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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13E-3/A
(AMENDMENT NO. 3)
RULE 13E-3 TRANSACTION STATEMENT
(PURSUANT TO SECTION 13(E) OF THE SECURITIES EXCHANGE ACT OF 1934)
CONSO INTERNATIONAL CORPORATION
-------------------------------
(Name of the Issuer)
CONSO INTERNATIONAL CORPORATION
CIC ACQUISITION CO.
CIC ACQUISITION SUB, INC.
J. CARY FINDLAY
----------------------------------
(Name of Persons Filing Statement)
COMMON STOCK
------------------------------
(Title of Class of Securities)
20854R 10 5
-------------------------------------
(CUSIP Number of Class of Securities)
J. Cary Findlay
Conso International Corporation
513 North Duncan Bypass
Union, South Carolina 29379
Telephone 864/427-9004
Copies to:
J. Norfleet Pruden, III Geoffrey W. Levin
Kennedy Covington Lobdell & Hickman, LLP Kirkland & Ellis
Bank of America Corporate Center, Suite 4200 Citicorp Center
100 North Tryon Street 153 East 53rd Street
Charlotte, North Carolina 28202-4006 New York, New York 10022-4675
Telephone 704/331-7442 Telephone 212/446-4904
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(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications On Behalf Of Persons Filing Statement)
This statement is filed in connection with (check the appropriate box):
a. [X] The filing of solicitation materials or an information
statement subject to Regulation 14A, Regulation 14C, or Rule
13e-3(c) under the Securities Exchange Act of 1934.
b. [ ] The filing of a registration statement under the Securities Act of 1933.
c. [ ] A tender offer.
d. [ ] None of the above.
Check the following box if the soliciting materials or information statement
referred to in checking box (a) are preliminary copies: [ ]
Calculation Of Filing Fee
Transaction Valuation(1) Amount Of Filing Fee
------------------------ --------------------
$66,928,500 $13,385.70
[X] Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
Amount previously paid: $13,385.70
Filing party: Conso International Corporation
Form or registration no.: Schedule 14A - Preliminary Proxy Statement
Date filed: October 20, 1999
(1) Pursuant to Exchange Act Rule 0-11(b), 7,436,500 shares of Common Stock of
the Issuer are valued at $9.00 per share, based upon cash merger
consideration per share.
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INTRODUCTORY NOTE
This Amendment No. 3 (the "Final Amendment") to the Transaction
Statement on Schedule 13E-3 relates to the merger (the "Merger") of CIC
Acquisition Sub, Inc., a South Carolina corporation ("Acquisition Sub"), with
and into Conso International Corporation, a South Carolina corporation (the
"Company"), pursuant to the Merger Agreement dated as of October 5, 1999 (the
"Merger Agreement"), by and among the Company, Acquisition Sub and CIC
Acquisition Co., a Delaware corporation ("Parent"), and the related Plan of
Merger (the "Plan of Merger"). In the Merger, certain shares of the Company's
Common Stock held by J. Cary Findlay, the Company's Chairman, President and
Chief Executive Officer, were converted into common stock and preferred stock of
the surviving corporation.
This Final Amendment amends the Schedule 13E-3 filed by such parties
with the Securities and Exchange Commission on October 20, 1999, as amended on
December 8, 1999 and February 4, 2000. All information below should be read in
conjunction with the information contained or incorporated by reference in the
Schedule 13E-3, as previously amended. This Final Amendment is filed pursuant to
Rule 13e-3(d)(3) promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), to report the consummation of the Merger on March
6, 2000.
ITEM 4. TERMS OF THE TRANSACTION.
Item 4 is hereby amended and supplemented by adding the following:
On March 6, 2000, the Merger became effective by filing Articles of
Merger (which included the Plan of Merger attached as Exhibit A to the Merger
Agreement) with the Secretary of State of South Carolina, whereupon Acquisition
Sub was merged with and into the Company.
ITEM 6. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Item 6 is hereby amended and supplemented as follows by adding the
following:
On March 6, 2000 the Company entered into a Revolving Credit and Term
Loan Agreement (the "Credit Agreement") with the lenders from time to time party
thereto, SunTrust Bank, as agent, as security agent, as issuing bank and as
swingline lender, GMAC Commercial Credit LLC, as syndication agent, and Heller
Financial, Inc., as documentation agent. The Credit Agreement provides for a
term A loan facility of $25.0 million, a term B loan facility of $30.0 million
and a revolving credit facility of up to $15.0 million (collectively, the
"Loans"). The term A loan facility and the revolving credit facility mature
December 31, 2004, and the term B loan facility matures December 31, 2006. The
Loans bear interest, at the Company's option, at a base rate plus an applicable
margin or at a LIBOR rate plus an applicable margin. The applicable margin
ranges from .50% to 2.75% for base rate loans and from 2.00% to 4.25% for LIBOR
loans, in each case depending on the Company's ratio of total funded debt to
adjusted EBITDA.
The Credit Agreement contains covenants that restrict the Company's
ability to, among other things, (a) incur indebtedness, (b) grant liens, (c)
consummate mergers,
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consolidations, acquisitions and asset sales, (d) make investments or loans, (e)
enter into certain leases, (f) engage in transactions with affiliates and (g)
make certain restricted payments or capital expenditures. The Company's
obligations with respect to the Loans are secured by a security interest in all
of the Company's and its domestic subsidiaries' U.S. properties and assets and
by a pledge of the capital stock of the Company's operating subsidiaries.
On March 6, 2000 borrowings of $61,420,257 bearing interest at rates
of 10.5% and 11.0% were outstanding under the Credit Agreement.
On March 6, 2000, the Company also entered into a Subordinated Note and
Warrant Purchase Agreement (the "Note and Warrant Purchase Agreement") with
SunTrust Banks, Inc., The Lincoln National Life Insurance Company and Lincoln
National Income Fund, Inc., pursuant to which it issued $20.0 million in
subordinated notes and warrants to purchase shares of common stock and preferred
stock. The subordinated notes are unsecured, bear interest at 12.0% per annum,
mature March 5, 2008 and are subordinated to certain designated senior
indebtedness. The warrants are subject to a 50% reduction if the subordinated
notes are repaid prior to June 5, 2001.
The terms and conditions of the Credit Agreement and the Note and
Warrant Purchase Agreement are substantially similar to the senior and
subordinated debt financing commitments previously obtained by Acquisition Sub
from SunTrust Bank and SunTrust Banks, Inc. Copies of the Credit Agreement and
the Note and Warrant Purchase Agreement are attached as Exhibits (a)(3) and
(a)(4) and are incorporated herein by reference.
ITEM 16. ADDITIONAL INFORMATION.
Item 16 is amended and supplemented by adding the following:
The Merger Agreement and the related Plan of Merger were approved and
adopted by the shareholders of the Company at a Special Meeting commenced on
January 18, 2000 and reconvened on February 24, 2000.
ITEM 17. MATERIAL TO BE FILED AS EXHIBITS.
Item 17 is amended and supplemented by adding the following:
(a)(3) Revolving Credit and Term Loan Agreement dated as of March 6, 2000 by
and among the Company, the lenders from time to time party thereto,
SunTrust Bank, as agent, as security agent, as issuing bank and as
swingline lender, GMAC Commercial Credit LLC, as syndication agent, and
Heller Financial, Inc., as documentation agent.
(a)(4) Subordinated Note and Warrant Purchase Agreement dated as of March 6,
2000 by and among Acquisition Sub, the subsidiary guarantors party
thereto, SunTrust Banks, Inc., The Lincoln Life Insurance Company and
Lincoln National Income Fund, Inc.
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SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Date: March 13, 2000 CONSO INTERNATIONAL CORPORATION
By: /s/ J. Cary Findlay
---------------------------------------
Name: J. Cary Findlay
Title: Chairman, President and Chief Executive
Officer
CIC ACQUISITION CO.
By: /s/ Michael Bradley
---------------------------------------
Name: Michael Bradley
Title: Vice President
/s/ J. Cary Findlay
------------------------------------------------
J. CARY FINDLAY
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EXHIBIT INDEX
Exhibit Exhibit
Number Description
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(a)(3) Revolving Credit and Term Loan Agreement dated as of March 6,
2000 by and among the Company, the lenders from time to time
party thereto, SunTrust Bank, as agent, as security agent, as
issuing bank and as swingline lender, GMAC Commercial Credit
LLC, as syndication agent, and Heller Financial, Inc., as
documentation agent (filed herewith).
(a)(4) Subordinated Note and Warrant Purchase Agreement dated as of
March 6, 2000 by and among Acquisition Sub, the subsidiary
guarantors party thereto, SunTrust Banks, Inc., The Lincoln
Life Insurance Company and Lincoln National Income Fund, Inc.
(filed herewith)
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EXHIBIT (a)(3)
EXECUTION COUNTERPART
REVOLVING CREDIT AND TERM LOAN AGREEMENT
dated as of March 6, 2000
among
CIC ACQUISITION SUB, INC.,
as assumed by CONSO INTERNATIONAL CORPORATION,
THE LENDERS FROM TIME TO TIME PARTIES HERETO,
SUNTRUST BANK, as Agent, as Security Agent, as Issuing Bank and
as Swingline Lender,
GMAC COMMERCIAL CREDIT LLC, as Syndication Agent,
and
HELLER FINANCIAL, INC. as Documentation Agent
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SUNTRUST EQUITABLE SECURITIES CORPORATION, as Arranger
================================================================================
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TABLE OF CONTENTS
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ARTICLE I. DEFINITIONS; CONSTRUCTION...........................................................................1
Section 1.01 Definitions.................................................................................1
Section 1.02 Accounting Terms and Determination.........................................................34
Section 1.03 Other Definitional Terms...................................................................34
Section 1.04 Exhibits and Schedules.....................................................................34
Section 1.05 Plural Terms...............................................................................35
ARTICLE II. AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENTS...................................................35
Section 2.01 Revolving Credit Commitments...............................................................35
Section 2.02 Revolving Loans............................................................................35
Section 2.03 Intentionally Omitted......................................................................37
Section 2.04 Letter of Credit Subcommitment.............................................................37
Section 2.05 Notice of Issuance of Letter of Credit; Agreement to Issue.................................37
Section 2.06 Payment of Amounts drawn under any Letter of Credit........................................38
Section 2.07 Payment by Revolving Lenders...............................................................39
Section 2.08 Obligations Absolute.......................................................................39
Section 2.09 Indemnification; Nature of Issuing Bank's Duties...........................................40
Section 2.10 Swingline Subcommitment....................................................................40
Section 2.11 Reductions of Revolving Credit Commitments; Mandatory Prepayments of Revolving Loans.......42
Section 2.12 Use of Proceeds............................................................................43
Section 2.13 Extension..................................................................................43
ARTICLE III. TERM A LOANS.......................................................................................43
Section 3.01 Term A Loans...............................................................................43
Section 3.02 Notices....................................................................................44
Section 3.03 Use of Proceeds............................................................................44
ARTICLE IV. TERM B LOANS.......................................................................................45
Section 4.01 Term B Loans...............................................................................45
Section 4.02 Notices....................................................................................45
Section 4.03 Use of Proceeds............................................................................46
ARTICLE V. GENERAL LOAN TERMS.................................................................................46
Section 5.01 Disbursement of Funds......................................................................46
Section 5.02 Interest...................................................................................47
Section 5.03 Interest Periods...........................................................................48
Section 5.04 Default Interest...........................................................................49
Section 5.05 Fees.......................................................................................49
Section 5.06 Voluntary Prepayments of Revolving Loans...................................................50
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Section 5.07 Voluntary Prepayments of Term Loans........................................................51
Section 5.08 Mandatory Prepayments of Loans.............................................................51
Section 5.09 Payments, etc..............................................................................52
Section 5.10 Apportionment of Payments; Allocation of Proceeds from Collateral..........................55
Section 5.11 Sharing of Payments, Etc...................................................................56
Section 5.12 Interest Rate Not Ascertainable, etc.......................................................56
Section 5.13 Illegality.................................................................................57
Section 5.14 Increased Costs............................................................................57
Section 5.15 Lending Offices............................................................................59
Section 5.16 Funding Losses.............................................................................59
Section 5.18 Assumptions Concerning Funding of LIBOR Loans..............................................60
Section 5.19 Capital Adequacy...........................................................................60
ARTICLE VI. CONDITIONS PRECEDENT TO LOANS......................................................................60
Section 6.01 Conditions Precedent to Effectiveness of this Agreement....................................60
Section 6.02 Conditions Precedent to Each Loan and Each Letter of Credit................................65
ARTICLE VII. REPRESENTATIONS AND WARRANTIES.....................................................................67
Section 7.01 Organizational Existence; Compliance with Law..............................................67
Section 7.02 Organizational Power; Authorization........................................................67
Section 7.03 Enforceable Obligations....................................................................67
Section 7.04 No Legal Bar...............................................................................68
Section 7.05 No Material Litigation.....................................................................68
Section 7.06 Investment Company Act, Etc................................................................68
Section 7.07 Margin Regulations.........................................................................68
Section 7.08 Compliance With Environmental Laws.........................................................68
Section 7.09 Insurance..................................................................................69
Section 7.10 No Default.................................................................................69
Section 7.11 No Burdensome Restrictions.................................................................69
Section 7.12 Taxes......................................................................................69
Section 7.13 Subsidiaries; Dormant Subsidiaries.........................................................69
Section 7.14 Financial Statements.......................................................................69
Section 7.15 Employee Benefits..........................................................................70
Section 7.16 Patents, Trademarks, Copyrights, Licenses, Etc.............................................72
Section 7.17 Ownership of Property......................................................................72
Section 7.18 Indebtedness...............................................................................73
Section 7.19 Financial Condition........................................................................73
Section 7.20 Labor Matters..............................................................................73
Section 7.21 Payment or Dividend Restrictions...........................................................73
Section 7.22 Year 2000 Issues...........................................................................74
Section 7.23 Representations and Warranties Relating to Accounts........................................74
Section 7.24 Representations and Warranties Relating to Inventory.......................................75
Section 7.25 Subordination of Subordinated Indebtedness.................................................75
Section 7.26 Disclosure.................................................................................75
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ARTICLE VIII. AFFIRMATIVE COVENANTS..............................................................................76
Section 8.01 Organizational Existence, Etc..............................................................76
Section 8.02 Compliance with Laws, Etc..................................................................76
Section 8.03 Payment of Taxes and Claims, Etc...........................................................76
Section 8.04 Keeping of Books...........................................................................76
Section 8.05 Visitation, Inspection, Collateral Appraisals and Audits, Etc..............................76
Section 8.06 Insurance; Maintenance of Properties; Net Casualty/Insurance Proceeds......................77
Section 8.07 Reporting Covenants........................................................................78
Section 8.08 Year 2000 Issues...........................................................................81
Section 8.09 Financial Covenants........................................................................82
Section 8.10 Additional Credit Parties..................................................................83
Section 8.11 Cash Management Arrangement................................................................84
Section 8.12 Key Man Life Insurance.....................................................................85
Section 8.13 Interest Rate Contract.....................................................................86
ARTICLE IX. NEGATIVE COVENANTS.................................................................................86
Section 9.01 Indebtedness...............................................................................87
Section 9.02 Liens......................................................................................88
Section 9.03 Mergers, Consolidations, Acquisitions, Sales, Etc..........................................89
Section 9.04 Investments, Loans, Etc....................................................................90
Section 9.05 Lease Obligations..........................................................................91
Section 9.06 Restricted Payments........................................................................91
Section 9.07 Sale and Leaseback Transactions............................................................92
Section 9.08 Transactions with Affiliates...............................................................92
Section 9.09 ERISA......................................................................................92
Section 9.10 Additional Negative Pledges................................................................92
Section 9.11 Limitation on Payment Restrictions Affecting Consolidated Companies........................93
Section 9.12 Capital Expenditures.......................................................................93
Section 9.13 Change in Business.........................................................................93
Section 9.14 Modification of Corporate Name, Charter, Etc...............................................93
Section 9.15 Modification of the Subordinated Note Documents............................................93
Section 9.16 Modification of BT Intercompany Debt Documents.............................................94
ARTICLE X. EVENTS OF DEFAULT..................................................................................94
Section 10.01 Payments...................................................................................94
Section 10.02 Covenants Without Notice...................................................................94
Section 10.03 Other Covenants............................................................................94
Section 10.04 Representations............................................................................94
Section 10.05 Non-Payments of Other Indebtedness.........................................................95
Section 10.06 Defaults Under Other Agreements............................................................95
Section 10.07 Bankruptcy.................................................................................95
Section 10.08 ERISA......................................................................................96
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Section 10.09 Judgment...................................................................................96
Section 10.10 Change in Control..........................................................................96
Section 10.11 Default Under Other Credit Documents.......................................................96
Section 10.12 Default Under Subordinated Note Documents..................................................97
Section 10.13 Default Under Interest Rate Contract or Currency Contract..................................97
Section 10.14 Attachments................................................................................97
ARTICLE XI. AGENT, ISSUING BANK AND SWING LINE LENDER..........................................................97
Section 11.01 Appointment of Agent; Appointment of Security Agent........................................97
Section 11.02 Appointment of Issuing Bank................................................................98
Section 11.03 Appointment of Swingline Lender............................................................98
Section 11.04 Nature of Duties of Agent, Security Agent, Issuing Bank and Swingline Lender...............98
Section 11.05 Lack of Reliance on the Agent, Security Agent, the Issuing Bank and the Swingline
Lender..................................................................................99
Section 11.06 Certain Rights of the Agent, the Security Agent, the Issuing Bank and the Swingline
Lender..................................................................................99
Section 11.07 Reliance by Agent, the Security Agent, Issuing Bank and the Swingline Lender..............100
Section 11.08 Indemnification of Agent, the Security Agent, the Issuing Bank and the Swingline
Lender.................................................................................100
Section 11.09 The Agent, the Security Agent, the Issuing Bank and the Swingline Lender in Their
Individual Capacities..................................................................101
Section 11.10 Holders of Notes..........................................................................101
Section 11.11 Successor Agent...........................................................................101
ARTICLE XII. MISCELLANEOUS.....................................................................................104
Section 12.01 Notices...................................................................................104
Section 12.02 Amendments, Etc...........................................................................104
Section 12.03 No Waiver; Remedies Cumulative............................................................105
Section 12.04 Payment of Expenses, Etc..................................................................105
Section 12.05 Right of Setoff...........................................................................107
Section 12.06 Benefit of Agreement......................................................................107
Section 12.07 Governing Law; Submission to Jurisdiction.................................................109
Section 12.08 Independent Nature of Lenders' Rights.....................................................110
Section 12.09 Counterparts..............................................................................111
Section 12.10 Survival..................................................................................111
Section 12.11 Severability..............................................................................111
Section 12.12 Independence of Covenants.................................................................111
Section 12.13 Change in Accounting Principles, Fiscal Year or Tax Laws..................................111
Section 12.14 Headings Descriptive; Entire Agreement....................................................112
Section 12.15 Maximum Interest Rate.....................................................................112
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Exhibits
Exhibit A -- Form of Assignment and Acceptance Agreement
Exhibit B -- Form of Revolving Credit Note
Exhibit C -- Form of Term A Note
Exhibit D -- Form of Term B Note
Exhibit E -- Form of Swingline Note
Exhibit F -- Form of Closing Certificate
Exhibit G -- Form of Compliance Certificate
Exhibit H -- Form of Borrowing Base Certificate
Exhibit I -- Assumption Agreement
Schedules
Schedule 3.01 -- Term A Loan Amortization Schedule
Schedule 4.01 -- Term B Loan Amortization Schedule
Schedule 7.02 -- Consents
Schedule 7.05 -- Litigation
Schedule 7.08 -- Environmental
Schedule 7.13 -- Subsidiaries
Schedule 7.15 -- ERISA
Schedule 7.17 -- Ownership of Property
Schedule 7.21 -- Payment and Dividend Restrictions
Schedule 8.11 -- Bank Accounts
Schedule 9.01 -- Indebtedness
Schedule 9.02 -- Liens
Schedule 9.04 -- Investments
Schedule 9.08 -- Transaction with Affiliates
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REVOLVING CREDIT AND TERM LOAN AGREEMENT
THIS REVOLVING CREDIT AND TERM LOAN AGREEMENT (this "Agreement") is
made and entered into as of March 6, 2000, by and among CIC ACQUISITION SUB,
INC., a South Carolina corporation, ("Borrower"), SUNTRUST BANK, a Georgia
banking corporation ("SunTrust"), and the other banks and lending institutions
that are signatories to this Agreement or that hereafter become "Lenders" as
provided herein (SunTrust and such other banks and lending institutions,
individually a "Lender" and collectively, the "Lenders"), SunTrust, in its
capacity as Agent for the Lenders (the "Agent"), and as Security Agent for the
Beneficiaries (defined below) (the "Security Agent"), as Issuing Bank (the
"Issuing Bank"), as Swingline Lender (the "Swingline Lender"), GMAC COMMERCIAL
CREDIT LLC, in its capacity as Syndication Agent, and HELLER FINANCIAL, INC., in
its capacity as Documentation Agent.
