such default or notice thereof given by
the Administrative Agent, or (ii) any Credit Document shall fail to be
in full force and effect or any Credit Party shall so assert or any
Credit Document shall fail to give the Administrative Agent and/or the
Lenders the security interests, liens, rights, powers and privileges
purported to be created thereby.
(e) Guaranties. The guaranty given by the Credit Parties
hereunder or by any Additional Credit Party hereafter or any provision
thereof shall cease to be in full force and effect, or any guarantor
thereunder or any Person acting by or on behalf of such guarantor shall
deny or disaffirm such Guarantor's obligations under such guaranty.
(f) Bankruptcy, etc. The occurrence of any of the following:
(i) a court or governmental agency having jurisdiction in the premises
shall enter a decree or order for relief in respect of any Credit Party
or any of its Subsidiaries in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect,
or appoint a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of any Credit Party or any of its
Subsidiaries or for any substantial part of its property or ordering
the winding up or liquidation of its affairs; or (ii) an involuntary
case under any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect is commenced against any Credit Party or any
of its Subsidiaries and such petition remains unstayed and in effect
for a period of 60 consecutive days; or (iii) any Credit Party or any
of its Subsidiaries shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, or consent to the entry of an order for relief in an
involuntary case under any such law, or consent to the appointment or
taking possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official of such Person or any
substantial part of its property or make any general assignment for the
benefit of creditors; or (iv) any Credit Party or any of its
Subsidiaries shall admit in writing its inability to pay its debts
generally as they become due or any action shall be taken by such
Person in furtherance of any of the aforesaid purposes.
(g) Defaults under Other Agreements.
(i) Except for the Indenture Default, a Credit Party
or any of its Subsidiaries shall default in the due
performance or observance (beyond the
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applicable grace period with respect thereto) of any material
obligation or condition of any contract or lease to which it
is a party; or
(ii) With respect to any Indebtedness in excess of
$2,000,000 (other than Indebtedness outstanding under this
Credit Agreement) of a Credit Party or any of their
Subsidiaries (i) such Person shall (A) default in any payment
(beyond the applicable grace period with respect thereto, if
any) with respect to any such Indebtedness, or (B) except for
the Indenture Default, default (after giving effect to any
applicable grace period) in the observance or performance
relating to such Indebtedness or contained in any instrument
or agreement evidencing, securing or relating thereto, or any
other event or condition shall occur or condition exist, the
effect of which default or other event or condition is to
cause, or permit, the holder or holders of such Indebtedness
(or trustee or agent on behalf of such holders) to cause
(determined without regard to whether any notice or lapse of
time is required) any such Indebtedness to become due prior to
its stated maturity; or (ii) any such Indebtedness shall be
declared due and payable, or required to be prepaid other than
by a regularly scheduled required prepayment prior to the
stated maturity thereof; or (iii) any such Indebtedness shall
mature and remain unpaid.
(h) Judgments. One or more judgments, orders, or decrees shall
be entered against any one or more of the Credit Parties and its
Subsidiaries involving a liability of $2,000,000 or more, in the
aggregate, (to the extent not paid or covered by insurance provided by
a carrier who has acknowledged coverage) and such judgments, orders or
decrees (i) are the subject of any enforcement proceeding commenced by
any creditor or (ii) shall continue unsatisfied, undischarged and
unstayed for a period ending on the first to occur of (A) the last day
on which such judgment, order or decree becomes final and unappealable
or (B) 60 days.
(i) ERISA. The occurrence of any of the following events or
conditions: (A) any "accumulated funding deficiency," as such term is
defined in Section 302 of ERISA and Section 412 of the Code, whether or
not waived, shall exist with respect to any Plan, or any lien shall
arise on the assets of any Credit Party or any ERISA Affiliate in favor
of the PBGC or a Plan; (B) a Termination Event shall occur with respect
to a Single Employer Plan, which is, in the reasonable opinion of the
Administrative Agent, likely to result in the termination of such Plan
for purposes of Title IV of ERISA; (C) a Termination Event shall occur
with respect to a Multiemployer Plan or Multiple Employer Plan, which
is, in the reasonable opinion of the Administrative Agent, likely to
result in (i) the termination of such Plan for purposes of Title IV of
ERISA, or (ii) any Credit Party or any ERISA Affiliate incurring any
liability in connection with a withdrawal from, reorganization of
(within the meaning of Section 4241 of ERISA), or insolvency (within
the meaning of Section 4245 of ERISA) of such Plan; or (D) any
prohibited transaction (within the meaning of Section 406 of ERISA or
Section 4975 of the Code) or breach of fiduciary responsibility shall
occur which may subject any Credit Party or any ERISA Affiliate to any
liability under Sections 406, 409, 502(i), or 502(l) of ERISA or
Section 4975 of the Code, or under any agreement or other instrument
pursuant to which any Credit Party or any
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ERISA Affiliate has agreed or is required to indemnify any person
against any such liability.
(j) Ownership. There shall occur a Change of Control.
(k) Maxim Retail Credit Agreement. There shall occur an Event
of Default (as defined in the Maxim Retail Credit Agreement) under the
Maxim Retail Credit Agreement.
(l) Synthetic Lease. There shall occur an Event of Default (as
defined in the Participation Agreement) under the Participation
Agreement.
(m) Subordinated Debt. Any holder of the Subordinated Debt
alleges in writing (or any Governmental Authority with applicable
jurisdiction determines) (i) that the Lenders are not holders of Senior
Indebtedness (as defined in the Indenture) or (ii) the subordinated
provisions in the Indenture shall, in whole or part, terminate, cease
to be effective or cease to be legally valid, binding and enforceable
against any holder of the Subordinated Debt.
(n) Default on Subordinated Debt. There shall occur (i) (other
than the Indenture Default) an Event of Default (as defined in the
Indenture) under the Indenture or (ii) a Change of Control (as defined
in the Indenture) under the Indenture.
(o) Shaw Promissory Note. There shall occur a default or event
of default under the Shaw Promissory Note.
(p) Indenture Default. The failure of the Credit Parties to
receive a written waiver of the Indenture Default in form and substance
satisfactory to the Administrative Agent on or before January 31, 1999.
(q) Action by Subordinated Debt Holders. The holders of the
Subordinated Debt or any Person acting on behalf of the holders of the
Subordinated Debt shall take any remedial action (whether affirmative
or by omission) with respect to the Indenture Default (other than the
waiver thereof), including but not limited to, acceleration of the
Subordinated Debt, written demand with respect to the Subordinated Debt
or the pursuit of any assets of the Credit Parties in connection
therewith.
9.2 Acceleration; Remedies.
Upon the occurrence, and during the continuance, of an Event of
Default, and at any time thereafter unless and until such Event of Default has
been waived in writing by the Required Lenders (or the Lenders as may be
required hereunder), the Administrative Agent shall, upon the request and
direction of the Required Lenders, by written notice to the Borrower, take the
following actions without prejudice to the rights of the Administrative Agent or
any Lender to enforce its claims against the Credit Parties, except as otherwise
specifically provided for herein:
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(a) Termination of Commitments. Declare the Commitments
terminated whereupon the Commitments shall be immediately terminated.
(b) Acceleration of Loans. Declare the unpaid principal of and
any accrued interest in respect of all Loans, any reimbursement
obligations arising from drawings under Letters of Credit and any and
all other indebtedness or obligations of any and every kind owing by a
Credit Party to any of the Lenders hereunder to be due whereupon the
same shall be immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by
the Credit Parties.
(c) Cash Collateral. Direct the Borrower to pay (and the
Borrower agrees that upon receipt of such notice, or upon the
occurrence of an Event of Default under Section 9.1(f), it will
immediately pay) to the Administrative Agent additional cash, to be
held by the Administrative Agent, for the benefit of the Lenders, in a
cash collateral account as additional security for the LOC Obligations
in respect of subsequent drawings under all then outstanding Letters of
Credit in an amount equal to the maximum aggregate amount which may be
drawn under all Letters of Credits then outstanding.
(d) Enforcement of Rights. Enforce any and all rights and
interests created and existing under the Credit Documents, including,
without limitation, all rights and remedies existing under the
Collateral Documents, all rights and remedies against a Guarantor and
all rights of set-off.
Notwithstanding the foregoing, if an Event of Default specified in Section
9.1(f) shall occur, then the Commitments shall automatically terminate and all
Loans, all reimbursement obligations under Letters of Credit, all accrued
interest in respect thereof, all accrued and unpaid fees and other indebtedness
or obligations owing to the Lenders hereunder shall immediately become due and
payable without the giving of any notice or other action by the Administrative
Agent or the Lenders, which notice or other action is expressly waived by the
Credit Parties.
Notwithstanding the fact that enforcement powers reside primarily with the
Administrative Agent, each Lender has, to the extent permitted by law, a
separate right of payment and shall be considered a separate "creditor" holding
a separate "claim" within the meaning of Section 101(5) of the Bankruptcy Code
or any other insolvency statute.
9.3 Allocation of Payments After Event of Default.
Notwithstanding any other provisions of this Credit Agreement, after
the occurrence and during the continuance of an Event of Default, all amounts
collected or received by the Administrative Agent or any Lender on account of
amounts outstanding under any of the Credit Documents or in respect of the
Collateral shall be paid over or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket costs
and expenses (including without limitation reasonable attorneys' fees)
of the Administrative Agent or any of the Lenders in connection with
enforcing the rights of the Lenders under the Credit
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Documents and any protective advances made by the Administrative Agent
or any of the Lenders with respect to the Collateral under or pursuant
to the terms of the Collateral Documents;
SECOND, to payment of any fees owed to the Administrative
Agent, the Issuing Lender or any Lender;
THIRD, to the payment of all accrued interest payable to the
Lenders hereunder and all other obligations which shall have become due
and payable under the Credit Documents and not repaid pursuant to
clauses "FIRST" and "SECOND" above;
FOURTH, to the payment of the outstanding principal amount of
the Loans and unreimbursed drawings under Letters of Credit, to the
payment or cash collateralization of the outstanding Revolving LOC
Obligations and Stand Alone LOC Obligations, pro rata as set forth
below;
FIFTH, to any principal amounts outstanding under Hedging
Agreements between a Credit Party and a Lender, pro rata, as set forth
below; and
SIXTH, to the payment of the surplus, if any, to whoever may
be lawfully entitled to receive such surplus.
In carrying out the foregoing, (a) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; (b) each of the Lenders shall receive an amount equal to
its pro rata share (based on the proportion that the then outstanding Loans,
Revolving LOC Obligations, Stand Alone LOC Obligations and obligations under
Hedging Agreements held by such Lender bears to the aggregate then outstanding
Loans, Revolving LOC Obligations, Stand Alone LOC Obligations and obligations
under Hedging Agreements) of amounts available to be applied; and (c) to the
extent that any amounts available for distribution pursuant to clause "FOURTH"
above are attributable to the issued but undrawn amount of outstanding Letters
of Credit, such amounts shall be held by the Administrative Agent in a cash
collateral account and applied (x) first, to reimburse the Issuing Lender from
time to time for any drawings under such Letters of Credit and (y) then,
following the expiration of all Letters of Credit, to all other obligations of
the types described in clauses "FOURTH," and "FIFTH" above in the manner
provided in this Section 9.3.
SECTION 10
AGENCY PROVISIONS
10.1 Appointment.
(a) Each Lender hereby designates and appoints NationsBank,
N.A. as Administrative Agent of such Lender to act as specified herein and the
other Credit Documents, and
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each such Lender hereby authorizes the Administrative Agent, as the agent for
such Lender, to take such action on its behalf under the provisions of this
Credit Agreement and the other Credit Documents and to exercise such powers and
perform such duties as are expressly delegated by the terms hereof and of the
other Credit Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere
herein and in the other Credit Documents, the Administrative Agent shall not
have any duties or responsibilities, except those expressly set forth herein and
therein, or any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Credit Agreement or any of the other Credit Documents, or
shall otherwise exist against the Administrative Agent. The provisions of this
Section are solely for the benefit of the Administrative Agent and the Lenders
and none of the Credit Parties shall have any rights as a third party
beneficiary of the provisions hereof. In performing its functions and duties
under this Credit Agreement and the other Credit Documents, the Administrative
Agent shall act solely as the agent of the Lenders and does not assume and shall
not be deemed to have assumed any obligation or relationship of agency or trust
with or for any Credit Party.
(b) Each Lender hereby consents to and approves the terms of the
Intercreditor Agreement, a copy of which is attached hereto as Exhibit 10.1(b).
By execution hereof, the Lenders acknowledge the terms of the Intercreditor
Agreement and agree to be bound by the terms thereof and further authorize and
direct the Administrative Agent to enter into the Intercreditor Agreement on
behalf of the Lenders.
10.2 Delegation of Duties.
The Administrative Agent may execute any of its duties hereunder or
under the other Credit Documents by or through agents or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining to such
duties. The Administrative Agent shall not be responsible for the negligence or
misconduct of any agents or attorneys-in-fact selected by it with reasonable
care.
10.3 Exculpatory Provisions.
Neither the Administrative Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates shall be liable for any
action lawfully taken or omitted to be taken by it or such Person under or in
connection herewith or in connection with any of the other Credit Documents
(except for its or such Person's own gross negligence or willful misconduct) or
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by any of the Credit Parties contained herein
or in any of the other Credit Documents or in any certificate, report, document,
financial statement or other written or oral statement referred to or provided
for in, or received by the Administrative Agent under or in connection herewith
or in connection with the other Credit Documents, or enforceability or
sufficiency therefor of any of the other Credit Documents, or for any failure of
the Borrower to perform its obligations hereunder or thereunder. The
Administrative Agent shall not be responsible to any Lender for the
effectiveness, genuineness, validity, enforceability, collectibility or
sufficiency of this Credit Agreement, or any of the other Credit Documents or
for any
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representations, warranties, recitals or statements made herein or therein or
made by a Borrower or any Credit Party in any written or oral statement or in
any financial or other statements, instruments, reports, certificates or any
other documents in connection herewith or therewith furnished or made by the
Administrative Agent to the Lenders or by or on behalf of the Credit Parties to
the Administrative Agent or any Lender or be required to ascertain or inquire as
to the performance or observance of any of the terms, conditions, provisions,
covenants or agreements contained herein or therein or as to the use of the
proceeds of the Loans or the use of the Letters of Credit or of the existence or
possible existence of any Default or Event of Default or to inspect the
properties, books or records of the Credit Parties. The Administrative Agent is
not a trustee for the Lenders and owes no fiduciary duty to the Lenders.
10.4 Reliance on Communications.
The Administrative Agent shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document or conversation reasonably believed
by it to be genuine and correct and to have been signed, sent or made by the
proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to any of the Credit Parties,
independent accountants and other experts selected by the Administrative Agent
with reasonable care). The Administrative Agent may deem and treat the Lenders
as the owner of its interests hereunder for all purposes unless a written notice
of assignment, negotiation or transfer thereof shall have been filed with the
Administrative Agent in accordance with Section 11.3(b). The Administrative
Agent shall be fully justified in failing or refusing to take any action under
this Credit Agreement or under any of the other Credit Documents unless it shall
first receive such advice or concurrence of the Required Lenders as it deems
appropriate or it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Administrative Agent shall
in all cases be fully protected in acting, or in refraining from acting,
hereunder or under any of the other Credit Documents in accordance with a
request of the Required Lenders (or to the extent specifically provided in
Section 11.6, all the Lenders) and such request and any action taken or failure
to act pursuant thereto shall be binding upon all the Lenders (including their
successors and assigns).
10.5 Notice of Default.
The Administrative Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default hereunder unless the
Administrative Agent has received notice from a Lender or a Credit Party
referring to the Credit Document, describing such Default or Event of Default
and stating that such notice is a "notice of default." In the event that the
Administrative Agent receives such a notice, the Administrative Agent shall give
prompt notice thereof to the Lenders. The Administrative Agent shall take such
action with respect to such Default or Event of Default as shall be reasonably
directed by the Required Lenders and as is permitted by the Credit Documents.
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10.6 Non-Reliance on Administrative Agent and Other Lenders.
Each Lender expressly acknowledges that neither the Administrative
Agent, NMS nor any of their officers, directors, employees, agent,
attorneys-in-fact or affiliates has made any representations or warranties to it
and that no act by the Administrative Agent or any affiliate thereof hereinafter
taken, including any review of the affairs of any Credit Party, shall be deemed
to constitute any representation or warranty by the Administrative Agent to any
Lender. Each Lender represents to the Administrative Agent and NMS that it has,
independently and without reliance upon the Administrative Agent or NMS or any
other Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
assets, operations, property, financial and other conditions, prospects and
creditworthiness of the Credit Parties and made its own decision to make its
Loans hereunder and enter into this Credit Agreement. Each Lender also
represents that it will, independently and without reliance upon the
Administrative Agent or NMS or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Credit Agreement, and to make such investigation as it deems necessary to
inform itself as to the business, assets, operations, property, financial and
other conditions, prospects and creditworthiness of the Credit Parties. Except
for notices, reports and other documents expressly required to be furnished to
the Lenders by the Administrative Agent hereunder, the Administrative Agent and
NMS shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the business, operations, assets,
property, financial or other conditions, prospects or creditworthiness of the
Credit Parties which may come into the possession of the Administrative Agent,
NMS or any of their officers, directors, employees, agents, attorneys-in-fact or
affiliates.
10.7 Indemnification.
The Lenders agree to indemnify the Administrative Agent in its capacity
as such (to the extent not reimbursed by the Borrower and without limiting the
obligation of the Borrower to do so), ratably according to their respective
Commitments (or if the Commitments have expired or been terminated, in
accordance with the respective principal amounts of outstanding Loans and
Participation Interest of the Lenders), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever which may at any time
(including without limitation at any time following payment in full of the
Credit Party Obligations) be imposed on, incurred by or asserted against the
Administrative Agent in its capacity as such in any way relating to or arising
out of this Credit Agreement or the other Credit Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the
Administrative Agent under or in connection with any of the foregoing; provided
that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the gross negligence or willful
misconduct of the Administrative Agent. If any indemnity furnished to the
Administrative Agent for any purpose shall, in the opinion of the Administrative
Agent, be insufficient or become impaired, the Administrative Agent may call for
additional indemnity and cease, or not commence, to do the acts indemnified
against until such additional indemnity is
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furnished. The agreements in this Section shall survive the payment of the
Credit Party Obligations and all other amounts payable hereunder and under the
other Credit Documents.
10.8 Administrative Agent in Its Individual Capacity.
The Administrative Agent and its affiliates may make loans to, accept
deposits from and generally engage in any kind of business with a Borrower or
any other Credit Party as though the Administrative Agent were not the
Administrative Agent hereunder. With respect to the Loans made and Letters of
Credit issued and all obligations owing to it, the Administrative Agent shall
have the same rights and powers under this Credit Agreement as any Lender and
may exercise the same as though they were not the Administrative Agent, and the
terms "Lender" and "Lenders" shall include the Administrative Agent in its
individual capacity.
10.9 Successor Administrative Agent.
(a) The Administrative Agent may, at any time, resign upon 20
days written notice to the Lenders. Upon any such resignation, the Required
Lenders shall have the right to appoint a successor Administrative Agent. If no
successor Administrative Agent shall have been so appointed by the Required
Lenders, and shall have accepted such appointment, within 60 days after the
notice of resignation, then the retiring Administrative Agent shall select a
successor Administrative Agent, provided such successor is an Eligible Assignee.
Upon the acceptance of any appointment as the Administrative Agent hereunder by
a successor, such successor Administrative Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations as the Administrative Agent, as appropriate,
under this Credit Agreement and the other Credit Documents and the provisions of
this Section 10.9 shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was the Administrative Agent under this Credit
Agreement.
(b) SunTrust Bank, Atlanta, in its capacity as Documentation
Agent and Fleet National Bank, in its capacity as Co-Agent shall have no duties
or obligations whatsoever under this Credit Agreement or any of the other Credit
Documents.
SECTION 11
MISCELLANEOUS
11.1 Notices.
Except as otherwise expressly provided herein, all notices and other
communications shall have been duly given and shall be effective (a) when
delivered, (b) when transmitted via telecopy (or other facsimile device) to the
number set out below, (c) the Business Day following the day on which the same
has been delivered prepaid to a reputable national overnight air courier
service, or (d) the third Business Day following the day on which the same is
sent by certified or registered
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mail, postage prepaid, in each case to the respective parties at the address or
telecopy numbers set forth on Schedule 11.1, or at such other address as such
party may specify by written notice to the other parties hereto.
11.2 Right of Set-Off.
In addition to any rights now or hereafter granted under applicable law
or otherwise, and not by way of limitation of any such rights, upon the
occurrence of an Event of Default and the commencement of remedies described in
Section 9.2, each Lender is authorized at any time and from time to time,
without presentment, demand, protest or other notice of any kind (all of which
rights being hereby expressly waived), to set-off and to appropriate and apply
any and all deposits (general or special) and any other indebtedness at any time
held or owing by such Lender (including, without limitation, branches, agencies
or Affiliates of such Lender wherever located) to or for the credit or the
account of any Credit Party against obligations and liabilities of such Credit
Party to the Lenders hereunder, under the Notes, the other Credit Documents or
otherwise, irrespective of whether the Administrative Agent or the Lenders shall
have made any demand hereunder and although such obligations, liabilities or
claims, or any of them, may be contingent or unmatured, and any such set-off
shall be deemed to have been made immediately upon the occurrence of an Event of
Default even though such charge is made or entered on the books of such Lender
subsequent thereto. The Credit Parties hereby agree that any Person purchasing a
participation in the Loans and Commitments hereunder pursuant to Section 11.3(c)
or 3.8 may exercise all rights of set-off with respect to its participation
interest as fully as if such Person were a Lender hereunder.
11.3 Benefit of Agreement.
(a) Generally. This Credit Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective successors
and assigns of the parties hereto; provided that none of the Credit
Parties may assign and transfer any of its interests (except as
permitted by Section 8.4 or 8.5) without the prior written consent of
the Lenders; and provided further that the rights of each Lender to
transfer, assign or grant participations in its rights and/or
obligations hereunder shall be limited as set forth below in this
Section 11.3.
(b) Assignments. Each Lender may assign to one or more
Eligible Assignees all or a portion of its rights and obligations under
this Credit Agreement (including, without limitation, all or a portion
of its Loans, its Notes, and its Commitments); provided, however, that:
(i) each such assignment shall be to an Eligible
Assignee;
(ii) except in the case of an assignment to another
Lender or an assignment of all of a Lender's rights and
obligations under this Credit Agreement, any such partial
assignment shall be in an amount at least equal to
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$5,000,000 (or, if less, the remaining amount of the
Commitment being assigned by such Lender) or an integral
multiple of $1,000,000 in excess thereof;
(iii) each such assignment by a Lender shall be of a
constant, and not varying, percentage of all of its rights and
obligations under this Credit Agreement and the Notes;
(iv) unless otherwise agreed to by the Borrower and
the Administrative Agent, such Lender proposing to assign a
portion of its Commitment shall be required to assign to such
Eligible Assignee (A) an identical percentage of its
Commitment (as defined in Appendix A to the Participation
Agreement) and (B) an identical percentage of its Holder
Commitment (as defined in Appendix A to the Participation
Agreement); provided that to the extent an Affiliate of any
Lender holds any portion of such Commitment or Holder
Commitment, such Lender shall cause such Affiliate to assign
to such Eligible Assignee (C) an identical percentage of its
Commitment (as defined in the Appendix A to the Participation
Agreement) and (D) an identical percentage of its Holder
Commitment (as defined in Appendix A to the Participation
Agreement);
(v) the parties to such assignment shall execute and
deliver to the Administrative Agent for its acceptance an
Assignment Agreement in substantially the form of Exhibit
11.3(b), together with a processing fee from the assignor of
$3,500.
Upon execution, delivery, and acceptance of such Assignment Agreement,
the assignee thereunder shall be a party hereto and, to the extent of
such assignment, have the obligations, rights, and benefits of a Lender
hereunder and the assigning Lender shall, to the extent of such
assignment, relinquish its rights and be released from its obligations
under this Credit Agreement. Upon the consummation of any assignment
pursuant to this Section 11.3(b), the assignor, the Administrative
Agent and the Borrower shall make appropriate arrangements so that, if
required, new Notes are issued to the assignor and the assignee. If the
assignee is not incorporated under the laws of the United States of
America or a state thereof, it shall deliver to the Borrower and the
Administrative Agent certification as to exemption from deduction or
withholding of taxes in accordance with Section 3.13.
By executing and delivering an assignment agreement in accordance with
this Section 11.3(b), the assigning Lender thereunder and the assignee
thereunder shall be deemed to confirm to and agree with each other and
the other parties hereto as follows: (A) such assigning Lender warrants
that it is the legal and beneficial owner of the interest being
assigned thereby free and clear of any adverse claim and the assignee
warrants that it is an Eligible Assignee; (B) except as set forth in
clause (A) above, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Credit
Agreement, any of the other Credit Documents or any other instrument or
document furnished pursuant hereto
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or thereto, or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Credit Agreement, any of the
other Credit Documents or any other instrument or document furnished
pursuant hereto or thereto or the financial condition of any Credit
Party or the performance or observance by any Credit Party of any of
its obligations under this Credit Agreement, any of the other Credit
Documents or any other instrument or document furnished pursuant hereto
or thereto; (C) such assignee represents and warrants that it is
legally authorized to enter into such assignment agreement; (D) such
assignee confirms that it has received a copy of this Credit Agreement,
the other Credit Documents and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision
to enter into such assignment agreement; (E) such assignee will
independently and without reliance upon the Administrative Agent, such
assigning Lender or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make
its own credit decisions in taking or not taking action under this
Credit Agreement and the other Credit Documents; (F) such assignee
appoints and authorizes the Administrative Agent to take such action on
its behalf and to exercise such powers under this Credit Agreement or
any other Credit Document as are delegated to the Administrative Agent
by the terms hereof or thereof, together with such powers as are
reasonably incidental thereto; and (G) such assignee agrees that it
will perform in accordance with their terms all the obligations which
by the terms of this Credit Agreement and the other Credit Documents
are required to be performed by it as a Lender.
(c) Register. The Administrative Agent shall maintain a copy
of each Assignment Agreement delivered to and accepted by it and a
register for the recordation of the names and addresses of the Lenders
and the Commitment of, and principal amount of the Loans owing to, each
Lender from time to time (the "Register"). The entries in the Register
shall be conclusive and binding for all purposes, absent manifest
error, and the Borrower, the Administrative Agent and the Lenders may
treat each Person whose name is recorded in the Register as a Lender
hereunder for all purposes of this Credit Agreement. The Register shall
be available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(d) Acceptance. Upon its receipt of an Assignment Agreement
executed by the parties thereto, together with any Note subject to such
assignment and payment of the processing fee, the Administrative Agent
shall, if such Assignment Agreement has been completed and is in
substantially the form of Exhibit 11.3(b) hereto, (i) accept such
Assignment Agreement, (ii) record the information contained therein in
the Register and (iii) give prompt notice thereof to the parties
thereto.
(e) Participations. Each Lender may sell participations to one
or more Persons in all or a portion of its rights, obligations or
rights and obligations under this Credit Agreement (including all or a
portion of its Commitments and its Loans); provided, however, that (i)
such Lender's obligations under this Credit Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) the
participant shall be entitled to the benefit of the yield protection
provisions contained in Sections 3.9 through 3.14,
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inclusive, and the right of set-off contained in Section 11.2, and (iv)
the Borrower shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under
this Credit Agreement, and such Lender shall retain the sole right to
enforce the obligations of the Borrower relating to its Loans and its
Notes and to approve any amendment, modification, or waiver of any
provision of this Credit Agreement (other than amendments,
modifications, or waivers decreasing the amount of principal of or the
rate at which interest is payable on such Loans or Notes, extending any
scheduled principal payment date or date fixed for the payment of
interest on such Loans or Notes, extending its Commitments or releasing
all or substantially all of the Collateral securing the Credit Party
Obligations).
(f) Nonrestricted Assignments. Notwithstanding any other
provision set forth in this Credit Agreement, any Lender may at any
time assign and pledge all or any portion of its Loans and its Notes to
any Federal Reserve Bank as collateral security pursuant to Regulation
A and any Operating Circular issued by such Federal Reserve Bank. No
such assignment shall release the assigning Lender from its obligations
hereunder.
(g) Information. Any Lender may furnish any information
concerning the Borrower or any of its Subsidiaries in the possession of
such Lender from time to time to assignees and participants (including
prospective assignees and participants), subject, however, to the
provisions of Section 11.16 hereof.
11.4 No Waiver; Remedies Cumulative.
No failure or delay on the part of Administrative Agent or any Lender
in exercising any right, power or privilege hereunder or under any other Credit
Document and no course of dealing between the Borrower or any Credit Party and
the Administrative Agent or any Lender shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder
or under any other Credit Document preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder or
thereunder. The rights and remedies provided herein are cumulative and not
exclusive of any rights or remedies which the Administrative Agent or any Lender
would otherwise have. No notice to or demand on any Credit Party in any case
shall entitle any Credit Party to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of the
Administrative Agent or the Lenders to any other or further action in any
circumstances without notice or demand.
11.5 Payment of Expenses; Indemnification.
The Credit Parties agree to: (a) pay all reasonable out-of-pocket costs
and expenses of (i) the Administrative Agent and NMS in connection with (A) the
negotiation, preparation, execution and delivery and administration of this
Credit Agreement and the other Credit Documents and the documents and
instruments referred to therein (including, without limitation, the reasonable
fees and expenses of Moore & Van Allen, PLLC, special counsel to the
Administrative Agent), (B) any amendment, waiver or consent relating hereto and
thereto including, but not limited to, any such
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amendments, waivers or consents resulting from or related to any work-out,
renegotiation or restructure relating to the performance by the Credit Parties
under this Credit Agreement, and (C) searches of the UCC and the preparation and
filing of UCC financing statements in connection with such searches subsequent
to the Closing Date (including, without limitation, the reasonable fees and
expenses of Moore & Van Allen, PLLC) and (ii) the Administrative Agent and the
Lenders in connection with (A) enforcement of the Credit Documents and the
documents and instruments referred to therein, including, without limitation, in
connection with any such enforcement, the reasonable fees and disbursements of
counsel for the Administrative Agent and each of the Lenders, and (B) any
bankruptcy or insolvency proceeding of a Credit Party of any of its Subsidiaries
and (b) indemnify the Administrative Agent, NMS and each Lender, its officers,
directors, employees, representatives and agents from and hold each of them
harmless against any and all losses, liabilities, claims, damages or expenses
incurred by any of them as a result of, or arising out of, or in any way related
to, or by reason of, any investigation, litigation or other proceeding (whether
or not the Administrative Agent, NMS or Lender is a party thereto) related to
(i) the entering into and/or performance of any Credit Document or the use of
proceeds of any Loans (including other extensions of credit) hereunder or the
consummation of any other transactions contemplated in any Credit Document,
including, without limitation, the reasonable fees and disbursements of counsel
incurred in connection with any such investigation, litigation or other
proceeding, (ii) any Environmental Claim, (iii) any claims for Non-Excluded
Taxes (but excluding in the case of (i), (ii) and (iii) above, any such losses,
liabilities, claims, damages or expenses to the extent incurred by reason of
gross negligence or willful misconduct on the part of the Person to be
indemnified).
11.6 Amendments, Waivers and Consents.
Neither this Credit Agreement nor any other Credit Document nor any of
the terms hereof or thereof may be amended, changed, waived, discharged or
terminated unless such amendment, change, waiver, discharge or termination is in
writing and signed by the Required Lenders and the then Credit Parties; provided
that no such amendment, change, waiver, discharge or termination shall without
the consent of each Lender affected thereby:
(a) extend the final maturity of any Loan or of any
reimbursement obligation; or any portion thereof, arising from drawings
under Letters of Credit;
(b) reduce the rate or extend the time of payment of interest
(other than as a result of waiving the applicability of any
post-default increase in interest rates) thereon or fees hereunder;
(c) reduce or waive the principal amount of any Loan or of any
reimbursement obligation, or any portion thereof, arising from drawings
under Letters of Credit;
(d) increase or extend the Revolving Committed Amount, the LOC
Committed Amount or the Commitment of any Lender (it being understood
and agreed that a waiver of any Default or Event of Default or a waiver
of any mandatory reduction in the Revolving Committed Amount or the LOC
Committed Amount shall not constitute a change in the
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terms of the Revolving Committed Amount, the LOC Committed Amount or
the Commitment of any Lender);
(e) release all or substantially all of the Collateral
securing the Credit Party Obligations hereunder (provided that the
Administrative Agent may, without consent from any other Lender,
release any Collateral that is sold or transferred by a Credit Party in
conformance with Section 8.5);
(f) release the Borrower from its obligations or release all
or substantially all of the other Credit Parties from their respective
obligations under the Credit Documents;
(g) amend, modify or waive any provision of this Section or
Section 3.4(a), 3.4(b), 3.4(c), 3.7, 3.8, 3.9, 3.10, 3.11, 3.12, 3.13,
3.14, 5.2, 9.1(a), 11.2, 11.3 or 11.5;
(h) reduce any percentage specified in, or otherwise modify,
the definition of Required Lenders; or
(i) consent to the assignment or transfer by the Borrower of
any of its rights and obligations under (or in respect of) the Credit
Documents.
Notwithstanding the above, no provisions of Section 10 may be amended or
modified without the consent of the Administrative Agent, and no provisions of
Section 2.2, Section 2.3 or Section 2.4 may be amended or modified without the
consent of the Issuing Lender.