W I T N E S S E T H:
WHEREAS, pursuant to a Merger Agreement, dated as of October 5, 1999,
between CIC Acquisition Co., a Delaware corporation ("Holdings"), the Borrower,
a wholly owned Subsidiary of Holdings, and Conso International Corporation, a
South Carolina corporation ("Conso International"), Conso International will
merge with and into the Borrower with Conso International as the surviving
corporation (the "Merger") and upon effectiveness of the Merger, Conso
International will assume all obligations of the Borrower hereunder and shall be
deemed to be the Borrower hereunder;
WHEREAS, the Borrower has requested that the Lenders establish a
$15,000,000 revolving credit facility in favor of the Borrower, and make two
term loans in the aggregate principal amount of $55,000,000 to the Borrower;
WHEREAS, subject to the terms and conditions of this Agreement, the
Lenders are willing to establish the requested revolving credit facility in
favor of the Borrower and make the requested term loans to the Borrower;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Borrower, the Lenders, the Agent, the Issuing
Bank and the Swingline Lender agree as follows:
ARTICLE I.
DEFINITIONS; CONSTRUCTION
Section 1.01 Definitions. In addition to the other terms defined
herein, the following terms used herein shall have the meanings herein specified
(to be equally applicable to both the singular and plural forms of the terms
defined):
"Account Debtor" shall mean any Person who is obligated under an
Account.
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"Accounts" shall mean, for any Person, all "accounts" (as defined in
the UCC), now or hereafter owned or acquired by such Person or in which such
Person now or hereafter has or acquires any rights and, in any event, shall mean
and include, without limitation, (a) all accounts receivable, contract rights,
book debts, notes, drafts and other obligations or indebtedness owing to such
Person arising from the sale or lease of goods or other property by it or the
performance of services by it (including, without limitation, any such
obligation which might be characterized as an account, contract right or general
intangible under the Uniform Commercial Code in effect in any jurisdiction), (b)
all of such Person's rights in, to and under all purchase and sales orders for
goods, services or other property, and all of such Person's rights to any goods,
services or other property represented by any of the foregoing (including
returned or repossessed goods and unpaid sellers' rights of rescission,
replevin, reclamation and rights to stoppage in transit), (c) all monies due to
or to become due to such Person under all contracts for the sale, lease or
exchange of goods or other property or the performance of services by it
(whether or not yet earned by performance on the part of such Person), and (d)
all collateral security and guarantees of any kind given to such Person with
respect to any of the foregoing.
"Active Subsidiary" shall mean each Subsidiary of the Borrower that has
any assets, liabilities or conducts any business whatsoever.
"Adjusted EBITDA" shall mean (a) for any period ending after the last
day of the second Fiscal Quarter of Fiscal Year 2001, EBIDTA, and (b) for any
period ending on or prior to the last day of the second Fiscal Quarter of Fiscal
Year 2001, EBITDA, plus:
(i) for the period ending on the last day of the third Fiscal Quarter
of Fiscal Year 2000, $366,000;
(ii) for the period ending on the last day of the fourth Fiscal Quarter
of Fiscal Year 2000, $117,500;
(iii) for the period ending on the last day of the first Fiscal Quarter
of Fiscal Year 2001, $40,000; or
(iv) for the period ending on the last day of the second Fiscal Quarter
of Fiscal Year 2001, $15,000.
"Affiliate" of any Person shall mean any other Person directly or
indirectly controlling, controlled by, or under common control with, such
Person, whether through the ownership of voting securities, by contract or
otherwise. For purposes of this definition, "control" (including with
correlative meanings, the terms "controlling", "controlled by", and "under
common control with") as applied to any Person, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of that Person.
"Agent" shall have the meaning assigned to such term in the opening
paragraph hereof.
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"Agency Fee " shall mean the "Agency Fee" payable by the Borrower to
the Agent pursuant to the Fee Letter.
"Agreement" shall mean this Revolving Credit and Term Loan Agreement,
as the same may be amended, restated, supplemented and otherwise modified from
time to time.
"Amortization" shall mean, for any period, amortization expense of the
Consolidated Companies determined on a consolidated basis in accordance with
GAAP.
"Applicable Base Rate Margin" shall mean for any period, the applicable
percentage per annum determined from the chart set forth below based on the
Total Funded Debt to Adjusted EBITDA Ratio calculated as of the relevant
determination date:
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The Applicable Base Rate The Applicable
If the Total Funded Debt to Margin for Revolving Loans Base Rate Margin for
Adjusted EBITDA Ratio is: and Term A Loans is: Term B Loans is:
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Greater than or equal to 4.25 2.25% 2.75%
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Greater than or equal to 4.00:1.0 and 1.75% 2.25%
less than 4.25:1.0
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Greater than or equal to 3.75:1.0 but 1.50% 2.00%
less than 4.00:1.0
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Greater than or equal to 3.50:1.0 but 1.25% 1.75%
less than 3.75:1.0
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Greater than or equal to 3.25:1.0 but 1.00% 1.50%
less than 3.50:1.0
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Greater than or equal to 3.00:1.0 but 0.75% 1.50%
less than 3.25:1.0
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Less than 3.00:1.0 0.50% 1.50%
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Each change in the Applicable Base Rate Margin resulting from a change in the
Total Funded Debt to Adjusted EBITDA Ratio shall be effective on the second
Business Day immediately following the date of delivery to the Agent of the
annual financial statements required under Section 8.07(a), or the monthly
financial statements for the third Fiscal Month of each Fiscal Quarter required
under Section 8.07(b), as applicable, delivery of such financial statements to
be accompanied by the compliance certificate required by Section 8.07(c) (which
compliance certificate will set forth a calculation of Total Funded Debt to
Adjusted EBITDA Ratio and will indicate any required change to the Applicable
Base Rate Margin); provided however, that for the period commencing on the
Closing Date and ending on September 6, 2000, the Applicable Base Rate Margin
shall not be less than (a) 1.75% per annum with respect to Revolving Loans and
the Term A Loans, and (b) 2.25% per annum with respect to the Term B Loans.
Notwithstanding the foregoing, but subject to the provisions of Section 5.04, if
at any time the Borrower has failed to deliver such financial statements and
certificates when required by Section 8.07(a), (b), and (c), as applicable, the
Applicable Base Rate Margin for Revolving Loans and the Term A Loans shall be
2.25% and the Applicable Base Rate Margin for the Term
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B Loans shall be 2.75% until such time as the delinquent financial statements
are delivered, at which time the Applicable Base Rate Margin for Revolving
Loans, the Term A Loans and the Term B Loans shall be as otherwise provided
herein.
"Applicable Commitment Fee Percentage" shall mean the applicable
percentage per annum determined from the chart set forth below based on the
Total Funded Debt to Adjusted EBITDA Ratio calculated as of the relevant
determination date:
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<CAPTION>
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If the Total Funded The Applicable Commitment
Debt to Adjusted EBITDA Ratio is: Fee Percentage is:
----------------------------------------------------------------------------------------------------------
<S> <C>
Greater than or equal to 3.50:1.0 0.50%
----------------------------------------------------------------------------------------------------------
Less than 3.50:1.0 0.375%
----------------------------------------------------------------------------------------------------------
</TABLE>
Each change in the Applicable Commitment Fee Percentage resulting from a change
in the Total Funded Debt to Adjusted EBITDA Ratio shall be effective on the
second Business Day immediately following the date of delivery to the Agent of
the annual financial statements required under Section 8.07(a), or the monthly
financial statements for the third Fiscal Month of each Fiscal Quarter required
under Section 8.07(b), as applicable, delivery of such financial statements to
be accompanied by the compliance certificate required by Section 8.07(c) (which
compliance certificate will set forth a calculation of Total Funded Debt to
Adjusted EBITDA Ratio and will indicate any required change to the Applicable
Commitment Fee Percentage); provided, however, for the period commencing on the
Closing Date and ending on September 6, 2000, the Applicable Commitment Fee
Percentage shall be 0.50% per annum. Notwithstanding the foregoing, if at any
time the Borrower has failed to deliver such financial statements and
certificates when required by Section 8.07(a), (b), and (c), as applicable, the
Applicable Commitment Fee Percentage shall be 0.50%, until such time as the
delinquent financial statements are delivered, at which time the Applicable
Commitment Fee Percentage shall be otherwise provided herein.
"Applicable LIBOR Margin" shall mean, for any period the applicable
percentage per annum determined from the chart set forth below based on the
Total Funded Debt to Adjusted EBITDA Ratio calculated as of the relevant
determination date:
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<PAGE> 11
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
The Applicable LIBOR Margin for The Applicable
If the Total Funded Debt to Adjusted Revolving Loans and Term A Loans LIBOR Margin
EBITDA Ratio is: is: for Term B Loans is:
-----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Greater than or equal to 4.25 3.75% 4.25%
-----------------------------------------------------------------------------------------------------------
Greater than or equal to 4.00:1.0 but
less than 4.25:1.0 3.25% 3.75%
-----------------------------------------------------------------------------------------------------------
Greater than or equal to 3.75:1.0 but
less than 4.00:1.0 3.00% 3.50%
-----------------------------------------------------------------------------------------------------------
Greater than or equal to 3.50:1.0 but
less than 3.75:1.0 2.75% 3.25%
-----------------------------------------------------------------------------------------------------------
Greater than or equal to 3.25:1.0 but
less than 3.50:1.0 2.50% 3.00%
-----------------------------------------------------------------------------------------------------------
Greater than or equal to 3.00:1.0 but
less than 3.25:1.0 2.25% 3.00%
-----------------------------------------------------------------------------------------------------------
Less than 3.00:1.0 2.00% 3.00%
-----------------------------------------------------------------------------------------------------------
</TABLE>
Each change in the Applicable LIBOR Margin resulting from a change in the Total
Funded Debt to Adjusted EBITDA Ratio shall be effective on the second Business
Day immediately following the date of delivery to the Agent of the annual
financial statements required under Section 8.07(a), or the monthly financial
statements for the third Fiscal Month of each Fiscal Quarter required under
Section 8.07(b), as applicable, delivery of such financial statements to be
accompanied by the compliance certificate required by Section 8.07(c) (which
compliance certificate will set forth a calculation of Total Funded Debt to
Adjusted EBITDA Ratio and will indicate any required change to the Applicable
LIBOR Margin); provided however, that for the period commencing on the Closing
Date and ending on September 6, 2000, the Applicable LIBOR Margin shall not be
less than (a) 3.25% per annum with respect to Revolving Loans and Term A Loans,
and (b) 3.75% per annum with respect to Term B Loans. Notwithstanding the
foregoing, if at any time the Borrower has failed to deliver such financial
statements and certificates when required by Section 8.07(a), (b), and (c), as
applicable, the Applicable LIBOR Margin for Revolving Loans and the Term A Loans
shall be 3.75% per annum the Applicable LIBOR Margin and for the Term B Loans
shall be 4.25% per annum, until such time as the delinquent financial statements
are delivered, at which time the Applicable LIBOR Margin shall be otherwise
provided herein.
"Arranger" shall mean SunTrust Equitable Securities Corporation.
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Lender and an Eligible Assignee in accordance with the terms
of this Agreement and substantially in the form of Exhibit A.
"Assignment of Life Insurance Policy" shall mean that certain
Assignment of Life Insurance Policy, made by the Borrower in favor of Agent, for
the benefit of the Lenders, assigning the Life Insurance Policy.
-5-
<PAGE> 12
"Assignment of Rents and Leases" shall mean collectively (i) the
Assignment of Rents and Leases, dated as of the date hereof, by Borrower in
favor of Agent, and (ii) the Assignment of Rents and Leases, dated as of the
date hereof, by Simplicity Pattern in favor of Agent, each as amended, restated,
modified or otherwise supplemented from time to time.
"Assumption Agreement" means the Assumption Agreement, dated as of the
Closing Date, to be executed and delivered by Conso International in favor of
the Agent and the Lenders in the form of Exhibit I.
"Bankruptcy Code" shall mean any of the United States Bankruptcy Code
of 1978 (11 U.S.C. ss. 1 et seq.), as amended and in effect from time to time.
"Base Rate" shall mean the higher of (i) the Federal Funds Rate, as in
effect from time to time, plus one-half of one percent (0.50%) per annum and
(ii) the rate which the Agent publicly announces from time to time to be its
prime lending rate, as in effect from time to time; provided that any change in
the Base Rate shall be effective as of the date of such change. The Agent's
prime lending rate is a reference rate and does not necessarily represent the
lowest or best rate charged to customers. The Agent may make commercial loans or
other loans at rates of interest at, above or below the Agent's prime lending
rate.
"Base Rate Loan" shall mean a Loan made or outstanding as a portion of
the Revolving Loans, the Swingline Loans, the Term A Loans or the Term B Loans
bearing interest based on the Base Rate.
"Beneficiaries" shall mean the Agent, the Lenders, the Issuing Bank,
the Swingline Lender and the Security Agent.
"Blocked Account" shall have the meaning assigned to such term in
Section 8.11(a).
"Blocked Account Agreements" shall mean, collectively, those certain
Blocked Account Agreements, dated as of the Closing Date, among the Borrower or
a Domestic Subsidiary, the Agent and the bank at which each Blocked Account is
located, with respect to each Blocked Account of the Borrower or such Domestic
Subsidiary and all other Blocked Account Agreements hereafter executed, in each
case as amended, restated, supplemented or otherwise modified from time to time.
"Borrower" shall mean initially CIC Acquisition Sub, Inc., a South
Carolina corporation, and upon the effectiveness of the Merger, shall mean Conso
International as successor by merger with CIC Acquisition Sub, Inc., and its
successors and assigns.
"Borrower Pledge Agreement" shall mean the Borrower Pledge Agreement,
dated as of the Closing Date pursuant to which the Borrower pledges (i) 100% of
the Stock of the Domestic Subsidiaries, and (ii) all Intercompany Notes owing to
or held by it, as amended, restated, modified or otherwise supplemented from
time to time.
-6-
<PAGE> 13
"Borrowing" shall mean the borrowing, continuation or conversion by the
Borrower of Loans of one Type and made pursuant to the same tranche of
Commitments (e.g. the Revolving Credit Commitments, the Swingline
Subcommitments, the Term A Loan Commitments or the Term B Loan Commitments), and
if such Loans are LIBOR Loans, concurrently having the same Interest Period
(except as otherwise provided in Sections 5.13(b) and 5.14) or the continuation
or conversion of an existing Borrowing or Borrowings in whole or in part.
"Borrowing Availability" shall mean, at any time, (i) the Borrowing
Limit less (ii) the sum of the principal amount of all outstanding Revolving
Loans, Swingline Loans and Letter of Credit Obligations.
"Borrowing Base" shall mean, at any time, the sum of (a) 85% of
Eligible Accounts, plus (b) 50% of Eligible Inventory, minus (c) without
duplication, reserves for losses, expenses and liabilities as the Agent shall
reasonably determine are necessary or advisable under the circumstances from
time to time. The Borrowing Base at any time in effect (except when Borrower
fails to timely deliver a Borrowing Base Certificate as required under Section
8.07(e)) shall be determined as set forth in the Borrowing Base Certificate most
recently delivered hereunder; provided that the information contained in such
Borrowing Base Certificate shall not be conclusive in calculating the Borrowing
Base and, after consultation with the Borrower, the Agent shall be entitled to
adjust the amounts and other information contained therein to the extent that it
believes in its reasonable credit judgment that such adjustment is necessary and
appropriate to cause the Borrowing Base (as so adjusted) to reflect the
standards set forth in the definitions of the terms Eligible Accounts and
Eligible Inventory (as calculated as of the last day of the Fiscal Month as to
which such Borrowing Base Certificate relates). Unless an Event of Default shall
have occurred and be continuing, the Borrowing Base (as so adjusted) shall be
the Borrowing Base in effect from the date the Agent notifies the Borrower that
it has made any such adjustment until the sooner of (i) a recalculation of the
Borrowing Base pursuant to Section 8.07(e), and (ii) the date upon which the
next Borrowing Base Certificate is delivered. When an Event of Default has
occurred and is continuing and after notice to the Borrower, Agent shall have
the right to reduce the advance rates from those set forth above, adjust
eligibility standards and reserve for losses, expenses and liabilities, in the
exercise of its reasonable credit judgment.
"Borrowing Base Certificate" shall mean a certificate of the chief
financial officer of the Borrower, substantially in the form of Exhibit H.
"Borrowing Limit" shall mean, at any time, the lesser of (i) the
aggregate principal amount of the Revolving Credit Commitments at such time and
(ii) the Borrowing Base as reported in the Borrowing Base Certificate most
recently delivered to the Lenders pursuant to Section 8.07(e).
"BT" shall mean British Trimmings Limited, a company incorporated under
the laws of England (Registered in England No. 2150914).
-7-
<PAGE> 14
"BT Credit Party" shall mean "Credit Party" as such term is defined in
the BT Intercompany Loan Agreement.
"BT Intercompany Borrower" shall mean "Borrower" as such term is
defined in the BT Intercompany Loan Agreement.
"BT Intercompany Collateral" shall mean "Collateral" as such term is
defined in the BT Intercompany Loan Agreement.
"BT Intercompany Debt" shall mean all Indebtedness arising under the BT
Intercompany Loan Agreement and the BT Intercompany Notes.
"BT Intercompany Debt Documents" shall mean, collectively, the BT
Intercompany Loan Agreement, the BT Intercompany Notes and all other "Loan
Documents" as defined in the BT Intercompany Loan Agreement.
"BT Intercompany Loan Agreement" shall mean the Loan Agreement, dated
as of the date hereof, between BT and the Borrower, as amended, restated,
supplemented, or otherwise modified from time to time in accordance with this
Agreement.
"BT Intercompany Notes" shall mean, collectively, the "Term Note" as
such term is defined in the BT Intercompany Loan Agreement, in the principal
amount of $11,818,345.07 and the "Revolving Note" as such term is defined in the
BT Intercompany Loan Agreement, as each may be amended, restated, modified or
otherwise supplemented from time to time in accordance with the provisions
hereof and of the BT Intercompany Loan Agreement.
"BT Intercompany Obligations" shall have the meaning assigned to the
term "Obligations" under the BT Intercompany Loan Agreement.
"BT Lender" shall mean the "Lender" as such term is defined in the BT
Intercompany Loan Agreement.
"BT Revolving Loans" shall mean the "Revolving Loans" as such term is
defined in the BT Intercompany Loan Agreement.
"Business Day" shall mean (i) with respect to any Borrowing, payment or
rate selection of LIBOR Loan a day (other than a Saturday or Sunday) on which
banks generally are open in Atlanta, Georgia for the conduct of substantially
all of their commercial lending activities, and on which dealings in U.S.
Dollars are carried on in the London interbank and foreign exchange market, and
(ii) for all other purposes, a day (other than a Saturday or Sunday) on which
banks generally are open in Atlanta, Georgia for the conduct of substantially
all of their commercial lending activities.
"Capital Expenditures" shall mean, for any period, the aggregate of
expenditures of the Consolidated Companies for the acquisition or leasing
pursuant to capital leases of fixed or
-8-
<PAGE> 15
capital assets or additions to property, plants and equipment (including, but
not limited to, replacements, capitalized repairs and improvements) which should
be capitalized under GAAP.
"Capital Lease Obligations" of any Person shall mean all obligations of
such Person under leases that are required to be classified and accounted for as
capital leases under GAAP.
"Cash Management Agreements" shall mean the Blocked Account Agreements,
the Concentration Account Agreements, the Disbursement Account Agreement, and
all blocked account agreements, lockbox agreements and all disbursement account
agreements entered into by the Borrower or any Domestic Subsidiary, the Agent
and a bank at which the Borrower or such Domestic Subsidiary maintains its
Blocked Accounts, Concentration Accounts and Disbursement Account, in form and
substance satisfactory to all Lenders in their sole and absolute discretion, as
amended, restated, supplemented or otherwise modified from time to time.
"Cash Taxes" shall mean, for any period, Taxes relating to income paid
by the Consolidated Companies during such period.
"Casualty" means any act or occurrence of any kind or nature that
results in damage, loss or destruction to any Collateral.
"Change in Control" shall mean and be deemed to occur on the earliest
of, and upon any subsequent occurrence of:
(a) (i) prior to the occurrence of a fully distributed public offering
of Stock or other securities of the Borrower, (A) CVC and its officers and
directors ceasing to own and control beneficially and of record, one hundred
percent of the capital stock of Holdings, (B) Holdings ceasing to own at least
fifty-one percent (51%) in the aggregate on a fully diluted, as if converted
basis, of the issued and outstanding voting Stock of the Borrower, or (C) for
the period commencing on the Closing Date and ending on the first anniversary of
the Closing Date, J. Cary Findlay or, in the event of his death, his estate or
members of his immediate family, ceasing to own and control beneficially and of
record, at least seventy-five percent (75%) of the voting Stock of the Borrower
held by J. Cary Findlay on the Closing Date, or (ii) approval by the
stockholders or the Board of Directors of the Borrower or Holdings of a merger,
reorganization, consolidation, exchange of shares, recapitalization,
restructuring or other business combination which could result in the occurrence
of any event described in clause (i) of this subparagraph (a); or
(b) following the occurrence of a fully distributed public offering of
Stock or other securities of the Borrower (i) CVC and its officers and directors
ceasing to own and control beneficially and of record, one hundred percent of
the capital stock of Holdings, (ii) CVC, its officers and directors and J. Cary
Findlay ceasing to own and control beneficially and of record thirty three
percent (33%) in the aggregate on a fully diluted, as if converted basis, of the
issued and outstanding voting Stock of the Borrower (iii) any Person or group
(within the meaning of Rule 13d-5 of the Securities Exchange Act of 1934 as in
effect on the date hereof) shall own and control beneficially and of record, a
percentage of the issued and outstanding voting Stock of the
-9-
<PAGE> 16
Borrower on a fully diluted, as if converted, basis having ordinary voting power
in excess of the percentage then owned beneficially and of record, on a fully
diluted, as if converted basis, by Holdings and J. Cary Findlay, or (iv) a
majority of the seats (except in the case of any vacancy for 30 days or less
resulting from the death or resignation of any director of the Borrower) on the
board of directors of the Borrower shall at any time be occupied by persons who
were neither (A) nominated by the board of directors of the Borrower nor (B)
appointed by the board of directors so nominated.
"Closing Date" shall mean the date on or before March 6, 2000, on which
the Lenders make the Term A Loans, the Term B Loans and the initial Revolving
Loans, the Issuing Bank issues the initial Letters of Credit and the conditions
set forth in Section 6.01 and Section 6.02 are satisfied or waived in accordance
with Section 12.02.
"Collateral" shall mean all tangible and intangible property, real and
personal, of any Credit Party that is the subject of a Lien granted pursuant to
a Credit Document to the Agent for the benefit of the Lenders to secure the
whole or any part of the Obligations, and shall include, without limitation, all
Condemnation Awards and insurance proceeds from Casualty with respect to any of
the foregoing.
"Collateral Assignment" shall mean the Collateral Assignment, dated as
of the date hereof, pursuant to which the Borrower assigns to Agent, for the
benefit of Lenders, all of the Borrower's right, title and interest to the
"Collateral" as such term is defined in the BT Intercompany Loan Agreement, as
amended, restated, supplemented or otherwise modified from time to time in
accordance with this Agreement.
"Collateral Documents" shall mean, collectively, the Security
Agreements, the Mortgages and other Real Estate Documents, the Trademark
Security Agreements, the Patent Security Agreements, the Copyright Security
Agreements, the Pledge Agreements, the Cash Management Agreements, the
Perfection Certificate, the Intercompany Notes, the Assignment of Life Insurance
Policy, all documents related to the pledge by Borrower to the Agent of the
shares of Stock of Val-Mex, the Collateral Assignment all other instruments and
agreements now or hereafter securing the whole or any part of the Obligations,
all UCC-1 financing statements, fixture financing statements, stock powers and
all other documents, instruments, agreements and certificates executed and
delivered by any Credit Party to the Agent and the Lenders in connection with
the foregoing.
"Commitment" shall mean, for any Lender, its Revolving Credit
Commitment (including its interest in the Letter of Credit Subcommitment and the
Swingline Subcommitment), its Term A Loan Commitment or its Term B Loan
Commitment, as the context indicates, and the term "Commitments" shall mean,
collectively, the Revolving Credit Commitments of all Revolving Lenders, the
Letter of Credit Subcommitment of the Issuing Bank, the Swingline Subcommitment
of the Swingline Lender, the Term A Loan Commitments of all Term A Lenders and
the Term B Loan Commitments of all Term B Lenders.
-10-
<PAGE> 17
"Concentration Accounts" shall have the meaning assigned to such term
in Section 8.11(a).
"Concentration Account Agreements" shall mean, collectively, those
certain Concentration Account Agreements, dated as of the Closing Date, among
the Borrower or a Domestic Subsidiary, the Agent and the bank at which each
Concentration Account is located, with respect to each Concentration Account of
the Borrower or such Domestic Subsidiary and all other Concentration Account
Agreements hereafter executed, in each case as amended, restated, supplemented
or otherwise modified from time to time.
"Condemnation" means any taking of title, of use, or of any other
property interest under the exercise of the power of eminent domain, whether
temporarily or permanently, by any Governmental Authority or by any Person
acting under Governmental Authority.
"Condemnation Award" means any and all judgments, awards of damages
(including, but not limited to, severance and consequential damages), payments,
proceeds, settlements, amounts paid for a taking in lieu of Condemnation, or
other compensation heretofore or hereafter made, including interest thereon, and
the right to receive the same, as a result of, or in connection, with, any
Condemnation or threatened Condemnation.
"Conso International" shall mean Conso International Corporation, a
South Carolina corporation.
"Consolidated Companies" shall mean, collectively the Borrower and all
of its Subsidiaries, and "Consolidated Company" shall mean, individually, the
Borrower or any of its Subsidiaries.
"Contractual Obligation" of any Person shall mean any provision of any
security issued by such Person or of any agreement, instrument or undertaking
under which such Person is obligated or by which it or any of the property in
which it has an interest is bound.
"Copyright Security Agreements" shall mean, collectively, (i) that
certain Collateral Assignment and Security Agreement (Copyrights), dated as of
the Closing Date, by and between Borrower and the Agent, (ii) that certain
Collateral Assignment and Security Agreement (Copyrights) by and between
Simplicity Pattern and the Agent, and (iii) each other Collateral Assignment and
Security Agreement (Copyrights), by and between any Credit Party and the Agent,
each as amended, restated, supplemented or otherwise modified from time to time.
"Credit Documents" shall mean, collectively, this Agreement, the Notes,
the Collateral Documents, the Subordination Agreement, the Guaranty Agreements,
all Notices of Borrowing, all Notices of Conversion/Continuation, all Borrowing
Base Certificates, the Post-Closing Agreement, the Fee Letter, all letter of
credit applications and all other instruments, agreements, documents and
writings executed in connection herewith.
-11-
<PAGE> 18
"Credit Party" shall mean the Borrower and any Guarantor (including any
Person that currently is a Guarantor and any Person who may at any time in the
future become a Guarantor).
"Currency Contracts" shall mean any forward contracts, futures
contracts, foreign exchange contracts, currency swap agreements, and other
similar agreements and arrangements designed to protect against fluctuations in
foreign exchange rates.
"CVC" shall mean Citicorp Venture Capital, Ltd., a New York
corporation, and its Affiliates.
"Debenture" shall have the meaning assigned to such term in the BT
Intercompany Loan Agreement.
"Default" shall mean any condition or event which, with notice or lapse
of time or both, would constitute an Event of Default.
"Default Rate" shall have the meaning assigned to such term in Section
5.04.
"Depreciation" shall mean, for any period, depreciation expense of the
Consolidated Companies determined on a consolidated basis in accordance with
GAAP.
"Disbursement Account" shall have the meaning assigned to such term in
Section 8.11(d).
"Disbursement Account Agreement" shall mean, collectively, that certain
Disbursement Account Agreement, dated as of the Closing Date, executed by the
Borrower in favor of the Agent, with respect to the Disbursement Account of the
Borrower and all other Disbursement Account Agreements hereafter executed by the
Borrower in favor of the Agent, in each case as amended, restated, supplemented
or otherwise modified from time to time.
"Dollar" and "U.S. Dollar" and the sign "$" shall mean lawful money of
the United States of America.
"Domestic Subsidiary" shall mean any Subsidiary of the Borrower that is
organized under the laws of one of the fifty states of the United States or the
District of Columbia of the United States.
"Dormant Subsidiary" shall mean each Subsidiary of the Borrower that
has no assets, no liabilities and does not conduct business in any way.
"EBITDA" shall mean, for any period, determined on a consolidated basis
in accordance with GAAP an amount equal to the sum of (i) Net Income (Loss) for
such period plus (ii) without duplication and to the extent deducted in
computing Net Income (Loss) for such period, (A) Interest Expense for such
period, (B) Cash Taxes for such period, (C) Depreciation for such period, (D)
Amortization for such period, and (E) all other non-cash charges, non-cash
losses and
-12-
<PAGE> 19
extraordinary one-time losses for such period (including transaction expenses
and the amortization of debt discount) minus (iii) without duplication and to
the extent included in computing Net Income (Loss) for such period, non-cash
gains and extraordinary gains for such period; provided, however, that with
respect to any Person, or substantially all of the assets of a Person, that
became a Subsidiary, of or was merged with or consolidated into, or acquired by,
a Consolidated Company in accordance with the terms of this Agreement, during
such period, "EBITDA" shall also include the EBITDA of such Person or the EBITDA
attributable to such assets during such period as if such Person or assets were
acquired as of the first day of such period.
"Eligible Accounts" shall mean all Accounts of the Borrower and its
Domestic Subsidiaries other than any Account:
(a) that does not arise from the sale of goods or the performance of
services by the Borrower or one of its Domestic Subsidiaries in the ordinary
course of its business;
(b) upon which (i) the Borrower's or any of its Domestic Subsidiaries'
right to receive payment is not absolute or is contingent upon the fulfillment
of any condition whatsoever or (ii) the Borrower or any of its Domestic
Subsidiaries are not able to bring suit or otherwise enforce its remedies
against the Account Debtor through judicial process;
(c) that is owed by an Account Debtor to which the Borrower or any
Domestic Subsidiary is indebted in any way, or which is subject to any defense,
right of setoff or counterclaim by the Account Debtor, but only to the extent of
such indebtedness, defense, setoff or counterclaim;
(d) (i) that is not a bona fide, valid and enforceable obligation of
the Account Debtor or (ii) with respect to which, in whole or in part, a check,
promissory note, draft, trade acceptance or other instrument for the payment of
money has been received, presented for payment and returned uncollected for any
reason or (iii) that is subject to any customer dispute;
(e) with respect to which an invoice has not been sent;
(f) that is not owned solely by the Borrower or one of its Domestic
Subsidiaries or that is subject to any right, claim, interest or lien of another
Person, other than a Lien in favor of the Agent;
(g) that is the obligation of an Account Debtor:
(i) that is the United States of America or any department,
agency, public corporation or other instrumentality thereof, unless the
Agent has agreed to the contrary in writing and all required procedures
for the effective collateral assignment of such Account under the
Federal Assignment of Claims Act of 1940, as amended, and any other
steps necessary to perfect the Agent's Lien in such Account, have been
complied with to the Agent's satisfaction.
-13-
<PAGE> 20
(ii) that (A) is uninsured and (B) either (i) does not
maintain its chief executive office in the United States, (ii) is not
organized under the laws of the United States or any state or other
political subdivision thereof, or (iii) is the government of any
foreign country or sovereign state or any state, province, municipality
or other political subdivision thereof, or of any department, agency,
public corporation or other instrumentality thereof, unless such
Account is secured by a letter of credit acceptable to the Agent;
(iii) that is an Affiliate, director, officer or employee of
the Borrower or one of its Domestic Subsidiaries; or
(iv) with whom the Borrower or one of its Domestic
Subsidiaries has any agreement or understanding for discounts or
deductions from the Account, except for discounts or allowances which
are made in the ordinary course of business for prompt payment or
volume purchases and which discounts or allowances are reflected in the
calculation of the face value of each invoice related to such Account.