Notwithstanding the fact that the consent of all the Lenders is required in
certain circumstances as set forth above, (x) each Lender is entitled to vote as
such Lender sees fit on any reorganization plan that affects the Loans or the
Letters of Credit, and each Lender acknowledges that the provisions of Section
1126(c) of the Bankruptcy Code supersedes the unanimous consent provisions set
forth herein and (y) the Required Lenders may consent to allow a Credit Party to
use cash collateral in the context of a bankruptcy or insolvency proceeding.
11.7 Counterparts/Telecopy.
This Credit Agreement may be executed in any number of counterparts,
each of which where so executed and delivered shall be an original, but all of
which shall constitute one and the same instrument. Delivery of executed
counterparts by telecopy shall be as effective as an original and shall
constitute a representation that an original will be delivered.
11.8 Headings.
The headings of the sections and subsections hereof are provided for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Credit Agreement.
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11.9 Defaulting Lender.
Each Lender understands and agrees that if such Lender is a Defaulting
Lender then notwithstanding the provisions of Section 11.6 it shall not be
entitled to vote on any matter requiring the consent of the Required Lenders or
to object to any matter requiring the consent of all the Lenders; provided,
however, that all other benefits and obligations under the Credit Documents
shall apply to such Defaulting Lender.
11.10 Survival of Indemnification and Representations and
Warranties.
All indemnities set forth herein and all representations and warranties
made herein shall survive the execution and delivery of this Credit Agreement,
the making of the Loans, the issuance of the Letters of Credit and the repayment
of the Loans, LOC Obligations and other obligations and the termination of the
Commitments hereunder.
11.11 Governing Law; Jurisdiction.
(a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF GEORGIA. Any legal action or proceeding with respect to
this Credit Agreement or any other Credit Document may be brought in
the courts of the State of North Carolina or of the United States for
the Western District of North Carolina, and, by execution and delivery
of this Credit Agreement, each Credit Party hereby irrevocably accepts
for itself and in respect of its property, generally and
unconditionally, the jurisdiction of such courts. Each Credit Party
further irrevocably consents to the service of process out of any of
the aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage
prepaid, to it at the address for notices pursuant to Section 11.1,
such service to become effective 10 days after such mailing. Nothing
herein shall affect the right of a Lender to serve process in any other
manner permitted by law or to commence legal proceedings or to
otherwise proceed against a Credit Party in any other jurisdiction.
Each Credit Party agrees that a final judgment in any action or
proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided
by law; provided that nothing in this Section 11.11(a) is intended to
impair a Credit Party's right under applicable law to appeal or seek a
stay of any judgment.
(b) Each Credit Party hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with
this Agreement or any other Credit Document brought in the courts
referred to in subsection (a) hereof and hereby further irrevocably
waives and agrees not to plead or claim in any such court that any such
action or proceeding brought in any such court has been brought in an
inconvenient forum.
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11.12 Waiver of Jury Trial.
TO THE EXTENT PERMITTED BY LAW, EACH OF THE PARTIES TO THIS AGREEMENT
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS CREDIT AGREEMENT, ANY OF THE
OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY.
11.13 Time.
All references to time herein shall be references to Eastern Standard
Time or Eastern Daylight time, as the case may be, unless specified otherwise.
11.14 Severability.
If any provision of any of the Credit Documents is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
11.15 Further Assurances.
The Credit Parties agree, upon the request of the Administrative Agent,
to promptly take such actions, as reasonably requested, as is necessary to carry
out the intent of this Credit Agreement and the other Credit Documents,
including, but not limited to, such actions as are necessary to ensure that the
Lenders have a perfected security interest in the Collateral subject to no Liens
other than Permitted Liens.
11.16 Confidentiality.
Each Lender agrees that it will use its reasonable best efforts to keep
confidential and to cause any representative designated under Section 7.12 to
keep confidential any non-public information from time to time supplied to it
under any Credit Document; provided, however, that nothing herein shall prevent
the disclosure of any such information to (a) the extent a Lender in good faith
believes such disclosure is required by Requirement of Law, (b) counsel for a
Lender or to its accountants, (c) bank examiners or auditors or comparable
Persons, (d) any affiliate of a Lender, (e) any other Lender, or any assignee,
transferee or participant, or any potential assignee, transferee or participant,
of all or any portion of any Lender's rights under this Agreement who is
notified of the confidential nature of the information or (f) any other Person
in connection with any litigation to which any one or more of the Lenders is a
party; and provided further that no Lender shall have any obligation under this
Section 11.16 to the extent any such information becomes available on a
non-confidential basis from a source other than a Credit Party or that any
information becomes publicly available other than by a breach of this Section
11.16 by any Lender or representative thereof.
97
<PAGE> 103
11.17 Entirety.
This Credit Agreement together with the other Credit Documents and the
Fee Letter represent the entire agreement of the parties hereto and thereto, and
supersede all prior agreements and understandings, oral or written, if any,
including any commitment letters or correspondence relating to the Credit
Documents or the transactions contemplated herein and therein.
11.18 Binding Effect; Continuing Agreement.
(a) This Credit Agreement shall become effective at such time
when all of the conditions set forth in Section 5.1 have been satisfied
or waived by the Lenders and it shall have been executed by the
Borrower, the Guarantors and the Administrative Agent, and the
Administrative Agent shall have received copies hereof (telefaxed or
otherwise) which, when taken together, bear the signatures of each
Lender, and thereafter this Credit Agreement shall be binding upon and
inure to the benefit of the Borrower, the Guarantors, the
Administrative Agent and each Lender and their respective successors
and assigns. Upon this Credit Agreement becoming effective, the Prior
Credit Agreement shall be deemed terminated and the lenders party to
the Prior Credit Agreement shall no longer have any obligations
thereunder.
(b) This Credit Agreement shall be a continuing agreement and
shall remain in full force and effect until all Loans, LOC Obligations,
interest, fees and other Credit Party Obligations have been paid in
full and all Commitments and Letters of Credit have been terminated.
Upon termination, the Credit Parties shall have no further obligations
(other than the indemnification provisions that survive) under the
Credit Documents and the Administrative Agent shall, at the request and
expense of the Borrower, deliver all Collateral in its possession to
the Borrower and release all Liens on Collateral; provided that should
any payment, in whole or in part, of the Credit Party Obligations be
rescinded or otherwise required to be restored or returned by the
Administrative Agent or any Lender, whether as a result of any
proceedings in bankruptcy or reorganization or otherwise, then the
Credit Documents shall automatically be reinstated and all Liens of the
Lenders shall reattach to the Collateral and all amounts required to be
restored or returned and all costs and expenses incurred by the
Administrative Agent or Lender in connection therewith shall be deemed
included as part of the Credit Party Obligations.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
98
<PAGE> 104
Each of the parties hereto has caused a counterpart of this Credit
Agreement to be duly executed and delivered as of the date first above written.
BORROWER: THE MAXIM GROUP, INC., a Delaware corporation
By: /s/ Thomas P. Leahey
------------------------------------------
Name: Thomas P. Leahey
----------------------------------------
Title: EVP
---------------------------------------
GUARANTORS:
IMAGE INDUSTRIES, INC., a Delaware
corporation
By: /s/ Thomas P. Leahey
------------------------------------------
Name: Thomas P. Leahey
----------------------------------------
Title: Asst. Secretary
---------------------------------------
CARPETMAX, L.P., a Georgia limited partnership
By: The Maxim Group, Inc. as its sole
general partner
By: /s/ Thomas P. Leahey
------------------------------------------
Name: Thomas P. Leahey
----------------------------------------
Title: EVP
---------------------------------------
BAILEY & ROBERTS CARPETMAX OF
TENNESSEE, INC., a Tennessee corporation
C & S TEXTILES, INC., an Idaho corporation
CARPETMAX ALABAMA CONTRACT, INC.,
an Alabama corporation
CARPETMAX OF ALABAMA, INC., a Georgia
corporation
CARPETMAX OF CHARLOTTE, INC., a Georgia
corporation
CARPETMAX OF FLORIDA, INC., a Delaware
corporation
[SIGNATURES CONTINUE]
<PAGE> 105
CARPETMAX OF INDIANA, INC., an Indiana
corporation
CARPETMAX OF IOWA, INC., a Georgia
corporation
CARPETMAX OF JACKSONVILLE, INC., a
Georgia corporation
CARPETMAX OF KENTUCKY, INC., a Delaware
corporation
CARPETMAX OF NORTH CAROLINA, INC., a
Georgia corporation
CARPETMAX OF OHIO, INC., a Georgia
corporation
CARPETMAX OF PALM BEACH, INC., a
Georgia corporation
CARPETMAX OF TEXAS, INC., a Texas
corporation
CARPETMAX OF UTAH, INC., a Utah
corporation
CARPETMAX RETAIL STORES, INC., a
Delaware corporation
CARPETSPLUS OF AMERICA, INC., a
Georgia corporation
GCO, INC., a Nevada corporation
GCO CARPET OUTLET, INC., an Alabama
corporation
INVESTOR MANAGEMENT, INC., an
Alabama corporation
MAXIM EQUIPMENT LEASING COMPANY,
INC., a Georgia corporation
MAXIM INSTALLATION SERVICES, INC., a
Georgia corporation
MAXIM RETAIL GROUP, INC., a Georgia
corporation
MAXIM RETAIL STORES, INC., a Georgia
corporation
RNA ENTERPRISES, INC., a
Delaware corporation
TRI-R OF ORLANDO, INC., a Georgia
corporation
By: /s/ Thomas P. Leahey
------------------------------------------
Name: Thomas P. Leahey
----------------------------------------
Title: VP of each of the foregoing Guarantors
---------------------------------------
[SIGNATURES CONTINUE]
<PAGE> 106
LENDERS:
NATIONSBANK, N.A., individually in its
capacity as a Lender, in its capacity as the
Administrative Agent, and in its capacity as
the Issuing Lender
By: /s/ David H. Dinkins
------------------------------------------
Name: David H. Dinkins
----------------------------------------
Title: Vice President
---------------------------------------
[SIGNATURES CONTINUE]
<PAGE> 107
SUNTRUST BANK, ATLANTA, individually in its
capacity as a Lender and in its capacity
as the Documentation Agent
By: /s/ Bradley J. Staples
------------------------------------------
Name: Bradley J. Staples
----------------------------------------
Title: Vice President
---------------------------------------
By: /s/ Kelley E. Brunson
------------------------------------------
Name: Kelley E. Brunson
----------------------------------------
Title: Banking Officer
---------------------------------------
[SIGNATURES CONTINUE]
<PAGE> 108
FLEET NATIONAL BANK, individually in its
capacity as a Lender and in its
capacity as the Co-Agent
By: /s/ Oliver Bennett
------------------------------------------
Name: Oliver Bennett
----------------------------------------
Title: SVP
---------------------------------------
[SIGNATURES CONTINUE]
<PAGE> 109
CITIZENS BANK OF RHODE ISLAND
PROVIDENCE, R.I.
By: /s/ Michael Disandro
------------------------------------------
Name: Michael Disandro
----------------------------------------
Title: Vice President
---------------------------------------
[SIGNATURES CONTINUE]
<PAGE> 110
NATIONAL BANK OF CANADA
By: /s/ E. B. Buchanan
------------------------------------------
Name: E. B. Buchanan
----------------------------------------
Title: Vice President
---------------------------------------
By: /s/ James F. Hannon
------------------------------------------
Name: James F. Hannon
----------------------------------------
Title: Vice President
---------------------------------------
<PAGE> 1
EXHIBIT 10.24
364-DAY CREDIT AGREEMENT
among
MAXIM RETAIL STORES, INC.
as Borrower,
AND
THE DOMESTIC SUBSIDIARIES OF THE BORROWER
as Guarantors,
AND
THE LENDERS IDENTIFIED HEREIN,
AND
NATIONSBANK, N.A.,
as Agent
DATED AS OF NOVEMBER 25, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
SECTION 1 DEFINITIONS AND ACCOUNTING TERMS.........................................................1
1.1 Definitions...........................................................................1
1.2 Computation of Time Periods and Other Definitional Provisions........................21
1.3 Accounting Terms.....................................................................21
SECTION 2 CREDIT FACILITIES.......................................................................21
2.1 Revolving Loans......................................................................21
2.2 Letter of Credit Subfacility.........................................................23
2.3 Continuations and Conversions........................................................29
2.4 Minimum Amounts......................................................................29
SECTION 3 GENERAL PROVISIONS APPLICABLE TO LOANS AND LETTERS OF CREDIT............................29
3.1 Interest.............................................................................29
3.2 Place and Manner of Payments.........................................................30
3.3 Prepayments..........................................................................30
3.4 Fees.................................................................................31
3.5 Payment in full at Maturity..........................................................32
3.6 Computations of Interest and Fees....................................................33
3.7 Pro Rata Treatment...................................................................33
3.8 Sharing of Payments..................................................................34
3.9 Capital Adequacy.....................................................................35
3.10 Inability To Determine Interest Rate.................................................36
3.11 Illegality...........................................................................36
3.12 Requirements of Law..................................................................36
3.13 Taxes................................................................................37
3.14 Compensation.........................................................................40
3.15 Evidence of Debt.....................................................................40
3.16 Replacement of Lenders...............................................................41
SECTION 4 GUARANTY................................................................................41
4.1 Guaranty of Payment..................................................................41
4.2 Obligations Unconditional............................................................41
4.3 Modifications........................................................................42
4.4 Waiver of Rights.....................................................................43
4.5 Reinstatement........................................................................43
4.6 Remedies.............................................................................43
4.7 Limitation of Guaranty...............................................................44
4.8 Rights of Contribution...............................................................44
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
SECTION 5 CONDITIONS PRECEDENT...................................................................................44
5.1 Closing Conditions..................................................................................44
5.2 Conditions to All Extensions of Credit..............................................................47
SECTION 6 REPRESENTATIONS AND WARRANTIES.........................................................................48
6.1 Financial Condition.................................................................................48
6.2 No Material Change..................................................................................49
6.3 Organization and Good Standing......................................................................49
6.4 Due Authorization...................................................................................49
6.5 No Conflicts........................................................................................49
6.6 Consents............................................................................................50
6.7 Enforceable Obligations.............................................................................50
6.8 No Default..........................................................................................50
6.9 Ownership...........................................................................................50
6.10 Indebtedness........................................................................................50
6.11 Litigation..........................................................................................50
6.12 Taxes...............................................................................................51
6.13 Compliance with Law.................................................................................51
6.14 ERISA...............................................................................................51
6.15 Subsidiaries........................................................................................52
6.16 Use of Proceeds.....................................................................................53
6.17 Government Regulation...............................................................................53
6.18 Environmental Matters...............................................................................54
6.19 Intellectual Property...............................................................................55
6.20 Solvency............................................................................................55
6.21 Investments.........................................................................................55
6.22 Location of Collateral..............................................................................56
6.23 Disclosure..........................................................................................56
6.24 Licenses, etc.......................................................................................56
6.25 Collateral Documents................................................................................56
6.26 Burdensome Restrictions.............................................................................56
SECTION 7 AFFIRMATIVE COVENANTS..................................................................................57
7.1 Information Covenants...............................................................................57
7.2 Financial Covenants.................................................................................61
7.3 Preservation of Existence and Franchises............................................................61
7.4 Books and Records...................................................................................61
7.5 Compliance with Law.................................................................................61
7.6 Payment of Taxes and Other Indebtedness.............................................................62
7.7 Insurance...........................................................................................62
7.8 Maintenance of Property.............................................................................62
7.9 Performance of Obligations..........................................................................63
7.10 Collateral..........................................................................................63
7.11 Use of Proceeds.....................................................................................63
7.12 Audits/Inspections..................................................................................64
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
7.13 Additional Credit Parties...........................................................................64
7.14 Year 2000 Compliance................................................................................65
SECTION 8 NEGATIVE COVENANTS.....................................................................................65
8.1 Indebtedness........................................................................................65
8.2 Liens...............................................................................................66
8.3 Nature of Business..................................................................................66
8.4 Consolidation and Merger............................................................................66
8.5 Sale or Lease of Assets.............................................................................67
8.6 Sale Leasebacks.....................................................................................67
8.7 Advances, Investments and Loans.....................................................................67
8.8 Restricted Payments.................................................................................67
8.9 Transactions with Affiliates........................................................................68
8.10 Fiscal Year; Organizational Documents...............................................................68
8.11 No Limitations......................................................................................68
8.12 No Other Negative Pledges...........................................................................68
8.13 Limitation on Foreign Operations....................................................................69
8.14 Capital Expenditures................................................................................69
8.15 Prepayments of Indebtedness.........................................................................69
SECTION 9 EVENTS OF DEFAULT......................................................................................69
9.1 Events of Default...................................................................................69
9.2 Acceleration; Remedies..............................................................................72
9.3 Allocation of Payments After Event of Default.......................................................73
SECTION 10 AGENCY PROVISIONS.....................................................................................74
10.1 Appointment.........................................................................................74
10.2 Delegation of Duties................................................................................75
10.3 Exculpatory Provisions..............................................................................75
10.4 Reliance on Communications..........................................................................76
10.5 Notice of Default...................................................................................76
10.6 Non-Reliance on Agent and Other Lenders.............................................................76
10.7 Indemnification.....................................................................................77
10.8 Agent in Its Individual Capacity....................................................................77
10.9 Successor Agent.....................................................................................78
SECTION 11 MISCELLANEOUS.........................................................................................78
11.1 Notices.............................................................................................78
11.2 Right of Set-Off....................................................................................78
11.3 Benefit of Agreement................................................................................79
11.4 No Waiver; Remedies Cumulative......................................................................81
11.5 Payment of Expenses; Indemnification................................................................82
11.6 Amendments, Waivers and Consents....................................................................82
11.7 Counterparts/Telecopy...............................................................................84
11.8 Headings............................................................................................84
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
11.9 Defaulting Lender..................................................................................84
11.10 Survival of Indemnification and Representations and Warranties.....................................84
11.11 Governing Law; Jurisdiction........................................................................84
11.12 Waiver of Jury Trial...............................................................................85
11.13 Time...............................................................................................85
11.14 Severability.......................................................................................85
11.15 Further Assurances.................................................................................85
11.16 Confidentiality....................................................................................85
11.17 Entirety...........................................................................................86
11.18 Binding Effect; Continuing Agreement...............................................................86
</TABLE>
SCHEDULES
Schedule 1.1(a) Commitment Percentages
Schedule 1.1(b) Indenture Default
Schedule 1.1(c) Permitted Liens
Schedule 6.10 Indebtedness
Schedule 6.15 Subsidiaries
Schedule 6.19 Intellectual Property
Schedule 6.22(a) Real Property Locations
Schedule 6.22(b) Personal Property Locations
Schedule 6.22(c) Chief Executive Offices
Schedule 7.7 Insurance
Schedule 11.1 Notices
EXHIBITS
Exhibit 2.1(b) Form of Notice of Borrowing
Exhibit 2.1(f) Form of Revolving Note
Exhibit 2.3 Form of Notice of Continuation/Conversion
Exhibit 7.1(d) Form of Borrowing Base Report
Exhibit 7.1(e) Form of Officer's Certificate
Exhibit 7.13 Form of Joinder Agreement
Exhibit 10.1(b) Form of Intercreditor Agreement
Exhibit 11.3(b) Form of Assignment Agreement
iv
<PAGE> 6
364-DAY CREDIT AGREEMENT
THIS 364-DAY CREDIT AGREEMENT (this "Credit Agreement"), is entered
into as of November 25, 1998 among MAXIM RETAIL STORES, INC., a Georgia
corporation (the "Borrower"), each of the Domestic Subsidiaries of the Borrower
(individually a "Guarantor" and collectively the "Guarantors"), the Lenders (as
defined herein) and NATIONSBANK, N.A., as Agent for the Lenders.
RECITALS
WHEREAS, the Borrower and the Guarantors have requested the Lenders to
provide a 364-day senior secured credit facility in an amount up to $15
million; and
WHEREAS, the Lenders party hereto have agreed to make the requested
364-day senior secured credit facility available to the Borrower on the terms
and conditions hereinafter set forth.
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITIONS AND ACCOUNTING TERMS
1.1 Definitions.
As used herein, the following terms shall have the meanings herein
specified unless the context otherwise requires. Defined terms herein shall
include in the singular number the plural and in the plural the singular:
"Additional Credit Party" means each Person that becomes a
Guarantor after the Closing Date, as provided in Section 7.13.
"Adjusted Base Rate" means the Base Rate plus 0.50%.
"Adjusted Eurodollar Rate" means the Eurodollar Rate plus
2.00%.
"Agent" means NationsBank, N.A. (or any successor thereto) or
any successor agent appointed pursuant to Section 10.9.
"Affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling (including but not limited
to all directors and officers of such Person), controlled by or under
direct or indirect common control with such Person. A Person shall be
deemed
<PAGE> 7
to control a corporation if such Person possesses, directly or
indirectly, the power (a) to vote 10% or more of the securities having
ordinary voting power for the election of directors of such
corporation or (b) to direct or cause direction of the management and
policies of such corporation, whether through the ownership of voting
securities, by contract or otherwise.
"Asset Disposition" means the disposition of any or all of
the assets of a Credit Party or any of its Subsidiaries whether by
sale, lease, transfer or otherwise, other than (a) transfers of assets
permitted by Section 8.5 and (b) losses of assets or destroyed assets
permitted by clauses (a) and (b) of Section 7.7.
"Bankruptcy Code" means the Bankruptcy Code in Title 11 of
the United States Code, as amended, modified, succeeded or replaced
from time to time.
"Base Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest whole multiple of 1/100 of 1%)
equal to the greater of (a) the Federal Funds Rate in effect on such
day plus 1/2 of 1% or (b) the Prime Rate in effect on such day. If for
any reason the Agent shall have determined (which determination shall
be conclusive absent manifest error) that it is unable after due
inquiry to ascertain the Federal Funds Rate for any reason, including
the inability or failure of the Agent to obtain sufficient quotations
in accordance with the terms hereof, the Base Rate shall be determined
without regard to clause (a) of the first sentence of this definition
until the circumstances giving rise to such inability no longer exist.
Any change in the Base Rate due to a change in the Prime Rate or the
Federal Funds Rate shall be effective on the effective date of such
change in the Prime Rate or the Federal Funds Rate, respectively.
"Base Rate Loan" means any Loan bearing interest at a rate
determined by reference to the Base Rate.
"Borrower" means Maxim Retail Stores, Inc., a Georgia
corporation, together with any successors and permitted assigns.
"Borrowing Base Assets" means, at any date of determination,
the sum of (a) 80% of Eligible Accounts Receivable plus (b) 30% of
Eligible Inventory in each case as set forth in the most recently
delivered Borrowing Base Report.
"Borrowing Base Report" means a report, substantially in the
form of Exhibit 7.1(d), describing the Borrowing Base Assets as of a
particular date.
"Business Day" means any day other than a Saturday, a Sunday,
a legal holiday or a day on which banking institutions are authorized
or required by law or other governmental action to close in Charlotte,
North Carolina; provided that in the case of Eurodollar Loans, such
day is also a day on which dealings between banks are carried on in
U.S. dollar deposits in the London interbank market.
2
<PAGE> 8
"Capital Expenditures" means all expenditures of the Credit
Parties and their Subsidiaries which, in accordance with GAAP, would
be classified as capital expenditures, including, without limitation,
Capital Leases.
"Capital Lease" means, as applied to any Person, any lease of
any property (whether real, personal or mixed) by that Person as
lessee which, in accordance with GAAP, is or should be accounted for
as a capital lease on the balance sheet of that Person and the amount
of such obligation shall be the capitalized amount thereof determined
in accordance with GAAP.
"Cash Equivalents" means (a) securities issued or directly
and fully guaranteed or insured by the United States of America or any
agency or instrumentality thereof (provided that the full faith and
credit of the United States of America is pledged in support thereof)
having maturities of not more than twelve months from the date of
acquisition, (b) U.S. dollar denominated time and demand deposits and
certificates of deposit of (i) any Lender, (ii) any domestic
commercial bank having capital and surplus in excess of $500,000,000
or (iii) any bank whose short-term commercial paper rating from S&P is
at least A-1 or the equivalent thereof or from Moody's is at least P-1
or the equivalent thereof (any such bank being an "Approved Bank"), in
each case with maturities of not more than 270 days from the date of
acquisition, (c) commercial paper and variable or fixed rate notes
issued by any Approved Bank (or by the parent company thereof) or any
variable rate notes issued by, or guaranteed by, any domestic
corporation rated A-1 (or the equivalent thereof) or better by S&P or
P-1 (or the equivalent thereof) or better by Moody's and maturing
within six months of the date of acquisition, (d) repurchase
agreements with a bank or trust company (including any of the Lenders)
or recognized securities dealer having capital and surplus in excess
of $500,000,000 for direct obligations issued by or fully guaranteed
by the United States of America in which the Borrower shall have a
perfected first priority security interest (subject to no other Liens)
and having, on the date of purchase thereof, a fair market value of at
least 100% of the amount of the repurchase obligations and (e)
Investments, classified in accordance with GAAP as current assets, in
money market investment programs registered under the Investment
Company Act of 1940, as amended, which are administered by reputable
financial institutions having capital of at least $500,000,000 and the
portfolios of which are limited to Investments of the character
described in the foregoing subdivisions (a) through (d).
"Change of Control" means the occurrence of any of the
following events: (a) any "person" or "group" (within the meaning of
Section 13(d) or 14(d) of the Exchange Act), has become, directly or
indirectly, the "beneficial owner" (as defined in Rules 13d-3 and
13d-5 under the Exchange Act, except that a Person shall be deemed to
have "beneficial ownership" of all shares that any such Person has the
right to acquire, whether such right is exercisable immediately or
only after the passage of time), by way of merger, consolidation or
otherwise, of 25% or more of the Voting Stock of Maxim on a
fully-diluted basis, after giving effect to the conversion and
exercise of all outstanding warrants, options and other securities of
Maxim (whether or not such securities are then currently convertible
or exercisable); (b) during any period of two consecutive calendar
years, individuals who at
3
<PAGE> 9
the beginning of such period constituted the board of directors of
Maxim cease for any reason to constitute a majority of the directors
of Maxim then in office unless such new directors were elected by the
directors of Maxim who constituted the board of directors of Maxim at
the beginning of such period; (c) Maxim shall fail to own and have the
right to vote 100% of the outstanding Voting Stock of the Parent,
determined on a fully diluted basis after giving effect to the
conversion and exercise of all outstanding warrants, options and other
securities of the Parent that are convertible into or exercisable for
Voting Stock of the Parent; or (d) the Parent shall fail to own and
have the right to vote 100% of the outstanding Voting Stock of the
Borrower, determined on a fully diluted basis after giving effect to
the conversion and exercise of all outstanding warrants, options and
other securities of the Borrower that are convertible into or
exercisable for Voting Stock of the Borrower.
"Closing Date" means the date hereof.
"Code" means the Internal Revenue Code of 1986 and the rules
and regulations promulgated thereunder, as amended, modified,
succeeded or replaced from time to time.
"Collateral" means all assets of the Credit Parties in which,
pursuant to the Collateral Documents, a Lien has been granted in favor
of the Agent, for the benefit of the Lenders.
"Collateral Documents" means the Security Agreements, the
Pledge Agreements, and such other documents executed and delivered in
connection with the attachment and perfection of the Agent's security
interests in the assets of the Credit Parties, including without
limitation, the UCC financing statements.
"Commitment Fees" means the fees payable to the Lenders
pursuant to Section 3.4(a).
"Commitments" means (i) with respect to each Lender, the
Revolving Loan Commitment and (ii) with respect to the Issuing Lender,
the LOC Commitment.
"Credit Documents" means this Credit Agreement, the Notes,
any Joinder Agreement, the Collateral Documents, the LOC Documents,
and all other related agreements and documents issued or delivered
hereunder or thereunder or pursuant hereto or thereto.
"Credit Parties" means the Borrower and the Guarantors and
"Credit Party" means any one of them.
"Credit Party Obligations" means, without duplication, (a)
all of the obligations of the Credit Parties to the Lenders (including
the Issuing Lender) and the Agent, whenever arising, under this Credit
Agreement, the Notes, the Collateral Documents or any of the other
Credit Documents to which any Credit Party is a party and (b) all
liabilities and
4
<PAGE> 10
obligations owing from such Credit Party to any Lender, or any
Affiliate of a Lender, arising under Hedging Agreements.
"Current Assets" means, as of the date of determination, the
total amount of current assets of the Borrower and its Subsidiaries on
a consolidated basis determined in accordance with GAAP.
"Current Liabilities" means, as of the date of determination,
the total amount of current liabilities of the Borrower and its
Subsidiaries on a consolidated basis determined in accordance with
GAAP.
"Current Ratio" means, with respect to the Borrower and its
Subsidiaries on a consolidated basis, the ratio of Current Assets to
Current Liabilities.
"Debt Issuance" means the issuance of any Indebtedness for
borrowed money by a Credit Party or any of its Subsidiaries, other
than Indebtedness permitted by Section 8.1.
"Default" means any event, act or condition which with notice
or lapse of time, or both, would constitute an Event of Default.
"Defaulting Lender" means, at any time, any Lender that, (a)
has failed to make a Loan or purchase a Participation Interest
required pursuant to the terms of this Credit Agreement (but only for
so long as such Loan is not made or such Participation Interest is not
purchased), (b) has failed to pay to the Agent or any Lender an amount
owed by such Lender pursuant to the terms of this Credit Agreement
(but only for so long as such amount has not been repaid) or (c) has
been deemed insolvent or has become subject to a bankruptcy or
insolvency proceeding or to a receiver, trustee or similar official.
"Dollars" and "$" means dollars in lawful currency of the
United States of America.
"Domestic Subsidiary" means each direct and indirect
Subsidiary of the Borrower that is domiciled, incorporated or
organized under the laws of any state of the United States or the
District of Columbia whether existing as of the date hereof or
hereafter created or acquired. As of the Closing Date, the Domestic
Subsidiaries are as set forth on Schedule 6.15.
"EBITDAR" means, for any period, with respect to the Credit
Parties and their Subsidiaries on a consolidated basis, the sum of (a)
Net Income for such period (excluding the effect of any extraordinary
or other non-recurring gains (including any gain from the sale of
property) or non-cash losses) plus (b) an amount which, in the
determination of Net Income for such period has been deducted for (i)
Interest Expense for such period, (ii) total Federal, state, foreign
or other income or franchise taxes for such period, (iii) all
depreciation and amortization for such period, and (iv) Rent Expense
for such period, all as determined in accordance with GAAP.
5
<PAGE> 11
"Effective Date" means the date on which the conditions set
forth in Section 5.1 shall have been fulfilled (or waived in the sole
discretion of the Lenders) and on which the initial Loans shall have
been made and/or the initial Letters of Credit shall have been issued.
"Eligible Assignee" means (a) any Lender; (b) an Affiliate of
a Lender; and (c) any other Person approved by the Agent and the
Borrower (such approval not to be unreasonably withheld or delayed);
provided that (i) the Borrower's consent is not required during the
existence and continuation of an Event of Default, (ii) approval by
the Borrower shall be deemed given if no objection is received by the
assigning Lender and the Agent from the Borrower within two Business
Days after notice of such proposed assignment has been received by the
Borrower; and (iii) neither the Borrower nor an Affiliate of the
Borrower shall qualify as an Eligible Assignee.
"Eligible Accounts Receivable" means, as of any date of
determination, and without duplication, the amount of all accounts
receivable, receivables, and obligations for payment created or
arising from the sale or shipment of inventory or the rendering of
services in the ordinary course of business (collectively, the
"Receivables"), owned by or owing to the Credit Parties and in which
the Agent, for the benefit of the Lenders, has a first priority
perfected security interest, net of any allowances and reserves for
doubtful or uncollectable accounts included in such aggregate value
and sales adjustments consistent with a Credit Party's internal
policies and in any event in accordance with GAAP, but excluding in
any event (a) Receivables subject to any Lien other than a Lien in
favor of the Agent for the benefit of the Lenders and a Lien in favor
of NationsBank, in its capacity as agent for the lenders party to the
Maxim Group Credit Agreement and the TROL Lenders, (b) Receivables
which, at the date of issuance of the invoice with respect thereto,
are payable more than 90 days after the date of issuance of such
invoice, (c) Receivables which are more than 90 days past due or
outstanding more than 90 days after the invoice date if no due date is
specified, (d) Receivables evidenced by notes, chattel paper or other
instruments, unless such notes, chattel paper or instruments have been
delivered to and are in the possession of the Agent, (e) Receivables
owing by an account debtor which is subject to any bankruptcy or
insolvency proceeding of any kind, (f) Receivables owing by an account
debtor located outside of the United States (unless (i) payment for
the goods shipped is secured by an irrevocable letter of credit or
(ii) export insurance is obtained, in each case in a form and from an
institution acceptable to the Agent), (g) Receivables which are
contingent or subject to offset, deduction, counterclaim, dispute or
other defense to payment, in each case to the extent of such offset,
deduction, counterclaim, dispute or other defense, (h) Receivables for
which any direct or indirect Subsidiary of the Borrower or any
Affiliate of the Borrower or the Borrower is the account debtor, (i)
Receivables representing a sale to the government of the United States
of America or any subdivision thereof, or any state, county or
municipal government and (j) all Receivables from an account debtor
who has more than 25% of its Receivables owing to the Credit Parties
that are more than 90 days past due or outstanding more than 90 days
after the invoice date if no due date is specified. It is specifically
understood and agreed that the accounts receivable and receivables
established or purchased by GE Capital under the GE Capital Program
and accounts receivable and receivables established or purchased by
Monogram under the Monogram
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<PAGE> 12
Program are not owned or owing to the Credit Parties, and therefore
such accounts receivable and receivables will not be included in the
definition of Eligible Accounts Receivable.