(h) that arises with respect to goods which are delivered on a
cash-on-delivery basis or placed on consignment, guaranteed sale or other terms
by reason of which the payment by the Account Debtor may be conditional;
(i) that is an obligation for which the total unpaid Accounts of the
Account Debtor exceed 15% of the net amount of all Accounts on a consolidated
basis, to the extent of such excess;
(j) that is in default; provided, that an Account shall be deemed in
default if (i) the Account is not paid within the lesser of 60 days from its due
date or 90 days from its original invoice date; (ii) the Account Debtor
obligated on such Account suspends business, becomes insolvent, files a petition
for bankruptcy, makes a general assignment for the benefit of creditors, or
fails to pay its debts generally as they come due; (iii) a petition is filed by
or against any Account Debtor obligated upon such Account under any bankruptcy
law or any other national, state or provincial receivership, insolvency relief
or other law or laws for the relief of debtors or (iv) a receiver or trustee for
the Account Debtor or any of its assets is appointed;
(k) that is the obligation of an Account Debtor for whom 50% or more of
the Accounts upon which such Account Debtor is obligated are not Eligible
Accounts;
(l) that arises from any bill-and-hold arrangement or other arrangement
for the sale of goods which remain in the possession or control of the Borrower
or one of its Domestic Subsidiaries;
(m) as to which the Agent does not have a first-priority perfected
security interest;
-14-
<PAGE> 21
(n) to the extent that such Account exceeds any reasonable credit limit
established by the Agent in its credit discretion;
(o) with respect to which any of the representations, warranties,
covenants, and agreements contained in the Credit Documents are not true and
correct;
(p) that represents interest payments or service charges owing to the
Borrower or one of its Domestic Subsidiaries as determined by the Borrower in
good faith;
provided, that the Agent shall have the right to create and adjust related
reserves monthly in its reasonable credit judgment.
"Eligible Assignee" shall mean (i) a commercial bank or savings and
loan association having total assets in excess of $100,000,000; (ii) a finance
company, insurance company or other financial institution, lender or fund
(whether a corporation, partnership or other entity) which is engaged in making,
purchasing or otherwise investing in commercial loans in the ordinary course of
its business, and having total assets in excess of at least $100,000,000; (iii)
any Lender or any Affiliate of any Lender; or (iv) any other Person to which the
Agent and the Borrower has consented (such approval by the Agent or the Borrower
not to be unreasonably withheld or delayed and such approval to be deemed given
by the Borrower 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 provided by the assigning Lender to the Borrower, and
provided that no such consent of the Borrower shall be required at any time
during which an Event of Default shall have occurred and be continuing);
provided however, that neither Borrower nor any Affiliate of the Borrower shall
qualify as an Eligible Assignee.
"Eligible Inventory" shall mean all Inventory of the Borrower and its
Domestic Subsidiaries other than Inventory that:
(a) consists of work-in-process;
(b) is not owned solely by the Borrower or one of its Domestic
Subsidiaries or that is subject to any right, claim, interest or Lien of another
Person, other than a Lien in favor of the Agent;
(c) is (i) not located in the continental United States, (ii) not
located on real property owned by the Borrower or one of its Domestic
Subsidiaries unless, if such property is leased by the Borrower or one of its
Domestic Subsidiaries, the landlord thereof, and any bailee, warehouseman or
similar party that will be in possession of such Inventory, has executed and
delivered to the Agent an agreement in favor of the Agent, in form and substance
acceptable to the Agent, waiving any lien or other rights that such person may
hold in regard to the property of the Borrower or any such Domestic Subsidiary
located on such premises and containing such other provisions as the Agent may
require or (iii) is located at any site if the aggregate book value of all
Inventory of the Borrower at such location is less than $100,000;
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(d) is in transit;
(e) is covered by a negotiable document of title, unless such document
and evidence of acceptable insurance covering such Inventory has been delivered
to the Agent with all necessary endorsements;
(f) is obsolete, unsalable, shopworn, seconds, damaged, unfit for
further processing, is of substandard quality or is not of good and merchantable
quality, free from any defects;
(g) consists of discontinued items, used items held for resale, goods
that have been returned by the buyer or other goods that are not held for sale
in the ordinary course of the Borrower's or such Domestic Subsidiaries'
business;
(h) does not meet all standards imposed by any Governmental Authority,
including with respect to its production, acquisition or importation (as the
case may be);
(i) is placed on consignment with another Person or is held by the
Borrower or one of its Domestic Subsidiaries on consignment from another Person,
or has been sent to a subcontractor by the Borrower or one of its Domestic
Subsidiaries;
(j) is held for rental or lease by or on behalf of the Borrower or one
of its Domestic Subsidiaries;
(k) is produced in violation of the Fair Labor Standards Act and
subject to the "hot goods" provisions contained in 29 U.S.C. ss. 215 or any
successor statute or section;
(l) with respect to which any of the representations, warranties,
covenants, and agreements contained in the Credit Documents are not true and
correct;
(m) is subject to any licensing, patent, royalty, trademark, trade name
or copyright agreement with any third parties, unless the license, agreement or
other appropriate agreement is subject to the Security Agreement or otherwise
assigned to the Agent;
provided, the Agent shall have the right to create and adjust related reserves
monthly in its reasonable credit judgement.
"Environmental Indemnity" shall mean collectively (i) the Environmental
Indemnity Agreement, dated as of the date hereof, by Borrower in favor of Agent,
and (ii) the Environmental Indemnity Agreement, dated as of the date hereof, by
Simplicity Pattern in favor of Agent, each as amended, restated, modified or
otherwise supplemented.
"Environmental Laws" shall mean all federal, state, provincial, local
and other foreign statutes and codes or regulations, rules or ordinances issued,
promulgated, or approved thereunder, now or hereafter in effect (including,
without limitation, those with respect to
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<PAGE> 23
asbestos or asbestos containing material or exposure to asbestos or asbestos
containing material), relating to pollution or to protection of the environment
or public health and safety, including without limitation those relating to (a)
emissions, discharges, releases or threatened releases of Hazardous Substances,
(b) the manufacture, processing, distribution, use, generation, treatment,
storage, disposal, transport or handling of Hazardous Substances, and (c)
underground storage tanks and related piping, and emissions, discharges and
releases or threatened releases therefrom; such Environmental Laws to include,
without limitation (i) the Clean Air Act (42 U. S. C. ss. 7401 et seq.), (ii)
the Clean Water Act (33 U. S. C. ss. 1251 et seq.), (iii) the Resource
Conservation and Recovery Act (42 U.S. C. ss. 6901 et seq.), (iv) the Toxic
Substances Control Act (15 U.S.C. ss. 2601 et seq.), and (v) the Comprehensive
Environmental Response Compensation and Liability Act of 1980, as amended by the
Superfund Amendments and Reauthorization Act of 1986 (42 U.S. C. ss. 9601 et
seq.).
"Equipment" shall mean all equipment, machinery, apparatus, fittings,
Fixtures and other tangible personal property (other than Inventory) of every
kind and description now or hereafter used in the business operations of any
Credit Party or now or hereafter owned by any Credit Party or in which any
Credit Party now or hereafter has an interest, and all parts, accessories and
special tools and all increases and accessions thereto and substitutions and
replacements therefor.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended and in effect from time to time.
"ERISA Affiliate" shall mean, with respect to any Person, each trade or
business (whether or not incorporated) that is considered to be a single
employer with such Person within the meaning of the Tax Code and the regulations
promulgated thereunder.
"Estoppel Agreement" shall mean the Ground Lessor Estoppel and
Agreement dated as of the date hereof, between Union County, South Carolina and
Agent, as amended, restated, modified or otherwise supplemented.
"Event of Default" shall have the meaning provided in Article X.
"Excess Cash Flow" shall mean, for the Consolidated Companies
determined on a consolidated basis for any Fiscal Year (a) Adjusted EBITDA for
such Fiscal Year minus (b) the sum of (i) Interest Expense for such Fiscal Year
(ii) principal repayments of Total Funded Debt made during such Fiscal Year,
(iii) Cash Taxes paid during such Fiscal Year, (iv) Capital Expenditures made
during such Fiscal Year made in accordance with Section 9.12, (v) increases in
Working Capital during such Fiscal Year, (vi) extraordinary cash expenses during
such Fiscal Year, and (vii) non cash gains or losses, plus (c) the sum of (y)
extraordinary gains (or losses) and (z) decreases in the Working Capital from
the last day of the prior Fiscal Year to the last day of such Fiscal Year;
provided, however, that for purposes of determining increases and decreases in
Working Capital for the Consolidated Companies, any Person, or substantially all
of the assets of a Person, that became a Subsidiary, or was merged with or
consolidated into, or acquired by a
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<PAGE> 24
Consolidated Company in accordance with the terms of this Agreement, shall be
treated as though such Person or assets were acquired immediately prior to the
start of such period.
"Facing Fee" shall have the meaning assigned to such term in Section
5.05(d).
"Federal Funds Rate" shall mean, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with member banks of the
Federal Reserve System arranged by Federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Agent from three Federal funds brokers of
recognized standing selected by the Agent.
"Fee Letter" shall mean that certain Fee Letter, dated as of the
Closing Date, executed by SunTrust Equitable Securities Corporation and accepted
and agreed to by Conso International.
"Fees" shall mean, collectively, the Agency Fee, the Underwriting Fee,
the Revolving Credit Commitment Fee, the Letter of Credit Fee and the Facing
Fee.
"Fiscal Month" shall mean a fiscal month of the Borrower.
"Fiscal Quarter" shall mean a fiscal quarter of the Borrower.
"Fiscal Year" shall mean a fiscal year of the Borrower; references to a
Fiscal Year with a number corresponding to any calendar year (e.g., the "Fiscal
Year 2000") refers to the Fiscal Year ending during such calendar year.
"Fixed Charge Coverage Ratio" shall mean, for any period, the ratio of
(a) the greater of (i) the difference of (x) Adjusted EBITDA minus (y) the sum
of (A) Capital Expenditures for such period, (B) Cash Taxes paid during such
period, and (C) to the extent deducted in determining Adjusted EBITDA,
management fees paid during such period, or (ii) zero, to (b) the sum of (i)
principal repayments of Total Funded Debt made during such period, and (ii)
Interest Expense during such period, in each case, measured for the four Fiscal
Quarter period ending on such date of determination; provided, however, for
purposes of calculating the Fixed Charge Coverage Ratio for any period ending
during Fiscal Year 2000 or Fiscal Year 2001, Capital Expenditures shall
specifically exclude Capital Expenditures made during Fiscal Year 2000 in the
operations of the Consolidated Companies in Juarez, Mexico and Coimbatore, India
in an aggregate amount not to exceed $3,700,000.
"Fixtures" shall mean, for any Person, all "fixtures" (as defined in
the UCC) now or hereafter owned or acquired by such Person or in which such
Person now or hereafter has or acquires any rights, wherever located.
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"Foreign Plan" shall mean any pension, profit sharing, deferred
compensation, or other employee benefit plan, program or arrangement maintained
by any Foreign Subsidiary which, under applicable local law, is required to be
funded through a trust or other funding vehicle.
"Foreign Subsidiary" shall mean any Subsidiary of the Borrower that is
organized under the laws of a jurisdiction other than one of the fifty states of
the United States or the District of Columbia of the United States.
"GAAP" shall mean generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, which are applicable to the circumstances as of the
date of determination.
"Governmental Authority" means any national, state or local government
(whether domestic or foreign), any political subdivision thereof or any other
governmental, quasi-governmental, judicial, public or statutory instrumentality,
authority, body, agency, bureau or entity (including, without limitation, the
FDIC, the Comptroller of the Currency or the Federal Reserve Board, any central
bank or any comparable authority or the Securities and Exchange Commission) or
any court or any arbitrator with authority to bind a party at law.
"Guarantor" shall mean each Person now or hereafter party to a Guaranty
Agreement, and their respective successors and permitted assigns.
"Guaranty" shall mean any contractual obligation, contingent or
otherwise, of a Person with respect to any Indebtedness or other obligation or
liability of another Person, including without limitation, any such
Indebtedness, obligation or liability directly or indirectly guaranteed,
endorsed, co-made or discounted or sold with recourse by that Person, or in
respect of which that Person is otherwise directly or indirectly liable,
including contractual obligations (contingent or otherwise) arising through any
agreement to purchase, repurchase, or otherwise acquire such Indebtedness,
obligation or liability or any security therefor, or any agreement to provide
funds for the payment or discharge thereof (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise), or to maintain
solvency, assets, level of income, or other financial condition, or to make any
payment other than for value received. The amount of any Guaranty shall be
deemed to be an amount equal to the stated or determinable amount of the primary
obligation in respect of which guaranty is made or, if not so stated or
determinable, the maximum reasonably anticipated liability in respect thereof
(assuming such Person is required to perform thereunder) as determined by such
Person in good faith.
"Guaranty Agreements" shall mean the Subsidiary Guaranty and each other
Guaranty of the Obligations now or hereafter executed in favor of the Agent and
the Lenders, as each may be amended, restated, modified or supplemented from
time to time.
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"Hazardous Substance" shall mean any pollutant, contaminant, chemical
or industrial toxic or hazardous constituent, substance or waste (a) that is
defined as a "hazardous waste", "hazardous material", "hazardous substance",
"pollutant" or "contaminant" under (i) the Clean Air Act (42 U.S.C. ss.7401 et
seq.), (ii) the Clean Water Act (33 U.S.C. ss.1251 et seq.), (iii) the Resource
Conservation and Recovery Act (42 U.S.C. ss.6901 et seq.), (iv) the Toxic
Substances Control Act (15 U.S.C. ss.2601 et seq.), or (v) the Comprehensive
Environmental Response Compensation and Liability Act of 1980, as amended by the
Superfund Amendments and Reauthorization Act of 1986, (42 U.S.C. ss. 9601 et
seq.); (b) that is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic or otherwise hazardous and is regulated by
any Governmental Authority; (c) that contains petroleum (including, without
limitation, crude oil or any fraction thereof), petroleum hydrocarbons or other
volatile organic compounds, polychlorinated biphenyls (PCBs) or asbestos or urea
formaldehyde foam insulation; or (d) that contains or remits radioactive
particles, waves or material, including, without limitation, radon gas.
"Holdings" shall have the meaning set forth in the recitals to this
Agreement.
"Indebtedness" of any Person shall mean, without duplication (a) all
obligations of such Person for borrowed money; (b) all obligations of such
Person evidenced by bonds, debentures, notes, drafts, bankers' acceptances or
other similar instruments, (c) all obligations of such Person to pay the
deferred purchase price of property or services (other than trade accounts
payable that are not past due by more than ninety (90) days and other
obligations accrued in the ordinary course of business and earn-outs or similar
arrangements), (d) all obligations of such Person under leases required to be
capitalized under GAAP, (e) all obligations or liabilities of others secured by
any Lien upon property of such Person whether or not such obligation or
liability is assumed, (f) all obligations of such Person under Interest Rate
Contracts or Currency Contracts, (g) all obligations of such Person in respect
of letters of credit (including all contingent reimbursement obligations,
whether or not any draws under such letters of credit have been presented for
payment) and all drafts, bankers acceptances or similar instruments issued in
connection therewith, (h) all Guaranties of Indebtedness of the type described
in clauses (a) through (g) of this definition of Indebtedness, (i) the aggregate
development, construction and acquisition cost of property leased to such Person
pursuant to a Synthetic Lease and all obligations of such Person with respect to
asset securitization programs, and (j) without duplication, all obligations and
liabilities of such Person that are required by GAAP to be shown as liabilities
on a balance sheet of such Person (other than reserves required under GAAP).
"India Trimmings" shall mean India Trimmings, a corporation organized
under the laws of India, and a wholly owned Subsidiary of BT.
"Intercompany Note" shall have the meaning assigned to such term in
Section 9.01(i).
"Interest Coverage Ratio" shall mean, as of any date of determination,
the ratio of (a) Adjusted EBITDA to (b) Interest Expense, in each case measured
for the four Fiscal Quarter period ending on such date of determination, or if
such date of determination is not the last day of any Fiscal Quarter, then
ending immediately prior to such date of determination.
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<PAGE> 27
"Interest Expense" shall mean, for any period, all interest expense of
the Consolidated Companies (including without limitation, interest expense
attributable to capitalized leases in accordance with GAAP, all capitalized
interest, all commissions, discounts and other fees and charges with respect to
bankers acceptance financing, and all interest expense (whether shown as
interest expense or as loss and expenses on sale of receivables) under a
receivables purchase facility) determined on a consolidated basis in accordance
with GAAP, provided that, for any period ending prior to the first four full
Fiscal Quarters after the Closing Date, Interest Expense shall mean interest
expense for the period commencing on the Closing Date and ending on the last day
of such period, multiplied by a fraction, the numerator of which is 365 and the
denominator of which is the number of days in such period.
"Interest Period" shall have the meaning set forth in Section 5.03.
"Interest Rate Contracts" shall mean any forward contracts, futures
contracts, interest rate exchange agreements, interest rate cap agreements,
interest rate collar agreements, and other similar agreements and arrangements
designed to protect against fluctuations in interest rates, which agreements and
arrangements shall be valued on a mark to market basis.
"Inventory" shall mean, for any Person, all "inventory" (as defined in
the UCC) now or hereafter owned or acquired by such Person or in which such
Person now or hereafter has or acquires any rights, wherever located, and, in
any event, shall mean and include inventory, merchandise, goods and other
personal property which are held by or on behalf of such Person for sale or
lease or are furnished or are to be furnished under a contract of service, or
which constitute raw materials, work in process or materials used or consumed or
to be used or consumed in such Person's business or in the processing,
production, packaging, promotion, delivery or shipping of the same, including
other supplies.
"Investment" shall mean, any direct or indirect advance, loan or other
extension of credit (other than the creation of receivables in the ordinary
course of business) or capital contribution (by means of transfers of property
to others or payments for property or services for the account or use of others,
or otherwise), or any direct or indirect purchase or other acquisition of, or of
a beneficial interest in, capital stock, partnership interests, bonds, notes,
debentures or other securities.
"Issuing Bank" shall have the meaning set forth in the opening
paragraph of this Agreement.
"L/C Cash Collateral Account" shall mean a cash collateral account
established by the Issuing Bank for deposit of cash collateral for the Letter of
Credit Obligations, which account shall be designated as the L/C Cash Collateral
Account and shall be subject to the sole dominion and control of the Issuing
Bank.
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"L/C Exposure" shall mean, with respect to each Revolving Lender, the
aggregate outstanding amount of Letter of Credit Obligations multiplied by such
Revolving Lender's Pro Rata Share of the Revolving Credit Commitments.
"Lenders" shall have the meaning set forth in the opening paragraph of
this Agreement.
"Lending Office" shall mean, for each Lender, the office that such
Lender may designate in writing from time to time to the Borrower and the Agent
with respect to each Type of Borrowing.
"Letter of Credit Fee" shall have the meaning set forth in Section
5.05(c).
"Letter of Credit Obligations" shall mean, as at any date of
determination, the sum of (a) the maximum aggregate amount available to be drawn
(assuming the conditions for drawing thereunder have been met) under all
outstanding Letters of Credit on such date of determination, plus (b) the
aggregate amount of all drawings under Letters of Credit honored by the Issuing
Bank but as of such date of determination have not been reimbursed.
"Letter of Credit Subcommitment" shall mean the commitment of the
Issuing Bank established pursuant to Section 2.01 as a subfacility of the
Revolving Credit Commitments to issue Letters of Credit for the account of the
Borrower in an aggregate face amount not to exceed the Letter of Credit
Subcommitment Amount
"Letter of Credit Subcommitment Amount" shall mean, initially,
$3,000,000, as such amount may be reduced pursuant to Section 2.11.
"Letters of Credit" shall mean, collectively, the letters of credit
issued pursuant to Section 2.04 hereof by the Issuing Bank for the account of
the Borrower pursuant to the Letter of Credit Subcommitment.
"LIBOR" shall mean, for any Borrowing of Loans having a specified
Interest Period (x) the offered rate for deposits in U.S. Dollars for a period
comparable to the Interest Period and in an amount comparable to the Agent's
portion of such Borrowing, appearing on Telerate Page 3750 as of 11:00 A.M.
(London, England time) on the day that is two Business Days prior to the first
day of the Interest Period; provided, however, that if two or more of such rates
appear on Telerate Page 3750, the rate shall be the arithmetical mean of such
rates, or if the foregoing rate is unavailable from Telerate Page 3750 for any
reason, then such rate shall be determined by the Agent from the Reuters Screen
LIBOR Page or if such rate is also unavailable from the Reuters Screen LIBOR
Page, then such rate shall be determined by the Agent from any other interest
rate reporting service of recognized standing designated in writing by the Agent
to the Borrower and the other Lenders, in any such case rounded, if necessary,
to the next higher 1/16 of 1.0%, divided by (y) a percentage equal to 1 minus
the then stated maximum rate (stated as a decimal) of all reserve requirements
(including, without limitation, any marginal, emergency, supplemental, special
or other reserves) applicable to any member bank of the Federal Reserve
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System in respect of Eurocurrency liabilities as defined in Regulation D (or
against any successor category of liabilities as defined in Regulation D);
"LIBOR Loan" shall mean a Loan made or outstanding as a portion of a
Borrowing of Revolving Loans, Term A Loans or Term B Loans bearing interest
based on LIBOR.
"Lien" shall mean, any mortgage, pledge, security interest, lien,
charge, hypothecation, assignment, deposit arrangement, title retention,
preferential right, trust or other arrangement having the practical effect of
the foregoing and shall include the interest of a vendor or lessor under any
conditional sale agreement, capitalized lease or other title retention
agreement, and the filing of a financing statement under the Uniform Commercial
Code (excluding precautionary filings or financing statements under the Uniform
Commercial Code which cover property that is made available to or used by a
Consolidated Company pursuant to the terms of a lease that is not a Capital
Lease or a Synthetic Lease).
"Life Insurance Policy" shall have the meaning assigned to such term in
Section 8.12.
"Loans" shall mean, collectively, the Revolving Loans, the Swingline
Loans and the Term Loans and "Loan" shall mean any one of them.
"Management" shall mean William M. Stewart, Frank J. Rizzo, C.V.
Balakrishnan, Louis S. Oltman, Richard A. Zonin, Judith Raymond Hadjandreas,
Jimmy K. Earley and John P.A. Regan.
"Margin Regulations" shall mean Regulation T, Regulation U and
Regulation X of the Board of Governors of the Federal Reserve System, as the
same may be in effect from time to time.
"Material Foreign Subsidiary" shall mean each Subsidiary of the
Borrower, now existing or hereafter acquired, that at any time during the term
of this Agreement, owns or acquires total assets in excess of $2,000,000.
"Materially Adverse Effect" shall mean any materially adverse change
in, or material adverse effect upon, (i) the business, results of operations,
condition (financial or otherwise), assets, liabilities or prospects of the
Consolidated Companies, taken as a whole, (ii) the ability of any Credit Party
to perform its obligations under the Credit Documents, (iii) the rights and
remedies of the Agent, the Issuing Bank, the Swingline Lender and the Lenders
under any Credit Documents, (iv) the legality, validity or enforceability of any
Credit Documents, or (v) the creation, attachment, perfection or priority of any
Lien granted pursuant to any Collateral Document.
"Maximum Permissible Rate" shall mean, with respect to interest payable
in any amount, the rate of interest on such amount that, if exceeded, would
under any applicable law or regulation, result in (i) criminal penalties being
imposed on any Lender or (ii) any Lender being
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unable to enforce payment of (or if collected, to retain) all or part of such
amount or the interest payable thereon.
"Merger" shall have the meaning set forth in the recitals to this
Agreement.
"Merger Documents" shall mean any and all agreements and other
documents relating to the Merger, including without limitation, the articles of
merger, including the Plan of Merger, which are filed in connection with the
Merger with the Secretary of State of South Carolina.
"Mexican Guaranty Trust Agreement" shall mean the Irrevocable Transfer
of Title and Management Trust Agreement (Fideicomiso Irrevocable Traslativo de
Domino y Adminstracion) among Agent, the Borrower and the Mexican Trustee,
pursuant to which the Borrower shall pledge 66% of the voting Stock of Val-Mex,
as amended, restated, modified or otherwise supplemented from time to time.
"Mexican Trustee" shall mean the trustee (fiduciario) appointed in the
Mexican Guaranty Trust Agreement.
"Mortgages" shall mean each of the mortgages, deeds of trust or other
real estate security documents delivered by any Credit Party to Agent with
respect to the Real Estate, all in form and substance satisfactory to Agent, as
each may be amended, restated, modified or otherwise supplemented from time to
time.
"Mortgaged Properties" shall mean, collectively, the properties covered
by Mortgages.
"Multiemployer Plan" shall have the meaning set forth in Section
4001(a)(3) of ERISA.
"Net Cash Proceeds" shall mean, (a) with respect to any sale or
disposition by any Consolidated Company of any of its assets, the gross amount
of cash proceeds received by such Consolidated Company including any cash
proceeds received from time to time as payments for the deferred purchase price
of such assets or as principal payments on any promissory notes or other
instruments made or issued to a Consolidated Company in payment of such assets)
less (i) the amount of all commissions and other reasonable and customary
transaction costs, transfer taxes, broker's fees, legal fees and other fees and
expenses properly attributable to such transaction and paid by the Consolidated
Company in cash in connection therewith to any Person that is not an Affiliate
of any of the Consolidated Companies (other than such costs and fees payable to
an Affiliate of CVC and on conditions at least as favorable to such Consolidated
Company as would be obtained by such Consolidated Company at the time in a
comparable arms-length transaction with a Person other than an Affiliate), (ii)
the amount of any reserves taken in accordance with GAAP against liabilities
incurred in connection with such asset sale, and (iii) the principal amount of
any Indebtedness plus premium, penalty and interest (other than the
Obligations), if any, which is secured by such asset and which is required to be
repaid in connection with the disposition thereof, and (b) with respect to the
issuance by Borrower of any Stock or debt securities, the gross proceeds
received by Borrower from such issuance less the
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amount of all underwriting discounts and commissions and other reasonable costs,
fees and expenses paid by Borrower in connection therewith to any Person that is
not an Affiliate.
"Net Casualty/Insurance Proceeds" when used with respect to any
Condemnation Awards or insurance proceeds allocable to the Collateral, means the
gross proceeds from any Casualty or Condemnation remaining after payment of all
expenses (including attorney's fees incurred in collection of such gross
proceeds).
"Net Income (Loss)" shall mean, for any period, the net income (or
loss) of the Consolidated Companies for such period (taken as a single
accounting period) determined on a consolidated basis in conformity with GAAP.
"Net Worth" shall mean, as of any date, total stockholders' equity of
the Consolidated Companies, determined on a consolidated basis in accordance
with GAAP.
"Notes" shall mean, collectively, the Revolving Credit Notes, the
Swingline Note and the Term Notes.
"Notice of Borrowing" shall mean a Revolving Notice of Borrowing or a
Swingline Borrowing Notice.
"Notice of Conversion/Continuation" shall mean a Revolving Notice of
Conversion/Continuation, a Term A Loan Notice of Conversion/Continuation or a
Term B Loan Notice of Conversion/Continuation.
"Obligations" shall mean all amounts owing to the Agent or any Lender
by the Borrower or its Domestic Subsidiaries pursuant to the terms of this
Agreement and all other Credit Documents including, without limitation, all
Loans (including all principal and interest payments due thereunder), all fees,
expenses, indemnification and reimbursement payments, indebtedness, liabilities
and obligations, direct or indirect, absolute or contingent, liquidated or
unliquidated, now existing or hereafter arising, together with all renewals,
extension, modifications or refinancings thereof.
"Patent Security Agreements" shall mean, collectively, (i) that certain
Collateral Assignment and Security Agreement (Patents), dated as of the Closing
Date, by and between Borrower and the Agent, and (ii) each other Collateral
Assignment and Security Agreement (Patents), by and between any Credit Party and
the Agent, each as amended, restated, supplemented or otherwise modified from
time to time.
"Payment Office" shall mean the office of the Agent specified as its
"Payment Office" on the signature page of the Agent to this Agreement, or such
other location as to which the Agent shall have given written notice to the
Borrower and the other Lenders.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
successor thereto.
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"Perfection Certificate" shall mean that certain certificate dated as
of even date herewith, setting forth the corporate names, chief executive office
or principal places of business and other current locations of the Credit
Parties and such other information as the Agent deems reasonably pertinent to
the perfection of security interests, completed and supplemented with the
schedules and attachments contemplated thereby to the satisfaction of the Agent,
and duly executed by an officer of each Credit Party.
"Permitted Liens" shall mean those Liens expressly permitted by Section
9.02.
"Person" shall mean any individual, partnership, firm, corporation, S
corporation, association, joint venture, limited liability company, trust or
other entity, or any government or political subdivision or agency, department
or instrumentality thereof.
"Plan" shall mean any "employee benefit plan" (as defined in Section
3(3) of ERISA), including, but not limited to, any defined benefit pension plan,
profit sharing plan, money purchase pension plan, savings or thrift plan, stock
bonus plan, employee stock ownership plan, Multiemployer Plan, or any plan,
fund, program, arrangement or practice providing for medical (including
post-retirement medical), hospitalization, accident, sickness, disability, or
life insurance benefits, but shall exclude any Foreign Plan.
"Pledge Agreements" shall mean the Borrower Pledge Agreement, the
Subsidiary Pledge Agreement, the Stockholder Pledge Agreement, the Holdings
Pledge Agreement, the Share Pledge and the Mexican Guaranty Trust Agreement.
"Post-Closing Agreement" shall mean the Post-Closing Agreement, dated
as of the date hereof, among Borrower, the Agent, the Lenders, the Swingline
Lender, the Issuing Bank, the Security Agent, the Syndication Agent and the
Documentation Agent.
"Pro Forma Financial Statements" shall have the meaning set forth in
Section 7.14(b).
"Pro Rata Share" shall mean (i) with respect to the Revolving Credit
Commitment of each Lender, each Loan to be made by, each Letter of Credit
Obligation and Swingline Loan to be participated in by and each payment
(including without limitation, each payment of principal, interest or fees) to
be made to, each Lender with respect thereto and each Lender's share of the
Borrowing Base, the percentage designated as such Lender's Pro Rata Share of the
Revolving Credit Commitments set forth under the name of such Lender on the
respective signature page for such Lender to this Agreement, or with respect to
any Person becoming a Revolving Lender after the Closing Date, the "Pro Rata
Share" set forth in the Assignment and Acceptance Agreement executed by such
Person as assignee, as the same may be increased or decreased from time to time
as a result of any assignment thereof pursuant to Section 12.06 or any amendment
thereof pursuant to Section 12.02, (ii) with respect to the Term A Loan
Commitment of each Lender, the Term A Loan to be made by each Lender, and each
payment (including, without limitation, each payment of principal, interest or
fees) to be made to each Lender with respect thereto, the percentage designated
as such Lender's Pro Rata Share of the Term A Loan Commitment as set forth under
the name of such Lender on the respective signature page for
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such Lender to this Agreement or, with respect to any Person becoming a Term A
Lender after the Closing Date, the Pro Rata Share of the Term A Loan set forth
in the Assignment and Acceptance Agreement executed by such Person as assignee,
as the same may be increased or decreased from time to time as a result of any
assignment thereof pursuant to Section 12.06 or any amendment thereof pursuant
to Section 12.02, and (iii) with respect to the Term B Loan Commitment of each
Lender, the Term B Loan to be made by each Lender, and each payment (including,
without limitation, each payment of principal, interest or fees) to be made to
each Lender with respect thereto, the percentage designated as such Lender's Pro
Rata Share of the Term B Loan Commitment as set forth under the name of such
Lender on the respective signature page for such Lender to this Agreement or,
with respect to any Person becoming a Term B Lender after the Closing Date, the
Pro Rata Share of the Term B Loans set forth in the Assignment and Acceptance
Agreement executed by such Person as assignee, as the same may be increased or
decreased from time to time as a result of any assignment thereof pursuant to
Section 12.06 or any amendment thereof pursuant to Section 12.02.
"Real Estate" shall have the meaning given to such term in Section
7.17.
"Real Estate Documents" shall mean collectively, the Mortgages, the
Estoppel Agreement, the Environmental Indemnity, Assignment of Rents and Leases
and all other documents, instruments, agreements and certificates executed and
delivered by any Credit Party to the Agent and the Lenders in connection with
the foregoing.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System, as the same may be in effect from time to time.
"Required Lenders" shall mean (i) at any time on or prior to the
Revolving Credit Termination Date, Lenders holding at least 51% of the sum of
aggregate principal amount of all Revolving Credit Commitments and the aggregate
outstanding principal amount of the Term Loans; and (ii) at any time after the
Revolving Credit Termination Date, Lenders holding at least 51% of the aggregate
outstanding principal amount of all Loans (including the aggregate outstanding
amount of participations in Swingline Loans) and the aggregate outstanding
amount of participations in Letter of Credit Obligations; provided, however,
that for purposes of this definition of "Required Lenders", any Lender that
fails to fund any Loan or any participation in a Letter of Credit or a Swingline
Loan, without providing notice to the Agent that in its determination one or
more of the conditions precedent to such funding has not been met, shall be
deemed to have no Commitments and no outstanding Loans unless and until the
earlier to occur of (x) all other Obligations have been paid in full, (y) such
failure to fulfill its Obligations to fund is cured and (z) the Obligations
shall have been declared or shall have immediately become due and payable and
all Commitments have been terminated.
"Requirement of Law" for any Person shall mean the articles or
certificate of incorporation and bylaws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation, or
determination of a Governmental Authority, in each case applicable to or binding
upon such Person or any of its property or to which such Person or any of its
property is subject.
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"Restricted Payment" shall have the meaning set forth in Section 9.06.
"Reuters Screen" shall mean, when used in connection with any
designated page for LIBOR, the display page so designated on the Reuter Monitor
Money Rates Service (or such other page as may replace that page on that service
for the purpose of displaying rates comparable to LIBOR).
"Revolving Borrowing" shall mean a Borrowing consisting or to consist
of Revolving Loans.
"Revolving Credit Commitment" shall mean, at any time for any Lender,
the commitment of such Lender established pursuant to Section 2.01 to make
Revolving Loans to the Borrower and to purchase participations in the Letters of
Credit and the Swingline Loans.
"Revolving Credit Commitment Fee" shall have the meaning assigned to
such term in Section 5.05(b).
"Revolving Credit Commitment Amount" shall mean, for any Lender, the
"Revolving Credit Commitment Amount" set forth under such Lender's name on the
signature pages to this Agreement, or with respect to any Person becoming a
Revolving Lender after the Closing Date, the "Revolving Credit Commitment
Amount" assigned to such Person in the Assignment and Acceptance Agreement
executed by such Person as an assignee, as the same may be increased or
decreased from time to time as a result of any reduction thereof pursuant to
Section 2.11, any assignment thereof pursuant to Section 12.06, or any amendment
thereof pursuant to Section 12.02.
"Revolving Credit Notes" shall mean the promissory notes from the
Borrower payable to the order of the Revolving Lenders, in substantially the
form of Exhibit B, evidencing the Revolving Loans made by such Revolving Lender
to the Borrower pursuant to the Revolving Credit Commitment, either as
originally executed or as they may be amended, restated, supplemented, renewed,
extended or otherwise modified from time to time.
"Revolving Credit Termination Date" shall mean the earlier of (i)
December 31, 2004, or such later date to which the Borrower and the Lenders have
agreed pursuant to Section 2.13, and (ii) the date on which all amounts
outstanding under this Agreement have been declared or have automatically become
due and payable (whether by acceleration or otherwise).
"Revolving Lenders" shall mean all Lenders that have Revolving Credit
Commitments, are owed Revolving Loans or have purchased participations in the
Letter of Credit Obligations and the Swingline Loans.
"Revolving Loan" shall mean for any Lender, a revolving loan made by
such Lender pursuant to the Borrower under the Revolving Credit Commitment
pursuant to Section 2.02.
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"Revolving Notice of Borrowing" shall have the meaning assigned to such
term in Section 2.02(c).
"Revolving Notice of Conversion/Continuation" shall have the meaning
assigned to such term in Section 2.02(d).
"Security Agent" shall have the meaning assigned to such term in the
opening paragraph hereof.
"Security Agreements" shall mean the Borrower Security Agreement and
the Subsidiary Security Agreement.