"Eligible Inventory" means, as of any date of determination
and without duplication, the lower of the aggregate book value (based
on a FIFO or a moving average cost valuation, consistently applied) or
fair market value (provided that the value of any inventory sold
between Credit Parties shall be calculated using the value of the
inventory prior to any such sale between Credit Parties) of all raw
materials and finished goods inventory owned by any Credit Party and
in which the Agent, for the benefit of the Lenders, has a first
priority perfected security interest less appropriate reserves
determined in accordance with GAAP, but excluding in any event (a)
inventory subject to any Lien other than Liens in favor of the Agent
for the benefit of the Lenders and Liens in favor of NationsBank, in
its capacity as agent for the lenders party to the Maxim Group Credit
Agreement and the TROL Lenders, (b) inventory which is not in good
condition or fails to meet standards for sale or use imposed by
governmental agencies, departments or divisions having regulatory
authority over such goods, (c) inventory which is discontinued or not
useable or saleable at prices approximating their cost in the ordinary
course of the applicable Credit Party's business (including without
duplication the amount of any reserves for obsolescence, unsalability
or decline in value), (d) inventory located outside of the United
States, (e) inventory located at a location not owned or leased by the
applicable Credit Party unless the Agent has received a waiver and
estoppel agreement, reasonably satisfactory to the Agent, from the
owner/operator of such location, and, if deemed appropriate by the
Agent, a UCC financing statement has been filed with respect to such
location, (f) inventory located at a location leased by the applicable
Credit Party at which such Credit Party maintains in excess of
$400,000 of inventory and with respect to which the Agent shall not
have received a landlord's waiver and estoppel agreement in a form
reasonably satisfactory to the Agent and (g) inventory which is leased
or on consignment.
"Environmental Claim" means any investigation, written
notice, violation, written demand, written allegation, action, suit,
injunction, judgment, order, consent decree, penalty, fine, lien,
proceeding, or written claim whether administrative, judicial, or
private in nature arising (a) pursuant to, or in connection with, an
actual or alleged violation of, any Environmental Law, (b) in
connection with any Hazardous Material, (c) from any assessment,
abatement, removal, remedial, corrective, or other response action in
connection with an Environmental Law or other order of a Governmental
Authority or (d) from any actual or alleged damage, injury, threat, or
harm to health, safety, natural resources, or the environment.
"Environmental Laws" means any current or future legal
requirement of any Governmental Authority pertaining to (a) the
protection of health, safety, and the indoor or outdoor environment,
(b) the conservation, management, or use of natural resources and
wildlife, (c) the protection or use of surface water and groundwater
or (d) the management, manufacture, possession, presence, use,
generation, transportation, treatment, storage, disposal, release,
threatened release, abatement, removal, remediation or handling of, or
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<PAGE> 13
exposure to, any hazardous or toxic substance or material or (e)
pollution (including any release to land surface water and
groundwater) and includes, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as
amended by the Superfund Amendments and Reauthorization Act of 1986,
42 USC 9601 et seq., Solid Waste Disposal Act, as amended by the
Resource Conservation and Recovery Act of 1976 and Hazardous and Solid
Waste Amendments of 1984, 42 USC 6901 et seq., Federal Water Pollution
Control Act, as amended by the Clean Water Act of 1977, 33 USC 1251 et
seq., Clean Air Act of 1966, as amended, 42 USC 7401 et seq., Toxic
Substances Control Act of 1976, 15 USC 2601 et seq., Hazardous
Materials Transportation Act, 49 USC App. 1801 et seq., Occupational
Safety and Health Act of 1970, as amended, 29 USC 651 et seq., Oil
Pollution Act of 1990, 33 USC 2701 et seq., Emergency Planning and
Community Right-to-Know Act of 1986, 42 USC 11001 et seq., National
Environmental Policy Act of 1969, 42 USC 4321 et seq., Safe Drinking
Water Act of 1974, as amended, 42 USC 300(f) et seq., any analogous
implementing or successor law, and any amendment, rule, regulation,
order, or directive issued thereunder.
"Equity Issuance" means any issuance by a Credit Party to any
Person of (a) shares of its capital stock or other equity interests,
(b) any shares of its capital stock or other equity interests pursuant
to the exercise of options or warrants or (c) any shares of its
capital stock or other equity interests pursuant to the conversion of
any debt securities to equity.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto, as interpreted by
the rules and regulations thereunder, all as the same may be in effect
from time to time. References to sections of ERISA shall be construed
also to refer to any successor sections.
"ERISA Affiliate" means an entity, whether or not
incorporated, which is under common control with any Credit Party or
any of its Subsidiaries within the meaning of Section 4001(a)(14) of
ERISA, or is a member of a group which includes any Credit Party or
any of its Subsidiaries and which is treated as a single employer
under Sections 414(b), (c), (m), or (o) of the Code.
"Eurodollar Loan" means a Loan bearing interest based at a
rate determined by reference to the Eurodollar Rate.
"Eurodollar Rate" means, for the Interest Period for each
Eurodollar Loan comprising part of the same borrowing (including
conversions, extensions and renewals), a per annum interest rate
determined pursuant to the following formula:
Eurodollar Rate = London Interbank Offered Rate
-------------------------------------
1 - Eurodollar Reserve Percentage
"Eurodollar Reserve Percentage" means for any day, that
percentage (expressed as a decimal) which is in effect from time to
time under Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as such regulation may be amended
from
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<PAGE> 14
time to time or any successor regulation, as the maximum reserve
requirement (including, without limitation, any basic, supplemental,
emergency, special, or marginal reserves) applicable with respect to
Eurocurrency liabilities as that term is defined in Regulation D (or
against any other category of liabilities that includes deposits by
reference to which the interest rate of Eurodollar Loans is
determined), whether or not a Lender has any Eurocurrency liabilities
subject to such reserve requirement at that time. Eurodollar Loans
shall be deemed to constitute Eurocurrency liabilities and as such
shall be deemed subject to reserve requirements without benefits of
credits for proration, exceptions or offsets that may be available
from time to time to a Lender. The Eurodollar Rate shall be adjusted
automatically on and as of the effective date of any change in the
Eurodollar Reserve Percentage.
"Event of Default" means any of the events or circumstances
specified in Section 9.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder, as
amended, modified, succeeded or replaced from time to time.
"Executive Officer" means any chief executive officer, chief
operating officer, executive vice president of finance, chief
financial officer or treasurer of the Borrower.
"Extension of Credit" means, as to any Lender, the making of
a Loan by such Lender (or a participation therein by a Lender) or the
issuance of, or participation in, a Letter of Credit by such Lender.
"Federal Funds Rate" means for any day the rate per annum
(rounded upward, if necessary, to the nearest 1/100th of 1%) equal to
the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by
Federal funds brokers on such day, as published by the Federal Reserve
Bank of New York on the Business Day next succeeding such day;
provided that (a) if such day is not a Business Day, the Federal Funds
Rate for such day shall be such rate on such transactions on the next
preceding Business Day and (b) if no such rate is so published on such
next preceding Business Day, the Federal Funds Rate for such day shall
be the average rate quoted to the Agent on such day on such
transactions as determined by the Agent.
"Fee Letter" means that certain letter agreement among Maxim,
NMS and the Agent dated as of August 4, 1998.
"First Tier Foreign Subsidiary" means each Foreign Subsidiary
which is owned directly by a Credit Party.
"Foreign Subsidiary" means any Subsidiary of the Borrower or
any other Credit Party that is not a Domestic Subsidiary.
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<PAGE> 15
"GAAP" means generally accepted accounting principles in the
United States applied on a consistent basis and subject to Section
1.3.
"GE Capital" means General Electric Capital Corporation, a
New York corporation.
"GE Capital Dealer Agreement" means any Shaw Business
Revolving Credit Card Program Business Revolving Charge Dealer
Agreement by and among the Borrower, C&S Textiles, Inc., Maxim and GE
Capital and any other credit card program revolving charge dealer
agreement entered into by and among the Borrower, C&S Textiles, Inc.,
Maxim and GE Capital.
"GE Capital Program" means any program established by GE
Capital under which GE Capital extends credit to certain customers of
the Borrower and C&S Textiles, Inc. for the purchase of goods,
services and other products from the Borrower and C&S Textiles, Inc.
"Governmental Authority" means any Federal, state, local,
provincial or foreign court or governmental agency, authority,
instrumentality or regulatory body.
"Guarantor" means each of the Domestic Subsidiaries of the
Borrower and each Additional Credit Party which has executed a Joinder
Agreement or otherwise become a Guarantor hereunder, together with
their successors and assigns.
"Guaranty Obligations" means, with respect to any Person,
without duplication, any obligations (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or
collection) guaranteeing any Indebtedness of any other Person in any
manner, whether direct or indirect, and including without limitation
any obligation, whether or not contingent, (a) to purchase any such
Indebtedness or other obligation or any property constituting security
therefor, (b) to advance or provide funds or other support for the
payment or purchase of such Indebtedness or obligation or to maintain
working capital, solvency or other balance sheet condition of such
other Person (including, without limitation, maintenance agreements,
comfort letters, take or pay arrangements, put agreements or similar
agreements or arrangements) for the benefit of the holder of
Indebtedness of such other Person, (c) to lease or purchase property,
securities or services primarily for the purpose of assuring the owner
of such Indebtedness or (d) to otherwise assure or hold harmless the
owner of such Indebtedness or obligation against loss in respect
thereof. The amount of any Guaranty Obligation hereunder shall
(subject to any limitations set forth therein) be deemed to be an
amount equal to the outstanding principal amount (or maximum principal
amount, if larger) of the Indebtedness in respect of which such
Guaranty Obligation is made.
"Hazardous Materials" means any substance, material or waste
defined in or regulated under any Environmental Laws.
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<PAGE> 16
"Hedging Agreements" means any interest rate protection
agreements, foreign currency exchange agreements, or other interest or
exchange rate hedging agreements, in each case, entered into or
purchased by a Credit Party by or from any Lender or any Affiliate of
any Lender.
"Indebtedness" of any Person means, without duplication, (a)
all obligations of such Person for borrowed money, (b) all obligations
of such Person evidenced by bonds, debentures, notes or similar
instruments, or upon which interest payments are customarily made (c)
all obligations of such Person under conditional sale or other title
retention agreements relating to property purchased by such Person to
the extent of the value of such property (other than customary
reservations or retentions of title under agreements with suppliers
entered into in the ordinary course of business), (d) all obligations,
other than intercompany items, of such Person issued or assumed as the
deferred purchase price of property or services purchased by such
Person which would appear as liabilities on a balance sheet of such
Person, (e) all Indebtedness of others secured by (or for which the
holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on, or payable out of the
proceeds of production from, property owned or acquired by such
Person, whether or not the obligations secured thereby have been
assumed, (f) all Guaranty Obligations of such Person, (g) the
principal portion of all obligations of such Person under (i) Capital
Leases and (ii) Synthetic Leases, (h) all net obligations of such
Person in respect of hedging agreements, foreign currency exchange
obligations, and commodity futures agreements, (i) the maximum amount
of all performance and standby letters of credit issued or bankers'
acceptances facilities created for the account of such Person and,
without duplication, all drafts drawn thereunder (to the extent
unreimbursed), (j) all preferred stock issued by such Person and
required by the terms thereof to be redeemed, or for which mandatory
sinking fund payments are due by a fixed date, (k) the aggregate
amount of uncollected accounts receivable of such Person subject at
such time to a sale of receivables (or similar transaction) regardless
of whether such transaction is effected without recourse to such
Person or in a manner that would not be reflected on the balance sheet
of such Person in accordance with GAAP, and (l) all obligations of
such Person to repurchase any securities which repurchase obligation
is related to the issuance thereof, including, without limitation,
obligations commonly known as residual equity appreciation potential
shares. The Indebtedness of any Person shall include the Indebtedness
of any partnership or unincorporated joint venture in which such
Person is legally obligated.
"Indenture" means that certain Indenture dated as of October
16, 1997 among Maxim, as issuer, Maxim and certain Subsidiaries of
Maxim, as guarantors and State Street Bank and Trust Company, as
trustee, as the same may be modified, supplemented or amended from
time to time.
"Indenture Default" means the existing default by the Credit
Parties in the performance or observance of Section 1009 of the
Indenture described in Schedule 1.1(b), which default has been
disclosed to the Lenders prior to the Closing Date.
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<PAGE> 17
"Intercreditor Agreement" means that certain Intercreditor
Subordination Agreement dated as of the date hereof among the Agent,
NationsBank, in its capacity as agent under the Participation
Agreement, NationsBank, in its capacity as administrative agent under
the Maxim Group Credit Agreement and NationsBank, in its capacity as
collateral agent for the Maxim Group Lenders and TROL Lenders.
"Interest Coverage Ratio" means for the three month period
ending on the last day of any fiscal quarter of the Borrower, the
ratio of (a) EBITDAR to (b) the sum of Interest Expense plus Rent
Expense.
"Interest Expense" means, for any period, with respect to the
Credit Parties and their Subsidiaries on a consolidated basis, all
interest expense, including the interest component under Capital
Leases, as determined in accordance with GAAP.
"Interest Payment Date" means (a) as to Base Rate Loans, the
last day of each calendar month and the Maturity Date and (b) as to
Eurodollar Loans, the last day of each applicable Interest Period and
the Maturity Date, and in addition where the applicable Interest
Period for a Eurodollar Loan is greater than three months, then also
the date three months from the beginning of the Interest Period and
each three months thereafter.
"Interest Period" means, as to Eurodollar Loans, a period of
one, two, three or six months' duration, as the Borrower may elect,
commencing, in each case, on the date of the borrowing (including
continuations and conversions thereof); provided, however, (a) if any
Interest Period would end on a day which is not a Business Day, such
Interest Period shall be extended to the next succeeding Business Day
(except that where the next succeeding Business Day falls in the next
succeeding calendar month, then on the next preceding Business Day),
(b) no Interest Period shall extend beyond the Maturity Date and (c)
where an Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month in which the
Interest Period is to end, such Interest Period shall end on the last
Business Day of such calendar month.
"Investment" means (a) the acquisition (whether for cash,
property, services, assumption of Indebtedness, securities or
otherwise) of assets, shares of capital stock, bonds, notes,
debentures, partnership, joint ventures or other ownership interests
or other securities of any Person or (b) any deposit with, or advance,
loan or other extension of credit to, any Person (other than deposits
made in connection with the purchase of equipment or other assets in
the ordinary course of business) or (c) any other capital contribution
to or investment in any Person, including, without limitation, any
Guaranty Obligation (including any support for a Letter of Credit
issued on behalf of such Person) incurred for the benefit of such
Person.
"Issuing Lender" means NationsBank, N.A. or any successor
Agent.
"Issuing Lender Fees" has the meaning set forth in Section
3.4(d).
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<PAGE> 18
"Joinder Agreement" means a Joinder Agreement substantially
in the form of Exhibit 7.13.
"Lender" means any of the Persons identified as a "Lender" on
the signature pages hereto, and any Eligible Assignee which may become
a Lender by way of assignment in accordance with the terms hereof,
together with their successors and permitted assigns.
"Letter of Credit" means any standby or trade Letter of
Credit issued for the account of a Credit Party by the Issuing Lender
pursuant to Section 2.2 hereof, as such Letter of Credit may be
amended, modified, extended, renewed or replaced.
"Lien" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, security interest, encumbrance, lien (statutory
or otherwise), preference, priority or charge of any kind, including,
without limitation, any agreement to give any of the foregoing, any
conditional sale or other title retention agreement, and any lease in
the nature thereof.
"Loan" or "Loans" means the Revolving Loans (or a portion of
any Revolving Loan), individually or collectively, as appropriate.
"LOC Commitment" means the commitment of the Issuing Lender
to issue Letters of Credit for the account of a Credit Party in an
aggregate face amount any time outstanding (together with the amounts
of any unreimbursed drawings thereon) of up to the LOC Committed
Amount.
"LOC Committed Amount" means TWO MILLION DOLLARS ($2,000,000).
"LOC Documents" means, with respect to any Letter of Credit,
such Letter of Credit, any amendments thereto, any documents delivered
in connection therewith, any application therefor, and any agreements,
instruments, guarantees or other documents (whether general in
application or applicable only to such Letter of Credit) governing or
providing for (a) the rights and obligations of the parties concerned
or at risk or (b) any collateral security for such obligations.
"LOC Obligations" means, at any time, the sum of (a) the
maximum amount which is, or at any time thereafter may become,
available to be drawn under Letters of Credit then outstanding,
assuming compliance with all requirements for drawings referred to in
such Letters of Credit plus (b) the aggregate amount of all drawings
under Letters of Credit honored by the Issuing Lender but not
theretofore reimbursed.
"LOC Participants" means the Lenders.
"London Interbank Offered Rate" means, with respect to any
Eurodollar Loan for the Interest Period applicable thereto, the rate
of interest per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) appearing on Telerate Page 3750 (or any successor
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<PAGE> 19
page) as the London interbank offered rate for deposits in Dollars at
approximately 11:00 A.M. (London time) two Business Days prior to the
first day of such Interest Period for a term comparable to such
Interest Period; provided, however, if more than one rate is specified
on Telerate Page 3750, the applicable rate shall be the arithmetic
mean of all such rates. If, for any reason, such rate is not
available, the term "London Interbank Offered Rate" shall mean, with
respect to any Eurodollar Loan for the Interest Period applicable
thereto, the rate of interest per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen
LIBO Page as the London interbank offered rate for deposits in Dollars
at approximately 11:00 A.M. (London time) two Business Days prior to
the first day of such Interest Period for a term comparable to such
Interest Period; provided, however, if more than one rate is specified
on Reuters Screen LIBO Page, the applicable rate shall be the
arithmetic mean of all such rates.
"Mandatory Borrowing" has the meaning set forth in Section
2.2(e).
"Material Adverse Effect" means a material adverse effect on
(a) the operations, financial condition, business or prospects of the
Credit Parties and their Subsidiaries taken as a whole, (b) the
ability of a Credit Party to perform its obligations under this Credit
Agreement or any of the other Credit Documents, or (c) the validity or
enforceability of this Credit Agreement, any of the other Credit
Documents, or the rights and remedies of the Lenders hereunder or
thereunder taken as a whole.
"Maturity Date" means November 24, 1999.
"Maxim" means The Maxim Group, Inc., a Delaware corporation.
"Maxim Group Credit Agreement" means that certain Credit
Agreement, dated as of the date hereof, among Maxim, certain
subsidiaries of Maxim, the lenders party thereto and NationsBank, as
agent, as amended, modified, supplemented or restated from time to
time.
"Maxim Group Lenders" means the Lenders (as defined in the
Maxim Group Credit Agreement).
"Maxim Group Loans" means the Loans (as defined in the Maxim
Group Credit Agreement).
"Maxim Group Revolving Committed Amount" means the Revolving
Committed Amount (as defined in the Maxim Group Credit Agreement).
"Maxim Group Revolving LOC Obligations" means the Revolving
LOC Obligations (as defined in the Maxim Group Credit Agreement).
"Maxim Group Stand Alone LOC Obligations" means the Stand
Alone LOC Obligations (as defined in the Maxim Group Credit
Agreement).
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<PAGE> 20
"Monogram" means Monogram Credit Card Bank of Georgia.
"Monogram Program" means any program established by Monogram
under which Monogram may extend credit to certain customers of
Borrower and C&S Textiles, Inc. for the purchase of goods, services
and other products from the Borrower and C&S Textiles, Inc.
"Moody's" means Moody's Investors Service, Inc., or any
successor or assignee of the business of such company in the business
of rating securities.
"Multiemployer Plan" means a Plan covered by Title IV of
ERISA which is a multiemployer plan as defined in Section 3(37) or
4001(a)(3) of ERISA.
"Multiple Employer Plan" means a Plan covered by Title IV of
ERISA, other than a Multiemployer Plan, which any Credit Party or any
of its Subsidiaries or any ERISA Affiliate and at least one employer
other than a Credit Party or any of its Subsidiaries or any ERISA
Affiliate are contributing sponsors.
"NationsBank" means NationsBank, N.A. or any successor
thereto.
"Net Cash Proceeds" means the aggregate cash proceeds
received from an Asset Disposition, an Equity Issuance or a Debt
Issuance net of (a) reasonable transaction costs payable to third
parties, and (b) taxes paid or a good faith estimate of the taxes
payable with respect to such proceeds.
"Net Income" means, for any period, the net income after
taxes for such period of the Credit Parties and their Subsidiaries on
a consolidated basis, as determined in accordance with GAAP.
"Net Worth" means, as of any date, shareholders' equity or
net worth of the Credit Parties and their Subsidiaries on a
consolidated basis, as determined in accordance with GAAP.
"NMS" means NationsBanc Montgomery Securities LLC.
"Non-Excluded Taxes" has the meaning set forth in Section
3.13.
"Note" or "Notes" means the Revolving Notes, individually or
collectively, as appropriate.
"Notice of Borrowing" means a request by the Borrower for a
Revolving Loan, in the form of Exhibit 2.1(b).
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<PAGE> 21
"Notice of Continuation/Conversion" means a request by the
Borrower to continue an existing Eurodollar Loan to a new Interest
Period or to convert a Eurodollar Loan to a Base Rate Loan or a Base
Rate Loan to a Eurodollar Loan, in the form of Exhibit 2.3.
"Operating Lease" means, as applied to any Person, any lease
(including, without limitation, leases which may be terminated by the
lessee at any time) of any Property (whether real, personal or mixed)
which is not a Capital Lease other than any such lease in which that
Person is the lessor.
"Parent" means Maxim Retail Group, Inc., a Delaware
corporation.
"Participation Agreement" means that certain Participation
Agreement dated as of November 25, 1998 among Maxim, as construction
agent and lessee, the guarantors party thereto, First Security Bank,
National Association, as owner trustee, the lenders identified
therein, as holders, the lenders identified therein, as lenders and
NationsBank, as agent, as amended or modified from time to time.
"Participation Interest" means the Extension of Credit by a
Lender by way of a purchase of a participation in Letters of Credit or
LOC Obligations as provided in Section 2.2 or in any Loans as provided
in Section 2.3 or Section 3.8.
"PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA and any
successor thereto.
"Permitted Investments" means Investments which are (a) cash
or Cash Equivalents, (b) accounts receivable created, acquired or made
in the ordinary course of business and payable or dischargeable in
accordance with customary trade terms, (c) inventory, raw materials,
furniture, fixtures, equipment and general intangibles acquired in the
ordinary course of business, (d) subject to the terms of Section 8.14
and 8.16, leasehold improvements acquired in the ordinary course of
business, (e) Investments by a Credit Party in another Credit Party,
(f) loans to directors, officers or employees in the ordinary course
of business for reasonable business expenses, not to exceed, in the
aggregate, $250,000 at any one time; (g) Investments by a Credit Party
in Maxim or any of its Subsidiaries (other than a Credit Party) in an
amount not to exceed, in the aggregate, $5,000,000 at any one time and
(h) other Investments (in addition to those set forth above) not to
exceed, in the aggregate, $250,000 at any one time.
"Permitted Liens" means (a) Liens securing Credit Party
Obligations, (b) Liens securing the obligations of the Credit Parties
under the Maxim Group Credit Agreement and the Credit Documents (as
defined in the Maxim Group Credit Agreement), (c) Liens for taxes not
yet due or Liens for taxes being contested in good faith by
appropriate proceedings for which adequate reserves determined in
accordance with GAAP have been established (and as to which the
property subject to any such Lien is not yet subject to foreclosure,
sale, collection, levy or loss on account thereof), (d) Liens in
respect of property imposed by law arising in the ordinary course of
business such as materialmen's,
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<PAGE> 22
mechanics', warehousemen's, carrier's, landlords' and other
nonconsensual statutory Liens which are not yet due and payable or
which are being contested in good faith by appropriate proceedings for
which adequate reserves determined in accordance with GAAP have been
established (and as to which the property subject to any such Lien is
not yet subject to foreclosure, sale or loss on account thereof), (e)
pledges or deposits made in the ordinary course of business to secure
payment of worker's compensation insurance, unemployment insurance,
pensions or social security programs, (f) Liens arising from good
faith deposits in connection with or to secure performance of tenders,
bids, leases, government contracts, performance and return-of-money
bonds and other similar obligations incurred in the ordinary course of
business (other than obligations in respect of the payment of borrowed
money), (g) Liens arising from good faith deposits in connection with
or to secure performance of statutory obligations and surety and
appeal bonds, (h) easements, rights-of-way, restrictions (including
zoning restrictions), matters of plat, minor defects or irregularities
in title and other similar charges or encumbrances not, in any
material respect, impairing the use of the encumbered property for its
intended purposes, (i) judgment Liens that would not constitute an
Event of Default, (j) Liens in connection with Indebtedness permitted
by Section 8.1(e), (k) Liens arising by virtue of any statutory or
common law provision relating to banker's liens, rights of setoff or
similar rights as to deposit accounts or other funds maintained with a
creditor depository institution and (l) Liens existing on the date
hereof and identified on Schedule 1.1(c); provided that no such Lien
shall extend to any property other than the property subject thereto
on the Closing Date.
"Person" means any individual, partnership, joint venture,
firm, corporation, limited liability company, association, trust or
other enterprise (whether or not incorporated), or any Governmental
Authority.
"Plan" means any employee benefit plan (as defined in Section
3(3) of ERISA) which is covered by ERISA and with respect to which any
Credit Party or any of its Subsidiaries or any ERISA Affiliate is (or,
if such plan were terminated at such time, would under Section 4069 of
ERISA be deemed to be) an "employer" within the meaning of Section
3(5) of ERISA.
"Pledge Agreements" means any pledge agreement executed and
delivered by a Credit Party in favor of the Agent, for the benefit of
the Lenders, to secure its obligations under the Credit Documents, as
amended, modified, extended, renewed or replaced from time to time.
"Prime Rate" means the per annum rate of interest established
from time to time by the Agent at its principal office in Charlotte,
North Carolina (or such other principal office of the Agent as
communicated in writing to the Borrower and the Lenders) as its Prime
Rate. Any change in the interest rate resulting from a change in the
Prime Rate shall become effective as of 12:01 a.m. of the Business Day
on which each change in the Prime Rate is announced by the Agent. The
Prime Rate is a reference rate used by the Agent in determining
interest rates on certain loans and is not intended to be the lowest
rate of interest charged on any extension of credit to any debtor.
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"Real Properties" means the real properties that the Credit
Parties may own or lease (as lessee or sublessee) from third parties
from time to time.
"Regulation D, U, or X" means Regulation D, U or X,
respectively, of the Board of Governors of the Federal Reserve System
as from time to time in effect and any successor to all or a portion
thereof.
"Rent Expense" means, for any period, with respect to the
Credit Parties and their Subsidiaries on a consolidated basis, all
rent payable under an operating lease (whether a lease of real
property, personal property or mixed), as determined in accordance
with GAAP.
"Reportable Event" means a "reportable event" as defined in
Section 4043 of ERISA with respect to which the notice requirements to
the PBGC have not been waived.
"Required Lenders" means a minimum of two (2) Lenders whose
aggregate Credit Exposure (as hereinafter defined) constitutes more
than 66 2/3% of the Credit Exposure of all Lenders at such time;
provided, however, that if any Lender shall be a Defaulting Lender at
such time then there shall be excluded from the determination of
Required Lenders the aggregate principal amount of Credit Exposure of
such Lender at such time. For purposes of the preceding sentence, the
term "Credit Exposure" as applied to each Lender shall mean (a) at any
time prior to the termination of the Commitments, the Revolving Loan
Commitment Percentage of such Lender multiplied by the Revolving
Committed Amount and (b) at any time after the termination of the
Commitments, the sum of (i) the principal balance of the outstanding
Loans of such Lender plus (ii) such Lender's Participation Interests
in the face amount of the outstanding Letters of Credit.
"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, treaty, rule or
regulation or final, non-appealable determination of an arbitrator or
a court or other Governmental Authority, in each case applicable to or
binding upon such Person or to which any of its material property is
subject.
"Revolving Committed Amount" means FIFTEEN MILLION DOLLARS
($15,000,000) or such lesser amount as the Revolving Committed Amount
may be reduced pursuant to Section 2.1(d) or 3.3(c).
"Revolving Loan Commitment" means, with respect to each
Lender, the commitment of such Lender to make its portion of the
Revolving Loans in a principal amount equal to such Lender's Revolving
Loan Commitment Percentage of the Revolving Committed Amount.
"Revolving Loan Commitment Percentage" means, for each
Lender, the percentage identified as its Revolving Loan Commitment
Percentage on Schedule 1.1(a), as such
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percentage may be modified in connection with any assignment made in
accordance with the provisions of Section 11.3.
"Revolving Loans" means the Revolving Loans made to the
Borrower pursuant to Section 2.1.
"Revolving Note" or "Revolving Notes" means the promissory
notes of the Borrower in favor of each of the Lenders evidencing the
Revolving Loans provided pursuant to Section 2.1, individually or
collectively, as appropriate, as such promissory notes may be amended,
modified, supplemented, extended, renewed or replaced from time to
time and as evidenced in the form of Exhibit 2.1(f).
"S&P" means Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc. or any successor or assignee of the
business of such division in the business of rating securities.
"Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Security Agreements" means any security agreement executed
and delivered by a Credit Party in favor of the Agent for the benefit
of the Lenders to secure its obligations under the Credit Documents,
as such may be amended, modified, extended, renewed, restated or
replaced from time to time.
"Single Employer Plan" means any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan.
"Solvent" means, with respect to any Person as of a
particular date, that on such date (a) such Person is able to pay its
debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business, (b) such
Person does not intend to, and does not believe that it will, incur
debts or liabilities beyond such Person's ability to pay as such debts
and liabilities mature in their ordinary course, (c) such Person is
not engaged in a business or a transaction, and is not about to engage
in a business or a transaction, for which such Person's assets would
constitute unreasonably small capital after giving due consideration
to the prevailing practice in the industry in which such Person is
engaged or is to engage, (d) the fair value of the assets of such
Person is greater than the total amount of liabilities, including,
without limitation, contingent liabilities, of such Person and (e) the
present fair saleable value of the assets of such Person is not less
than the amount that will be required to pay the probable liability of
such Person on its debts as they become absolute and matured. In
computing the amount of contingent liabilities at any time, it is
intended that such liabilities will be computed at the amount which,
in light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an
actual or matured liability.
"Standby Letter of Credit Fees" has the meaning set forth in
Section 3.4(b).
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"Subordinated Debt" means the Indebtedness evidenced by the
Indenture or by the guarantees thereof in an aggregate amount not to
exceed $100,000,000.
"Subordinated Guarantees" means the guarantee obligations of
the Credit Parties evidenced by the Indenture.
"Subsidiary" means, as to any Person, (a) any corporation
more than 50% of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the
directors of such corporation (irrespective of whether or not at the
time, any class or classes of such corporation shall have or might
have voting power by reason of the happening of any contingency) is at
the time owned by such Person directly or indirectly through
Subsidiaries, and (b) any partnership, association, joint venture or
other entity in which such person directly or indirectly through
Subsidiaries has more than a 50% equity interest at any time.
"Synthetic Lease" means any synthetic lease, tax retention
operating lease, off-balance sheet loan or similar off-balance sheet
financing product where such transaction is considered borrowed money
indebtedness for tax purposes but is classified as an Operating Lease.
"Termination Event" means (a) with respect to any Single
Employer Plan, the occurrence of a Reportable Event or the substantial
cessation of operations (within the meaning of Section 4062(e) of
ERISA); (b) the withdrawal of any Credit Party or any of its
Subsidiaries or any ERISA Affiliate from a Multiple Employer Plan
during a plan year in which it was a substantial employer (as such
term is defined in Section 4001(a)(2) of ERISA), or the termination of
a Multiple Employer Plan; (c) the distribution of a notice of intent
to terminate or the actual termination of a Plan pursuant to Section
4041(a)(2) or 4041A of ERISA; (d) the institution of proceedings to
terminate or the actual termination of a Plan by the PBGC under
Section 4042 of ERISA; (e) any event or condition which might
reasonably constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any
Plan; or (f) the complete or partial withdrawal of any Credit Party or
any of its Subsidiaries or any ERISA Affiliate from a Multiemployer
Plan.
"Total Assets" means all items which in accordance with GAAP
would be classified as assets of the Borrower and its Subsidiaries on
a consolidated basis.
"Trade Letter of Credit Fees" has the meaning set forth in
Section 3.4(c).
"TROL Lenders" means the lenders, holders and other Financing
Parties (as defined in the Participation Agreement) from time to time
party to the Participation Agreement.
"Unused Commitment" means, for any period, the amount by
which (a) the then applicable aggregate Revolving Committed Amount
exceeds (b) the daily average sum for
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such period of the outstanding aggregate principal amount of all
Revolving Loans plus the aggregate amount of LOC Obligations
outstanding.
"Voting Stock" of a corporation means all classes of the
capital stock of such corporation then outstanding and normally
entitled to vote in the election of directors.
"Year 2000 Problem" means any risk that any computer
hardware, software or other equipment used by a Credit Party or any of
its Subsidiaries will not function as effectively and reliably on and
after January 1, 2000 as it does prior to January 1, 2000, to the
extent such risk would cause or be reasonably expected to cause a
Material Adverse Effect.
1.2 Computation of Time Periods and Other Definitional
Provisions.