"Share Pledge" shall mean the Security Over Shares Agreement, dated as
of the date hereof, between the Borrower and the Security Agent, as amended,
restated, modified or otherwise supplemented from time to time.
"Simplicity Capital" shall mean Simplicity Capital Corp., a Delaware
corporation.
"Simplicity Holdings" shall mean Simplicity Holdings, a Delaware
corporation.
"Simplicity Pattern" shall mean Simplicity Pattern Co., Inc., a
Delaware corporation.
"South Carolina Ground Lease" shall mean that certain Ground Lease,
among Union County, South Carolina, as landlord and the Borrower, formerly known
as Conso Products Corporation, as tenant, dated as of December 10, 1997, a
Memorandum of which was recorded in Deed Book 217, page 7, Office of the Clerk
of Court for Union County, South Carolina
"Stock" shall mean (i) with respect to any Person that is a
corporation, any and all shares, interests or equivalents in capital stock
(whether voting or nonvoting, and whether common or preferred) of such
corporation, and (ii) with respect to any Person that is not a corporation, any
and all partnership, membership, limited liability company or other equity
interests of such Person; and in each case, any and all warrants, rights, or
options to purchase any of the foregoing.
"Stockholder Pledge Agreement" shall mean the Stockholder Pledge
Agreement, dated as of the Closing Date, between J. Cary Findlay, Management,
CVC and the Agent, pursuant to which J. Cary Findlay, Management and CVC pledge
the Stock of the Borrower to secure the Obligations, as amended, restated,
supplemented or otherwise modified from time to time.
"Subordinated Debt" shall mean, collectively, (i) all Indebtedness
arising under the Subordinated Note Purchase Agreement and the Subordinated
Notes, and (ii) all Indebtedness of the Consolidated Companies subordinated to
all Obligations of the Credit Parties on terms and conditions, including without
limitation, with respect to interest rates, payment terms, maturities,
amortization schedules, covenants, defaults, remedies, and subordination
provisions, satisfactory
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to the Agent and the Required Lenders in their sole and absolute discretion as
evidenced by the written approval of the Agent and Required Lenders.
"Subordinated Note Documents" shall mean, collectively, the
Subordinated Note Purchase Agreement, the Subordinated Notes and all other "Note
Documents" as defined in the Subordinated Note Purchase Agreement.
"Subordinated Noteholders" shall mean SunTrust Banks, Inc., The Lincoln
National Life Insurance Company and Lincoln National Income Fund, Inc. and their
respective successors and assigns.
"Subordinated Note Purchase Agreement" shall mean that certain
Subordinated Note and Warrant Purchase Agreement, dated as of the date hereof,
by and among the Borrower and the Subordinated Noteholders, as amended,
restated, supplemented or otherwise modified from time to time in accordance
with this Agreement.
"Subordinated Note" shall mean the Subordinated Notes issued by the
Borrower to the Subordinated Noteholders, together with all replacements and
substitutions therefor, in each case as amended, restated, supplemented or
otherwise modified from time to time in accordance with this Agreement.
"Subordination Agreement" shall mean that certain Subordination
Agreement, dated as of the Closing Date, executed by the Lenders and the Agent
as the "Senior Lenders" and by the Subordinated Noteholders, as the
"Subordinated Lenders", as amended, restated, supplemented or modified from time
to time.
"Subsidiary" shall mean, with respect to any Person, any other Person a
majority of the total combined voting power of all classes of voting Stock of
which shall, at the time as of which any determination is being made, be owned
by such first Person, either directly or indirectly through one or more other
Subsidiaries.
"Subsidiary Guarantor" shall mean Simplicity Pattern, Simplicity
Capital, Simplicity Holdings and all other Domestic Subsidiaries now or
hereafter existing, and their respective successors and permitted assigns.
"Subsidiary Guaranty" shall mean the Subsidiary Guaranty, dated as of
the Closing Date, made by each Domestic Subsidiary in favor of the Agent and the
Lenders, pursuant to which the Domestic Subsidiaries guaranty the Obligations,
as amended, restated, supplemented or otherwise modified from time to time.
"Subsidiary Pledge Agreement" shall mean the Subsidiary Pledge
Agreement, dated as of the Closing Date, between the Subsidiary Guarantors and
the Agent, pursuant to which each Subsidiary Guarantor pledges 100% of the Stock
of each of its respective Domestic Subsidiaries and 66% of the voting Stock of
each of its respective Foreign Subsidiaries.
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"Subsidiary Security Agreement" shall mean the Security Agreement
(Domestic Subsidiary), dated as of the Closing Date, made by each Domestic
Subsidiary in favor of the Agent, for the benefit of the Lenders, as amended,
restated, supplemented or otherwise modified from time to time.
"Swingline Borrowing Notice" shall have the meaning assigned to such
term in Section 2.10(c).
"Swingline Commitment Amount" shall mean $2,000,000, as such amount may
be reduced pursuant to Section 2.10.
"Swingline Exposure" shall mean, for any Lender, the outstanding
principal amount of the Swingline Loans multiplied by such Lender's Pro Rata
Share of the Revolving Credit Commitments.
"Swingline Lender" shall have the meaning assigned to such term in the
opening paragraph of this Agreement.
"Swingline Loan" shall mean a swingline loan made by the Swingline
Lender to the Borrower under the Swingline Subcommitment pursuant to Section
2.10.
"Swingline Note" shall mean the promissory note made by the Borrower
payable to the order of the Swingline Lender, in substantially the form of
Exhibit E, evidencing the Swingline Loans made by the Swingline Lender to the
Borrower pursuant to the Swingline Subcommitment, either as originally executed
or as it may be from time to time amended, restated, supplemented, renewed,
extended or otherwise modified from time to time.
"Swingline Subcommitment" shall mean the commitment of the Swingline
Lender to make Swingline Loans to the Borrower in an aggregate principal amount
not to exceed the Swingline Commitment Amount, and the commitments of the
Lenders to purchase participations in such Swingline Loans which commitment of
the Swingline Lender and the commitments of the Lenders established pursuant to
Section 2.01 as a subfacility of the Revolving Credit Commitments.
"Synthetic Lease" shall mean lease that is not treated as a capital
lease under GAAP, but that is treated as a financing under the Tax Code.
"Synthetic Lease Obligations" shall mean the obligations of any
Consolidated Company pursuant to a Synthetic Lease.
"Tax Code" shall mean the Internal Revenue Code of 1986, as amended,
and any successor statute, together with the regulations thereunder, as in
effect from time to time.
"Taxes" shall mean (except as stated in Section 5.09(b) for the
specific purpose stated therein) any present or future taxes, levies, imposts,
duties, fees, assessments, deductions,
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withholdings or other charges of whatever nature, including without limitation,
income, receipts, excise, property, sales, transfer, license, payroll,
withholding, social security and franchise taxes now or hereafter imposed or
levied by the United States of America, or any state, local or foreign
government or by any department, agency or other political subdivision or taxing
authority thereof or therein and all interest, penalties, additions to tax and
similar liabilities with respect thereto.
"Telerate" shall mean, when used in connection with any designated page
for LIBOR, the display page so designated on the Telerate, Inc. Telerate Service
(or such other page as may replace that page on that service for the purpose of
displaying LIBOR or rates comparable to LIBOR).
"Term A Lenders" shall mean all Lenders that hold a Term A Loan.
"Term A Loan" shall mean, for any Lender, the term loan made to the
Borrower by such Lender pursuant to Section 3.01.
"Term A Loan Commitment" shall mean, for any Lender, its commitment
established pursuant to Section 3.01(a) to make a Term A Loan to the Borrower.
"Term A Loan Commitment Amount" shall mean, for any Lender, the "Term A
Loan Commitment Amount" set forth under such Lender's name on the signature
pages of this Agreement.
"Term A Loan Maturity Date" shall mean the earlier of (i) December 31,
2004, and (ii) the date on which all amounts outstanding under this Agreement
have been declared or have automatically become due and payable (whether by
acceleration or otherwise).
"Term A Note" shall mean a promissory note made by the Borrower payable
to the order of a Term A Lender, in substantially the form of Exhibit C,
evidencing the Term A Loan made by such Term A Lender to the Borrower, either as
originally executed or as it may be from time to time amended, restated,
supplemented, renewed, extended or otherwise modified from time to time.
"Term A Loan Notice of Conversion/Continuation" shall have the meaning
assigned to such term in Section 3.02.
"Term B Lenders" shall mean all Lenders that hold a Term B Loan.
"Term B Loan" shall mean, for any Lender, the term loan made to the
Borrower by such Lender pursuant to Section 4.01.
"Term B Loan Commitment" shall mean, for any Lender, its commitment
established pursuant to Section 4.01(a) to make a Term B Loan to the Borrower.
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"Term B Loan Commitment Amount" shall mean, for any Lender, the "Term B
Loan Commitment Amount" set forth under such Lender's name on the signature
pages of this Agreement.
"Term B Loan Maturity Date" shall mean the earlier of (i) December 31,
2006, and (ii) the date on which all amounts outstanding under this Agreement
have been declared or have automatically become due and payable (whether by
acceleration or otherwise).
"Term B Note" shall mean a promissory note made by the Borrower payable
to the order of a Term B Lender, in substantially the form of Exhibit D,
evidencing the Term B Loan made by such Term B Lender to the Borrower, either as
originally executed or as it may be from time to time amended, restated,
supplemented, renewed, extended or otherwise modified from time to time.
"Term B Notice of Conversion/Continuation" shall have the meaning
assigned to such term in Section 4.02
"Term Lenders" shall mean, collectively, the Term A Lenders and the
Term B Lenders.
"Term Loans" shall mean, collectively, the Term A Loans and the Term B
Loans.
"Term Notes" shall mean, collectively, the Term A Notes and the Term B
Notes.
"Total Funded Debt" shall mean, as of any date of determination,
without duplication, the sum of all Indebtedness of the Consolidated Companies
described in clauses (a) through (e) and in clause (i) of the definition of
"Indebtedness", including without limitation, the Loans and the Letter of Credit
Obligations.
"Total Funded Debt to Adjusted EBITDA Ratio" shall mean, as of any date
of determination, the ratio of (a) Total Funded Debt, as of such date of
determination, to (b) Adjusted EBITDA measured for the four Fiscal Quarter
period ending on such date of determination, or if such date of determination is
not the last day of any Fiscal Quarter, then ending immediately prior to such
date of determination.
"Total Revolving Credit Commitment Amount" shall mean the aggregate
principal amount of all Revolving Credit Commitment Amounts of all Lenders,
which as of the Closing Date is $15,000,000.
"Trademark Security Agreements" shall mean, collectively, (i) that
certain Collateral Assignment and Security Agreement (Trademarks), dated as of
the Closing Date, by and between Borrower and the Agent, (ii) that certain
Collateral Assignment and Security Agreement (Trademarks) by and between
Simplicity Pattern and the Agent, and (iii) each other Collateral Assignment and
Security Agreement (Trademarks), by and between any Credit Party and the Agent,
each as amended, restated, supplemented or otherwise modified from time to time.
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"Transaction Documents" shall mean, collectively, the Credit Documents,
the Subordinated Note Documents and the Merger Documents.
"Type" of Borrowing shall mean a Borrowing made as Base Rate Loans or
LIBOR Loans, as the case may be.
"Underwriting Fee" shall mean the "Senior Credit Facilities
Underwriting Fee" payable by the Borrower to the Arranger pursuant to the terms
of the Fee Letter.
"Uniform Commercial Code" or "UCC" means the Uniform Commercial Code as
in effect from time to time in the State of Georgia.
"United States" shall mean the United States of America, any of the
fifty states thereof, and the District of Columbia thereof.
"Val-Mex" shall mean, Val-Mex, S.A. de C.V., a corporation organized
under the laws of Mexico, and a wholly owned subsidiary of the Borrower.
"Working Capital" shall mean, as of any date, an amount equal to the
current assets of the Consolidated Companies as of such date (excluding cash and
cash equivalents), less the current liabilities of the Consolidated Companies as
of such date (excluding current maturities of the Obligations), in each case,
determined on a consolidated basis in accordance with GAAP.
"Year 2000 Issues" shall mean the actual and anticipated costs, claims,
losses, and liabilities associated with the inability of certain computer
applications to handle effectively data that includes dates on and after January
1, 2000, as such inability in respect of the Consolidated Companies and their
respective material customers, suppliers and vendors materially affects the
business, operations, and financial condition of the Consolidated Companies.
Section 1.02 Accounting Terms and Determination. Unless otherwise
defined or specified herein, all accounting terms shall be construed herein, all
accounting determinations hereunder shall be made, all financial statements
required to be delivered hereunder shall be prepared, and all financial records
shall be maintained in accordance with GAAP, provided, however, if there is a
change in GAAP, the financial statements required to be delivered by the
Borrower under Section 8.07(a) or 8.07(b), as applicable, shall be delivered
within ninety (90) days of the effective date of such change in GAAP, and
otherwise in accordance with the requirements of Section 8.07(a) or Section
8.07(b), as applicable.
Section 1.03 Other Definitional Terms. The words "hereof', "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement, and Article, Section, Schedule, Exhibit and like references are to
this Agreement unless otherwise specified.
Section 1.04 Exhibits and Schedules. All Exhibits and Schedules
attached hereto are by reference made a part hereof.
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Section 1.05 Plural Terms. Capitalized terms used in the singular shall
import the plural and vice versa.
ARTICLE II.
AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENTS
Section 2.01 Revolving Credit Commitments. Subject to and upon the
terms and conditions herein set forth, (x) each Revolving Lender hereby
severally establishes in favor of the Borrower, a Revolving Credit Commitment
pursuant to which such Revolving Lender agrees to make Revolving Loans to the
Borrower in accordance with Section 2.02 for the purposes set forth in Section
2.12 to purchase a participation interest in the Letters of Credit issued for
the account of the Borrower in accordance with this Article II and the Swingline
Loans made to the Borrower pursuant to this Article II, (y) the Issuing Bank
establishes in favor of the Borrower a letter of credit subcommitment within the
Revolving Credit Commitments pursuant to which the Issuing Bank agrees to issue
Letters of Credit in accordance with this Article II, and (z) the Swingline
Lender establishes in favor of the Borrower a swingline subcommitment within the
Revolving Credit Commitments pursuant to which the Swingline Lender agrees to
make Swingline Loans in accordance with this Article II; provided, however, that
in no event may the aggregate principal amount of all outstanding Revolving
Loans, the aggregate principal amount of all outstanding Swingline Loans and the
aggregate amount of all Letter of Credit Obligations exceed the Total Revolving
Credit Commitments from time to time in effect.
Section 2.02 Revolving Loans.
(a) Subject to and upon the terms and conditions herein set forth
(including the limitation set forth in Section 2.01), each Revolving Lender
severally agrees to make to the Borrower, from time to time prior to the
Revolving Credit Termination Date, Revolving Loans in an aggregate principal
amount outstanding at any time not to exceed an amount equal to (i) such
Revolving Lender's Pro Rata Share of the Borrowing Limit, minus (ii) such
Revolving Lender's L/C Exposure minus (iii) such Revolving Lender's Swingline
Exposure; provided, however, that the conditions set forth in Sections 2.01,
6.01 and 6.02 have been fulfilled before and after giving effect to each
Borrowing of Revolving Loans. The Borrower shall be entitled to repay and
reborrow Revolving Loans in accordance with the provisions of this Agreement.
(b) Each Revolving Loan shall, at the option of the Borrower, be made
or continued as, or converted into, part of one or more Borrowings that shall
consist entirely of Base Rate Loans or LIBOR Loans. The aggregate principal
amount of each Borrowing of Revolving Loans comprised of LIBOR Loans or Base
Rate Loans shall be not less than $500,000 or a greater integral multiple of
$100,000. At no time shall the total number of Borrowings of all Loans comprised
of LIBOR Loans exceed eight in any case.
(c) Whenever the Borrower desires to make a Borrowing of Revolving
Loans (other than one resulting from a conversion or continuation pursuant to
Section 2.02(d)), the
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Borrower shall give the Agent prior written notice (or an authorized officer of
the Borrower may give telephonic notice promptly confirmed in writing) of such
Borrowing (a "Revolving Notice of Borrowing") at the Payment Office (x) prior to
11:00 a.m. (Atlanta, Georgia time) on the date of such requested Borrowing in
the case of Base Rate Loans and (y) prior to 1:00 p.m. (Atlanta, Georgia time)
three (3) Business Days prior to the requested date of such Borrowing in the
case of LIBOR Loans. Notices received after the times set forth above shall be
deemed received on the next Business Day. The Agent shall promptly notify each
Revolving Lender upon its receipt of a Revolving Notice of Borrowing. Each
Revolving Notice of Borrowing shall be irrevocable and shall specify (i) the
aggregate principal amount of such Borrowing, (ii) the date of such Borrowing
(which shall be a Business Day), (iii) whether such Borrowing is to consist of
Base Rate Loans or LIBOR Loans, and (iv) in the case of LIBOR Loans, the
Interest Period to be applicable thereto.
(d) Whenever the Borrower desires to convert all or a portion of an
outstanding Revolving Borrowing consisting of Base Rate Loans into a Revolving
Borrowing consisting of LIBOR Loans or to continue outstanding a Revolving
Borrowing consisting of LIBOR Loans for a new Interest Period, the Borrower
shall give the Agent prior written notice (or an authorized officer of the
Borrower may give telephonic notice promptly confirmed in writing) of each such
Borrowing to be converted into or continued as LIBOR Loans (a "Revolving Notice
of Conversion/Continuation") prior to 1:00 p.m. (Atlanta, Georgia time) three
(3) Business Days prior to the requested date of continuation or conversion.
Notice received after such time shall be deemed received on the next Business
Day. The Agent shall promptly notify each Revolving Lender upon its receipt of a
Revolving Notice of Conversion/Continuation. Each such Revolving Notice of
Conversion/Continuation shall be irrevocable and shall specify (i) the aggregate
principal amount of the Borrowing to be converted or continued, (ii) the date of
such conversion or continuation and (iii) the Interest Period to be applicable
thereto. If, upon the expiration of any Interest Period in respect of any
Revolving Borrowing consisting of LIBOR Loans, the Borrower shall have failed to
deliver the Notice of Conversion/Continuation, the Borrower shall be deemed to
have elected to convert such Borrowing to a Borrowing consisting of Base Rate
Loans. So long as any Default or Event of Default shall have occurred and be
continuing, no Revolving Borrowing may be converted into or continued (upon
expiration of the current Interest Period) as LIBOR Loans unless the Agent and
each of the Revolving Lenders shall have otherwise consented in writing. No
conversion of any Revolving Borrowing of LIBOR Loans shall be permitted except
on the last day of the Interest Period in respect thereof.
(e) Without in any way limiting the Borrower's obligation to confirm in
writing any telephonic notice, the Agent, the Issuing Bank and the Swingline
Lender may act without liability upon the basis of telephonic notice believed by
the Agent, the Issuing Bank and the Swingline Lender in good faith to be from
the Borrower, in the case of a Borrowing of Revolving Loans, a Borrowing of
Swingline Loans, Swingline Borrowing or Letter of Credit, prior to receipt of
written confirmation. In each such case, the Borrower hereby waives the right to
dispute the records of the Agent, the Issuing Bank and the Swingline Lender as
to the terms of such telephonic notice.
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(f) The Borrower's obligation to pay the principal of, and interest on,
the Revolving Loans to each Revolving Lender shall be evidenced by the records
of the Agent and such Revolving Lender and by the Revolving Credit Note payable
to such Revolving Lender (or its the assignor) completed in conformity with this
Agreement.
(g) The entire outstanding principal amount of the Revolving Loans,
together with all accrued but unpaid interest thereon, shall be due and payable
in full on the Revolving Credit Termination Date.
Section 2.03 Intentionally Omitted.
Section 2.04 Letter of Credit Subcommitment. Subject to, and upon the
terms and conditions hereof, the Borrower may request, in accordance with the
provisions of this Section 2.04 and Section 2.05, that the Issuing Bank issue
one or more Letters of Credit for the account of the Borrower; provided that (i)
no Letter of Credit shall have an expiration date that is later than five (5)
Business Days prior to the Revolving Credit Termination Date; (ii) each Letter
of Credit issued by the Issuing Bank shall be in a stated amount of at least
$5,000; and (iii) the Borrower shall not request that the Issuing Bank issue any
Letter of Credit, if, after giving effect to such issuance, (A) the aggregate
Letter of Credit Obligations would exceed the Letter of Credit Subcommitment or
(B) the aggregate amount of all Letter of Credit Obligations, plus the aggregate
principal amount of all outstanding Revolving Loans, plus the aggregate
principal amount of all outstanding Swingline Loans would exceed the Borrowing
Limit.
Section 2.05 Notice of Issuance of Letter of Credit; Agreement to
Issue.
(a) Whenever the Borrower desires the issuance of a Letter of Credit,
the Borrower shall, in addition to any application and documentation procedures
required by the Issuing Bank for the issuance of such Letter of Credit, deliver
to the Agent and the Issuing Bank a written notice no later than 1:00 p.m.
(Atlanta, Georgia time) at least five (5) Business Days in advance of the
proposed date of issuance. Each such notice shall specify (i) the proposed date
of issuance (which shall be a Business Day); (ii) the face amount of the Letter
of Credit; (iii) the expiration date of the Letter of Credit; and (iv) the name
and address of the beneficiary with respect to such Letter of Credit, and shall
attach a precise description of the documentation and a verbatim text of any
certificate to be presented by the beneficiary of such Letter of Credit which
would require the Issuing Bank to make payment under the Letter of Credit,
provided that the Issuing Bank may require changes in any such documents and
certificates in accordance with its customary letter of credit practices, and
provided further, that no Letter of Credit shall require payment against a
conforming draft to be made thereunder on the same Business Day that such draft
is presented if such presentation is made after 1:00 p.m. (Atlanta, Georgia
time). In determining whether to pay under any Letter of Credit, the Issuing
Bank shall be responsible only to determine that the documents and certificate
required to be delivered under its Letter of Credit have been delivered, and
that they comply on their face with the requirements of the Letter of Credit.
Promptly after receiving the notice of issuance of a Letter of Credit, the Agent
shall notify each Revolving Lender of such Revolving Lender's respective
participation therein,
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determined in accordance with its respective Pro Rata Share of the Revolving
Credit Commitments on the date of the issuance of such Letter of Credit.
(b) The Issuing Bank agrees, subject to the terms and conditions set
forth in this Agreement, to issue for the account of the Borrower one or more
Letters of Credit, each in a face amount equal to the face amount requested
under Section 2.05(a) above, following its receipt of a notice and the
application and other documents required by Section 2.05(a). Immediately upon
the issuance of each Letter of Credit, each Revolving Lender shall be deemed to,
and hereby agrees to, have irrevocably purchased from the Issuing Bank a
participation in such Letter of Credit and any drawing thereunder in an amount
equal to such Revolving Lender's Pro Rata Share of the Revolving Credit
Commitments multiplied by the face amount of such Letter of Credit.
Section 2.06 Payment of Amounts drawn under any Letter of Credit.
(a) In the event of any request for a drawing under any Letter of
Credit by the beneficiary thereof, the Issuing Bank shall notify the Borrower,
the Agent and the Revolving Lenders on or before the date on which the Issuing
Bank intends to honor such drawing, and the Borrower agrees to reimburse the
Issuing Bank on the day on which such drawing is honored in an amount, in same
day funds, equal to the amount of such drawing, provided that anything contained
in this Agreement to the contrary notwithstanding, unless the Borrower shall
have notified the Issuing Bank and the Agent prior to 1:00 p.m. (Atlanta,
Georgia time) on the Business Day immediately prior to the date on which such
drawing is honored, that the Borrower intends to reimburse the Issuing Bank for
the amount of such drawing with funds other than the proceeds of Revolving
Loans, the Borrower shall be deemed to have timely given a Revolving Notice of
Borrowing to the Agent requesting Revolving Loans which are Base Rate Loans on
the date on which such drawing is honored in an amount equal to the amount of
such drawing. The Agent shall promptly notify each Revolving Lender of any
Notice of Borrowing deemed to have been given by the Borrower pursuant to this
Section 2.06 and the Revolving Lenders shall by 2:00 p.m. (Atlanta, Georgia
time) on the date of such drawing, make Revolving Loans which are Base Rate
Loans in the amount of such drawing, the proceeds of which shall be applied
directly by the Agent to reimburse the Issuing Bank for the amount of such
drawing, provided that for the purposes solely of such Revolving Borrowing, the
conditions precedent set forth in Sections 6.01 and Section 6.02 hereof shall
not be applicable, and provided further that if for any reason proceeds of the
Revolving Loans are not received by the Issuing Bank on such date in the amount
equal to the amount of such drawing, the Borrower shall reimburse the Issuing
Bank on the Business Day immediately following the date of such drawing in an
amount, in U.S. Dollars and immediately available funds, equal to the excess of
the amount of such drawing over the amount of such Revolving Loans, if any,
which are so received, plus accrued interest on the amount at the applicable
rate of interest for Base Rate Loans.
(b) Notwithstanding any provision of this Agreement to the contrary, to
the extent that any Letter of Credit or portion thereof remains outstanding on
the Revolving Credit Termination Date, the parties hereby agree that the
beneficiary or beneficiaries thereof shall be deemed to have made a drawing of
all available amounts pursuant to such Letters of Credit on
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the Revolving Credit Termination Date, which amounts shall be reimbursed to the
Issuing Bank by the Borrower directly (and not through a Revolving Borrowing
under the Revolving Credit Commitments as contemplated in Section 2.06(a)) and
thereafter held by the Issuing Bank as cash collateral for its remaining
obligations pursuant to such Letters of Credit in the L/C Cash Collateral
Account.
Section 2.07 Payment by Revolving Lenders. In the event that the
Borrower shall fail to reimburse the Issuing Bank as provided in Section 2.06 by
borrowing Revolving Loans, or otherwise providing an amount equal to the amount
of any drawing honored by the Issuing Bank, the Issuing Bank shall promptly
notify the Agent who shall promptly notify each Revolving Lender of the
unreimbursed amount of such drawing and of such Revolving Lender's respective
participation therein. Each Revolving Lender shall make available to the Agent
an amount equal to its respective participation, in U.S. Dollars and in
immediately available funds, at the Payment Office not later than 2:00 p.m.
(Atlanta, Georgia time) on the Business Day after the date notified by the
Agent, and the Agent shall promptly make such amounts available to the Issuing
Bank. In the event that any such Revolving Lender fails to make available to the
Agent the amount of such Revolving Lender's participation in such Letter of
Credit, the Issuing Bank shall be entitled to recover such amount on demand from
such Revolving Lender together with interest at the Federal Funds Rate for the
first two Business Days after demand and thereafter at the Base Rate. The
Issuing Bank shall distribute to the Agent all payments received by the Issuing
Bank from the Borrower in reimbursement of drawings honored by the Issuing Bank
under such Letter of Credit when such payments are received. The Agent shall
promptly distribute to each Revolving Lender (other than the Issuing Bank) that
has paid all amounts payable under this Section with respect to any Letter of
Credit, such Revolving Lender's Pro Rata Share of such payments.
Section 2.08 Obligations Absolute. The obligation of the Borrower to
reimburse the Issuing Bank for drawings made under Letters of Credit issued for
the account of the Borrower, and the Revolving Lenders' obligation to honor
their participations purchased therein, shall be unconditional and irrevocable
and shall be paid strictly in accordance with the terms of this Agreement under
all circumstances, including without limitation, the following circumstances:
(a) Any lack of validity or enforceability of any Letter of Credit;
(b) The existence of any claim, set-off, defense or other right which
the Borrower or any Subsidiary or Affiliate of the Borrower may have at any time
against a beneficiary or any transferee of any Letter of Credit (or any Persons
or entities for whom any such beneficiary or transferee may be acting), any
Lender or any other Person, whether in connection with this Agreement, the
transactions contemplated herein or any unrelated transaction (including without
limitation any underlying transaction between the Borrower or any of its
Subsidiaries and Affiliates and the beneficiary for which such Letter of Credit
was issued);
(c) Any draft, demand, certificate or any other document presented
under any Letter of Credit proving to be forged, fraudulent or invalid in any
respect or any statement therein being untrue or inaccurate in any respect;
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(d) Payment by the Issuing Bank under any Letter of Credit against
presentation of a demand, draft or certificate or other document which does not
comply with the terms of such Letter of Credit;
(e) Any other circumstance or happening whatsoever which is similar to
any of the foregoing; or
(f) The fact that a Default or an Event of Default shall have occurred
and be continuing.
Nothing in this Section 2.08 shall prevent an action against the Issuing Bank
for its gross negligence or willful misconduct.
Section 2.09 Indemnification; Nature of Issuing Bank's Duties
(a) In addition to amounts payable elsewhere pursuant to this
Agreement, without duplication, the Borrower hereby agrees to protect,
indemnify, pay and save the Issuing Bank, the Agent and each Revolving Lender
harmless from and against any and all claims, demands, liabilities, damages,
losses, costs, charges and reasonable expenses (including reasonable attorney's
fees and disbursements) which the Issuing Bank, the Agent or any Revolving
Lender may incur or be subject to as a consequence, direct or indirect, of (i)
the issuance of any Letter of Credit for the account of the Borrower; or (ii)
the failure of the Issuing Bank to honor a drawing under any Letter of Credit
due to any act or omission (whether rightful or wrongful) of any present or
future de jure or de facto government or Governmental Authority.
(b) Notwithstanding any other provision contained in this Agreement,
the Issuing Bank shall not be obligated to issue any Letter of Credit, nor shall
any Revolving Lender be obligated to purchase its participation in any Letter of
Credit to be issued hereunder, if the issuance of such Letter of Credit or
purchase of such participation shall have become unlawful or prohibited by
compliance by the Issuing Bank or such Revolving Lender in good faith with any
law, governmental rule, guideline, request, order, injunction, judgment or
decree (whether or not having the force of law); provided that in the case of
the obligation of a Revolving Lender to purchase such participation, such
Revolving Lender shall have notified the Agent to such effect in writing at
least ten (10) Business Days' prior to the issuance thereof by the Issuing Bank,
which notice shall relieve the Issuing Bank of its obligation to issue such
Letter of Credit pursuant to Section 2.05 and Section 2.06 hereof.
Section 2.10 Swingline Subcommitment.
(a) Subject to and upon the terms and conditions herein set forth, the
Swingline Lender agrees to make to the Borrower, from time to time prior to the
Revolving Credit Termination Date, Swingline Loans in an aggregate principal
amount outstanding at any time not to exceed the Swingline Commitment Amount;
provided, however, that the conditions set forth in Sections 6.01 and Section
6.02 have been fulfilled before and after giving effect to
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each Borrowing of Swingline Loans. The Borrower shall be entitled to repay and
reborrow Swingline Loans in accordance with the provisions of this Agreement.
(b) Each Swingline Loan shall be made as a Base Rate Loan.
(c) Whenever the Borrower desires to make a Borrowing of Swingline
Loans, it shall give the Swingline Lender (with a copy to the Agent) written
notice (or an authorized officer of the Borrower may give telephonic notice
promptly confirmed in writing) of such Borrowing (each a "Swingline Borrowing
Notice") prior to 11:00 a.m. (Atlanta, Georgia time) on the requested date of
such Borrowing. Notices received after the times set forth above shall be deemed
received on the next Business Day. Each Swingline Borrowing Notice shall be
irrevocable and shall specify (i) the aggregate principal amount of such
Borrowing, and (ii) the date of such Borrowing (which shall be a Business Day).
(d) The Borrower's obligation to pay the principal of, and interest on,
the Swingline Loans to the Swingline Lender shall be evidenced by the records of
the Agent and the Swingline Lender and by the Swingline Note payable to the
Swingline Lender (or the assignor of the Swingline Lender) completed in
conformity with this Agreement.
(e) All outstanding principal amounts of the Swingline Loans, and all
accrued but unpaid interest thereon, shall be due and payable in full on the
Revolving Credit Termination Date.
(f) At any time on the request of the Swingline Lender, each Revolving
Lender other than the Swingline Lender shall purchase a participating interest
in all outstanding Swingline Loans in an amount equal to its Pro Rata Share of
the Revolving Credit Commitments of such Swingline Loans, and upon request of
any Revolving Lender, the Swingline Lender shall furnish such Revolving Lender
with a certificate evidencing such participating interest. Such purchase shall
be made one Business Day after such request is made. On the date of such
required purchase, each Revolving Lender will immediately transfer to the
Swingline Lender, in immediately available funds, the amount of its
participation. At any time after the Swingline Lender has received from any such
Revolving Lender the funds for its participating interest in a Swingline Loan,
if the Agent or the Swingline Lender receives any payment on account thereof,
the Agent or the Swingline Lender, as the case may be, will distribute to such
Revolving Lender its participating interest in such amount (appropriately
adjusted, in the case of interest payments, to reflect the period of time during
which such Revolving Lender's participating interest was outstanding and
funded); provided, however, that if such payment received by the Agent or the
Swingline Lender is required to be returned, such Revolving Lender will return
to the Agent or the Swingline Lender any portion thereof previously distributed
by the Agent or the Swingline Lender to it. Each Revolving Lender's obligation
to purchase such participating interests shall be absolute and unconditional and
shall not be affected by any circumstance, including without limitation (i) any
setoff, counterclaim, recoupment, defense or other right that such Revolving
Lender or any other Person may have against the Swingline Lender requesting such
purchase or any other Person for any reason whatsoever, (ii) the occurrence or
continuation of a Default or an Event of Default or the termination of the
Revolving Credit Commitments, (iii) any adverse
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change in the condition (financial or otherwise) of the Borrower, any of its
Subsidiaries, or any other Person, (iv) any breach of this Agreement by the
Borrower or any other Lender, or (v) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing; provided, however,
that (i) no such obligation shall exist to the extent that the aggregate
Swingline Loans were advanced in excess of the Swingline Subcommitment then in
effect and (ii) no Lender shall be required to purchase a participating interest
in any Swingline Loan made at a time which such Lender was not a Revolving
Lender.
Section 2.11 Reductions of Revolving Credit Commitments; Mandatory
Prepayments of Revolving Loans.
(a) Upon at least three (3) days' prior written notice (or telephonic
notice from an authorized officer, promptly confirmed in writing) from the
Borrower to the Agent, the Borrower shall have the right, without premium or
penalty, to reduce the Revolving Credit Commitments in part or to terminate the
Revolving Credit Commitments in whole, provided that (i) any such reduction or
termination shall apply to proportionately and permanently reduce the Revolving
Credit Commitment of each Revolving Lender, (ii) any partial termination
pursuant to this Section 2.11 shall be in an amount of at least $1,000,000 and
integral multiples of $500,000, and (iii) no such reduction shall be permitted
which would reduce the Total Revolving Credit Commitment Amount to an aggregate
amount less than the aggregate outstanding principal amount of all Revolving
Loans, Swingline Loans and Letter of Credit Obligations. If the Total Revolving
Credit Commitment Amount is reduced to an amount less than the Swingline
Commitment Amount, the Swingline Commitment Amount shall automatically be deemed
reduced to an amount equal to the Total Revolving Credit Commitment Amount. If
the Total Revolving Credit Commitment Amount is reduced to amount less than the
Letter of Credit Subcommitment Amount, the Letter of Credit Subcommitment Amount
shall automatically be deemed reduced to an amount equal to the Total Revolving
Credit Commitment Amount.