For purposes of computation of periods of time hereunder, the word
"from" means "from and including" and the words "to" and "until" each mean "to
but excluding." References in this Agreement to "Articles", "Sections",
"Schedules" or "Exhibits" shall be to Articles, Sections, Schedules or Exhibits
of or to this Agreement unless otherwise specifically provided.
1.3 Accounting Terms.
Except as otherwise expressly provided herein, all accounting terms
used herein shall be interpreted, and all financial statements and certificates
and reports as to financial matters required to be delivered to the Lenders
hereunder shall be prepared, in accordance with GAAP applied on a consistent
basis. All calculations made for the purposes of determining compliance with
this Credit Agreement shall (except as otherwise expressly provided herein) be
made by application of GAAP applied on a basis consistent with the most recent
annual or quarterly financial statements delivered pursuant to Section 7.1 (or,
prior to the delivery of the first financial statements pursuant to Section
7.1, consistent with the financial statements described in Section 5.1(d);
provided, however, if (a) the Borrower shall object to determining such
compliance on such basis at the time of delivery of such financial statements
due to any change in GAAP or the rules promulgated with respect thereto or (b)
the Agent or the Required Lenders shall so object in writing within 30 days
after delivery of such financial statements, then such calculations shall be
made on a basis consistent with GAAP as in effect as of the date of the most
recent financial statements delivered by the Borrower to the Lenders to which
no such objection shall have been made.
SECTION 2
CREDIT FACILITIES
2.1 Revolving Loans.
(a) Revolving Loan Commitment. Subject to the terms and
conditions set forth herein, each Lender severally agrees to make
revolving loans (each a "Revolving Loan" and
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collectively the "Revolving Loans") to the Borrower, in Dollars, at
any time and from time to time, during the period from and including
the Effective Date to but not including the Maturity Date (or such
earlier date if the Revolving Committed Amount has been terminated as
provided herein); provided, however, that (i) the sum of the aggregate
amount of Revolving Loans outstanding plus the aggregate amount of LOC
Obligations outstanding shall not exceed the lesser of (A) the
Revolving Committed Amount and (B) the Borrowing Base Assets and (ii)
with respect to each individual Lender, the Lender's pro rata share of
outstanding Revolving Loans plus such Lender's pro rata share of
outstanding LOC Obligations shall not exceed such Lender's Revolving
Loan Commitment Percentage of the lesser of (A) the Revolving
Committed Amount and (B) the Borrowing Base Assets. Subject to the
terms of this Credit Agreement (including Section 3.3), the Borrower
may borrow, repay and reborrow Revolving Loans.
(b) Method of Borrowing for Revolving Loans. By no later
than 11:00 a.m. (i) on the date of the requested borrowing of
Revolving Loans that will be Base Rate Loans or (ii) three Business
Days prior to the date of the requested borrowing of Revolving Loans
that will be Eurodollar Loans, the Borrower shall telephone the Agent
with the information described below as well as submit a written
Notice of Borrowing in the form of Exhibit 2.1(b) to the Agent setting
forth (A) the amount requested, (B) whether such Revolving Loans shall
accrue interest at the Adjusted Base Rate or the Adjusted Eurodollar
Rate, (C) with respect to Revolving Loans that will be Eurodollar
Loans, the Interest Period applicable thereto and (D) certification
that the Borrower has complied in all respects with Section 5.2. All
Revolving Loans made on the Effective Date shall be Base Rate Loans.
Thereafter, all or any portion of such Revolving Loans may be
converted into Eurodollar Loans in accordance with the terms of
Section 2.3.
(c) Funding of Revolving Loans. Upon receipt of a Notice
of Borrowing, the Agent shall promptly inform the Lenders as to the
terms thereof. Each Lender shall make its Revolving Loan Commitment
Percentage of the requested Revolving Loans available to the Agent by
1:00 p.m. on the date specified in the Notice of Borrowing by deposit,
in Dollars, of immediately available funds at the offices of the Agent
at its principal office in Charlotte, North Carolina or at such other
address as the Agent may designate in writing. The amount of the
requested Revolving Loans will then be made available to the Borrower
by the Agent by crediting the account of the Borrower on the books of
such office of the Agent, to the extent the amount of such Revolving
Loans are made available to the Agent.
No Lender shall be responsible for the failure or delay by
any other Lender in its obligation to make Revolving Loans hereunder;
provided, however, that the failure of any Lender to fulfill its
obligations hereunder shall not relieve any other Lender of its
obligations hereunder. Unless the Agent shall have been notified by
any Lender prior to the date of any such Revolving Loan that such
Lender does not intend to make available to the Agent its portion of
the Revolving Loans to be made on such date, the Agent may assume that
such Lender has made such amount available to the Agent on the date of
such Revolving Loans, and the Agent in reliance upon such assumption,
may (in its sole discretion but without any obligation to do so) make
available to the Borrower a
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corresponding amount. If such corresponding amount is not in fact made
available to the Agent, the Agent shall be able to recover such
corresponding amount from such Lender. If such Lender does not pay
such corresponding amount forthwith upon the Agent's demand therefor,
the Agent will promptly notify the Borrower, and the Borrower shall
immediately pay such corresponding amount to the Agent. The Agent
shall also be entitled to recover from the Lender or the Borrower, as
the case may be, interest on such corresponding amount in respect of
each day from the date such corresponding amount was made available by
the Agent to the Borrower to the date such corresponding amount is
recovered by the Agent at a per annum rate equal to (i) from the
Borrower at the applicable rate for such Revolving Loan pursuant to
the Notice of Borrowing and (ii) from a Lender at the Federal Funds
Rate.
(d) Reductions of Revolving Committed Amount. Upon at
least three Business Days' notice, the Borrower shall have the right
to permanently reduce, without premium or penalty, all or part of the
aggregate unused amount of the Revolving Committed Amount at any time
or from time to time; provided that (i) each partial reduction shall
be in an aggregate amount at least equal to $1,000,000 and in integral
multiples of $500,000 above such amount and (ii) no reduction shall be
made which would reduce the Revolving Committed Amount to an amount
less than the aggregate amount of outstanding Revolving Loans plus the
aggregate amount of outstanding LOC Obligations. Any reduction in (or
termination of) the Revolving Committed Amount shall be permanent and
may not be reinstated. The Agent shall immediately notify the Lenders
of any reduction in the Revolving Committed Amount.
(e) Interest. Subject to the provisions of Section 3.1,
(i) Base Rate Loans. During such periods as
Revolving Loans shall be comprised in whole or in part of
Base Rate Loans, such Base Rate Loans shall bear interest at
a per annum rate equal to the Adjusted Base Rate.
(ii) Eurodollar Loans.During such periods as
Revolving Loans shall be comprised in whole or in part of
Eurodollar Loans, such Eurodollar Loans shall bear interest
at a per annum rate equal to the Adjusted Eurodollar Rate.
(f) Revolving Notes. The Revolving Loans made by each
Lender shall be evidenced by a duly executed promissory note of the
Borrower to such Lender in an original principal amount equal to such
Lender's Revolving Loan Commitment Percentage of the Revolving
Committed Amount and in substantially the form of Exhibit 2.1(f).
2.2 Letter of Credit Subfacility.
(a) Issuance. Subject to the terms and conditions hereof
and of the LOC Documents, if any, and any other terms and conditions
which the Issuing Lender may reasonably require and in reliance upon
the representations and warranties set forth herein, the Issuing
Lender shall from time to time upon request issue (from the Effective
Date to
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the Maturity Date and in a form reasonably acceptable to the Issuing
Lender), in Dollars, and the LOC Participants shall participate in,
the Letters of Credit for the account of a Credit Party; provided,
however, that (i) the aggregate amount of LOC Obligations shall not at
any time exceed the LOC Committed Amount, (ii) the sum of the
aggregate amount of LOC Obligations outstanding plus the Revolving
Loans outstanding shall not exceed the lesser of (A) the Revolving
Committed Amount and (B) the Borrowing Base Assets and (iii) with
respect to each individual LOC Participant, the LOC Participant's pro
rata share of outstanding Revolving Loans plus its pro rata share of
outstanding LOC Obligations shall not exceed such LOC Participant's
Revolving Loan Commitment Percentage of the lesser of (A) the
Revolving Committed Amount and (B) the Borrowing Base Assets. The
Issuing Lender may require the issuance and expiry date of each Letter
of Credit to be a Business Day. Each Letter of Credit shall be a
standby or trade letter of credit issued to support the obligations
(including pension or insurance obligations), contingent or otherwise,
of a Credit Party or any of its Subsidiaries. Except as otherwise
expressly agreed upon by all the LOC Participants, no Letter of Credit
shall have an expiry date extending beyond the Maturity Date. Each
Letter of Credit shall comply with the related LOC Documents.
(b) Notice and Reports. The request for the issuance of
a Letter of Credit shall be submitted to the Issuing Lender at least
three Business Days prior to the requested date of issuance. The
Issuing Lender will, at least quarterly and more frequently upon
request, provide to the Agent for dissemination to the Lenders a
detailed report specifying the Letters of Credit which are then issued
and outstanding and any activity with respect thereto which may have
occurred since the date of the prior report, and including therein,
among other things, the account party, the beneficiary, the face
amount, and the expiry date as well as any payments or expirations
which may have occurred. The Issuing Lender will further provide to
the Agent, promptly upon request, copies of the Letters of Credit and
the other LOC Documents. Notwithstanding anything to the contrary set
forth in this Credit Agreement, with respect to any Letter of Credit
issued for the account of a Credit Party other than the Borrower, the
Borrower shall be the actual account party for all purposes of this
Credit Agreement for such Letter of Credit and the Borrower shall have
the reimbursement obligations hereunder with respect to such Letter of
Credit.
(c) Participations.
(i) Each LOC Participant, upon issuance of a
Letter of Credit, shall be deemed to have purchased without
recourse a risk participation from the Issuing Lender in such
Letter of Credit and each LOC Document related thereto and
the rights and obligations arising thereunder and any
collateral relating thereto, in each case in an amount equal
to its Revolving Loan Commitment Percentage of the
obligations under such Letter of Credit, and shall
absolutely, unconditionally and irrevocably assume, as
primary obligor and not as surety, and be obligated to pay to
the Issuing Lender therefor and discharge when due, its
Revolving Loan Commitment Percentage of the obligations
arising under such Letter of Credit. Without limiting the
scope and nature of each LOC Participant's participation in
any Letter of Credit, to the extent that the Issuing Lender
has not been reimbursed as
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required hereunder or under any such Letter of Credit, each
such LOC Participant shall pay to the Issuing Lender its
Revolving Loan Commitment Percentage of such unreimbursed
drawing in same day funds on the day of notification by the
Issuing Lender of an unreimbursed drawing pursuant to the
provisions of subsection (d) or (e) hereof. The obligation of
each LOC Participant to so reimburse the Issuing Lender shall
be absolute and unconditional and shall not be affected by
the occurrence of a Default, an Event of Default or any other
occurrence or event. Any such reimbursement shall not relieve
or otherwise impair the obligation of the Borrower or any
other Credit Party to reimburse the Issuing Lender under any
Letter of Credit, together with interest as hereinafter
provided.
(d) Reimbursement. In the event of any drawing under any
Letter of Credit, the Issuing Lender will promptly notify the
Borrower. Unless the Borrower shall immediately notify the Issuing
Lender of its intent to otherwise reimburse the Issuing Lender, the
Borrower shall be deemed to have requested that the Lenders make a
Revolving Loan in the amount of the drawing as provided in subsection
(e) below on the related Letter of Credit, the proceeds of which will
be used to satisfy the related reimbursement obligations. The Borrower
shall reimburse the Issuing Lender on the day of drawing under any
Letter of Credit with the proceeds of such Revolving Loan obtained
hereunder or otherwise in same day funds as provided herein or in the
LOC Documents. If the Borrower shall fail to reimburse the Issuing
Lender as provided hereinabove, the unreimbursed amount of such
drawing shall bear interest at a per annum rate equal to the Adjusted
Base Rate plus two percent (2%). The Borrower's reimbursement
obligations hereunder shall be absolute and unconditional under all
circumstances irrespective of (but without waiver of) any rights of
set-off, counterclaim or defense to payment the applicable account
party or the Borrower may claim or have against an Issuing Lender, the
Agent, the Lenders, the beneficiary of the Letter of Credit drawn upon
or any other Person, including without limitation, any defense based
on any failure of the applicable account party, the Borrower or any
other Credit Party to receive consideration or the legality, validity,
regularity or unenforceability of the Letter of Credit. The Issuing
Lender will promptly notify the LOC Participants of the amount of any
unreimbursed drawing and each LOC Participant shall promptly pay to
the Issuing Lender, in Dollars and in immediately available funds, the
amount of such LOC Participant's Revolving Loan Commitment Percentage
of such unreimbursed drawing. Such payment shall be made on the day
such notice is received by such Lender from the Issuing Lender if such
notice is received at or before 12:00 Noon, otherwise such payment
shall be made at or before 12:00 Noon on the Business Day next
succeeding the day such notice is received. If such LOC Participant
does not pay such amount to the Issuing Lender in full upon such
request, such LOC Participant shall, on demand, pay to the Issuing
Lender interest on the unpaid amount during the period from the date
the LOC Participant received the notice regarding the unreimbursed
drawing until such LOC Participant pays such amount to the Issuing
Lender in full at a rate per annum equal to, if paid within two
Business Days of the date of drawing, the Federal Funds Rate and
thereafter at a rate equal to the Base Rate. Each LOC Participant's
obligation to make such payment to the Issuing Lender, and the right
of the Issuing Lender to receive the same, shall be absolute and
unconditional, shall not be affected by any circumstance whatsoever
and without regard to
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the termination of this Credit Agreement or the Commitments hereunder,
the existence of a Default or Event of Default or the acceleration of
the obligations hereunder and shall be made without any offset,
abatement, withholding or reduction whatsoever. Simultaneously with
the making of each such payment by a LOC Participant to the Issuing
Lender, such LOC Participant shall, automatically and without any
further action on the part of the Issuing Lender or such LOC
Participant, acquire a participation in an amount equal to such
payment (excluding the portion of such payment constituting interest
owing to the Issuing Lender) in the related unreimbursed drawing
portion of the LOC Obligation and in the interest thereon and in the
related LOC Documents, and shall have a claim against the Borrower and
the other Credit Parties with respect thereto.
(e) Repayment with Revolving Loans. On any day on which
the Borrower shall have requested, or been deemed to have requested, a
Revolving Loan borrowing to reimburse a drawing under a Letter of
Credit (as set forth in clause (d) above), the Agent shall give notice
to the applicable Lenders that a Revolving Loan has been requested or
deemed requested in connection with a drawing under a Letter of
Credit, in which case a Revolving Loan borrowing comprised solely of
Base Rate Loans (each such borrowing, a "Mandatory Borrowing") shall
be immediately made from all applicable Lenders (without giving effect
to any termination of the Commitments pursuant to Section 9.2) pro
rata based on each Lender's respective Revolving Loan Commitment
Percentage and the proceeds thereof shall be paid directly to the
Issuing Lender for application to the respective LOC Obligations. Each
such Lender hereby irrevocably agrees to make such Revolving Loans
immediately upon any such request or deemed request on account of each
such Mandatory Borrowing in the amount and in the manner specified in
the preceding sentence and on the same such date notwithstanding (i)
the amount of Mandatory Borrowing may not comply with the minimum
amount for borrowings of Revolving Loans otherwise required hereunder,
(ii) whether any conditions specified in Section 5.2 are then
satisfied, (iii) whether a Default or Event of Default then exists,
(iv) failure of any such request or deemed request for Revolving Loans
to be made by the time otherwise required hereunder, (v) the date of
such Mandatory Borrowing, or (vi) any reduction in the Revolving
Committed Amount or any termination of the Commitments. In the event
that any Mandatory Borrowing cannot for any reason be made on the date
otherwise required above (including, without limitation, as a result
of the commencement of a proceeding under the Bankruptcy Code with
respect to the Borrower or any other Credit Party), then each such
Lender hereby agrees that it shall forthwith fund (as of the date the
Mandatory Borrowing would otherwise have occurred, but adjusted for
any payments received from the Borrower on or after such date and
prior to such purchase) its Participation Interest in the outstanding
LOC Obligations; provided, further, that in the event any Lender shall
fail to fund its Participation Interest on the day the Mandatory
Borrowing would otherwise have occurred, then the amount of such
Lender's unfunded Participation Interest therein shall bear interest
payable to the Issuing Lender upon demand, at the rate equal to, if
paid within two Business Days of such date, the Federal Funds Rate,
and thereafter at a rate equal to the Base Rate.
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(f) Modification and Extension. The issuance of any
supplement, modification, amendment, renewal, or extensions to any
Letter of Credit shall, for purposes hereof, be treated in all
respects the same as the issuance of a new Letter of Credit hereunder.
(g) Uniform Customs and Practices. The Issuing Lender
may have the Letters of Credit be subject to The Uniform Customs and
Practice for Documentary Credits, as published as of the date of issue
by the International Chamber of Commerce (Publication No. 500 or the
most recent publication, the "UCP"), in which case the UCP may be
incorporated therein and deemed in all respects to be a part thereof.
(h) Responsibility of Issuing Lender. It is expressly
understood and agreed as between the Lenders that the obligations of
the Issuing Lender hereunder to the LOC Participants are only those
expressly set forth in this Credit Agreement and that the Issuing
Lender shall be entitled to assume that the conditions precedent set
forth in Section 5.2 have been satisfied unless it shall have acquired
actual knowledge that any such condition precedent has not been
satisfied; provided, however, that nothing set forth in this Section
2.2 shall be deemed to prejudice the right of any LOC Participant to
recover from the Issuing Lender any amounts made available by such LOC
Participant to the Issuing Lender pursuant to this Section 2.2 in the
event that it is determined by a court of competent jurisdiction that
the payment with respect to a Letter of Credit constituted gross
negligence or willful misconduct on the part of the Issuing Lender.
(i) Conflict with LOC Documents. In the event of any
conflict between this Credit Agreement and any LOC Document, this
Credit Agreement shall govern.
(j) Indemnification of Issuing Lender.
(i) In addition to its other obligations under
this Credit Agreement, the Borrower hereby agrees to protect,
indemnify, pay and save the Issuing Lender harmless from and
against any and all claims, demands, liabilities, damages,
losses, costs, charges and expenses (including reasonable
attorneys' fees) that the Issuing Lender may incur or be
subject to as a consequence, direct or indirect, of (A) the
issuance of any Letter of Credit or (B) the failure of the
Issuing Lender to honor a drawing under a Letter of Credit as
a result of any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto
Governmental Authority (all such acts or omissions, herein
called "Government Acts").
(ii) As between the Borrower and the Issuing
Lender, the Borrower shall assume all risks of the acts,
omissions or misuse of any Letter of Credit by the
beneficiary thereof. The Issuing Lender shall not be
responsible for: (A) the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document
submitted by any party in connection with the application for
and issuance of any Letter of Credit, even if it should in
fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (B) the
validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign any Letter of
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Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, that may prove to be invalid or
ineffective for any reason; (C) failure of the beneficiary of
a Letter of Credit to comply fully with conditions required
in order to draw upon a Letter of Credit; (D) errors,
omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they be in cipher; (E) errors in
interpretation of technical terms; (F) any loss or delay in
the transmission or otherwise of any document required in
order to make a drawing under a Letter of Credit or of the
proceeds thereof; and (G) any consequences arising from
causes beyond the control of the Issuing Lender, including,
without limitation, any Government Acts. None of the above
shall affect, impair, or prevent the vesting of the Issuing
Lender's rights or powers hereunder.
(iii) In furtherance and extension and not in
limitation of the specific provisions hereinabove set forth,
any action taken or omitted by the Issuing Lender, under or
in connection with any Letter of Credit or the related
certificates, if taken or omitted in good faith, shall not
put the Issuing Lender under any resulting liability to the
Borrower or any other Credit Party. It is the intention of
the parties that this Credit Agreement shall be construed and
applied to protect and indemnify the Issuing Lender against
any and all risks involved in the issuance of the Letters of
Credit, all of which risks are hereby assumed by the
Borrower, including, without limitation, any and all risks of
the acts or omissions, whether rightful or wrongful, of any
present or future Government Acts. The Issuing Lender shall
not, in any way, be liable for any failure by the Issuing
Lender or anyone else to pay any drawing under any Letter of
Credit as a result of any Government Acts or any other cause
beyond the control of the Issuing Lender.
(iv) Nothing in this Subsection (j) is intended
to limit the reimbursement obligation of the Borrower
contained in this Section 2.2. The obligations of the
Borrower under this subsection (j) shall survive the
termination of this Credit Agreement. No act or omission of
any current or prior beneficiary of a Letter of Credit shall
in any way affect or impair the rights of the Issuing Lender
to enforce any right, power or benefit under this Credit
Agreement.
(v) Notwithstanding anything to the contrary
contained in this subsection (j), the Borrower shall have no
obligation to indemnify the Issuing Lender in respect of any
liability incurred by the Issuing Lender arising solely out
of the gross negligence or willful misconduct of the Issuing
Lender, as determined by a court of competent jurisdiction.
(vi) To the extent the Borrower does not fulfill
any or all of its obligations under this subsection (j), each
LOC Participant agrees to reimburse the Issuing Lender for
any losses incurred thereby ratably in accordance with each
such LOC Participant's Revolving Loan Commitment Percentage.
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2.3 Continuations and Conversions.
The Borrower shall have the option, on any Business Day, to continue
existing Eurodollar Loans for a subsequent Interest Period, to convert Base
Rate Loans into Eurodollar Loans or to convert Eurodollar Loans into Base Rate
Loans; provided, however, that (i) each such continuation or conversion must be
requested by the Borrower pursuant to a written Notice of
Continuation/Conversion, in the form of Exhibit 2.3, in compliance with the
terms set forth below, (ii) except as provided in Section 3.11, Eurodollar
Loans may only be continued or converted into Base Rate Loans on the last day
of the Interest Period applicable thereto, (iii) Eurodollar Loans may not be
continued nor may Base Rate Loans be converted into Eurodollar Loans during the
existence and continuation of a Default or an Event of Default and (iv) any
request to continue a Eurodollar Loan that fails to comply with the terms
hereof or any failure to request a continuation of a Eurodollar Loan at the end
of an Interest Period shall constitute a conversion to a Base Rate Loan on the
last day of the applicable Interest Period. Each continuation or conversion
must be requested by the Borrower no later than 11:00 a.m. (A) on the date for
a requested conversion of a Eurodollar Loan to a Base Rate Loan or (B) three
Business Days prior to the date for a requested continuation of a Eurodollar
Loan or conversion of a Base Rate Loan to a Eurodollar Loan, in each case
pursuant to a written Notice of Continuation/Conversion submitted to the Agent
which shall set forth (x) whether the Borrower wishes to continue or convert
such Loans and (y) if the request is to continue a Eurodollar Loan or convert a
Base Rate Loan to a Eurodollar Loan, the Interest Period applicable thereto.
2.4 Minimum Amounts.
Each request for a borrowing, conversion or continuation shall be
subject to the requirements that (a) each Eurodollar Loan shall be in a minimum
amount of $2,000,000 and in integral multiples of $100,000 in excess thereof,
(b) each Base Rate Loan shall be in a minimum amount of the lesser of $500,000
(and integral multiples of $100,000 in excess thereof) or the remaining amount
available under the Revolving Committed Amount and (c) no more than five (5)
Eurodollar Loans shall be outstanding hereunder at any one time. For the
purposes of this Section, all Eurodollar Loans with the same Interest Periods
that begin and end on the same date shall be considered as one Eurodollar Loan,
but Eurodollar Loans with different Interest Periods, even if they begin on the
same date, shall be considered as separate Eurodollar Loans.
SECTION 3
GENERAL PROVISIONS APPLICABLE TO LOANS AND LETTERS OF CREDIT
3.1 Interest.
(a) Default Rate of Interest. Upon the occurrence, and
during the continuance, of an Event of Default, the principal of and,
to the extent permitted by law, interest on the Loans and any other
amounts owing hereunder or under the other Credit Documents (including
without limitation fees and expenses) shall bear interest, payable on
demand, at a
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per annum rate equal to 2% plus the rate which would otherwise be
applicable (or if no rate is applicable, then the Adjusted Base Rate
plus two percent (2%) per annum).
(b) Interest Payments. Interest on Loans shall be due
and payable in arrears on each Interest Payment Date. If an Interest
Payment Date falls on a date which is not a Business Day, such
Interest Payment Date shall be deemed to be the next succeeding
Business Day, except that in the case of Eurodollar Loans where the
next succeeding Business Day falls in the next succeeding calendar
month, then on the next preceding day.
3.2 Place and Manner of Payments.
All payments of principal, interest, fees, expenses and other amounts
to be made by a Credit Party under this Credit Agreement shall be received not
later than 2:00 p.m. on the date when due, in Dollars and in immediately
available funds, by the Agent at its offices in Charlotte, North Carolina.
Payments received after such time shall be deemed to have been received on the
next Business Day. The Borrower shall, at the time it makes any payment under
this Credit Agreement, specify to the Agent, the Loans, Letters of Credit, fees
or other amounts payable by the Borrower hereunder to which such payment is to
be applied (and in the event that it fails to specify, or if such application
would be inconsistent with the terms hereof, the Agent shall, subject to
Section 3.7, distribute such payment to the Lenders in such manner as the Agent
may deem appropriate). The Agent will distribute such payments to the
applicable Lenders on the same Business Day if any such payment is received
prior to 2:00 p.m.; otherwise the Agent will distribute such payment to the
applicable Lenders on the next succeeding Business Day. Whenever any payment
hereunder shall be stated to be due on a day which is not a Business Day, the
due date thereof shall be extended to the next succeeding Business Day (subject
to accrual of interest and fees for the period of such extension), except that
in the case of Eurodollar Loans, if the extension would cause the payment to be
made in the next following calendar month, then such payment shall instead be
made on the next preceding Business Day.
3.3 Prepayments.
(a) Voluntary Prepayments. The Borrower shall have the
right to prepay Loans in whole or in part from time to time without
premium or penalty; provided, however, that (i) Eurodollar Loans may
only be prepaid on three Business Days' prior written notice to the
Agent and (ii) each such partial prepayment of Loans shall be in the
minimum principal amount of $1,000,000 and integral multiples of
$500,000 in excess thereof. All prepayments under this Section shall
be subject to Section 3.14 and be accompanied by interest on the
principal amount prepaid through the date of prepayment.
(b) Mandatory Prepayments.
(i) Revolving Committed Amount. If at any time
the sum of the aggregate amount of Revolving Loans
outstanding plus LOC Obligations outstanding exceeds the
lesser of (A) the Revolving Committed Amount and (B) the
Borrowing Base Assets, the Borrower shall immediately make a
principal payment
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to the Agent in the manner and in an amount such that the sum
of the aggregate amount of Revolving Loans outstanding plus
LOC Obligations outstanding is less than or equal to the
lesser of (A) the Revolving Committed Amount and (B) the
Borrowing Base Assets (to be applied as set forth in Section
3.3(c) below).
(ii) Asset Sales. Immediately upon receipt by a
Credit Party or any of its Subsidiaries of proceeds from any
Asset Disposition, the Borrower shall forward an amount equal
to 100% of the Net Cash Proceeds of such Asset Disposition to
the Lenders and the Maxim Group Lenders as a prepayment of
the Loans and Maxim Group Loans (to be applied as set forth
in Section 3.3(c) below).
(iii) Issuances of Equity. Immediately upon
receipt by a Credit Party or any of its Subsidiaries of cash
proceeds from any Equity Issuance, the Borrower shall forward
100% of the Net Cash Proceeds of such Equity Issuance to the
Lenders and Maxim Group Lenders as a prepayment of the Loans
and Maxim Group Loans (to be applied as set forth in Section
3.3(c) below).
(iv) Issuance of Debt. Immediately upon receipt
by a Credit Party or any of its Subsidiaries of proceeds from
any Debt Issuance, the Borrower shall forward 100% of the Net
Cash Proceeds of such Debt Issuance to the Lenders and the
Maxim Group Lenders as a prepayment of the Loans and Maxim
Group Loans (to be applied as set forth in Section 3.3(c)
below).
(c) Application of Prepayments. All amounts required to
be paid pursuant to Section 3.3(b)(i) shall be applied first to
Revolving Loans and second to a cash collateral account in respect of
LOC Obligations. All amounts required to be paid pursuant to Sections
3.3(b)(ii), (iii) and (iv) above shall be applied first pro rata among
the Revolving Loans (with a corresponding permanent reduction in the
Revolving Committed Amount) and the Maxim Group Loans (with a
corresponding permanent reduction in the Maxim Group Revolving
Committed Amount), and second, pro rata to a cash collateral account
in respect of the LOC Obligations and a cash collateral account in
respect of the Maxim Group Revolving LOC Obligations and the Maxim
Group Stand Alone LOC Obligations. Within the parameters of the
applications set forth above, prepayments shall be applied first to
Base Rate Loans and then to Eurodollar Loans in direct order of
Interest Period maturities. All prepayments hereunder shall be subject
to Section 3.14 and shall be accompanied by interest on the principal
amount prepaid through the date of prepayment.
3.4 Fees.
(a) Commitment Fees. In consideration of the Revolving
Committed Amount being made available by the Lenders hereunder, the
Borrower agrees to pay to the Agent, for the pro rata benefit of each
Lender (based on each Lender's Revolving Loan Commitment Percentage of
the Revolving Committed Amount), a fee equal to 0.375% per annum on
the Unused Commitment (the "Commitment Fees"). The Commitment Fees
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shall commence to accrue on the Effective Date and shall be due and
payable in arrears on the last day of each fiscal quarter of the
Borrower (as well as on the Maturity Date and on any date that the
Revolving Committed Amount is reduced) for the immediately preceding
fiscal quarter (or portion thereof), beginning with the first of such
dates to occur after the Closing Date.
(b) Standby Letter of Credit Fee. In consideration of
the issuance of standby Letters of Credit hereunder, the Borrower
agrees to pay to the Issuing Lender for the pro rata benefit of each
Lender (based on each Lender's Revolving Loan Commitment Percentage of
the Revolving Committed Amount), a per annum fee (the "Standby Letter
of Credit Fees") equal to 2.0% on the average daily maximum amount
available to be drawn under each such Letter of Credit from the date
of issuance to the date of expiration. The Standby Letter of Credit
Fees will be payable in arrears on the last day of each fiscal quarter
of the Borrower (as well as on the Maturity Date) for the immediately
preceding fiscal quarter (or portion thereof), beginning with the
first of such dates to occur after the Closing Date.
(c) Trade Letter of Credit Fee. In consideration of the
issuance of trade Letters of Credit hereunder, the Borrower agrees to
pay to the Issuing Lender for the pro rata benefit of each Lender
(based on each Lender's Revolving Loan Commitment Percentage of the
Revolving Committed Amount) a per annum fee (the "Trade Letter of
Credit Fees") equal to 0.375% on the average daily maximum amount
available to be drawn under each such Letter of Credit from the date
of issuance to the date of expiration. The Trade Letter of Credit Fees
will be payable in arrears on the last day of each fiscal quarter of
the Borrower (as well as on the Maturity Date) for the immediately
preceding fiscal quarter (or portion thereof), beginning with the
first of such dates to occur after the Closing Date.
(d) Issuing Lender Fees. In addition to the Standby
Letter of Credit Fees payable pursuant to clause (b) above and the
Trade Letter of Credit Fees payable pursuant to clause (c) above, the
Borrower shall pay to the Issuing Lender for its own account, without
sharing by the other Lenders, (i) the customary charges from time to
time to the Issuing Lender for its services in connection with the
issuance, amendment, payment, transfer, administration, cancellation
and conversion of, and drawings under, Letters of Credit, and (ii) a
letter of credit fronting fee of 0.125% of the face amount of each
Letter of Credit (collectively, the "Issuing Lender Fees").
(e) Administrative Fees. The Borrower agrees to pay to
the Agent, for its own account, an annual fee in accordance with the
terms of the Fee Letter.
3.5 Payment in full at Maturity.
On the Maturity Date, the entire outstanding principal balance of all
Loans and all LOC Obligations, together with accrued but unpaid interest and
all other sums owing with respect thereto, shall be due and payable in full,
unless accelerated sooner pursuant to Section 9.2.
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3.6 Computations of Interest and Fees.
(a) Except for Base Rate Loans, in which case interest
shall be computed on the basis of a 365 or 366 day year as the case
may be, all computations of interest and fees hereunder shall be made
on the basis of the actual number of days elapsed over a year of 360
days. Interest shall accrue from and include the date of borrowing (or
continuation or conversion) but exclude the date of payment.
(b) It is the intent of the Lenders and the Credit
Parties to conform to and contract in strict compliance with
applicable usury law from time to time in effect. All agreements
between the Lenders and the Credit Parties are hereby limited by the
provisions of this paragraph which shall override and control all such
agreements, whether now existing or hereafter arising and whether
written or oral. In no way, nor in any event or contingency (including
but not limited to prepayment or acceleration of the maturity of any
obligation), shall the interest taken, reserved, contracted for,
charged, or received under this Credit Agreement, under the Notes or
otherwise, exceed the maximum nonusurious amount permissible under
applicable law. If, from any possible construction of any of the
Credit Documents or any other document, interest would otherwise be
payable in excess of the maximum nonusurious amount, any such
construction shall be subject to the provisions of this paragraph and
such documents shall be automatically reduced to the maximum
nonusurious amount permitted under applicable law, without the
necessity of execution of any amendment or new document. If any Lender
shall ever receive anything of value which is characterized as
interest on the Loans under applicable law and which would, apart from
this provision, be in excess of the maximum lawful amount, an amount
equal to the amount which would have been excessive interest shall,
without penalty, be applied to the reduction of the principal amount
owing on the Loans and not to the payment of interest, or refunded to
the Borrower or the other payor thereof if and to the extent such
amount which would have been excessive exceeds such unpaid principal
amount of the Loans. The right to demand payment of the Loans or any
other indebtedness evidenced by any of the Credit Documents does not
include the right to accelerate the payment of any interest which has
not otherwise accrued on the date of such demand, and the Lenders do
not intend to charge or receive any unearned interest in the event of
such demand. All interest paid or agreed to be paid to the Lenders
with respect to the Loans shall, to the extent permitted by applicable
law, be amortized, prorated, allocated, and spread throughout the full
stated term (including any renewal or extension) of the Loans so that
the amount of interest on account of such indebtedness does not exceed
the maximum nonusurious amount permitted by applicable law.
3.7 Pro Rata Treatment.
Except to the extent otherwise provided herein:
(a) Loans. Each Revolving Loan borrowing (including,
without limitation, each Mandatory Borrowing), each payment or
prepayment of principal of any Loan, each payment of fees (other than
the Issuing Lender Fees retained by the Issuing Lender for its
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own account and the fees retained by the Agent for its own account),
each reduction of the Revolving Committed Amount, and each conversion
or continuation of any Loan, shall (except as otherwise provided in
Section 3.11) be allocated pro rata among the relevant Lenders in
accordance with the respective Revolving Loan Commitment Percentages
of such Lenders (or, if the Commitments of such Lenders have expired
or been terminated, in accordance with the respective principal
amounts of the outstanding Loans and Participation Interests of such
Lenders); provided that, if any Lender shall have failed to pay its
applicable pro rata share of any Revolving Loan, then any amount to
which such Lender would otherwise be entitled pursuant to this
subsection (a) shall instead be payable to the Agent until the share
of such Loan not funded by such Lender has been repaid; provided
further, that in the event any amount paid to any Lender pursuant to
this subsection (a) is rescinded or must otherwise be returned by the
Agent, each Lender shall, upon the request of the Agent, repay to the
Agent the amount so paid to such Lender, with interest for the period
commencing on the date such payment is returned by the Agent until the
date the Agent receives such repayment at a rate per annum equal to,
during the period to but excluding the date two Business Days after
such request, the Federal Funds Rate, and thereafter, the Base Rate
plus two percent (2%) per annum; and
(b) Letters of Credit. Each payment of unreimbursed
drawings in respect of LOC Obligations shall be allocated to each LOC
Participant pro rata in accordance with its Revolving Loan Commitment
Percentage; provided that, if any LOC Participant shall have failed to
pay its applicable pro rata share of any drawing under any Letter of
Credit, then any amount to which such LOC Participant would otherwise
be entitled pursuant to this subsection (b) shall instead be payable
to the Issuing Lender until the share of such unreimbursed drawing not
funded by such Lender has been repaid; provided further, that in the
event any amount paid to any LOC Participant pursuant to this
subsection (b) is rescinded or must otherwise be returned by the
Issuing Lender, each LOC Participant shall, upon the request of the
Issuing Lender, repay to the Agent for the account of the Issuing
Lender the amount so paid to such LOC Participant, with interest for
the period commencing on the date such payment is returned by the
Issuing Lender until the date the Issuing Lender receives such
repayment at a rate per annum equal to, during the period to but
excluding the date two Business Days after such request, the Federal
Funds Rate, and thereafter, the Base Rate plus two percent (2%) per
annum.
3.8 Sharing of Payments.
The Lenders agree among themselves that, except to the extent
otherwise provided herein, in the event that any Lender shall obtain payment in
respect of any Loan, unreimbursed drawing with respect to any LOC Obligations
or any other obligation owing to such Lender under this Credit Agreement
through the exercise of a right of setoff, banker's lien or counterclaim, or
pursuant to a secured claim under Section 506 of the Bankruptcy Code or other
security or interest arising from, or in lieu of, such secured claim, received
by such Lender under any applicable bankruptcy, insolvency or other similar law
or otherwise, or by any other means, in excess of its pro rata share of such
payment as provided for in this Credit Agreement, such Lender shall promptly
pay in cash or purchase from the other Lenders a participation in such Loans,
LOC Obligations, and
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other obligations in such amounts, and make such other adjustments from time to
time, as shall be equitable to the end that all Lenders share such payment in
accordance with their respective ratable shares as provided for in this Credit
Agreement. The Lenders further agree among themselves that if payment to a
Lender obtained by such Lender through the exercise of a right of setoff,
banker's lien, counterclaim or other event as aforesaid shall be rescinded or
must otherwise be restored, each Lender which shall have shared the benefit of
such payment shall, by payment in cash or a repurchase of a participation
theretofore sold, return its share of that benefit (together with its share of
any accrued interest payable with respect thereto) to each Lender whose payment
shall have been rescinded or otherwise restored. The Borrower agrees that any
Lender so purchasing such a participation may, to the fullest extent permitted
by law, exercise all rights of payment, including setoff, banker's lien or
counterclaim, with respect to such participation as fully as if such Lender
were a holder of such Loan, LOC Obligation or other obligation in the amount of
such participation. Except as otherwise expressly provided in this Credit
Agreement, if any Lender or the Agent shall fail to remit to the Agent or any
other Lender an amount payable by such Lender or such Agent to the Agent or
such other Lender pursuant to this Credit Agreement on the date when such
amount is due, such payments shall be made together with interest thereon for
each date from the date such amount is due until the date such amount is paid
to the Agent or such other Lender at a rate per annum equal to the Federal
Funds Rate. If under any applicable bankruptcy, insolvency or other similar
law, any Lender receives a secured claim in lieu of a setoff to which this
Section 3.8 applies, such Lender shall, to the extent practicable, exercise its
rights in respect of such secured claim in a manner consistent with the rights
of the Lenders under this Section 3.8 to share in the benefits of any recovery
on such secured claim.
3.9 Capital Adequacy.
If, after the date hereof, any Lender has determined that the adoption
or the becoming effective of, or any change in, or any change by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof in the interpretation or
administration of, any applicable law, rule or regulation regarding capital
adequacy, or compliance by such Lender, or its parent corporation, with any
request or directive regarding capital adequacy (whether or not having the
force of law) of any such authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on such Lender's (or
parent corporation's) capital or assets as a consequence of its commitments or
obligations hereunder to a level below that which such Lender, or its parent
corporation, could have achieved but for such adoption, effectiveness, change
or compliance (taking into consideration such Lender's (or parent
corporation's) policies with respect to capital adequacy), then, upon notice
from such Lender to the Borrower, the Borrower shall be obligated to pay to
such Lender such additional amount or amounts as will compensate such Lender on
an after-tax basis (after taking into account applicable deductions and credits
in respect of the amount indemnified) for such reduction. Each determination by
any such Lender of amounts owing under this Section shall, absent manifest
error, be conclusive and binding on the parties hereto. This covenant shall
survive the termination of this Credit Agreement and the payment of the Loans
and all other amounts payable hereunder.
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3.10 Inability To Determine Interest Rate.
If prior to the first day of any Interest Period, the Agent shall have
determined in good faith (which determination shall be conclusive and binding
upon the Borrower) that, by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Interest Period, the Agent shall give telecopy or
telephonic notice thereof to the Borrower and the Lenders as soon as
practicable thereafter, and will also give prompt written notice to the
Borrower when such conditions no longer exist. If such notice is given (a) any
Eurodollar Loans requested to be made on the first day of such Interest Period
shall be made as Base Rate Loans, (b) any Loans that were to have been
converted on the first day of such Interest Period to or continued as
Eurodollar Loans shall be converted to or continued as Base Rate Loans and (c)
any outstanding Eurodollar Loans shall be converted, on the first day of such
Interest Period, to Base Rate Loans. Until such notice is withdrawn by the
Agent, no further Eurodollar Loans shall be made or continued as such, nor
shall the Borrower have the right to convert Base Rate Loans to Eurodollar
Loans.
3.11 Illegality.
Notwithstanding any other provision herein, if the adoption of or any
change in any Requirement of Law or in the interpretation or application
thereof occurring after the Closing Date shall make it unlawful for any Lender
to make or maintain Eurodollar Loans as contemplated by this Credit Agreement,
(a) such Lender shall promptly give written notice of such circumstances to the
Borrower and the Agent (which notice shall be withdrawn whenever such
circumstances no longer exist), (b) the commitment of such Lender hereunder to
make Eurodollar Loans, continue Eurodollar Loans as such and convert a Base
Rate Loan to Eurodollar Loans shall forthwith be canceled and, until such time
as it shall no longer be unlawful for such Lender to make or maintain
Eurodollar Loans, such Lender shall then have a commitment only to make a Base
Rate Loan when a Eurodollar Loan is requested and (c) such Lender's Loans then
outstanding as Eurodollar Loans, if any, shall be converted automatically to
Base Rate Loans on the respective last days or the then current Interest
Periods with respect to such Loans or within such earlier period as required by
law. If any such conversion of a Eurodollar Loan occurs on a day which is not
the last day of the then current Interest Period with respect thereto, the
Borrower shall pay to such Lender such amounts, if any, as may be required
pursuant to Section 3.14.
3.12 Requirements of Law.
If the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof applicable to any Lender, or compliance
by any Lender with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority, in each case made
subsequent to the Closing Date (or, if later, the date on which such Lender
becomes a Lender):
(a) shall subject such Lender to any tax of any kind
whatsoever with respect to any Letter of Credit, any Eurodollar Loans
made by it or its obligation to make Eurodollar Loans, or change the
basis of taxation of payments to such Lender in respect thereof
(except
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for Non-Excluded Taxes covered by Section 3.13 (including Non-Excluded
Taxes imposed solely by reason of any failure of such Lender to comply
with its obligations under Section 3.13(b)) and changes in taxes
measured by or imposed upon the overall net income, or franchise tax
(imposed in lieu of such net income tax), of such Lender or its
applicable lending office, branch, or any affiliate thereof);
(b) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of the Eurodollar Rate
hereunder; or
(c) shall impose on such Lender any other condition
(excluding any tax of any kind whatsoever);
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting
into, continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, upon notice to the Borrower from such Lender,
through the Agent, in accordance herewith, the Borrower shall be obligated to
promptly pay such Lender, upon its demand, any additional amounts necessary to
compensate such Lender on an after-tax basis (after taking into account
applicable deductions and credits in respect of the amount indemnified) for
such increased cost or reduced amount receivable, provided that, in any such
case, the Borrower may elect to convert the Eurodollar Loans made by such
Lender hereunder to Base Rate Loans by giving the Agent at least one Business
Day's notice of such election, in which case the Borrower shall promptly pay to
such Lender, upon demand, without duplication, such amounts, if any, as may be
required pursuant to Section 3.14. If any Lender becomes entitled to claim any
additional amounts pursuant to this Section 3.12, it shall provide prompt
notice thereof to the Borrower, through the Agent, certifying (x) that one of
the events described in this Section 3.12 has occurred and describing in
reasonable detail the nature of such event, (y) as to the increased cost or
reduced amount resulting from such event and (z) as to the additional amount
demanded by such Lender and a reasonably detailed explanation of the
calculation thereof. Such a certificate as to any additional amounts payable
pursuant to this Section 3.12 submitted by such Lender, through the Agent, to
the Borrower shall be conclusive and binding on the parties hereto in the
absence of manifest error. This covenant shall survive the termination of this
Credit Agreement and the payment of the Loans and all other amounts payable
hereunder.
3.13 Taxes.
(a) Except as provided below in this Section 3.13, all
payments made by the Borrower under this Credit Agreement and any
Notes shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future income, stamp
or other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any court, or governmental body, agency or other official,
excluding taxes measured by or imposed upon the net
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income of any Lender or its applicable lending office, or any branch
or affiliate thereof, and all franchise taxes, branch taxes, taxes on
doing business or taxes on the capital or net worth of any Lender or
its applicable lending office, or any branch or affiliate thereof, in
each case imposed in lieu of net income taxes: (i) by the jurisdiction
under the laws of which such Lender, applicable lending office, branch
or affiliate is organized or is located, or in which its principal
executive office is located, or any nation within which such
jurisdiction is located or any political subdivision thereof; or (ii)
by reason of any connection between the jurisdiction imposing such tax
and such Lender, applicable lending office, branch or affiliate other
than a connection arising solely from such Lender having executed,
delivered or performed its obligations, or received payment under or
enforced, this Credit Agreement or any Notes. If any such non-excluded
taxes, levies, imposts, duties, charges, fees, deductions or
withholdings ("Non-Excluded Taxes") are required to be withheld from
any amounts payable to the Agent or any Lender hereunder or under any
Notes, (A) the amounts so payable to the Agent or such Lender shall be
increased to the extent necessary to yield to the Agent or such Lender
(after payment of all Non-Excluded Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in
this Credit Agreement and any Notes, provided, however, that the
Borrower shall be entitled to deduct and withhold any Non-Excluded
Taxes and shall not be required to increase any such amounts payable
to any Lender that is not organized under the laws of the United
States of America or a state thereof if such Lender fails to comply
with the requirements of paragraph (b) of this Section 3.13 whenever
any Non-Excluded Taxes are payable by the Borrower, and (B) as
promptly as possible after requested the Borrower shall send to the
Agent for its own account or for the account of such Lender, as the
case may be, a certified copy of an original official receipt received
by the Borrower showing payment thereof. If the Borrower fails to pay
any Non-Excluded Taxes when due to the appropriate taxing authority or
fails to remit to the Agent the required receipts or other required
documentary evidence, the Borrower shall indemnify the Agent and any
Lender for any incremental Non-Excluded Taxes, interest or penalties
that may become payable by the Agent or any Lender as a result of any
such failure. The agreements in this subsection shall survive the
termination of this Credit Agreement and the payment of the Loans and
all other amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws
of the United States of America or a state thereof shall:
(i) (A) on or before the date of any
payment by the Borrower under this Credit Agreement or Notes
to such Lender, deliver to the Borrower and the Agent (x) two
duly completed copies of United States Internal Revenue
Service Form 1001 or 4224, or successor applicable form, as
the case may be, certifying that it is entitled to receive
payments under this Credit Agreement and any Notes without
deduction or withholding of any United States federal income
taxes and (y) an Internal Revenue Service Form W-8 or W-9, or
successor applicable form, as the case may be, certifying
that it is entitled to an exemption from United States backup
withholding tax;
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(B) deliver to the Borrower and the
Agent two further copies of any such form or certification on
or before the date that any such form or certification
expires or becomes obsolete and after the occurrence of any
event requiring a change in the most recent form previously
delivered by it to the Borrower; and
(C) obtain such extensions of time for
filing and complete such forms or certifications as may
reasonably be requested by the Borrower or the Agent; or
(ii) in the case of any such Lender that is not
a "bank" within the meaning of Section 881(c)(3)(A) of the
Internal Revenue Code, (A) represent to the Borrower (for the
benefit of the Borrower and the Agent) that it is not a bank
within the meaning of Section 881(c)(3)(A) of the Internal
Revenue Code, (B) agree to furnish to the Borrower, on or
before the date of any payment by the Borrower, with a copy
to the Agent, two accurate and complete original signed
copies of Internal Revenue Service Form W-8, or successor
applicable form certifying to such Lender's legal entitlement
at the date of such certificate to an exemption from U.S.
withholding tax under the provisions of Section 881(c) of the
Internal Revenue Code with respect to payments to be made
under this Credit Agreement and any Notes (and to deliver to
the Borrower and the Agent two further copies of such form on
or before the date it expires or becomes obsolete and after
the occurrence of any event requiring a change in the most
recently provided form and, if necessary, obtain any
extensions of time reasonably requested by the Borrower or
the Agent for filing and completing such forms), and (C)
agree, to the extent legally entitled to do so, upon
reasonable request by the Borrower, to provide to the
Borrower (for the benefit of the Borrower and the Agent) such
other forms as may be reasonably required in order to
establish the legal entitlement of such Lender to an
exemption from withholding with respect to payments under
this Credit Agreement and any Notes.
Notwithstanding the above, if any change in treaty, law or regulation
has occurred after the date such Person becomes a Lender hereunder
which renders all such forms inapplicable or which would prevent such
Lender from duly completing and delivering any such form with respect
to it and such Lender so advises the Borrower and the Agent, then such
Lender shall be exempt from such requirements. Each Person that shall
become a Lender or a participant of a Lender pursuant to Section 11.3
shall, upon the effectiveness of the related transfer, be required to
provide all of the forms, certifications and statements required
pursuant to this subsection (b); provided that in the case of a
participant of a Lender, the obligations of such participant of a
Lender pursuant to this subsection (b) shall be determined as if the
participant of a Lender were a Lender except that such participant of
a Lender shall furnish all such required forms, certifications and
statements to the Lender from which the related participation shall
have been purchased.
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3.14 Compensation.
The Borrower promises to indemnify each Lender and to hold each Lender
harmless from any loss or expense which such Lender may sustain or incur as a
consequence of (a) default by the Borrower in making a borrowing of, conversion
into or continuation of Eurodollar Loans after the Borrower has given a notice
requesting the same in accordance with the provisions of this Credit Agreement,
(b) default by the Borrower in making any prepayment of a Eurodollar Loan after
the Borrower has given a notice thereof in accordance with the provisions of
this Credit Agreement and (c) the making of a prepayment of Eurodollar Loans on
a day which is not the last day of an Interest Period with respect thereto.
Such indemnification may include an amount equal to (i) the amount of interest
which would have accrued on the amount so prepaid, or not so borrowed,
converted or continued, for the period from the date of such prepayment or of
such failure to borrow, convert or continue to the last day of the applicable
Interest Period (or, in the case of a failure to borrow, convert or continue,
the Interest Period that would have commenced on the date of such failure) in
each case at the applicable rate of interest for such Eurodollar Loans provided
for herein minus (ii) the amount of interest (as reasonably determined by such
Lender) which would have accrued to such Lender on such amount by placing such
amount on deposit for a comparable period with leading banks in the interbank
Eurodollar market. The agreements in this Section shall survive the termination
of this Credit Agreement and the payment of the Loans and all other amounts
payable hereunder.
3.15 Evidence of Debt.
(a) Each Lender shall maintain an account or accounts evidencing
each Loan made by such Lender to the Borrower from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Credit Agreement. Each Lender will make reasonable efforts to
maintain the accuracy of its account or accounts and to promptly update its
account or accounts from time to time, as necessary.
(b) The Agent shall maintain the Register pursuant to Section
11.3(c), and a subaccount for each Lender, in which Register and subaccounts
(taken together) shall be recorded (i) the amount, type and Interest Period of
each such Loan hereunder, (ii) the amount of any principal or interest due and
payable or to become due and payable to each Lender hereunder, and (iii) the
amount of any sum received by the Agent hereunder from or for the account of
the Borrower and each Lender's share thereof, if any. The Agent will make
reasonable efforts to maintain the accuracy of the subaccounts referred to in
the preceding sentence and to promptly update such subaccounts from time to
time, as necessary.
(c) The entries made in the accounts, Register and subaccounts
maintained pursuant to subsection (b) of this Section 3.16 (and, if consistent
with the entries of the Agent, subsection (a)) shall be prima facie evidence of
the existence and amounts of the obligations of the Borrower therein recorded;
provided, however, that the failure of any Lender or the Agent to maintain such
account, such Register, or such subaccount, as applicable, or any error
therein, shall not in any manner affect the obligation of the Borrower to repay
the Loans made by such Lender in accordance with the terms hereof.
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3.16 Replacement of Lenders.
In the event any Lender delivers to the Borrower any notice in
accordance with Section 3.9, 3.11, or 3.12, then the Borrower shall have the
right, if no Default or Event of Default then exists, to replace such Lender
(the "Replaced Lender") with one or more additional banks or financial
institutions (collectively, the "Replacement Lender"), provided, that (a) the
Replacement Lender is acceptable to the Agent, (b) at the time of any
replacement pursuant to this Section 3.16, the Replacement Lender shall enter
into one or more Assignment and Acceptance agreements pursuant to, and in
accordance with the terms of, Section 11.3(b) (and with all processing and
recordation fees payable pursuant to said Section 11.3(b) to be paid by the
Replacement Lender or, at its option, the Borrower) pursuant to which the
Replacement Lender shall acquire all of the rights and obligations of the
Replaced Lender hereunder and, in connection therewith, shall pay to the
Replaced Lender in respect thereof an amount equal to the sum of (i) the
principal of, and all accrued interest on, all outstanding Loans of the
Replaced Lender, and (ii) all accrued, but theretofore unpaid, fees owing to
the Replaced Lender pursuant to Section 3.4, (c) all other obligations of the
Borrower owing to the Replaced Lender (including all other obligations, if any,
owing pursuant to Sections 3.9, 3.11 and 3.12 shall be paid in full to such
Replaced Lender concurrently with such replacement and (d) the Agent and the
Lenders shall not be obligated to assist the Borrower in identifying any
Replacement Lender.
SECTION 4
GUARANTY
4.1 Guaranty of Payment.
Subject to Section 4.7 below, each of the Guarantors hereby, jointly
and severally, unconditionally guarantees to each Lender, each Affiliate of
Lender that enters into a Hedging Agreement and the Agent the prompt payment of
the Credit Party Obligations in full when due (whether at stated maturity, as a
mandatory prepayment, by acceleration or otherwise). This Guaranty is a
guaranty of payment and not of collection and is a continuing guaranty and
shall apply to all Credit Party Obligations whenever arising.
4.2 Obligations Unconditional.
The obligations of the Guarantors hereunder are absolute and
unconditional, irrespective of the value, genuineness, validity, regularity or
enforceability of any of the Credit Documents or the Hedging Agreements, or any
other agreement or instrument referred to therein, to the fullest extent
permitted by applicable law, irrespective of any other circumstance whatsoever
which might otherwise constitute a legal or equitable discharge or defense of a
surety or guarantor. Each Guarantor agrees that this Guaranty may be enforced
by the Lenders without the necessity at any time of resorting to or exhausting
any other security or collateral and without the necessity at any time of
having recourse to the Notes or any other of the Credit Documents or any
collateral, if any,
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hereafter securing the Credit Party Obligations or otherwise and each Guarantor
hereby waives the right to require the Lenders to proceed against the Borrower
or any other Person (including a co-guarantor) or to require the Lenders to
pursue any other remedy or enforce any other right. Each Guarantor further
agrees that it shall have no right of subrogation, indemnity, reimbursement or
contribution against the Borrower or any other Guarantor of the Credit Party
Obligations for amounts paid under this Guaranty until such time as the Lenders
(and any Affiliates of Lenders entering into Hedging Agreements) have been paid
in full, all Commitments under the Credit Agreement have been terminated and no
Person or Governmental Authority shall have any right to request any return or
reimbursement of funds from the Lenders in connection with monies received
under the Credit Documents. Each Guarantor further agrees that nothing
contained herein shall prevent the Lenders from suing on the Notes or any of
the other Credit Documents or any of the Hedging Agreements or foreclosing its
security interest in or Lien on any collateral, if any, securing the Credit
Party Obligations or from exercising any other rights available to it under
this Credit Agreement, the Notes, any other of the Credit Documents, or any
other instrument of security, if any, and the exercise of any of the aforesaid
rights and the completion of any foreclosure proceedings shall not constitute a
discharge of any of any Guarantor's obligations hereunder; it being the purpose
and intent of each Guarantor that its obligations hereunder shall be absolute,
independent and unconditional under any and all circumstances. Neither any
Guarantor's obligations under this Guaranty nor any remedy for the enforcement
thereof shall be impaired, modified, changed or released in any manner
whatsoever by an impairment, modification, change, release or limitation of the
liability of the Borrower or by reason of the bankruptcy or insolvency of the
Borrower. Each Guarantor waives any and all notice of the creation, renewal,
extension or accrual of any of the Credit Party Obligations and notice of or
proof of reliance of by the Agent or any Lender upon this Guarantee or
acceptance of this Guarantee. The Credit Party Obligations, and any of them,
shall conclusively be deemed to have been created, contracted or incurred, or
renewed, extended, amended or waived, in reliance upon this Guarantee. All
dealings between the Borrower and any of the Guarantors, on the one hand, and
the Agent and the Lenders, on the other hand, likewise shall be conclusively
presumed to have been had or consummated in reliance upon this Guarantee. The
Guarantors further agree to all rights of set-off as set forth in Section 11.2.
4.3 Modifications.
Each Guarantor agrees that (a) all or any part of the Collateral now
or hereafter held for the Credit Party Obligations, if any, may be exchanged,
compromised or surrendered from time to time; (b) the Lenders shall not have
any obligation to protect, perfect, secure or insure any such security
interests, liens or encumbrances now or hereafter held, if any, for the Credit
Party Obligations or the properties subject thereto; (c) the time or place of
payment of the Credit Party Obligations may be changed or extended, in whole or
in part, to a time certain or otherwise, and may be renewed or accelerated, in
whole or in part; (d) the Borrower and any other party liable for payment under
the Credit Documents may be granted indulgences generally; (e) any of the
provisions of the Notes or any of the other Credit Documents may be modified,
amended or waived; (f) any party (including any co-guarantor) liable for the
payment thereof may be granted indulgences or be released; and (g) any deposit
balance for the credit of the Borrower or any other party liable for the
payment of the Credit Party Obligations or liable upon any security therefor
may be released, in whole or in part, at, before or after the stated, extended
or accelerated maturity of the
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Credit Party Obligations, all without notice to or further assent by such
Guarantor, which shall remain bound thereon, notwithstanding any such exchange,
compromise, surrender, extension, renewal, acceleration, modification,
indulgence or release.
4.4 Waiver of Rights.
Each Guarantor expressly waives to the fullest extent permitted by
applicable law: (a) notice of acceptance of this Guaranty by the Lenders and of
all extensions of credit to the Borrower by the Lenders; (b) presentment and
demand for payment or performance of any of the Credit Party Obligations; (c)
protest and notice of dishonor or of default (except as specifically required
in the Credit Agreement) with respect to the Credit Party Obligations or with
respect to any security therefor; (d) notice of the Lenders obtaining,
amending, substituting for, releasing, waiving or modifying any security
interest, lien or encumbrance, if any, hereafter securing the Credit Party
Obligations, or the Lenders' subordinating, compromising, discharging or
releasing such security interests, liens or encumbrances, if any; (e) all other
notices to which such Guarantor might otherwise be entitled; and (f) demand for
payment under this Guaranty.
4.5 Reinstatement.
The obligations of the Guarantors under this Section 4 shall be
automatically reinstated if and to the extent that for any reason any payment
by or on behalf of any Person in respect of the Credit Party Obligations is
rescinded or must be otherwise restored by any holder of any of the Credit
Party Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it will indemnify
the Agent and each Lender on demand for all reasonable costs and expenses
(including, without limitation, reasonable fees of counsel) incurred by the
Agent or such Lender in connection with such rescission or restoration,
including any such costs and expenses incurred in defending against any claim
alleging that such payment constituted a preference, fraudulent transfer or
similar payment under any bankruptcy, insolvency or similar law.
4.6 Remedies.
The Guarantors agree that, as between the Guarantors, on the one hand,
and the Agent and the Lenders, on the other hand, the Credit Party Obligations
may be declared to be forthwith due and payable as provided in Section 9 (and
shall be deemed to have become automatically due and payable in the
circumstances provided in Section 9) notwithstanding any stay, injunction or
other prohibition preventing such declaration (or preventing such Credit Party
Obligations from becoming automatically due and payable) as against any other
Person and that, in the event of such declaration (or such Credit Party
Obligations being deemed to have become automatically due and payable), such
Credit Party Obligations (whether or not due and payable by any other Person)
shall forthwith become due and payable by the Guarantors. The Guarantors
acknowledge and agree that their obligations hereunder are secured in
accordance with the terms of the Security Agreements and the other Collateral
Documents and that the Lenders may exercise their remedies thereunder in
accordance with the terms thereof.
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4.7 Limitation of Guaranty.
Notwithstanding any provision to the contrary contained herein or in
any of the other Credit Documents, to the extent the obligations of any
Guarantor shall be adjudicated to be invalid or unenforceable for any reason
(including, without limitation, because of any applicable state or federal law
relating to fraudulent conveyances or transfers) then the obligations of such
Guarantor hereunder shall be limited to the maximum amount that is permissible
under applicable law (whether federal or state and including, without
limitation, the Bankruptcy Code).
4.8 Rights of Contribution.
The Credit Parties agree among themselves that, in connection with
payments made hereunder, each Credit Party shall have contribution rights
against the other Credit Parties as permitted under applicable law. Such
contribution rights shall be subordinate and subject in right of payment to the
obligations of the Credit Parties under the Credit Documents and no Credit
Party shall exercise such rights of contribution until all Credit Party
Obligations have been paid in full and the Commitments terminated.
SECTION 5
CONDITIONS PRECEDENT
5.1 Closing Conditions.
The obligation of the Lenders to enter into this Credit Agreement and
make the initial Extension of Credit is subject to satisfaction (or waiver by
each of the Lenders) of the following conditions:
(a) Executed Credit Documents. Receipt by the Agent of
duly executed copies of: (i) this Credit Agreement; (ii) the Notes;
(iii) the Collateral Documents; and (iv) all other Credit Documents,
each in form and substance reasonably acceptable to the Agent.
(b) Corporate Documents. Receipt by the Agent of the
following:
(i) Charter Documents. Copies of the articles
or certificates of incorporation or other charter documents
of each Credit Party certified to be true and complete as of
a recent date by the appropriate Governmental Authority of
the state or other jurisdiction of its incorporation and
certified by a secretary or assistant secretary of such
Credit Party to be true and correct as of the Effective Date.
(ii) Bylaws. A copy of the bylaws of each Credit
Party certified by a secretary or assistant secretary of such
Credit Party to be true and correct as of the Effective Date.
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(iii) Resolutions. Copies of resolutions of the
Board of Directors of each Credit Party approving and
adopting the Credit Documents to which it is a party, the
transactions contemplated therein and authorizing execution
and delivery thereof, certified by a secretary or assistant
secretary of such Credit Party to be true and correct and in
force and effect as of the Effective Date.
(iv) Good Standing. Copies of certificates of
good standing, existence or its equivalent with respect to
each Credit Party certified as of a recent date by the
appropriate Governmental Authorities of the state or other
jurisdiction of incorporation and each other jurisdiction in
which the failure to so qualify and be in good standing would
have a Material Adverse Effect on the business or operations
of a Credit Party in such jurisdiction.
(v) Incumbency. An incumbency certificate of
each Credit Party certified by a secretary or assistant
secretary to be true and correct as of the Effective Date.
(c) Opinion of Counsel. Receipt by the Agent of an
opinion or opinions (which shall cover, among other things, authority,
legality, validity, binding effect, and enforceability of the Credit
Documents and the attachment, perfection, and validity of liens),
reasonably satisfactory to the Agent, addressed to the Agent and the
Lenders and dated as of the Effective Date, from legal counsel to the
Credit Parties.
(d) Financial Statements. Receipt by the Lenders of such
financial information regarding the Borrower and its Subsidiaries as
they may request, including, but not limited to, (i) the consolidated
financial statements of the Borrower and its Subsidiaries for the
fiscal years 1996 and 1997, including balance sheets, income
statements and cash flow statements audited by independent public
accountants of recognized national standing and prepared in accordance
with GAAP, (ii) interim monthly financial statements for the Borrower
and its Subsidiaries, prepared in accordance with GAAP, and (iii)
monthly working capital detail for the trailing twelve months of the
Borrower and its Subsidiaries and the first projected year for the
Borrower and its Subsidiaries.
(e) Personal Property Collateral. The Agent shall have
received, in form and substance reasonably satisfactory to the Agent:
(i) searches of Uniform Commercial Code ("UCC")
filings in the jurisdiction of the chief executive office of
each Credit Party and each jurisdiction where any Collateral
is located or where a filing would need to be made in order
to perfect the Agent's security interest in the Collateral,
copies of the financing statements on file in such
jurisdictions and evidence that no Liens exist other than
Permitted Liens;
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(ii) duly executed UCC financing statements for
each appropriate jurisdiction as is necessary, in the Agent's
sole discretion, to perfect the Agent's security interest in
the Collateral;
(iii) searches of ownership of intellectual
property in the appropriate governmental offices as requested
by the Agent and such patent, trademark and copyright filings
as requested by the Agent;
(iv) all stock certificates evidencing the stock
pledged to the Agent pursuant to the Pledge Agreements,
together with duly executed in blank undated stock powers
attached thereto; and
(v) all instruments and chattel paper in the
possession of a Credit Party, as required by the Security
Agreements, together with allonges or assignments as may be
necessary to perfect the Agent's security interest in such
Collateral.
(f) Evidence of Insurance. Receipt by the Agent of
copies of insurance policies or certificates of insurance of the
Credit Parties evidencing liability and casualty insurance meeting the
requirements set forth in the Credit Documents, including, but not
limited to, naming the Agent as additional insured or loss payee on
behalf of the Lenders.
(g) Material Adverse Effect. No material adverse change
shall have occurred since December 31, 1997 in the condition
(financial or otherwise), business, management or prospects of the
Borrower and its Subsidiaries taken as a whole.
(h) Litigation. There shall not exist any pending or,
to the knowledge of any Credit Party, threatened action, suit,
investigation or proceeding against a Credit Party or any of their
Subsidiaries that would have or would reasonably be expected to have a
Material Adverse Effect.
(i) Landlord Waiver. With respect to each leased
location of a Credit Party (i) on which such Credit Party maintains in
excess of $400,000 of inventory and (ii) for which the Agent in its
sole discretion determines that a landlord consent is required,
receipt by the Agent of a landlord consent from the respective
landlord in form and substance satisfactory to the Agent.
(j) Officer's Certificates. The Agent shall have received a
certificate or certificates executed by an Executive Officer of the
Borrower as of the Effective Date stating that (i) except for the
Indenture Default, the Borrower and each of its Subsidiaries are in
compliance with all existing financial obligations, (ii) no action,
suit, investigation or proceeding is pending or, to the knowledge of
any Credit Party, threatened in any court or before any arbitrator or
governmental instrumentality that purports to effect the Borrower, any
of the its Subsidiaries or any transaction contemplated by the Credit
Documents, if such action, suit, investigation or proceeding would
have or might reasonably be expected to
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have a Material Adverse Effect, (iii) the financial statements and
information delivered to the Agent on or before the Effective Date
were prepared in good faith and in accordance with GAAP and (iv)
immediately after giving effect to this Credit Agreement, the other
Credit Documents and all the transactions contemplated therein to
occur on such date, (A) the Borrower and each of its Subsidiaries is
Solvent, (B) no Default or Event of Default exists, (C) all
representations and warranties contained herein and in the other
Credit Documents are true and correct in all material respects, and
(D) the Credit Parties are in compliance with each of the financial
covenants set forth in Section 7.2.
(k) Borrowing Base Report. A Borrowing Base Report, in
the form of Exhibit 7.1(d), dated as of the Effective Date.
(l) Fees and Expenses. Payment by the Credit Parties of
the fees and expenses owed by them to the Agent, as set forth in the
Fee Letter.
(m) Priority of Liens. The Agent shall have received
satisfactory evidence that none of the Collateral is subject to any
Liens other than Permitted Liens.
(n) Year 2000. Receipt by the Agent of evidence that (a)
the Borrower and its Subsidiaries are taking all necessary and
appropriate steps to ascertain the extent of, and to quantify and
successfully address, business and financial risks facing the Borrower
and such Subsidiary as a result of what is commonly referred to as the
`Year 2000 problem' (i.e., the inability of certain computer
applications to recognize correctly and perform date-sensitive
functions involving certain dates prior to and after December 31,
1999), including risks resulting from the failure of key vendors and
customers of the Borrower or any Subsidiary to successfully address
the Year 2000 problem, and (b) the Borrower and each Subsidiary's
material computer applications and those of its key vendors and
customers will, on a timely basis, adequately address the Year 2000
problem in all material respects.
(o) Maxim Group Credit Agreement. Receipt by the Agent
of evidence that conditions precedent to the effectiveness of the
Maxim Group Credit Agreement shall have been satisfied.
(p) Other. Receipt and satisfactory review by the Agent
of such other documents, instruments, agreements or information as
reasonably and timely requested by the Agent or any Lender, including,
but not limited to, information regarding litigation, tax, accounting,
labor, insurance, pension liabilities (actual or contingent), real
estate leases, material contracts, debt agreements, property ownership
and contingent liabilities of the Borrower and its Subsidiaries.
5.2 Conditions to All Extensions of Credit.
In addition to the conditions precedent stated elsewhere herein, the
Lenders shall not be obligated to make Loans nor shall an Issuing Lender be
required to issue or extend a Letter of Credit unless:
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(a) Notice. The Borrower shall have delivered (i) in the
case of any new Revolving Loan, a Notice of Borrowing, duly executed
and completed, by the time specified in Section 2.1 and (ii) in the
case of any Letter of Credit, the Issuing Lender shall have received
an appropriate request for issuance in accordance with the provisions
of Section 2.2;
(b) Representations and Warranties. The representations
and warranties made by the Credit Parties in any Credit Document are
true and correct in all material respects at and as if made as of such
date except to the extent they expressly relate to an earlier date;
(c) No Default. No Default or Event of Default shall
exist or be continuing either prior to or after giving effect thereto;
and
(d) Availability. Immediately after giving effect to the
making of a Loan (and the application of the proceeds thereof) or to
the issuance of a Letter of Credit, as the case may be, the sum of the
Revolving Loans outstanding plus LOC Obligations outstanding shall not
exceed the lesser of (i) the Revolving Committed Amount and (ii) the
Borrowing Base Assets.
The delivery of each Notice of Borrowing and each request for a Letter of
Credit shall constitute a representation and warranty by the Borrower of the
correctness of the matters specified in subsections (b), (c), and (d) above.
SECTION 6
REPRESENTATIONS AND WARRANTIES
The Credit Parties hereby represent to the Agent and each Lender that:
6.1 Financial Condition.
(a) The financial statements delivered to the Lenders
prior to the Effective Date and pursuant to Section 7.1(a) and (b):
(i) have been prepared in accordance with GAAP and (ii) present fairly
the consolidated and consolidating (as applicable) financial
condition, results of operations and cash flows of the Credit Parties
and their Subsidiaries as of such date and for such periods.
(b) Since December 31, 1997, there has been no sale,
transfer or other disposition by any Credit Party or any of their
Subsidiaries of any material part of the business or property of the
Credit Parties, taken as a whole, and no purchase or other acquisition
by any of them of any business or property (including any capital
stock of any other Person) material in relation to the consolidated
financial condition of the Credit Parties, taken as a whole, in each
case, which, is not (i) reflected in the most recent financial
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statements delivered to the Lenders pursuant to Section 7.1 or in the
notes thereto or (ii) otherwise permitted by the terms of this Credit
Agreement and communicated to the Agent.
6.2 No Material Change.
Since the Effective Date, there has been no development or event
relating to or affecting a Credit Party or any of their Subsidiaries which has
had or would be reasonably expected to have a Material Adverse Effect. To the
knowledge of any Credit Party, since December 31, 1997, there has been no
development or event relating to or affecting a Credit Party or any of their
Subsidiaries which has had or would be reasonably expected to have a Material
Adverse Effect.
6.3 Organization and Good Standing.
Each Credit Party (a) is duly organized, validly existing and in good
standing under the laws of the State (or other jurisdiction) of its
incorporation or formation, (b) is duly qualified and in good standing and
authorized to do business in every jurisdiction unless the failure to be so
qualified, in good standing or authorized would have a Material Adverse Effect
and (c) has the right, power and authority to own its properties and to carry
on its business as now conducted and as proposed to be conducted.
6.4 Due Authorization.
Each Credit Party (a) has the right, power and authority to execute,
deliver and perform this Credit Agreement and the other Credit Documents to
which it is a party and to incur the obligations herein and therein provided
for and (b) is duly authorized to, and has been authorized by all necessary
corporate and other action, to execute, deliver and perform this Credit
Agreement and the other Credit Documents to which it is a party.
6.5 No Conflicts.
Neither the execution and delivery of the Credit Documents, nor the
consummation of the transactions contemplated therein, nor performance of and
compliance with the terms and provisions thereof by such Credit Party will (a)
violate or conflict with any provision of the articles or certificate of
incorporation, bylaws or other organizational documents of the Borrower or any
of its Subsidiaries, (b) violate, contravene or materially conflict with any
Requirement of Law or any other law, regulation (including, without limitation,
Regulation U or Regulation X), order, writ, judgment, injunction, decree or
permit applicable to it, (c) violate, contravene or conflict with contractual
provisions of, or cause an event of default under, any indenture, loan
agreement, mortgage, deed of trust, contract or other agreement or instrument
to which it is a party or by which it may be bound, the violation of which
could have or might be reasonably expected to have a Material Adverse Effect,
or (d) result in or require the creation of any Lien (other than those
contemplated in or created in connection with the Credit Documents) upon or
with respect to its properties.
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6.6 Consents.
Except for consents, approvals and authorizations which have been
obtained, no consent, approval, authorization or order of, or filing,
registration or qualification with, any court or Governmental Authority or
third party in respect of any Credit Party is required in connection with the
execution, delivery or performance of this Credit Agreement or any of the other
Credit Documents by such Credit Party.
6.7 Enforceable Obligations.
This Credit Agreement and the other Credit Documents have been duly
executed and delivered and constitute legal, valid and binding obligations of
each Credit Party enforceable against such Credit Party in accordance with
their respective terms, except as may be limited by bankruptcy, insolvency,
reorganization or moratorium laws or similar laws relating to or affecting
creditors' rights generally or by general equitable principles.
6.8 No Default.
Except for the Indenture Default, no Credit Party, nor any of their
Subsidiaries, is in default in any respect under any contract, lease, loan
agreement, indenture, mortgage, security agreement or other agreement or
obligation to which it is a party or by which any of its properties is bound
which default would have or would be reasonably expected to have a Material
Adverse Effect. No Default or Event of Default exists except as previously
disclosed in writing to the Lenders.
6.9 Ownership.
Each Credit Party, and each of its Subsidiaries, is the owner of, and
has good and marketable title to, or has a valid license to use all of its
respective assets and none of such assets is subject to any Lien other than
Permitted Liens.
6.10 Indebtedness.
The Credit Parties and their Subsidiaries have no Indebtedness except
(a) as disclosed in the financial statements referenced in Section 6.1, (b) as
set forth on Schedule 6.10 and (c) as otherwise permitted by this Credit
Agreement.
6.11 Litigation.
There are no actions, suits or legal, equitable, arbitration or
administrative proceedings, pending or, to the knowledge of any Credit Party,
threatened against, any Credit Party or any of its Subsidiaries which could
have or might be reasonably expected to have a Material Adverse Effect.
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6.12 Taxes.
Each Credit Party, and each of its Subsidiaries, has filed, or caused
to be filed, all material tax returns (federal, state, local and foreign)
required to be filed and paid (a) all material amounts of taxes shown thereon
to be due and payable (including interest and penalties) and (b) all material
other taxes, fees, assessments and other governmental charges (including
documentary stamp taxes and intangibles taxes) that are due and payable, except
for such taxes (i) which are not yet delinquent or (ii) that are being
contested in good faith and by proper proceedings, and against which adequate
reserves are being maintained in accordance with GAAP. To the knowledge of the
Credit Parties, there are no material amounts claimed to be due against any of
them by any Governmental Authority.
6.13 Compliance with Law.
Each Credit Party, and each of its Subsidiaries, is in compliance with
all Requirements of Law and all other laws, rules, regulations, orders and
decrees (including without limitation Environmental Laws) applicable to it, or
to its properties, unless such failure to comply would not have or would not be
reasonably expected to have a Material Adverse Effect.
6.14 ERISA.
Except as would not result or be reasonably expected to result in a
Material Adverse Effect:
(a) During the five-year period prior to the date on
which this representation is made or deemed made: (i) no Termination
Event has occurred, and, to the knowledge of the Credit Parties, no
event or condition has occurred or exists as a result of which any
Termination Event could reasonably be expected to occur, with respect
to any Plan; (ii) no "accumulated funding deficiency," as such term is
defined in Section 302 of ERISA and Section 412 of the Code, whether
or not waived, has occurred with respect to any Plan; (iii) each Plan
has been maintained, operated, and funded in compliance with its own
terms and in material compliance with the provisions of ERISA, the
Code, and any other applicable federal or state laws; and (iv) no lien
in favor or the PBGC or a Plan has arisen or is reasonably likely to
arise on account of any Plan.
(b) The actuarial present value of all "benefit
liabilities" under each Single Employer Plan (determined within the
meaning of Section 401(a)(2) of the Code, utilizing the actuarial
assumptions used to fund such Plans), whether or not vested, did not,
as of the last annual valuation date prior to the date on which this
representation is made or deemed made, exceed the current value of the
assets of such Plan allocable to such accrued liabilities.
(c) Neither the Borrower, nor any of its Subsidiaries
nor any ERISA Affiliate has incurred, or, to the knowledge of the
Credit Parties, are reasonably expected to incur, any withdrawal
liability under ERISA to any Multiemployer Plan or Multiple Employer
Plan. Neither the Borrower, any of its Subsidiaries nor any ERISA
Affiliate has received
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any notification that any Multiemployer Plan is in reorganization
(within the meaning of Section 4241 of ERISA), is insolvent (within
the meaning of Section 4245 of ERISA), or has been terminated (within
the meaning of Title IV of ERISA), and no Multiemployer Plan is, to
the best knowledge of the Credit Parties, reasonably expected to be in
reorganization, insolvent, or terminated.
(d) No prohibited transaction (within the meaning of
Section 406 of ERISA or Section 4975 of the Code) or breach of
fiduciary responsibility has occurred with respect to a Plan which has
subjected or is reasonably likely to subject the Borrower or any of
its Subsidiaries or any ERISA Affiliate to any liability under
Sections 406, 409, 502(i), or 502(l) of ERISA or Section 4975 of the
Code, or under any agreement or other instrument pursuant to which the
Borrower or any of its Subsidiaries or any ERISA Affiliate has agreed
or is required to indemnify any person against any such liability.
(e) The present value (determined using actuarial and
other assumptions which are reasonable with respect to the benefits
provided and the employees participating) of the liability of the
Borrower and its Subsidiaries and each ERISA Affiliate for
post-retirement welfare benefits to be provided to their current and
former employees under Plans which are welfare benefit plans (as
defined in Section 3(1) of ERISA), net of all assets under all such
Plans allocable to such benefits, are reflected on the Financial
Statements in accordance with FASB 106.
(f) Each Plan which is a welfare plan (as defined in
Section 3(1) of ERISA) to which Sections 601-609 of ERISA and Section
4980B of the Code apply has been administered in material compliance
with such sections.
6.15 Subsidiaries.
Set forth on Schedule 6.15 is a complete and accurate list of all
Subsidiaries of each Credit Party. Information on Schedule 6.15 includes
jurisdiction of incorporation or organization, the number of shares of each
class of capital stock or other equity interests outstanding, the number and
percentage of outstanding shares of each class owned (directly or indirectly)
by such Credit Party; and the number and effect, if exercised, of all
outstanding options, warrants, rights of conversion or purchase and all other
similar rights with respect thereto. The outstanding capital stock and other
equity interests of all such Subsidiaries is validly issued, fully paid and
non-assessable and is owned by each such Credit Party, directly or indirectly,
free and clear of all Liens (other than those arising under or contemplated in
connection with the Credit Documents). Other than as set forth in Schedule
6.15, neither any Credit Party nor any Subsidiary thereof has outstanding any
securities convertible into or exchangeable for its capital stock nor does any
such Person have outstanding any rights to subscribe for or to purchase or any
options for the purchase of, or any agreements providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims of any
character relating to its capital stock. Schedule 6.15 may be updated from time
to time by the Borrower by giving written notice thereof to the Agent. As of
the Closing Date, none of the Credit Parties owns any shares of capital stock
in any Foreign Subsidiaries.
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6.16 Use of Proceeds.
The proceeds of the Loans hereunder will be used solely for the
purposes specified in Section 7.11. No proceeds of the Loans hereunder have
been or will be used (a) to acquire, directly or indirectly, any security in
any transaction which is subject to Sections 13 or 14 of the Securities
Exchange Act of 1934, as amended, (including, without limitation, Sections
13(d) and 14(d) thereof) or to refinance any Indebtedness used to acquire any
such securities or (b) for the acquisition of another Person unless the board
of directors (or other comparable governing body) or stockholders, as
appropriate, of such Person has approved such acquisition.
6.17 Government Regulation.
(a) No part of the Letters of Credit or proceeds of the
Loans will be used, directly or indirectly, for the purpose of
purchasing or carrying any "margin stock" within the meaning of
Regulation U, or for the purpose of purchasing or carrying or trading
in any securities. If requested by any Lender or the Agent, the
Borrower will furnish to the Agent and each Lender a statement to the
foregoing effect in conformity with the requirements of FR Form U-1
referred to in Regulation U. No Indebtedness being reduced or retired
out of the proceeds of the Loans was or will be incurred for the
purpose of purchasing or carrying any margin stock within the meaning
of Regulation U or any "margin security" within the meaning of
Regulation T. "Margin stock" within the meaning of Regulation U does
not constitute more than 25% of the value of the consolidated assets
of the Credit Parties and their Subsidiaries. None of the transactions
contemplated by the Credit Documents (including, without limitation,
the direct or indirect use of the proceeds of the Loans) will violate
or result in a violation of the Securities Act of 1933, as amended, or
the Securities Exchange Act of 1934, as amended, or regulations issued
pursuant thereto, or Regulation T, U or X.
(b) No Credit Party, nor any of their Subsidiaries, is
subject to regulation under the Public Utility Holding Company Act of
1935, the Federal Power Act or the Investment Company Act of 1940,
each as amended. In addition, no Credit Party, nor any of their
Subsidiaries, is (i) an "investment company" registered or required to
be registered under the Investment Company Act of 1940, as amended,
and is not controlled by such a company, or (ii) a "holding company",
or a "subsidiary company" of a "holding company", or an "affiliate" of
a "holding company" or of a "subsidiary" of a "holding company",
within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
(c) No director, executive officer or principal
shareholder of any Credit Party or any of their Subsidiaries is a
director, executive officer or principal shareholder of any Lender.
For the purposes hereof the terms "director", "executive officer" and
"principal shareholder" (when used with reference to any Lender) have
the respective meanings assigned thereto in Regulation O issued by the
Board of Governors of the Federal Reserve System.
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6.18 Environmental Matters.
(a) Except as would not cause or reasonably be expected
to cause a Material Adverse Effect:
(i) Each of the Real Properties and all
operations at the Real Properties are in compliance with all
applicable Environmental Laws, and there is no violation of
any Environmental Law with respect to the Real Properties or
the businesses operated by the Credit Parties or any of their
Subsidiaries (the "Businesses"), and there are no conditions
relating to the Businesses or Real Properties that would
reasonably be expected to give rise to liability under any
applicable Environmental Laws.
(ii) No Credit Party has received any written
notice of, or inquiry from any Governmental Authority
regarding, any violation, alleged violation, non-compliance,
liability or potential liability regarding Hazardous
Materials or compliance with Environmental Laws with regard
to any of the Real Properties or the Businesses, nor, to the
knowledge of a Credit Party or any of its Subsidiaries, is
any such notice being threatened.
(iii) Hazardous Materials have not been
transported or disposed of from the Real Properties, or
generated, treated, stored or disposed of at, on or under any
of the Real Properties or any other location, in each case
by, or on behalf or with the permission of, a Credit Party or
any of its Subsidiaries in a manner that would give rise to
liability under any applicable Environmental Laws.
(iv) No judicial proceeding or governmental or
administrative action is pending or, to the knowledge of a
Credit Party or any of its Subsidiaries, threatened, under
any Environmental Law to which a Credit Party or any of its
Subsidiaries is or will be named as a party, nor are there
any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other
administrative or judicial requirements outstanding under any
Environmental Law with respect to a Credit Party or any of
its Subsidiaries, the Real Properties or the Businesses.
(v) There has been no release (including,
without limitation, disposal) or threat of release of
Hazardous Materials at or from the Real Properties, or
arising from or related to the operations of a Credit Party
or any of its Subsidiaries in connection with the Real
Properties or otherwise in connection with the Businesses
where such release constituted a violation of, or would give
rise to liability under, any applicable Environmental Laws.
(vi) None of the Real Properties contains, or
has previously contained, any Hazardous Materials at, on or
under the Real Properties in amounts or concentrations that,
if released, constitute or constituted a violation of, or
could give rise to liability under, Environmental Laws.
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(vii) No Credit Party, nor any of its
Subsidiaries, has assumed any liability of any Person (other
than another Credit Party, or one of its Subsidiaries) under
any Environmental Law.
(b) The Credit Parties have adopted procedures that are
designed to (i) ensure that each Credit Party, any of its operations
and each of the properties owned or leased by each Credit Party
complies with applicable Environmental Laws and (ii) minimize any
liabilities or potential liabilities that each Credit Party, any of
its operations and each of the properties owned or leased by each
Credit Party may have under applicable Environmental Laws.
6.19 Intellectual Property.
Each Credit Party owns, or has the legal right to use, all patents,
trademarks, tradenames, copyrights, technology, know-how and processes (the
"Intellectual Property") necessary for each of them to conduct its business as
currently conducted except for those the failure to own or have such legal
right to use would not have or be reasonably expected to have a Material
Adverse Effect. Set forth on Schedule 6.19 is a list of all patents, registered
and material unregistered trademarks, tradenames and registered copyrights
owned by each Credit Party or that any Credit Party has the right to use.
Except as provided on Schedule 6.19, none of the Intellectual Property is
subject to any licensing or franchise agreement. Furthermore, except as
provided on Schedule 6.19, no claim has been asserted against any Credit Party
or its Subsidiaries in writing and is pending by any Person challenging or
questioning the use of any Intellectual Property owned by a Credit Party or
that any Credit Party has a right to use or the validity or effectiveness of
any such Intellectual Property, nor does any Credit Party have knowledge of any
such claim, and to the Credit Parties' knowledge the use of any Intellectual
Property by the Credit Parties or any of their Subsidiaries does not infringe
on the rights of any Person, except for such claims and infringements that in
the aggregate, would not have or be reasonably expected to have a Material
Adverse Effect. Schedule 6.19 may be updated from time to time by the Borrower
by giving written notice thereof to the Agent.
6.20 Solvency.
Each Credit Party is and, after consummation of the transactions
contemplated by this Credit Agreement, will be Solvent.
6.21 Investments.
All Investments of each Credit Party and its Subsidiaries are
Permitted Investments.
6.22 Location of Collateral.
Set forth on Schedule 6.22(a) is a list of all Real Properties with
street address, county and state where located. Set forth on Schedule 6.22(b)
is a list of all locations where any personal
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property of a Credit Party is located, including county and state where
located. Set forth on Schedule 6.22(c) is the chief executive office and
principal place of business of each Credit Party. Schedules 6.22(a), 6.22(b)
and 6.22(c) may be updated from time to time by the Borrower by giving written
notice thereof to the Agent.
6.23 Disclosure.
Neither this Credit Agreement nor any financial statements delivered
to the Lenders nor any other document, certificate or statement furnished to
the Lenders by or on behalf of any Credit Party in connection with the
transactions contemplated hereby contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the
statements contained therein or herein, taken as a whole, not misleading.
6.24 Licenses, etc.
The Credit Parties have obtained and hold in full force and effect,
all franchises, licenses, permits, certificates, authorizations,
qualifications, accreditations, easements, rights of way and other rights,
consents and approvals which are necessary for the operation of their
respective businesses as presently conducted, except where the failure to
obtain same would not have a Material Adverse Effect.
6.25 Collateral Documents.
The Collateral Documents create valid security interests in, and Liens
on, the Collateral purported to be covered thereby, which security interests
and Liens are prior to all other Liens other than Permitted Liens.
6.26 Burdensome Restrictions.
No Credit Party, nor any of this Subsidiaries, is a party to any
agreement or instrument or subject to any other obligation or any charter or
corporate restriction or any provision of any applicable law, rule or
regulation which, individually or in the aggregate, would have or be reasonably
expected to have a Material Adverse Effect.
6.27 Year 2000 Compliance.
Each Credit Party has (i) initiated a review and assessment
of all areas within its and each of its Subsidiaries' business and operations
(including those affected by suppliers, vendors and customers) that could be
adversely affected by the "Year 2000 Problem" (that is, the risk that computer
applications used by such Credit Party or any of its Subsidiaries may be unable
to recognize and perform properly date-sensitive functions involving certain
dates prior to and any date after December 31, 1999), (ii) developed a plan and
timeline for addressing the Year 2000 Problem on a timely basis, and (iii) to
date, implemented that plan in accordance with the timetable. Based on the
foregoing, each Credit Party believes that all computer applications (including
those of its suppliers, vendors and customers) that are material to its and any
of its
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Subsidiaries' business and operations are reasonably expected on a timely basis
to be able to perform properly date-sensitive functions for all dates before
and after January 1, 2000 (that is, be "Year 2000 compliant"), except to the
extent that a failure to do so could not reasonably be expected to have
Material Adverse Effect.
6.28 Labor Contracts and Disputes.
(i) There is no collective bargaining agreement or other labor
contract covering employees of any Credit Party; (ii) no union or other labor
organization is seeking to organize, or be recognized as, a collective
bargaining unit of employees of any Credit Party; (iii) there is no pending, or
to any Credit Party's knowledge, threatened, strike, work stoppage, material
unfair lease practice claim or other material labor dispute against or
effecting any Credit Party or its employees.
SECTION 7
AFFIRMATIVE COVENANTS
Each Credit Party hereby covenants and agrees that so long as this
Credit Agreement is in effect and until the Loans and LOC Obligations, together
with interest and fees and other obligations then due and payable hereunder,
have been paid in full and the Commitments and Letters of Credit hereunder
shall have terminated:
7.1 Information Covenants.
The Credit Parties will furnish, or cause to be furnished, to the
Agent and each of the Lenders:
(a) Annual Financial Statements. As soon as available,
and in any event within 90 days after the close of each fiscal year of
the Borrower, a consolidated and consolidating balance sheet and
income statement of the Borrower and its Subsidiaries, as of the end
of such fiscal year, together with related consolidated and
consolidating statements of operations and retained earnings and of
cash flows for such fiscal year, setting forth in comparative form
consolidated and consolidating figures for the preceding fiscal year,
all such consolidated financial information described above to be in
reasonable form and detail and audited by independent certified public
accountants of recognized national standing reasonably acceptable to
the Agent and whose opinion shall be to the effect that such financial
statements have been prepared in accordance with GAAP (except for
changes with which such accountants concur) and shall not be limited
as to the scope of the audit or qualified in any manner.
(b) Quarterly Financial Statements. As soon as
available, and in any event within 45 days after the close of each
fiscal quarter of the Borrower, a consolidated and consolidating
balance sheet and income statement of the Borrower and its
Subsidiaries, as
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of the end of such fiscal quarter, together with related consolidated
and consolidating statements of operations and retained earnings and
of cash flows for such fiscal quarter in each case setting forth in
comparative form consolidated and consolidating figures for the
corresponding period of the preceding fiscal year, all such financial
information described above to be in reasonable form and detail and
reasonably acceptable to the Agent, and accompanied by a certificate
of the chief financial officer of the Borrower to the effect that such
quarterly financial statements fairly present in all material respects
the financial condition of the Borrower and its Subsidiaries and have
been prepared in accordance with GAAP, subject to changes resulting
from audit and normal year-end audit adjustments.
(c) Monthly Financial Statements. As soon as available,
and in any event within 20 days after the close of each calendar
month, a consolidated and consolidating balance sheet and income
statement of the Borrower and its Subsidiaries, as of the end of such
calendar month, together with related consolidated and consolidating
statements of operations and retained earnings and of cash flows for
such calendar month in each case setting forth in comparative form
consolidated and consolidating figures for the corresponding period of
the preceding fiscal year, all such financial information described
above to be in reasonable form and detail and reasonably acceptable to
the Agent, and accompanied by a certificate of the chief financial
officer of the Borrower to the effect that such monthly financial
statements fairly present in all material respects the financial
condition of the Borrower and its Subsidiaries and have been prepared
in accordance with GAAP, subject to changes resulting from audit and
normal year-end audit adjustments.
(d) Borrowing Base Report. Within 20 days after the end
of each calendar month or at any other time reasonably required by the
Agent, a Borrowing Base Report, as of the end of the immediately
preceding month in each case in substantially the form of Exhibit
7.1(d) and certified by an Executive Officer of the Borrower to be
true and correct as of the date thereof.
(e) Officer's Certificate. At the time of delivery of
the financial statements provided for in Sections 7.1(a) and 7.1(b)
above, a certificate of an Executive Officer of the Borrower
substantially in the form of Exhibit 7.1(e), (i) demonstrating
compliance with the financial covenants contained in Section 7.2 by
calculation thereof as of the end of each such fiscal period, (ii)
demonstrating compliance with any other terms of this Credit Agreement
as requested by the Agent and (iii) stating that no Default or Event
of Default exists, or if any Default or Event of Default does exist,
specifying the nature and extent thereof and what action the Borrower
proposes to take with respect thereto.
(f) Annual Business Plan and Budgets. Prior to the end
of each fiscal year of the Borrower, an annual business plan and
budget of the Borrower and its Subsidiaries on a consolidated basis
containing, among other things, pro forma financial projections
(including without limitation, income statement, balance sheet and
statement of cash flows) for the next fiscal year.
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(g) Accountant's Certificate. Within the period for
delivery of the annual financial statements provided in Section
7.1(a), a certificate of the accountants conducting the annual audit
stating that they have reviewed this Credit Agreement and stating
further whether, in the course of their audit, they have become aware
of any Default or Event of Default and, if any such Default or Event
of Default exists, specifying the nature and extent thereof.
(h) Auditor's Reports. Promptly upon receipt thereof, a
copy of any "management letter" submitted by independent accountants
to the Borrower or any of its Subsidiaries in connection with any
annual, interim or special audit of the books of the Borrower or any
of its Subsidiaries.
(i) Reports. Promptly upon transmission or receipt
thereof, (a) copies of any public filings and registrations with, and
reports to or from, the Securities and Exchange Commission, or any
successor agency, and copies of all financial statements, proxy
statements, notices and reports as the Borrower or any of its
Subsidiaries shall send to its shareholders generally and (b) upon the
written request of the Agent, all reports and written information to
and from the United States Environmental Protection Agency, or any
state or local agency responsible for environmental matters, the
United States Occupational Health and Safety Administration, or any
state or local agency responsible for health and safety matters, or
any successor agencies or authorities concerning environmental, health
or safety matters.
(j) Notices. Upon an officer of a Credit Party obtaining
knowledge thereof, the Borrower will give written notice to the Agent
promptly (and in any event within two Business Days) of (a) the
occurrence of an event or condition consisting of a Default or Event
of Default, specifying the nature and existence thereof and what
action the Borrower proposes to take with respect thereto, and (b) the
occurrence of any of the following with respect to the Borrower or any
of its Subsidiaries: (i) the pendency or commencement of any
litigation, arbitral or governmental proceeding against a Credit Party
or any of its Subsidiaries which if adversely determined would have or
would be reasonably expected to have a Material Adverse Effect, (ii)
the institution of any proceedings against a Credit Party or any of
its Subsidiaries with respect to, or the receipt of written notice by
such Person of potential liability or responsibility for violation, or
alleged violation of any federal, state or local law, rule or
regulation, (including but not limited to, Environmental Laws) the
violation of which would have or would be reasonably expected to have
a Material Adverse Effect, or (iii) any information that a Credit
Party may have a Year 2000 Problem on or after January 1, 2000.
(k) ERISA. Upon any of the Credit Parties or any ERISA
Affiliate obtaining knowledge thereof, the Borrower will give written
notice to the Agent promptly (and in any event within two Business
Days) of: (i) any event or condition, including, but not limited to,
any Reportable Event, that constitutes, or might reasonably lead to, a
Termination Event; (ii) with respect to any Multiemployer Plan, the
receipt of notice as prescribed in ERISA or otherwise of any
withdrawal liability assessed against the Credit Parties or any of
their
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ERISA Affiliates, or of a determination that any Multiemployer Plan is
in reorganization or insolvent (both within the meaning of Title IV of
ERISA); (iii) the failure to make full payment on or before the due
date (including extensions) thereof of all amounts which a Credit
Party or any of its Subsidiaries or ERISA Affiliates is required to
contribute to each Plan pursuant to its terms and as required to meet
the minimum funding standard set forth in ERISA and the Code with
respect thereto; or (iv) any change in the funding status of any Plan
that could have a Material Adverse Effect; together, with a
description of any such event or condition or a copy of any such
notice and a statement by the principal financial officer of the
Borrower briefly setting forth the details regarding such event,
condition, or notice, and the action, if any, which has been or is
being taken or is proposed to be taken by the Credit Parties with
respect thereto. Promptly upon request, a Credit Party shall furnish
the Agent and each of the Lenders with such additional information
concerning any Plan as may be reasonably requested, including, but not
limited to, copies of each annual report/return (Form 5500 series), as
well as all schedules and attachments thereto required to be filed
with the Department of Labor and/or the Internal Revenue Service
pursuant to ERISA and the Code, respectively, for each "plan year"
(within the meaning of Section 3(39) of ERISA).
(l) Environmental.
(i) Subsequent to a notice from any
Governmental Authority where the subject matter of such
notice would reasonably cause concern, or during the
existence of an Event of Default, and upon the written
request of Agent, the Credit Parties will furnish or cause to
be furnished to the Agent, at the Credit Parties' expense, a
report of an environmental assessment of reasonable scope,
form and depth, including, where appropriate, invasive soil
or groundwater sampling, by a consultant reasonably
acceptable to the Agent addressing the subject of such notice
or, if during the existence of an Event of Default, regarding
any release or threat of release of Hazardous Materials on
any property owned, leased or operated by a Credit Party and
the compliance by the Credit Parties with Environmental Laws.
If the Credit Parties fail to deliver such an environmental
report within sixty (60) days after receipt of such written
request, then the Agent may arrange for same, and the Credit
Parties hereby grant to the Agent and its representatives
access to the Real Properties and a license of a scope
reasonably necessary to undertake such an assessment
(including, where appropriate, invasive soil or groundwater
sampling). The reasonable cost of any assessment arranged for
by the Agent pursuant to this provision will be payable by
the Credit Parties on demand and added to the obligations
secured by the Collateral Documents.
(ii) Each Credit Party will conduct and complete
all investigations, studies, sampling, and testing and all
remedial, removal, and other actions necessary to address all
Hazardous Materials on, from, or affecting any real property
owned or leased by a Credit Party to the extent necessary to
be in compliance with all Environmental Laws and all other
applicable federal, state, and local laws, regulations, rules
and policies and with the orders and directives of all
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Governmental Authorities exercising jurisdiction over such
real property to the extent any failure would have or be
reasonably expected to have a Material Adverse Effect.
(m) Other Information. With reasonable promptness upon
any such request, such other information regarding the business,
properties or financial condition of the Credit Parties and their
Subsidiaries as the Agent may reasonably request.
7.2 Financial Covenants.
(a) Current Ratio. The Current Ratio, measured as of the
last day of each fiscal quarter of the Borrower, shall be greater than
or equal to 1.75 to 1.0.
(b) Interest Coverage Ratio. The Interest Coverage Ratio
(beginning with the fiscal quarter ending January 31, 1999), measured
as of the last day of each fiscal quarter of the Borrower, shall be
greater than or equal to 1.10 to 1.0.
(c) Net Worth. As of the last day of each fiscal quarter
of the Borrower, the Net Worth shall be greater than or equal to the
sum of (i) $80 million plus (ii) 50% of the cumulative Net Income
(without deduction for losses) earned for each completed fiscal
quarter subsequent to the Closing Date to the date of determination
plus (iii) 100% of the amount of Net Cash Proceeds from any Equity
Issuance.
7.3 Preservation of Existence and Franchises.
Each of the Credit Parties will do all things necessary to (a)
preserve and keep in full force and effect its existence and (b) take all
reasonable action to maintain all rights, franchises and authority necessary or
desirable in the normal conduct of its business, except as permitted by Section
8.4.
7.4 Books and Records.
Each of the Credit Parties will, and cause its Subsidiaries to, keep
complete and accurate books and records of its transactions in accordance with
GAAP (including the establishment and maintenance of appropriate reserves).
7.5 Compliance with Law.
Each of the Credit Parties will, and cause its Subsidiaries to, comply
with all material laws, rules, regulations and orders, and all applicable
material restrictions imposed by all Governmental Authorities, applicable to it
and its property (including, without limitation, Environmental Laws).
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7.6 Payment of Taxes and Other Indebtedness.
Each of the Credit Parties will pay, settle or discharge (a) all
taxes, assessments and governmental charges or levies imposed upon it, or upon
its income or profits, or upon any of its properties, before they shall become
delinquent, (b) all lawful claims (including claims for labor, materials and
supplies) which, if unpaid, might give rise to a Lien upon any of its
properties, and (c) all of its other Indebtedness as it shall become due (to
the extent such repayment is not otherwise prohibited by this Credit
Agreement); provided, however, that a Credit Party shall not be required to pay
any such tax, assessment, charge, levy, claim or Indebtedness which is being
contested in good faith by appropriate proceedings and as to which adequate
reserves therefor have been established in accordance with GAAP, unless the
failure to make any such payment (i) would give rise to an immediate right to
foreclose or collect on a Lien securing such amounts or (ii) would have or
reasonably be expected to have a Material Adverse Effect.
7.7 Insurance.
Each of the Credit Parties will at all times maintain in full force
and effect insurance (including worker's compensation insurance, liability
insurance, casualty insurance and business interruption insurance) in such
amounts, covering such risks and liabilities and with such deductibles or
self-insurance retentions as are in accordance with normal industry practice.
All policies shall have the Agent, on behalf of the Lenders, named as an
additional insured and loss payee.
In the event there occurs any material loss, damage to or destruction of the
Collateral of any Credit Party or any part thereof, such Credit Party shall
promptly give written notice thereof to the Agent generally describing the
nature and extent of such damage or destruction. Subsequent to any loss, damage
to or destruction of the Collateral of any Credit Party or any part thereof,
such Credit Party, whether or not the insurance proceeds, if any, received on
account of such damage or destruction shall be sufficient for that purpose, at
such Credit Party's cost and expense, will promptly repair or replace the
Collateral of such Credit Party so lost, damaged or destroyed; provided,
however, that such Credit Party need not repair or replace the Collateral of
such Credit Party so lost, damaged or destroyed to the extent the failure to
make such repair or replacement (a) is desirable to the proper conduct of the
business of such Credit Party in the ordinary course and otherwise is in the
best interest of such Credit Party and (b) would not materially impair the
rights and benefits of the Agent or the Lenders under this Credit Agreement or
any other Credit Document. In the event a Credit Party shall receive any
insurance proceeds, as a result of any loss, damage or destruction of
Collateral, in a net amount in excess of $500,000, such Credit Party will
immediately pay over such proceeds to the Agent as cash collateral for the
Credit Party Obligations. The Agent agrees to release such insurance proceeds
to such Credit Party for replacement or restoration of the portion of the
Collateral of such Credit Party lost, damaged or destroyed if (A) within 30
days from the date the Agent receives such insurance proceeds, the Agent has
received written application for such release from such Credit Party together
with evidence reasonably satisfactory to it that the Collateral lost, damaged
or destroyed has been or will be replaced or restored to its condition (or by
Collateral having a value at least equal to the condition of the asset subject
to the loss, damage or destruction) immediately prior to the loss, destruction
or other event giving rise to the payment of
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such insurance proceeds and (B) on the date of such release no Default or Event
of Default exists. If the conditions in the preceding sentence are not met, the
Agent may or, upon the request of the Required Lenders, shall at any time after
the first Business Day subsequent to the date 30 days after it received such
insurance proceeds, apply such insurance proceeds as a mandatory prepayment of
the Credit Party Obligations for application in accordance with the terms of
Section 3.3(b)(iii). All insurance proceeds shall be subject to the security
interest of the Lenders under the Collateral Documents.
The present insurance coverage of the Credit Parties and their Subsidiaries is
outlined as to carrier, policy number, expiration date, type and amount on
Schedule 7.7. Schedule 7.7 shall be amended and updated by the Credit Parties
on an at least annual basis or upon the request of the Agent.
7.8 Maintenance of Property.
Each of the Credit Parties will maintain and preserve its properties
and equipment in good repair, working order and condition, normal wear and tear
excepted, and will make, or cause to be made, in such properties and equipment
from time to time all repairs, renewals, replacements, extensions, additions,
betterments and improvements thereto as may be needed or proper, to the extent
and in the manner customary for companies in similar businesses.
7.9 Performance of Obligations.
Each of the Credit Parties will perform in all material respects all
of its obligations under the terms of all material agreements, indentures,
mortgages, security agreements or other debt instruments to which it is a party
or by which it is bound.
7.10 Collateral.
If, subsequent to the Closing Date, a Credit Party shall (a) acquire
any patented, registered or applied for intellectual property or any securities
or (b) acquire any other personal property required to be delivered to the
Agent as Collateral hereunder or under any of the Collateral Documents, the
Borrower shall immediately notify the Agent of same. Each Credit Party shall
take such action (including, but not limited to, the actions set forth in
Sections 5.1(e)), as reasonably requested by the Agent and at its own expense,
to ensure that the Agent has a perfected Lien in all owned personal property of
the Credit Parties as set forth in the Security Agreements and the Pledge
Agreements (whether now owned or hereafter acquired), subject only to Permitted
Liens. Each Credit Party shall adhere to the covenants regarding the location
of personal property as set forth in the Security Agreements.
7.11 Use of Proceeds.
The Credit Parties will use the proceeds of the Loans solely (a) to
provide working capital, (b) to make Capital Expenditures and (c) for general
corporate purposes. The Credit Parties will use the Letters of Credit solely
for the purposes set forth in Section 2.2(a).
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7.12 Audits/Inspections.
Upon reasonable notice and during normal business hours, each Credit
Party will permit representatives appointed by the Agent or any Lender,
including, without limitation, independent accountants, agents, attorneys and
appraisers to visit and inspect such Credit Party's property, including its
books and records, its accounts receivable and inventory, its facilities and
its other business assets, and to make photocopies or photographs thereof and
to write down and record any information such representative obtains and shall
permit the Agent or its representatives or any Lender or its representatives to
investigate and verify the accuracy of information provided to the Lenders,
including, without limitation, the performance of collateral valuation reviews
from time to time to assess the composition of the Borrowing Base Assets, and
to discuss all such matters with the officers, employees and representatives of
the Credit Parties. The Credit Parties agree that the Agent may conduct such
collateral reviews, at the Credit Parties' expense, as it reasonably deems
appropriate.
7.13 Additional Credit Parties.
At the time any Person becomes a Subsidiary of a Credit Party, the
Borrower shall so notify the Agent and promptly thereafter (but in any event
within 30 days after the date thereof) shall cause such Person to (a) if it is
a Domestic Subsidiary, execute a Joinder Agreement in substantially the same
form as Exhibit 7.13, (b) cause all of the capital stock of such Person (if it
is a Domestic Subsidiary) or 65% of the capital stock of such Person (if it is
a First Tier Foreign Subsidiary) to be delivered to the Agent (together with
undated stock powers signed in blank) and pledged to the Agent pursuant to an
appropriate pledge agreement in substantially the form of the Pledge Agreement
(or a joinder to the existing Pledge Agreement) and otherwise in a form
reasonably acceptable to the Agent, (c) if such Person is a Domestic
Subsidiary, pledge all of its assets to the Agent pursuant to a security
agreement in substantially the form of the Security Agreement (or a joinder to
the existing Security Agreement) and otherwise in a form reasonably acceptable
to the Agent, and (d) if such Person is a Domestic Subsidiary and has any
Subsidiaries, (A) deliver all of the capital stock of such Domestic
Subsidiaries owned by it and 65% of the stock of the First Tier Foreign
Subsidiaries owned by it (together with undated stock powers signed in blank)
to the Agent and (B) execute a pledge agreement in substantially the form of
the Pledge Agreement (or a joinder to the existing Pledge Agreement) and
otherwise in a form acceptable to the Agent, (e) if such Person is a Domestic
Subsidiary and leases any real property, cause to be delivered in a
commercially reasonable manner a landlord waiver or estoppel letter with
respect thereto in a form acceptable to the Agent) and (f) deliver such other
documentation as the Agent may reasonably request in connection with the
foregoing, including, without limitation, appropriate UCC-1 financing
statements, environmental reports, landlord's waivers, certified resolutions
and other organizational and authorizing documents of such Person and favorable
opinions of counsel to such Person (which shall cover, among other things, the
legality, validity, binding effect and enforceability of the documentation
referred to above), all in form, content and scope reasonably satisfactory to
the Agent.
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7.14 Year 2000 Compliance.
Each Credit Party will promptly notify the Agent in the event such
Credit Party discovers or determines that any computer application that is
material to its or any of its Subsidiaries' business and operations will not be
Year 2000 compliant, except to the extent that such failure could reasonably be
expected to have a Material Adverse Effect.
SECTION 8
NEGATIVE COVENANTS
Each Credit Party hereby covenants and agrees that so long as this
Credit Agreement is in effect and until the Loans and LOC Obligations, together
with interest, fees and other obligations then due and payable hereunder, have
been paid in full and the Commitments and Letters of Credit hereunder shall
have terminated:
8.1 Indebtedness.
No Credit Party will, nor will it permit any of its Subsidiaries to,
contract, create, incur, assume or permit to exist any Indebtedness, except:
(a) Indebtedness arising (i) under this Credit Agreement
and the other Credit Documents and (ii) under the Maxim Group Credit
Agreement and the other Credit Documents (as defined in the Maxim
Group Credit Agreement);
(b) Indebtedness existing as of the Closing Date as
referenced in Section 6.10 (and renewals, refinancings, replacements
or extensions thereof on terms and conditions no more favorable, in
the aggregate, to such creditor than such existing Indebtedness and in
a principal amount not in excess of that outstanding as of the date of
such renewal, refinancing, replacement or extension);
(c) Indebtedness in respect of current accounts payable
and accrued expenses incurred in the ordinary course of business and
to the extent not current, accounts payable and accrued expenses that
are subject to bona fide dispute;
(d) Indebtedness owing by a Credit Party to another
Credit Party.
(e) purchase money Indebtedness (including obligations
in respect of Capital Leases or Synthetic Leases) to finance the
purchase of fixed assets (including equipment); provided that (i) the
total of all such Indebtedness for all such Persons taken together
shall not exceed an aggregate principal amount of $1,000,000 at any
one time outstanding (in addition to any such Indebtedness referred to
in subsection (b) above); (ii) such Indebtedness when incurred shall
not exceed the purchase price of the asset(s) financed; and
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(iii) no such Indebtedness shall be refinanced for a principal amount
in excess of the principal balance outstanding thereon at the time of
such refinancing;
(f) Subordinated Guarantees;
(g) Indebtedness arising from Hedging Agreements entered
into in the ordinary course of business and not for speculative
purposes; and
(h) other unsecured Indebtedness up to $500,000, in the
aggregate, at any one time outstanding.
8.2 Liens.
No Credit Party will, nor will it permit its Subsidiaries to,
contract, create, incur, assume or permit to exist any Lien with respect to any
of its property or assets of any kind (whether real or personal, tangible or
intangible), whether now owned or after acquired, except for Permitted Liens.
8.3 Nature of Business.
No Credit Party will, nor will it permit its Subsidiaries to, alter
the character of its business from that conducted as of the Effective Date or
engage in any business other than the business conducted as of the Effective
Date and activities which are substantially similar or related thereto or
logical extensions thereof.
8.4 Consolidation and Merger.
No Credit Party will, nor will it permit any Subsidiary to, enter into
any transaction of merger or consolidation or liquidate, wind up or dissolve
itself; provided that a Credit Party or a Subsidiary of a Credit Party may
merge or consolidate with or into another Credit Party if the following
conditions are satisfied:
(a) the Agent is given prior written notice of such
action;
(b) if the merger or consolidation involves a Credit
Party, the Person formed by such consolidation or into which a Credit
Party is merged shall either (i) be such Credit Party or (ii) be a
Domestic Subsidiary and expressly assume in writing all of the
obligations of such Credit Party under the Credit Documents; provided
that if the transaction is between the Borrower and another Person,
the Borrower must be the surviving entity;
(c) the Credit Parties execute and deliver such
documents, instruments and certificates as the Agent may request
(including, if necessary, to maintain its perfection and priority in
the Collateral pledged pursuant to the Collateral Documents);
(d) immediately after giving effect to such transaction,
no Default or Event of Default shall have occurred and be continuing;
and
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(e) the Borrower delivers to the Agent an officer's
certificate demonstrating compliance with clause (b) or (c) above, as
applicable, and an opinion of counsel stating that such consolidation
or merger and any written agreement entered into in connection
therewith, comply with this Section 8.4.
8.5 Sale or Lease of Assets.
No Credit Party will, nor will it permit its Subsidiaries to, convey,
sell, lease, transfer or otherwise dispose of, in one transaction or a series
of transactions, all or any part of its business or assets whether now owned or
hereafter acquired, including, without limitation, inventory, receivables,
equipment, real property interests (whether owned or leasehold), and
securities, other than (a) any inventory sold or otherwise disposed of in the
ordinary course of business; (b) the sale, lease, transfer or other disposal by
a Credit Party (other than the Borrower) of any or all of its assets to another
Credit Party; (c) obsolete, slow-moving, idle or worn-out assets no longer used
or useful in its business or the trade in of equipment for equipment in better
condition or of better quality; (d) the transfer of assets which constitute a
Permitted Investment; (e) the lease or sublease of real property interests in
the ordinary course of business; (f) accounts receivable and related rights and
interests sold to GE Capital pursuant to the terms of the GE Capital Dealer
Agreement and (g) other sales of assets not to exceed $2,500,000, in the
aggregate, during the term of this Credit Agreement.
Upon a sale of assets permitted by this Section 8.5, the Agent shall
promptly deliver to the Borrower, upon the Borrower's request and at the
Borrower's expense, such documentation as is reasonably necessary to evidence
the release of the Agent's security interest in such assets, including, without
limitation, amendments or terminations of UCC financing statements.
8.6 Sale Leasebacks.
No Credit Party will, nor will it permit its Subsidiaries to, directly
or indirectly become or remain liable as lessee or as guarantor or other surety
with respect to any lease of any property (whether real or personal or mixed),
whether now owned or hereafter acquired, (a) which such Credit Party or its
Subsidiary has sold or transferred or is to sell or transfer to any other
Person other than a Credit Party or (b) which such Credit Party or its
Subsidiary intends to use for substantially the same purpose as any other
property which has been sold or is to be sold or transferred by such Credit
Party to any Person in connection with such lease.
8.7 Advances, Investments and Loans.
No Credit Party will, nor will it permit its Subsidiaries to, make any
Investments except for Permitted Investments.
8.8 Restricted Payments.
No Credit Party will, nor will it permit its Subsidiaries to, directly
or indirectly, (a) declare or pay any dividends or make any other distribution
upon any shares of its capital stock of any class
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or (b) purchase, redeem or otherwise acquire or retire or make any provisions
for redemption, acquisition or retirement of any shares of its capital stock of
any class or any warrants or options to purchase any such shares; provided that
(i) any Subsidiary of the Borrower may pay dividends to its parent and (ii) any
Credit Party may pay dividends to the Parent.
8.9 Transactions with Affiliates.
No Credit Party will, nor will it permit its Subsidiaries to, enter
into any transaction or series of transactions, whether or not in the ordinary
course of business, with any officer, director, shareholder, Subsidiary or
Affiliate other than on terms and conditions substantially as favorable as
would be obtainable in a comparable arm's-length transaction with a Person
other than an officer, director, shareholder, Subsidiary or Affiliate.
8.10 Fiscal Year; Organizational Documents.
No Credit Party will, nor will it permit its Subsidiaries to, (a)
change its fiscal year or (b) in any manner that would reasonably be likely to
adversely affect the rights of the Lenders, change its articles or certificate
of incorporation or its bylaws.
8.11 No Limitations.
No Credit Party will, nor will it permit its Subsidiaries to, directly
or indirectly, create or otherwise cause, incur, assume, suffer or permit to
exist or become effective any consensual encumbrance or restriction of any kind
on the ability of any such Person to (a) pay dividends or make any other
distribution on any of such Person's capital stock, (b) pay any Indebtedness
owed to any other Credit Party, (c) make loans or advances to any other Credit
Party or (d) transfer any of its property to any other Credit Party, except for
encumbrances or restrictions existing under or by reason of (i) customary
non-assignment or net worth provisions in any lease governing a leasehold
interest, (ii) any agreement or other instrument of a Person existing at the
time it becomes a Subsidiary of a Credit Party; provided that such encumbrance
or restriction is not applicable to any other Person, or any property of any
other Person, other than such Person becoming a Subsidiary of a Credit Party
and was not entered into in contemplation of such Person becoming a Subsidiary
of a Credit Party, (iii) this Credit Agreement and the other Credit Documents,
(iv) the Maxim Group Credit Agreement and the other Credit Documents (as
defined in the Maxim Group Credit Agreement) and (v) the Indenture.
8.12 No Other Negative Pledges.
No Credit Party will, nor will it permit its Subsidiaries to, enter
into, assume or become subject to any agreement prohibiting or otherwise
restricting the creation or assumption of any Lien upon its properties or
assets, whether now owned or hereafter acquired, or requiring the grant of any
security for such obligation if security is given for some other obligation
except as set forth in (a) the Credit Documents, (b) the Credit Documents (as
defined in the Maxim Group Credit Agreement) and (c) the Indenture.
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8.13 Limitation on Foreign Operations.
The Credit Parties will not, nor will they permit any of their
Subsidiaries to, allow the Foreign Subsidiaries to have assets which in the
aggregate constitute more than 5% of Total Assets at any time.
8.14 Capital Expenditures.
The Credit Parties shall not, nor will they permit any of their
Subsidiaries to, make Capital Expenditures of more than (i) $15,000,000 in the
aggregate in fiscal year 1999 and (ii) $15,000,000 in the aggregate in fiscal
year 2000.
8.15 Prepayments of Indebtedness.
No Credit Party will, nor will it permit any of its Subsidiaries to,
(a) amend or modify (or permit the amendment or modification of) any of the
terms of any Indebtedness if such amendment or modification would add or change
any terms in a manner adverse to the Lenders, including but not limited to,
shortening final maturity or average life to maturity of such Indebtedness or
requiring any payment to be made sooner than originally scheduled or increasing
the interest rate applicable thereto or change any subordination provision
thereof, (b) during the existence of a Default or Event of Default, or if a
Default or Event of Default would be caused as a result thereof make (or give
any notice with respect thereto) any voluntary or optional payment or
prepayment or redemption or acquisition for value of (including, without
limitation, by way of depositing money or securities with the trustee with
respect thereto before due for the purpose of paying when due), refund,
refinance or exchange of any other Indebtedness.
8.16 Limitation on Store Openings.
The Credit Parties will not, nor will they permit their Subsidiaries
to, open or start up, in the aggregate, more than ten (10) new stores in any
fiscal year of the Borrower.
SECTION 9
EVENTS OF DEFAULT
9.1 Events of Default.
An Event of Default shall exist upon the occurrence, and during the
continuance, of any of the following specified events (each an "Event of
Default"):
(a) Payment. Any Credit Party shall default in the
payment (i) when due of any principal of any of the Loans or any
reimbursement obligation arising from drawings under Letters of Credit
or (ii) within three Business Days of when due of any interest on the
Loans
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or any fees or other amounts owing hereunder, under any of the other
Credit Documents or in connection herewith.
(b) Representations. Any representation, warranty or
statement made or deemed to be made by any Credit Party herein, in any
of the other Credit Documents, or in any statement or certificate
delivered or required to be delivered pursuant hereto or thereto shall
prove untrue in any material respect on the date as of which it was
made or deemed to have been made.
(c) Covenants. Any Credit Party shall:
(i) default in the due performance or
observance of any term, covenant or agreement contained in
Sections 7.2, 7.3, 7.5, 7.11, 7.12, or 8.1 through 8.16
inclusive;
(ii) default in the due performance or
observance by it of any term, covenant or agreement contained
in Sections 7.1 and such default shall continue unremedied
for a period of five Business Days;
(iii) default in the due performance or
observance by it of any term, covenant or agreement (other
than those referred to in subsections (a), (b) or (c)(i) or
(ii) of this Section 9.1) contained in this Credit Agreement
and such default shall continue unremedied for a period of at
least 30 days after the earlier of a Credit Party becoming
aware of such default or notice thereof given by the Agent.
(d) Other Credit Documents. (i) Any Credit Party shall
default in the due performance or observance of any term, covenant or
agreement in any of the other Credit Documents and such default shall
continue unremedied for a period of at least 30 days after the earlier
of a Credit Party becoming aware of such default or notice thereof
given by the Agent, or (ii) any Credit Document shall fail to be in
full force and effect or any Credit Party shall so assert or any
Credit Document shall fail to give the Agent and/or the Lenders the
security interests, liens, rights, powers and privileges purported to
be created thereby.
(e) Guaranties. The guaranty given by the Credit Parties
hereunder or by any Additional Credit Party hereafter or any provision
thereof shall cease to be in full force and effect, or any guarantor
thereunder or any Person acting by or on behalf of such guarantor
shall deny or disaffirm such Guarantor's obligations under such
guaranty.
(f) Bankruptcy, etc. The occurrence of any of the
following: (i) a court or governmental agency having jurisdiction in
the premises shall enter a decree or order for relief in respect of
any Credit Party or any of its Subsidiaries in an involuntary case
under any applicable bankruptcy, insolvency or other similar law now
or hereafter in effect, or appoint a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of any Credit
Party or any of its Subsidiaries or for any substantial part of its
property or ordering the winding up or liquidation of its affairs; or
(ii) an involuntary case under any
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applicable bankruptcy, insolvency or other similar law now or
hereafter in effect is commenced against any Credit Party or any of
its Subsidiaries and such petition remains unstayed and in effect for
a period of 60 consecutive days; or (iii) any Credit Party or any of
its Subsidiaries shall commence a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in
effect, or consent to the entry of an order for relief in an
involuntary case under any such law, or consent to the appointment or
taking possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official of such Person or any
substantial part of its property or make any general assignment for
the benefit of creditors; or (iv) any Credit Party or any of its
Subsidiaries shall admit in writing its inability to pay its debts
generally as they become due or any action shall be taken by such
Person in furtherance of any of the aforesaid purposes.
(g) Defaults under Other Agreements.
(i) Except for the Indenture Default, a Credit
Party or any of its Subsidiaries shall default in the due
performance or observance (beyond the applicable grace period
with respect thereto) of any material obligation or condition
of any contract or lease to which it is a party; or
(ii) With respect to any Indebtedness in excess
of $500,000 (other than Indebtedness outstanding under this
Credit Agreement) of a Credit Party or any of their
Subsidiaries (i) such Person shall (A) default in any payment
(beyond the applicable grace period with respect thereto, if
any) with respect to any such Indebtedness, or (B) except for
the Indenture Default, default (after giving effect to any
applicable grace period) in the observance or performance
relating to such Indebtedness or contained in any instrument
or agreement evidencing, securing or relating thereto, or any
other event or condition shall occur or condition exist, the
effect of which default or other event or condition is to
cause, or permit, the holder or holders of such Indebtedness
(or trustee or agent on behalf of such holders) to cause
(determined without regard to whether any notice or lapse of
time is required) any such Indebtedness to become due prior
to its stated maturity; or (ii) any such Indebtedness shall
be declared due and payable, or required to be prepaid other
than by a regularly scheduled required prepayment prior to
the stated maturity thereof; or (iii) any such Indebtedness
shall mature and remain unpaid.
(h) Judgments. One or more judgments, orders, or decrees
shall be entered against any one or more of the Credit Parties and its
Subsidiaries involving a liability of $500,000 or more, in the
aggregate, (to the extent not paid or covered by insurance provided by
a carrier who has acknowledged coverage) and such judgments, orders or
decrees (i) are the subject of any enforcement proceeding commenced by
any creditor or (ii) shall continue unsatisfied, undischarged and
unstayed for a period ending on the first to occur of (A) the last day
on which such judgment, order or decree becomes final and unappealable
or (B) 60 days.
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(i) ERISA. The occurrence of any of the following events
or conditions: (A) any "accumulated funding deficiency," as such term
is defined in Section 302 of ERISA and Section 412 of the Code,
whether or not waived, shall exist with respect to any Plan, or any
lien shall arise on the assets of any Credit Party or any ERISA
Affiliate in favor of the PBGC or a Plan; (B) a Termination Event
shall occur with respect to a Single Employer Plan, which is, in the
reasonable opinion of the Agent, likely to result in the termination
of such Plan for purposes of Title IV of ERISA; (C) a Termination
Event shall occur with respect to a Multiemployer Plan or Multiple
Employer Plan, which is, in the reasonable opinion of the Agent,
likely to result in (i) the termination of such Plan for purposes of
Title IV of ERISA, or (ii) any Credit Party or any ERISA Affiliate
incurring any liability in connection with a withdrawal from,
reorganization of (within the meaning of Section 4241 of ERISA), or
insolvency (within the meaning of Section 4245 of ERISA) of such Plan;
or (D) any prohibited transaction (within the meaning of Section 406
of ERISA or Section 4975 of the Code) or breach of fiduciary
responsibility shall occur which may subject any Credit Party or any
ERISA Affiliate to any liability under Sections 406, 409, 502(i), or
502(l) of ERISA or Section 4975 of the Code, or under any agreement or
other instrument pursuant to which any Credit Party or any ERISA
Affiliate has agreed or is required to indemnify any person against
any such liability.
(j) Ownership. There shall occur a Change of Control.
(k) Maxim Group Credit Agreement. There shall occur an
Event of Default (as defined in the Maxim Group Credit Agreement)
under the Maxim Group Credit Agreement.
(l) Default on Subordinated Guarantees. There shall
occur (i) (other than the Indenture Default) an Event of Default (as
defined in the Indenture) under the Indenture or (ii) a Change of
Control (as defined in the Indenture) under the Indenture.
(m) Indenture Default. The failure of the Credit Parties
to receive a written waiver of the Indenture Default in form and
substance satisfactory to the Agent on or before January 31, 1999.
(n) Action by Subordinated Debt Holders. The holders of
the Subordinated Debt or any Person acting on behalf of the holders of
the Subordinated Debt shall take any remedial action (whether
affirmative or by omission) with respect to the Indenture Default
(other than the waiver thereof), including but not limited to,
acceleration of the Subordinated Debt, written demand with respect to
the Subordinated Debt or the pursuit of any assets of the Credit
Parties in connection therewith.
9.2 Acceleration; Remedies.
Upon the occurrence, and during the continuance, of an Event of
Default, and at any time thereafter unless and until such Event of Default has
been waived in writing by the Required Lenders (or the Lenders as may be
required hereunder) the Agent shall, upon the request and direction of the
Required Lenders, by written notice to the Borrower, take the following actions
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without prejudice to the rights of the Agent or any Lender to enforce its
claims against the Credit Parties, except as otherwise specifically provided
for herein:
(a) Termination of Commitments. Declare the Commitments
terminated whereupon the Commitments shall be immediately terminated.
(b) Acceleration of Loans. Declare the unpaid principal
of and any accrued interest in respect of all Loans, any reimbursement
obligations arising from drawings under Letters of Credit and any and
all other indebtedness or obligations of any and every kind owing by a
Credit Party to any of the Lenders hereunder to be due whereupon the
same shall be immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by
the Credit Parties.
(c) Cash Collateral. Direct the Borrower to pay (and the
Borrower agrees that upon receipt of such notice, or upon the
occurrence of an Event of Default under Section 9.1(f), it will
immediately pay) to the Agent additional cash, to be held by the
Agent, for the benefit of the Lenders, in a cash collateral account as
additional security for the LOC Obligations in respect of subsequent
drawings under all then outstanding Letters of Credit in an amount
equal to the maximum aggregate amount which may be drawn under all
Letters of Credits then outstanding.
(d) Enforcement of Rights. Enforce any and all rights
and interests created and existing under the Credit Documents,
including, without limitation, all rights and remedies existing under
the Collateral Documents, all rights and remedies against a Guarantor
and all rights of set-off.
Notwithstanding the foregoing, if an Event of Default specified in Section
9.1(f) shall occur, then the Commitments shall automatically terminate and all
Loans, all reimbursement obligations under Letters of Credit, all accrued
interest in respect thereof, all accrued and unpaid fees and other indebtedness
or obligations owing to the Lenders hereunder shall immediately become due and
payable without the giving of any notice or other action by the Agent or the
Lenders, which notice or other action is expressly waived by the Credit
Parties.
Notwithstanding the fact that enforcement powers reside primarily with the
Agent, each Lender has, to the extent permitted by law, a separate right of
payment and shall be considered a separate "creditor" holding a separate
"claim" within the meaning of Section 101(5) of the Bankruptcy Code or any
other insolvency statute.
9.3 Allocation of Payments After Event of Default.
Notwithstanding any other provisions of this Credit Agreement, after
the occurrence and during the continuance of an Event of Default, all amounts
collected or received by the Agent or any Lender on account of amounts
outstanding under any of the Credit Documents or in respect of the Collateral
shall be paid over or delivered as follows:
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FIRST, to the payment of all reasonable out-of-pocket costs
and expenses (including without limitation reasonable attorneys' fees)
of the Agent or any of the Lenders in connection with enforcing the
rights of the Lenders under the Credit Documents and any protective
advances made by the Agent or any of the Lenders with respect to the
Collateral under or pursuant to the terms of the Collateral Documents;
SECOND, to payment of any fees owed to the Agent, the Issuing
Lender or any Lender;
THIRD, to the payment of all accrued interest payable to the
Lenders hereunder and all other obligations which shall have become
due and payable under the Credit Documents and not repaid pursuant to
clauses "FIRST" and "SECOND" above;
FOURTH, to the payment of the outstanding principal amount of
the Loans and unreimbursed drawings under Letters of Credit, to the
payment or cash collateralization of the outstanding LOC Obligations,
pro rata as set forth below;
FIFTH, to any principal amounts outstanding under Hedging
Agreements between a Credit Party and a Lender, pro rata, as set forth
below; and
SIXTH, to the payment of the surplus, if any, to whoever may
be lawfully entitled to receive such surplus.
In carrying out the foregoing, (a) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; (b) each of the Lenders shall receive an amount equal to
its pro rata share (based on the proportion that the then outstanding Loans,
LOC Obligations and obligations under Hedging Agreements held by such Lender
bears to the aggregate then outstanding Loans, LOC Obligations and obligations
under Hedging Agreements) of amounts available to be applied; and (c) to the
extent that any amounts available for distribution pursuant to clause "FOURTH"
above are attributable to the issued but undrawn amount of outstanding Letters
of Credit, such amounts shall be held by the Agent in a cash collateral account
and applied (x) first, to reimburse the Issuing Lender from time to time for
any drawings under such Letters of Credit and (y) then, following the
expiration of all Letters of Credit, to all other obligations of the types
described in clauses "FOURTH," and "FIFTH" above in the manner provided in this
Section 9.3.
SECTION 10
AGENCY PROVISIONS
10.1 Appointment.
(a) Each Lender hereby designates and appoints NationsBank, N.A.
as Agent of such Lender to act as specified herein and the other Credit
Documents, and each such Lender hereby
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authorizes the Agent, as the agent for such Lender, to take such action on its
behalf under the provisions of this Credit Agreement and the other Credit
Documents and to exercise such powers and perform such duties as are expressly
delegated by the terms hereof and of the other Credit Documents, together with
such other powers as are reasonably incidental thereto. Notwithstanding any
provision to the contrary elsewhere herein and in the other Credit Documents,
the Agent shall not have any duties or responsibilities, except those expressly
set forth herein and therein, or any fiduciary relationship with any Lender,
and no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Credit Agreement or any of the other Credit
Documents, or shall otherwise exist against the Agent. The provisions of this
Section are solely for the benefit of the Agent and the Lenders and none of the
Credit Parties shall have any rights as a third party beneficiary of the
provisions hereof. In performing its functions and duties under this Credit
Agreement and the other Credit Documents, the Agent shall act solely as the
agent of the Lenders and does not assume and shall not be deemed to have
assumed any obligation or relationship of agency or trust with or for any
Credit Party.
(b) Each Lender hereby consents to and approves the terms of the
Intercreditor Agreement, a copy of which is attached hereto as Exhibit 10.1(b).
By execution hereof, the Lenders acknowledge the terms of the Intercreditor
Agreement and agree to be bound by the terms thereof and further authorize and
direct the Agent to enter into the Intercreditor Agreement on behalf of the
Lenders.
10.2 Delegation of Duties.
The Agent may execute any of its duties hereunder or under the other
Credit Documents by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
The Agent shall not be responsible for the negligence or misconduct of any
agents or attorneys-in-fact selected by it with reasonable care.
10.3 Exculpatory Provisions.
Neither the Agent nor any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates shall be liable for any action lawfully
taken or omitted to be taken by it or such Person under or in connection
herewith or in connection with any of the other Credit Documents (except for
its or such Person's own gross negligence or willful misconduct) or responsible
in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by any of the Credit Parties contained
herein or in any of the other Credit Documents or in any certificate, report,
document, financial statement or other written or oral statement referred to or
provided for in, or received by the Agent under or in connection herewith or in
connection with the other Credit Documents, or enforceability or sufficiency
therefor of any of the other Credit Documents, or for any failure of the
Borrower to perform its obligations hereunder or thereunder. The Agent shall
not be responsible to any Lender for the effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Credit Agreement, or any
of the other Credit Documents or for any representations, warranties, recitals
or statements made herein or therein or made by a Borrower or any Credit Party
in any written or oral statement or in any financial or other statements,
instruments, reports, certificates or any other documents in connection
herewith or
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therewith furnished or made by the Agent to the Lenders or by or on behalf of
the Credit Parties to the Agent or any Lender or be required to ascertain or
inquire as to the performance or observance of any of the terms, conditions,
provisions, covenants or agreements contained herein or therein or as to the
use of the proceeds of the Loans or the use of the Letters of Credit or of the
existence or possible existence of any Default or Event of Default or to
inspect the properties, books or records of the Credit Parties. The Agent is
not a trustee for the Lenders and owes no fiduciary duty to the Lenders.
10.4 Reliance on Communications.
The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation reasonably believed by it to
be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to any of the Credit Parties, independent
accountants and other experts selected by the Agent with reasonable care). The
Agent may deem and treat the Lenders as the owner of its interests hereunder
for all purposes unless a written notice of assignment, negotiation or transfer
thereof shall have been filed with the Agent in accordance with Section
11.3(b). The Agent shall be fully justified in failing or refusing to take any
action under this Credit Agreement or under any of the other Credit Documents
unless it shall first receive such advice or concurrence of the Required
Lenders as it deems appropriate or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action.
The Agent shall in all cases be fully protected in acting, or in refraining
from acting, hereunder or under any of the other Credit Documents in accordance
with a request of the Required Lenders (or to the extent specifically provided
in Section 11.6, all the Lenders) and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders
(including their successors and assigns).
10.5 Notice of Default.
The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default hereunder unless the Agent has
received notice from a Lender or a Credit Party referring to the Credit
Document, describing such Default or Event of Default and stating that such
notice is a "notice of default." In the event that the Agent receives such a
notice, the Agent shall give prompt notice thereof to the Lenders. The Agent
shall take such action with respect to such Default or Event of Default as
shall be reasonably directed by the Required Lenders and as is permitted by the
Credit Documents.
10.6 Non-Reliance on Agent and Other Lenders.
Each Lender expressly acknowledges that neither the Agent, NMS nor any
of their officers, directors, employees, agent, attorneys-in-fact or affiliates
has made any representations or warranties to it and that no act by the Agent
or any affiliate thereof hereinafter taken, including any review of the affairs
of any Credit Party, shall be deemed to constitute any representation or
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warranty by the Agent to any Lender. Each Lender represents to the Agent and
NMS that it has, independently and without reliance upon the Agent or NMS or
any other Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
assets, operations, property, financial and other conditions, prospects and
creditworthiness of the Credit Parties and made its own decision to make its
Loans hereunder and enter into this Credit Agreement. Each Lender also
represents that it will, independently and without reliance upon the Agent or
NMS or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Credit
Agreement, and to make such investigation as it deems necessary to inform
itself as to the business, assets, operations, property, financial and other
conditions, prospects and creditworthiness of the Credit Parties. Except for
notices, reports and other documents expressly required to be furnished to the
Lenders by the Agent hereunder, the Agent and NMS shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, assets, property, financial or other
conditions, prospects or creditworthiness of the Credit Parties which may come
into the possession of the Agent, NMS or any of their officers, directors,
employees, agents, attorneys-in-fact or affiliates.
10.7 Indemnification.
The Lenders agree to indemnify the Agent in its capacity as such (to
the extent not reimbursed by the Borrower and without limiting the obligation
of the Borrower to do so), ratably according to their respective Commitments
(or if the Commitments have expired or been terminated, in accordance with the
respective principal amounts of outstanding Loans and Participation Interest of
the Lenders), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever which may at any time (including without limitation at
any time following payment in full of the Credit Party Obligations) be imposed
on, incurred by or asserted against the Agent in its capacity as such in any
way relating to or arising out of this Credit Agreement or the other Credit
Documents or any documents contemplated by or referred to herein or therein or
the transactions contemplated hereby or thereby or any action taken or omitted
by the Agent under or in connection with any of the foregoing; provided that no
Lender shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the gross negligence or willful
misconduct of the Agent. If any indemnity furnished to the Agent for any
purpose shall, in the opinion of the Agent, be insufficient or become impaired,
the Agent may call for additional indemnity and cease, or not commence, to do
the acts indemnified against until such additional indemnity is furnished. The
agreements in this Section shall survive the payment of the Credit Party
Obligations and all other amounts payable hereunder and under the other Credit
Documents.
10.8 Agent in Its Individual Capacity.
The Agent and its affiliates may make loans to, accept deposits from
and generally engage in any kind of business with a Borrower or any other
Credit Party as though the Agent were not the Agent hereunder. With respect to
the Loans made and Letters of Credit issued and all obligations
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owing to it, the Agent shall have the same rights and powers under this Credit
Agreement as any Lender and may exercise the same as though they were not the
Agent, and the terms "Lender" and "Lenders" shall include the Agent in its
individual capacity.
10.9 Successor Agent.
The Agent may, at any time, resign upon 20 days written notice to the
Lenders. Upon any such resignation, the Required Lenders shall have the right
to appoint a successor Agent. If no successor Agent shall have been so
appointed by the Required Lenders, and shall have accepted such appointment,
within 60 days after the notice of resignation, then the retiring Agent shall
select a successor Agent, provided such successor is an Eligible Assignee. Upon
the acceptance of any appointment as the Agent hereunder by a successor, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations as the Agent, as
appropriate, under this Credit Agreement and the other Credit Documents and the
provisions of this Section 10.9 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was the Agent under this Credit
Agreement.
SECTION 11
MISCELLANEOUS
11.1 Notices.
Except as otherwise expressly provided herein, all notices and other
communications shall have been duly given and shall be effective (a) when
delivered, (b) when transmitted via telecopy (or other facsimile device) to the
number set out below, (c) the Business Day following the day on which the same
has been delivered prepaid to a reputable national overnight air courier
service, or (d) the third Business Day following the day on which the same is
sent by certified or registered mail, postage prepaid, in each case to the
respective parties at the address or telecopy numbers set forth on Schedule
11.1, or at such other address as such party may specify by written notice to
the other parties hereto.
11.2 Right of Set-Off.
In addition to any rights now or hereafter granted under applicable
law or otherwise, and not by way of limitation of any such rights, upon the
occurrence of an Event of Default and the commencement of remedies described in
Section 9.2, each Lender is authorized at any time and from time to time,
without presentment, demand, protest or other notice of any kind (all of which
rights being hereby expressly waived), to set-off and to appropriate and apply
any and all deposits (general or special) and any other indebtedness at any
time held or owing by such Lender (including, without limitation, branches,
agencies or Affiliates of such Lender wherever located) to or for the credit or
the account of any Credit Party against obligations and liabilities of such
Credit Party to the Lenders hereunder, under the Notes, the other Credit
Documents or otherwise,
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irrespective of whether the Agent or the Lenders shall have made any demand
hereunder and although such obligations, liabilities or claims, or any of them,
may be contingent or unmatured, and any such set-off shall be deemed to have
been made immediately upon the occurrence of an Event of Default even though
such charge is made or entered on the books of such Lender subsequent thereto.
The Credit Parties hereby agree that any Person purchasing a participation in
the Loans and Commitments hereunder pursuant to Section 11.3(c) or 3.8 may
exercise all rights of set-off with respect to its participation interest as
fully as if such Person were a Lender hereunder.
11.3 Benefit of Agreement.
(a) Generally. This Credit Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto; provided that none of
the Credit Parties may assign and transfer any of its interests
(except as permitted by Section 8.4 or 8.5) without the prior written
consent of the Lenders; and provided further that the rights of each
Lender to transfer, assign or grant participations in its rights
and/or obligations hereunder shall be limited as set forth below in
this Section 11.3.
(b) Assignments. Each Lender may assign to one or more
Eligible Assignees all or a portion of its rights and obligations
under this Credit Agreement (including, without limitation, all or a
portion of its Loans, its Notes, and its Commitments); provided,
however, that:
(i) each such assignment shall be to an
Eligible Assignee;
(ii) except in the case of an assignment to
another Lender or an assignment of all of a Lender's rights
and obligations under this Credit Agreement, any such partial
assignment shall be in an amount at least equal to $5,000,000
(or, if less, the remaining amount of the Commitment being
assigned by such Lender) or an integral multiple of
$1,000,000 in excess thereof;
(iii) each such assignment by a Lender shall be
of a constant, and not varying, percentage of all of its
rights and obligations under this Credit Agreement and the
Notes;
(iv) the parties to such assignment shall
execute and deliver to the Agent for its acceptance an
Assignment Agreement in substantially the form of Exhibit
11.3(b), together with a processing fee from the assignor of
$3,500.
Upon execution, delivery, and acceptance of such Assignment Agreement,
the assignee thereunder shall be a party hereto and, to the extent of
such assignment, have the obligations, rights, and benefits of a
Lender hereunder and the assigning Lender shall, to the extent of such
assignment, relinquish its rights and be released from its obligations
under this Credit Agreement. Upon the consummation of any assignment
pursuant to this
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Section 11.3(b), the assignor, the Agent and the Borrower shall make
appropriate arrangements so that, if required, new Notes are issued to
the assignor and the assignee. If the assignee is not incorporated
under the laws of the United States of America or a state thereof, it
shall deliver to the Borrower and the Agent certification as to
exemption from deduction or withholding of taxes in accordance with
Section 3.13.
By executing and delivering an assignment agreement in accordance with
this Section 11.3(b), the assigning Lender thereunder and the assignee
thereunder shall be deemed to confirm to and agree with each other and
the other parties hereto as follows: (A) such assigning Lender
warrants that it is the legal and beneficial owner of the interest
being assigned thereby free and clear of any adverse claim and the
assignee warrants that it is an Eligible Assignee; (B) except as set
forth in clause (A) above, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in
connection with this Credit Agreement, any of the other Credit
Documents or any other instrument or document furnished pursuant
hereto or thereto, or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Credit
Agreement, any of the other Credit Documents or any other instrument
or document furnished pursuant hereto or thereto or the financial
condition of any Credit Party or the performance or observance by any
Credit Party of any of its obligations under this Credit Agreement,
any of the other Credit Documents or any other instrument or document
furnished pursuant hereto or thereto; (C) such assignee represents and
warrants that it is legally authorized to enter into such assignment
agreement; (D) such assignee confirms that it has received a copy of
this Credit Agreement, the other Credit Documents and such other
documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such assignment agreement;
(E) such assignee will independently and without reliance upon the
Agent, such assigning Lender or any other Lender, and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking
action under this Credit Agreement and the other Credit Documents; (F)
such assignee appoints and authorizes the Agent to take such action on
its behalf and to exercise such powers under this Credit Agreement or
any other Credit Document as are delegated to the Agent by the terms
hereof or thereof, together with such powers as are reasonably
incidental thereto; and (G) such assignee agrees that it will perform
in accordance with their terms all the obligations which by the terms
of this Credit Agreement and the other Credit Documents are required
to be performed by it as a Lender.
(c) Register. The Agent shall maintain a copy of each
Assignment Agreement delivered to and accepted by it and a register
for the recordation of the names and addresses of the Lenders and the
Commitment of, and principal amount of the Loans owing to, each Lender
from time to time (the "Register"). The entries in the Register shall
be conclusive and binding for all purposes, absent manifest error, and
the Borrower, the Agent and the Lenders may treat each Person whose
name is recorded in the Register as a Lender hereunder for all
purposes of this Credit Agreement. The Register shall be available for
inspection by the Borrower or any Lender at any reasonable time and
from time to time upon reasonable prior notice.
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(d) Acceptance. Upon its receipt of an Assignment
Agreement executed by the parties thereto, together with any Note
subject to such assignment and payment of the processing fee, the
Agent shall, if such Assignment Agreement has been completed and is in
substantially the form of Exhibit 11.3(b) hereto, (i) accept such
Assignment Agreement, (ii) record the information contained therein in
the Register and (iii) give prompt notice thereof to the parties
thereto.
(e) Participations. Each Lender may sell participations
to one or more Persons in all or a portion of its rights, obligations
or rights and obligations under this Credit Agreement (including all
or a portion of its Commitments and its Loans); provided, however,
that (i) such Lender's obligations under this Credit Agreement shall
remain unchanged, (ii) such Lender shall remain solely responsible to
the other parties hereto for the performance of such obligations,
(iii) the participant shall be entitled to the benefit of the yield
protection provisions contained in Sections 3.9 through 3.14,
inclusive, and the right of set-off contained in Section 11.2, and
(iv) the Borrower shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under
this Credit Agreement, and such Lender shall retain the sole right to
enforce the obligations of the Borrower relating to its Loans and its
Notes and to approve any amendment, modification, or waiver of any
provision of this Credit Agreement (other than amendments,
modifications, or waivers decreasing the amount of principal of or the
rate at which interest is payable on such Loans or Notes, extending
any scheduled principal payment date or date fixed for the payment of
interest on such Loans or Notes, extending its Commitments or
releasing all or substantially all of the Collateral securing the
Credit Party Obligations).
(f) Nonrestricted Assignments. Notwithstanding any other
provision set forth in this Credit Agreement, any Lender may at any
time assign and pledge all or any portion of its Loans and its Notes
to any Federal Reserve Bank as collateral security pursuant to
Regulation A and any Operating Circular issued by such Federal Reserve
Bank. No such assignment shall release the assigning Lender from its
obligations hereunder.
(g) Information. Any Lender may furnish any information
concerning the Borrower or any of its Subsidiaries in the possession
of such Lender from time to time to assignees and participants
(including prospective assignees and participants), subject, however,
to the provisions of Section 11.16 hereof.
11.4 No Waiver; Remedies Cumulative.
No failure or delay on the part of Agent or any Lender in exercising
any right, power or privilege hereunder or under any other Credit Document and
no course of dealing between the Borrower or any Credit Party and the Agent or
any Lender shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or under any other Credit
Document preclude any other or further exercise thereof or the exercise of any
other right,
81
<PAGE> 87
power or privilege hereunder or thereunder. The rights and remedies provided
herein are cumulative and not exclusive of any rights or remedies which the
Agent or any Lender would otherwise have. No notice to or demand on any Credit
Party in any case shall entitle any Credit Party to any other or further notice
or demand in similar or other circumstances or constitute a waiver of the
rights of the Agent or the Lenders to any other or further action in any
circumstances without notice or demand.
11.5 Payment of Expenses; Indemnification.
The Credit Parties agree to: (a) pay all reasonable out-of-pocket
costs and expenses of (i) the Agent and NMS in connection with (A) the
negotiation, preparation, execution and delivery and administration of this
Credit Agreement and the other Credit Documents and the documents and
instruments referred to therein (including, without limitation, the reasonable
fees and expenses of Moore & Van Allen, PLLC, special counsel to the Agent),
(B) any amendment, waiver or consent relating hereto and thereto including, but
not limited to, any such amendments, waivers or consents resulting from or
related to any work-out, renegotiation or restructure relating to the
performance by the Credit Parties under this Credit Agreement and (C) searches
of the UCC and the preparation and filing of UCC financing statements in
connection with such searches subsequent to the Closing Date (including without
limitation, the reasonable fees and expenses of Moore & Van Allen, PLLC) and
(ii) the Agent and the Lenders in connection with (A) enforcement of the Credit
Documents and the documents and instruments referred to therein, including,
without limitation, in connection with any such enforcement, the reasonable
fees and disbursements of counsel for the Agent and each of the Lenders, and
(B) any bankruptcy or insolvency proceeding of a Credit Party of any of its
Subsidiaries and (b) indemnify the Agent, NMS and each Lender, its officers,
directors, employees, representatives and agents from and hold each of them
harmless against any and all losses, liabilities, claims, damages or expenses
incurred by any of them as a result of, or arising out of, or in any way
related to, or by reason of, any investigation, litigation or other proceeding
(whether or not the Agent, NMS or Lender is a party thereto) related to (i) the
entering into and/or performance of any Credit Document or the use of proceeds
of any Loans (including other extensions of credit) hereunder or the
consummation of any other transactions contemplated in any Credit Document,
including, without limitation, the reasonable fees and disbursements of counsel
incurred in connection with any such investigation, litigation or other
proceeding, (ii) any Environmental Claim, (iii) any claims for Non-Excluded
Taxes (but excluding in the case of (i), (ii) and (iii) above, any such losses,
liabilities, claims, damages or expenses to the extent incurred by reason of
gross negligence or willful misconduct on the part of the Person to be
indemnified).
11.6 Amendments, Waivers and Consents.
Neither this Credit Agreement nor any other Credit Document nor any of
the terms hereof or thereof may be amended, changed, waived, discharged or
terminated unless such amendment, change, waiver, discharge or termination is
in writing and signed by the Required Lenders and the then Credit Parties;
provided that no such amendment, change, waiver, discharge or termination shall
without the consent of each Lender affected thereby:
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<PAGE> 88
(a) extend the final maturity of any Loan or of any
reimbursement obligation; or any portion thereof, arising from
drawings under Letters of Credit;
(b) reduce the rate or extend the time of payment of
interest (other than as a result of waiving the applicability of any
post-default increase in interest rates) thereon or fees hereunder;
(c) reduce or waive the principal amount of any Loan or
of any reimbursement obligation, or any portion thereof, arising from
drawings under Letters of Credit;
(d) increase or extend the Revolving Committed Amount,
the LOC Committed Amount or the Commitment of any Lender (it being
understood and agreed that a waiver of any Default or Event of Default
or a waiver of any mandatory reduction in the Revolving Committed
Amount or the LOC Committed Amount shall not constitute a change in
the terms of the Revolving Committed Amount, LOC Committed Amount or
the Commitment of any Lender);
(e) release all or substantially all of the Collateral
securing the Credit Party Obligations hereunder (provided that the
Agent may, without consent from any other Lender, release any
Collateral that is sold or transferred by a Credit Party in
conformance with Section 8.5);
(f) release the Borrower from its obligations or release
all or substantially all of the other Credit Parties from their
respective obligations under the Credit Documents;
(g) amend, modify or waive any provision of this Section
or Section 3.4(a), 3.4(b), 3.4(c), 3.7, 3.8, 3.9, 3.10, 3.11, 3.12,
3.13, 3.14, 5.2, 9.1(a), 11.2, 11.3 or 11.5;
(h) reduce any percentage specified in, or otherwise
modify, the definition of Required Lenders; or
(i) consent to the assignment or transfer by the
Borrower of any of its rights and obligations under (or in respect of)
the Credit Documents.
Notwithstanding the above, no provisions of Section 10 may be amended or
modified without the consent of the Agent, and no provisions of Section 2.2 may
be amended or modified without the consent of the Issuing Lender.
Notwithstanding the fact that the consent of all the Lenders is required in
certain circumstances as set forth above, (x) each Lender is entitled to vote
as such Lender sees fit on any reorganization plan that affects the Loans or
the Letters of Credit, and each Lender acknowledges that the provisions of
Section 1126(c) of the Bankruptcy Code supersedes the unanimous consent
provisions set forth herein and (y) the Required Lenders may consent to allow a
Credit Party to use cash collateral in the context of a bankruptcy or
insolvency proceeding.
83
<PAGE> 89
11.7 Counterparts/Telecopy.
This Credit Agreement may be executed in any number of counterparts,
each of which where so executed and delivered shall be an original, but all of
which shall constitute one and the same instrument. Delivery of executed
counterparts by telecopy shall be as effective as an original and shall
constitute a representation that an original will be delivered.
11.8 Headings.
The headings of the sections and subsections hereof are provided for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Credit Agreement.
11.9 Defaulting Lender.
Each Lender understands and agrees that if such Lender is a Defaulting
Lender then notwithstanding the provisions of Section 11.6 it shall not be
entitled to vote on any matter requiring the consent of the Required Lenders or
to object to any matter requiring the consent of all the Lenders; provided,
however, that all other benefits and obligations under the Credit Documents
shall apply to such Defaulting Lender.
11.10 Survival of Indemnification and Representations and Warranties
All indemnities set forth herein and all representations and
warranties made herein shall survive the execution and delivery of this Credit
Agreement, the making of the Loans, the issuance of the Letters of Credit and
the repayment of the Loans, LOC Obligations and other obligations and the
termination of the Commitments hereunder.
11.11 Governing Law; Jurisdiction.
(a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER
SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF GEORGIA. Any legal action or proceeding with
respect to this Credit Agreement or any other Credit Document may be
brought in the courts of the State of North Carolina or of the United
States for the Western District of North Carolina, and, by execution
and delivery of this Credit Agreement, each Credit Party hereby
irrevocably accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of such courts. Each
Credit Party further irrevocably consents to the service of process
out of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or certified
mail, postage prepaid, to it at the address for notices pursuant to
Section 11.1, such service to become effective 10 days after such
mailing. Nothing herein shall affect the right of a Lender to serve
process in any other manner permitted by law or to commence legal
proceedings or to otherwise proceed against a Credit Party in any
other jurisdiction. Each Credit Party agrees that a final judgment in
any action or proceeding shall be conclusive and
84
<PAGE> 90
may be enforced in other jurisdictions by suit on the judgment or in
any other manner provided by law; provided that nothing in this
Section 11.11(a) is intended to impair a Credit Party's right under
applicable law to appeal or seek a stay of any judgment.
(b) Each Credit Party hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of
any of the aforesaid actions or proceedings arising out of or in
connection with this Agreement or any other Credit Document brought in
the courts referred to in subsection (a) hereof and hereby further
irrevocably waives and agrees not to plead or claim in any such court
that any such action or proceeding brought in any such court has been
brought in an inconvenient forum.
11.12 Waiver of Jury Trial.
TO THE EXTENT PERMITTED BY LAW, EACH OF THE PARTIES TO THIS AGREEMENT
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS CREDIT AGREEMENT, ANY OF THE
OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY.
11.13 Time.
All references to time herein shall be references to Eastern Standard
Time or Eastern Daylight time, as the case may be, unless specified otherwise.
11.14 Severability.
If any provision of any of the Credit Documents is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
11.15 Further Assurances.
The Credit Parties agree, upon the request of the Agent, to promptly
take such actions, as reasonably requested, as is necessary to carry out the
intent of this Credit Agreement and the other Credit Documents, including, but
not limited to, such actions as are necessary to ensure that the Lenders have a
perfected security interest in the Collateral subject to no Liens other than
Permitted Liens.
11.16 Confidentiality.
Each Lender agrees that it will use its reasonable best efforts to
keep confidential and to cause any representative designated under Section 7.12
to keep confidential any non-public information from time to time supplied to
it under any Credit Document; provided, however, that nothing herein shall
prevent the disclosure of any such information to (a) the extent a Lender in
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<PAGE> 91
good faith believes such disclosure is required by Requirement of Law, (b)
counsel for a Lender or to its accountants, (c) bank examiners or auditors or
comparable Persons, (d) any affiliate of a Lender, (e) any other Lender, or any
assignee, transferee or participant, or any potential assignee, transferee or
participant, of all or any portion of any Lender's rights under this Agreement
who is notified of the confidential nature of the information or (f) any other
Person in connection with any litigation to which any one or more of the
Lenders is a party; and provided further that no Lender shall have any
obligation under this Section 11.16 to the extent any such information becomes
available on a non-confidential basis from a source other than a Credit Party
or that any information becomes publicly available other than by a breach of
this Section 11.16 by any Lender or representative thereof.
11.17 Entirety.
This Credit Agreement together with the other Credit Documents and the
Fee Letter represent the entire agreement of the parties hereto and thereto,
and supersede all prior agreements and understandings, oral or written, if any,
including any commitment letters or correspondence relating to the Credit
Documents or the transactions contemplated herein and therein.
11.18 Binding Effect; Continuing Agreement.
(a) This Credit Agreement shall become effective at
such time when all of the conditions set forth in Section 5.1 have
been satisfied or waived by the Lenders and it shall have been
executed by the Borrower, the Guarantors and the Agent, and the Agent
shall have received copies hereof (telefaxed or otherwise) which, when
taken together, bear the signatures of each Lender, and thereafter
this Credit Agreement shall be binding upon and inure to the benefit
of the Borrower, the Guarantors, the Agent and each Lender and their
respective successors and assigns.
(b) This Credit Agreement shall be a continuing
agreement and shall remain in full force and effect until all Loans,
LOC Obligations, interest, fees and other Credit Party Obligations
have been paid in full and all Commitments and Letters of Credit have
been terminated. Upon termination, the Credit Parties shall have no
further obligations (other than the indemnification provisions that
survive) under the Credit Documents and the Agent shall, at the
request and expense of the Borrower, deliver all Collateral in its
possession to the Borrower and release all Liens on Collateral;
provided that should any payment, in whole or in part, of the Credit
Party Obligations be rescinded or otherwise required to be restored or
returned by the Agent or any Lender, whether as a result of any
proceedings in bankruptcy or reorganization or otherwise, then the
Credit Documents shall automatically be reinstated and all Liens of
the Lenders shall reattach to the Collateral and all amounts required
to be restored or returned and all costs and expenses incurred by the
Agent or Lender in connection therewith shall be deemed included as
part of the Credit Party Obligations.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 92
Each of the parties hereto has caused a counterpart of this Credit
Agreement to be duly executed and delivered as of the date first above written.
BORROWER:
MAXIM RETAIL STORES, INC., a
Georgia corporation
By: /s/ Thomas P. Leahey
----------------------------------------
Name: Thomas P. Leahey
--------------------------------------
Title: VP
-------------------------------------
GUARANTORS:
MAXIM INSTALLATION SERVICES, INC.,
a Georgia corporation
By: /s/ Thomas P. Leahey
----------------------------------------
Name: Thomas P. Leahey
--------------------------------------
Title: VP
-------------------------------------
C&S TEXTILES, INC., an Idaho corporation
By: /s/ Thomas P. Leahey
----------------------------------------
Name: Thomas P. Leahey
--------------------------------------
Title: VP
-------------------------------------
[SIGNATURES CONTINUE]
MAXIM RETAIL STORES, INC.
CREDIT AGREEMENT
<PAGE> 93
LENDERS:
NATIONSBANK, N.A., individually in its
capacity as a Lender, in its capacity as
the Agent, and in its capacity as the
Issuing Lender
By: /s/ David H. Dinkins
---------------------------------------
Name: David H. Dinkins
-------------------------------------
Title: Vice President
------------------------------------
[SIGNATURES CONTINUE]
MAXIM RETAIL STORES, INC.
CREDIT AGREEMENT
<PAGE> 94
SUNTRUST BANK, ATLANTA
By: /s/ Bradley J. Staples
---------------------------------------
Name: Bradley J. Staples
-------------------------------------
Title: Vice President
------------------------------------
By: /s/ Kelley E. Brunson
---------------------------------------
Name: Kelley E. Brunson
-------------------------------------
Title: Banking Officer
------------------------------------
MAXIM RETAIL STORES, INC.
CREDIT AGREEMENT
<PAGE> 1
EXHIBIT 11
THE MAXIM GROUP, INC. AND SUBSIDIARIES
COMPUTATION OF BASIC AND DILUTED EARNINGS
PER COMMON AND COMMON EQUIVALENT SHARE
(In Thousands, Except Per Share Information)
<TABLE>
<CAPTION>
Three Months Ended
------------------------
October 31, October 31,
1998 1997
----------- -----------
<S> <C> <C>
Basic:
Net earnings $ 6,029 $ 4,397
======= =======
Weighted average number of common shares outstanding 19,428 16,164
======= =======
Basic earnings per common share $ 0.31 $ 0.27
======= =======
Diluted:
Net earnings $ 6,029 $ 4,397
======= =======
Shares:
Weighted average number of common shares
outstanding 19,428 16,164
Shares issuable from assumed exercise of outstanding
stock options 813 758
------- -------
Weighted average number of common and common
equivalent shares (a) 20,241 16,922
======= =======
Diluted earnings per common share $ 0.30 $ 0.26
======= =======
</TABLE>
(a) Common equivalent shares represent stock options
granted to key employees and directors.
-25-
<PAGE> 2
EXHIBIT 11
THE MAXIM GROUP, INC. AND SUBSIDIARIES
COMPUTATION OF BASIC AND DILUTED EARNINGS
PER COMMON AND COMMON EQUIVALENT SHARE
(In Thousands, Except Per Share Information)
<TABLE>
<CAPTION>
Nine Months Ended
---------------------------
October 31, October 31,
1998 1997
----------- -----------
<S> <C> <C>
Basic:
Net (loss) earnings $(8,217) $12,233
======= =======
Weighted average number of common shares outstanding 17,385 16,189
======= =======
Basic (loss) earnings per common share $ (0.47) $ 0.76
======= =======
Diluted:
Net (loss) earnings $(8,217) $12,233
======= =======
Shares:
Weighted average number of common shares
outstanding 17,385 16,189
Shares issuable from assumed exercise of outstanding
stock options N/A(a) 534
------- -------
Weighted average number of common and common
equivalent shares (b) 17,385 16,723
======= =======
Diluted (loss) earnings per common share $ (0.47) $ 0.73
======= =======
</TABLE>
(a) Common equivalent shares are antidilutive for the
nine months ended October 31, 1998.
(b) Common equivalent shares represent stock options
granted to key employees and directors.
-26-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET OF THE MAXIM GROUP, INC. AND SUBSIDIARIES AS OF
OCTOBER 31, 1998 AND THE RELATED CONSOLIDATED STATEMENTS OF INCOME AND CASH
FLOWS FOR THE PERIOD ENDED OCTOBER 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-31-1999
<PERIOD-START> FEB-01-1998
<PERIOD-END> OCT-31-1998
<CASH> 34,152
<SECURITIES> 0
<RECEIVABLES> 117,161
<ALLOWANCES> 4,978
<INVENTORY> 112,450
<CURRENT-ASSETS> 273,505
<PP&E> 247,161
<DEPRECIATION> 58,715
<TOTAL-ASSETS> 536,095
<CURRENT-LIABILITIES> 239,222
<BONDS> 116,041
0
0
<COMMON> 21
<OTHER-SE> 170,754
<TOTAL-LIABILITY-AND-EQUITY> 536,095
<SALES> 464,125
<TOTAL-REVENUES> 464,125
<CGS> 308,907
<TOTAL-COSTS> 123,510
<OTHER-EXPENSES> 307
<LOSS-PROVISION> 850
<INTEREST-EXPENSE> 8,917
<INCOME-PRETAX> (9,139)
<INCOME-TAX> (1,299)
<INCOME-CONTINUING> (7,840)
<DISCONTINUED> 0
<EXTRAORDINARY> 377
<CHANGES> 0
<NET-INCOME> (8,217)
<EPS-PRIMARY> (.47)
<EPS-DILUTED> (.47)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET OF THE MAXIM GROUP, INC. AND SUBSIDIARIES AS OF
OCTOBER 31, 1997 AND THE RELATED CONSOLIDATED STATEMENTS OF INCOME AND CASH
FLOWS FOR THE PERIOD ENDED OCTOBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-START> FEB-01-1997
<PERIOD-END> OCT-31-1997
<CASH> 41,226
<SECURITIES> 0
<RECEIVABLES> 64,525
<ALLOWANCES> 2,500
<INVENTORY> 48,050
<CURRENT-ASSETS> 159,414
<PP&E> 168,233
<DEPRECIATION> 48,357
<TOTAL-ASSETS> 303,848
<CURRENT-LIABILITIES> 46,873
<BONDS> 126,156
0
0
<COMMON> 17
<OTHER-SE> 125,567
<TOTAL-LIABILITY-AND-EQUITY> 303,848
<SALES> 276,796
<TOTAL-REVENUES> 276,796
<CGS> 189,078
<TOTAL-COSTS> 62,818
<OTHER-EXPENSES> 292
<LOSS-PROVISION> 415
<INTEREST-EXPENSE> 4,252
<INCOME-PRETAX> 21,377
<INCOME-TAX> 8,359
<INCOME-CONTINUING> 13,018
<DISCONTINUED> 0
<EXTRAORDINARY> 785
<CHANGES> 0
<NET-INCOME> 12,233
<EPS-PRIMARY> 0.76
<EPS-DILUTED> 0.73
</TABLE>