(b) If at any time the aggregate outstanding principal amount of
Revolving Loans, the aggregate amount of Letter of Credit Obligations and the
aggregate outstanding principal amount of Swingline Loans exceeds the Borrowing
Limit, as reduced pursuant to Section 2.11(a) or otherwise, the Borrower shall
immediately repay the Revolving Loans and the Swingline Loans in an amount equal
to such excess, together with all accrued and unpaid interest on such excess
amount and any amounts due under Section 5.16. Each such prepayment by the
Borrower shall be applied first to the Swingline Loans to the full extent
thereof, then to Base Rate Loans comprising Revolving Loans, to the full extent
thereof, and finally to LIBOR Loans comprising Revolving Loans to the full
extent thereof. In the event that following such repayment of Revolving Loans
and Swingline Loans, the Letter of Credit Obligations still exceed the Total
Revolving Credit Commitment Amount, the Borrower shall immediately deliver to
the Agent an amount in U.S. Dollars equal to the amount of such excess, to be
delivered to and held by the Issuing Bank in the L/C Cash Collateral Account.
(c) If at any time the BT Intercompany Borrower makes any principal
payment on account of the BT Revolving Loans to the BT Lender, the Borrower
shall repay the Revolving Loans in an amount equal to such principal payment,
together with all accrued and
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unpaid interest on such Revolving Loans. Each such prepayment by the Borrower
shall be applied first to the Swingline Loans to the fullest extent thereof,
then to Base Rate Loans comprising Revolving Loans, to the full extent thereof,
and finally to LIBOR Loans comprising Revolving Loans to the full extent
thereof.
Section 2.12 Use of Proceeds. The proceeds of the Revolving Loans and
Swingline Loans shall be used by the Borrower (a) to consummate the Merger, (b)
to refinance existing Indebtedness of Conso International (as successor by
merger to the Borrower), (c) to pay expenses related to the transactions
contemplated by this Agreement, (d) to make Capital Expenditures, (e) to provide
ongoing working capital for the Borrower, and (f) to consummate acquisitions, so
long as such acquisitions comply with Section 9.03(c).
Section 2.13 Extension. The term of the Revolving Credit Commitments
shall commence on the Closing Date and shall continue until December 31, 2004
(the "Initial Term") and, on the fourth and fifth anniversary of the Closing
Date, the term of each Lender's Revolving Credit Commitment may be extended, at
the option of each such Lender in its sole discretion following a request from
the Borrower, for successive periods of one year each (each, a "Renewal Term"),
provided, that (i) there shall be no extension of the term of any Lender's
Revolving Credit Commitment without the consent of the Required Lenders, and
(ii) no Lender's Revolving Credit Commitment can be extended hereunder without
such Lender's consent. The Revolving Credit Commitments shall terminate upon the
later to occur of (a) the end of the term (including any Renewal Term) of the
Revolving Credit Commitments and (b) the repayment and satisfaction in full of
all Obligations to the Revolving Lenders; provided that the Lenders may earlier
terminate the Revolving Credit Commitments pursuant to Article X hereof.
ARTICLE III.
TERM A LOANS
Section 3.01 Term A Loans.
(a) Subject to and upon the terms and conditions herein set forth, each
Term A Lender severally agrees to make a term loan to the Borrower on the
Closing Date in the principal amount equal to such Lender's Term A Loan
Commitment Amount. The Borrower shall not be entitled to reborrow any amounts
repaid with respect to the Term A Loans.
(b) Each Term A Loan shall, at the option of the Borrower, be made or
continued as, or converted into, one or more Borrowings that shall consist
entirely of Base Rate Loans or LIBOR Loans. The aggregate principal amount of
each Borrowing of Term A Loans comprised of LIBOR Loans shall be not less than
$500,000 or a greater integral multiple of $100,000. At no time shall the total
number of Borrowings of all Loans comprised of LIBOR Loans exceed eight in any
case.
(c) During the period commencing on the Closing Date and ending on
December 31, 2004, the Borrower agrees to pay accrued interest on the Term A
Loans in arrears in accordance with Section 5.02, through and including the Term
A Loan Maturity Date. During
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the period commencing on June 30, 2000 and thereafter, the Borrower agrees to
make principal payments on the last day of each calendar quarter as set forth in
the amortization schedule in Schedule 3.01. Each such payment of principal of
the Term A Loans shall be applied first to Base Rate Loans comprising the Term A
Loans to the full extent thereof, before application to LIBOR Loans comprising
the Term A Loans. The entire outstanding principal amount of the Term A Loans,
together with all accrued and unpaid interest thereon, shall be due and payable
in full on the Term A Loan Maturity Date.
(d) The Borrower's obligation to pay the principal of, and interest on,
the Term A Loans to each Term A Lender shall be evidenced by the records of the
Agent and such Term A Lender and by the Term A Note payable to such Term A
Lender (or the assignee thereof) completed in conformity with this Agreement.
Section 3.02 Notices. Whenever the Borrower desires to convert all or a
portion of an outstanding Borrowing of Term A Loans consisting of Base Rate
Loans into a Borrowing of Term A Loans consisting of LIBOR Loans or to continue
outstanding a Borrowing of Term A Loans consisting of LIBOR Loans for a new
Interest Period, the Borrower shall give the Agent prior written notice (or an
authorized officer of the Borrower may give telephonic notice promptly confirmed
in writing) of each such Borrowing to be converted into or continued as LIBOR
Loans (a "Term A Loan Notice of Conversion/Continuation") prior to 1:00 p.m.
(Atlanta, Georgia time) three (3) Business Days prior to the requested date of
continuation or conversion. Notice received after such time shall be deemed
received on the next Business Day. The Agent shall promptly notify each Term A
Lender upon its receipt of a Term A Loan Notice of Conversion/Conversion. Each
such Term A Loan Notice of Conversion/Continuation shall be irrevocable and
shall specify (i) the aggregate principal amount of the Borrowing to be
converted or continued, (ii) the date of such conversion or continuation and
(iii) the Interest Period to be applicable thereto. If, upon the expiration of
any Interest Period in respect of any Borrowing of Term A Loans consisting of
LIBOR Loans, the Borrower shall have failed to deliver the Notice of
Conversion/Continuation, the Borrower shall be deemed to have elected to convert
such Borrowing to a Borrowing consisting of Base Rate Loans. So long as any
Default or Event of Default shall have occurred and be continuing, no Borrowing
of Term A Loans may be converted into or continued (upon expiration of the
current Interest Period) as LIBOR Loans unless the Agent and each of the Term A
Lenders shall have otherwise consented in writing. No conversion of any
Borrowing of LIBOR Loans shall be permitted except on the last day of the
Interest Period in respect thereof.
Section 3.03 Use of Proceeds. The proceeds of the Term A Loans shall be
used by the Borrower (a) to consummate the Merger, (b) to refinance existing
Indebtedness of Conso International (as successor by merger to the Borrower),
and (c) to pay expenses related to the transactions contemplated by this
Agreement.
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ARTICLE IV.
TERM B LOANS
Section 4.01 Term B Loans.
(a) Subject to and upon the terms and conditions herein set forth, each
Term B Lender severally agrees to make a term loan to the Borrower on the
Closing Date in the principal amount equal to such Lender's Term B Loan
Commitment Amount. The Borrower shall not be entitled to reborrow any amounts
repaid with respect to the Term B Loans.
(b) Each Term B Loan shall, at the option of the Borrower, be made or
continued as, or converted into, one or more Borrowings that shall consist
entirely of Base Rate Loan or LIBOR Loan. The aggregate principal amount of each
Borrowing of Term B Loans comprised of LIBOR Loan shall be not less than
$500,000 or a greater integral multiple of $100,000. At no time shall the total
number of Borrowings of all Loans comprised of LIBOR Loans exceed eight in any
case.
(c) During the period commencing on the Closing Date and ending on
December 31, 2006, the Borrower agrees to pay accrued interest on the Term B
Loans in arrears in accordance with Section 5.02, through and including the Term
B Loan Maturity Date. During the period commencing on June 30, 2000 and
thereafter, the Borrower agrees to make principal payments on the last day of
each calendar quarter as set forth in the amortization schedule in Schedule
4.01. Each such payment of principal of the Term B Loans shall be applied first
to Base Rate Loans comprising the Term B Loans to the full extent thereof,
before application to LIBOR Loans comprising the Term B Loans. The entire
outstanding principal amount of the Term B Loans, together with all accrued and
unpaid interest thereon, shall be due and payable in full on the Term B Loan
Maturity Date.
(d) The Borrower's obligation to pay the principal of, and interest on,
the Term B Loans to each Term B Lender shall be evidenced by the records of the
Agent and such Term B Lender and by the Term B Note payable to such Term B
Lender (or the assignee thereof) completed in conformity with this Agreement.
Section 4.02 Notices. Whenever the Borrower desires to convert all or a
portion of an outstanding Borrowing of Term B Loans consisting of Base Rate
Loans into a Borrowing of Term B Loans consisting of LIBOR Loans or to continue
outstanding a Borrowing of Term B Loans consisting of LIBOR Loans for a new
Interest Period, the Borrower shall give the Agent prior written notice (or an
authorized officer of the Borrower may give telephonic notice promptly confirmed
in writing) of each such Borrowing to be converted into or continued as LIBOR
Loans (a "Term B Loan Notice of Conversion/Continuation") prior to 1:00 p.m.
(Atlanta, Georgia time) three (3) Business Days prior to the requested date of
continuation or conversion. Notice received after such time shall be deemed
received on the next Business Day. The Agent shall promptly notify each Term B
Lender upon its receipt of a Term B Loan Notice of Conversion/Continuation. Each
such Term B Loan Notice of Conversion/Continuation shall be irrevocable and
shall specify (i) the aggregate principal amount of the Borrowing to be
converted
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or continued, (ii) the date of such conversion or continuation and (iii) the
Interest Period to be applicable thereto. If, upon the expiration of any
Interest Period in respect of any Borrowing of Term B Loans consisting of LIBOR
Loans, the Borrower shall have failed to deliver the Notice of
Conversion/Continuation, the Borrower shall be deemed to have elected to convert
such Borrowing to a Borrowing consisting of Base Rate Loans. So long as any
Default or Event of Default shall have occurred and be continuing, no Borrowing
of Term B Loans may be converted into or continued (upon expiration of the
current Interest Period) as LIBOR Loans unless the Agent and each of the Term B
Lenders shall have otherwise consented in writing. No conversion of any
Borrowing of LIBOR Loans shall be permitted except on the last day of the
Interest Period in respect thereof.
Section 4.03 Use of Proceeds. The proceeds of the Term B Loans shall be
used by the Borrower (a) to consummate the Merger, (b) to refinance existing
Indebtedness of the Conso International (as successor by merger to the
Borrower), and (c) to pay expenses related to the transactions contemplated by
this Agreement.
ARTICLE V.
GENERAL LOAN TERMS
Section 5.01 Disbursement of Funds.
(a) No later than 2:00 p.m. (Atlanta, Georgia time) on the date of any
requested Borrowing of Revolving Loans or Term Loans, each Lender will make
available its Pro Rata Share of the amount of such Borrowing in immediately
available funds at the Payment Office. The Agent will make available to the
Borrower the aggregate of the amounts (if any) so made available by the Lenders
to the Agent in a timely manner by crediting such amounts to the Borrower's
demand deposit account maintained with the Agent or at the Borrower's option, by
effecting a wire transfer of such amounts to any other account specified by the
Borrower to the Agent in writing, by the close of business on such Business Day.
In the event that any Lender does not make its Pro Rata Share of such Borrowing
available to the Agent by the time prescribed above, but such amount is received
by the Agent later that day, such amount may be credited to the Borrower in the
manner described in the preceding sentence on the next Business Day (with
interest on such amount to begin accruing hereunder on such next Business Day).
(b) Unless the Agent shall have been notified by any Lender prior to
the date of a Borrowing of Revolving Loans or Term Loans that such Lender does
not intend to make available to the Agent such Lender's portion of the Borrowing
to be made on such date, the Agent may assume that such Lender has made such
amount available to the Agent on such date and the Agent may make available to
the Borrower a corresponding amount. If such corresponding amount is not in fact
made available to the Agent by such Lender on the date of Borrowing, the Agent
shall be entitled to recover such corresponding amount on demand from such
Lender together with interest at the Federal Funds Rate if such Lender pays the
Agent within two Business Days after demand, and otherwise at the Base Rate. If
such Lender does not pay such corresponding amount forthwith upon the Agent's
demand therefor, the Agent shall promptly notify the Borrower, and the Borrower
shall immediately pay such corresponding
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amount to the Agent together with interest at the rate specified for the
Borrowing. Nothing in this subsection shall be deemed to relieve any Lender from
its obligation to fund its Commitments hereunder or to prejudice any rights
which the Borrower may have against any Lender as a result of any default by
such Lender hereunder.
(c) All Borrowings comprising the Revolving Loans shall be made by the
Lenders on the basis of their Pro Rata Shares of the Revolving Credit
Commitments. All Borrowings comprising the Term Loans shall be made by the
Lenders on the basis of their Pro Rata Shares of the Term Loan Commitments. No
Lender shall be responsible for any default by any other Lender in its
obligations hereunder, and each Lender shall be obligated to make its Loans
provided to be made by it hereunder, regardless of the failure of any other
Lender make its Loans hereunder.
(d) No later than 2:00 p.m. (Atlanta, Georgia time) on the date of any
requested Borrowing of a Swingline Loan, the Swingline Lender will make
available such Swingline Loan to the Borrower by crediting such amounts to the
Borrower's demand deposit account maintained with the Swingline Lender or at the
Borrower's option, by effecting a wire transfer of such amounts to any other
account of the Borrower specified by the Borrower to the Swingline Lender in
writing, by the close of business on such Business Day.
Section 5.02 Interest.
(a) Subject to Section 5.04, the Borrower agrees to pay interest in
respect of all unpaid principal amounts of all Loans from the date such
principal amounts are advanced to maturity (whether by acceleration, notice of
prepayment or otherwise) at rates per annum equal to the rates indicated below
as applicable to outstanding Loans in accordance with the terms hereof:
(i) For a Base Rate Loan--the Base Rate in effect from time to
time plus the Applicable Base Rate Margin then in effect; and
(ii) For a LIBOR Loan--LIBOR plus the Applicable LIBOR Margin
then in effect.
(b) Interest on the principal amount of all Loans shall accrue from and
including the date such Loans are made to but excluding the date of any
repayment thereof, provided that, if the principal amount of any Loan is repaid
on the same day made, one day's interest shall be paid on such principal.
Interest on all outstanding Base Rate Loans and Swingline Loans shall be payable
monthly in arrears on the last day of each calendar month. Interest on all
outstanding LIBOR Loans shall be payable on the last day of each Interest Period
applicable thereto, and, in the case of LIBOR Loans having an Interest Period in
excess of three months, on each day which occurs every three months after the
initial date of such Interest Period. Interest on all Loans shall be payable on
any conversion of a loan into a loan of another Type, prepayment (on the amount
prepaid), at maturity (whether by acceleration notice of prepayment or
otherwise) and, after maturity, on demand.
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(c) The Agent, upon determining LIBOR for the Loans for any Interest
Period, shall promptly notify the Borrower and the other Lenders of such rate by
telephone (confirmed in writing) or in writing. Any such determination shall,
absent manifest error, be final, conclusive and binding for all purposes.
(d) In no event, shall the amount of interest due and payable on any
Loan exceed the highest rate of interest permissible under any law which a court
of competent jurisdiction shall, in a final determination, deem applicable to
the Lenders with respect to such Loan (the "Maximum Lawful Rate"). In the event
and so long as the Lenders of a Loan exceeds the Maximum Lawful Rate, such
interest rate shall be reduced to the Maximum Lawful Rate. In the event any such
payment is paid to the Lenders by the Borrower in excess of the Maximum Lawful
Rate, then such excess sum shall be credited as a payment of principal, unless
the Borrower shall notify the Agent in writing that the Borrower elects to have
such excess sum returned to it forthwith. It is the express intent of the
parties hereto that the Borrower shall not pay, and the Lenders not receive,
directly or indirectly, in any manner whatsoever, interest in excess of the
Maximum Lawful Rate.
Section 5.03 Interest Periods. In connection with the making or
continuation of, or conversion into, each Borrowing of LIBOR Loans, the Borrower
shall select an interest period (each an "Interest Period") to be applicable to
such Loans, which Interest Period shall be either a one, two, three or six month
period; provided that:
(i) The initial Interest Period for any Borrowing consisting
of LIBOR Loans shall commence on the date of such Borrowing (including
the date of any conversion from a Borrowing consisting of Loans of
another Type) and each Interest Period occurring thereafter in respect
of such Borrowing shall commence on the day on which the next preceding
Interest Period expires;
(ii) If any Interest Period would otherwise expire on a day
which is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day, provided that if any Interest Period
would otherwise expire on a day that is not a Business Day but is a day
of the month after which no further Business Day occurs in such month,
such Interest Period shall expire on the next preceding Business Day;
(iii) Any Interest Period which begins on a day for which
there is no numerically corresponding day in the calendar month at the
end of such Interest Period shall, subject to part (iv) below, expire
on the last Business Day of such calendar month;
(iv) No Interest Period shall extend beyond any date upon
which any prepayment is required to be made on the Loans, unless the
aggregate principal amount of Loans that are not LIBOR Loans, or that
have Interest Periods which will expire on or before the date of the
respective payment or prepayment, is equal to or in excess of the
amount of any such principal payments or prepayments to be made;
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(v) The Interest Period for a LIBOR Loan which is converted
pursuant to Section 5.13(b) or Section 5.14 shall commence on the date
of such conversion and shall expire on the date on which the Interest
Periods for the LIBOR Loans of the other Lenders which were not
converted expires; and
(vi) No Interest Period with respect to the Revolving Loans
shall extend beyond the Revolving Credit Termination Date, no Interest
Period with respect to the Term A Loans shall extend beyond the Term A
Loan Maturity Date, and no Interest Period with respect to the Term B
Loans shall extend beyond the Term B Loan Maturity Date.
Section 5.04 Default Interest. If any Event of Default has occurred and
is continuing, the Borrower agrees to pay interest in respect of all Loans and
all other amounts owing hereunder, at the following rates per annum (the
"Default Rate"):
(i) in the case of Loans outstanding as LIBOR Loans, at the
rate otherwise applicable for the then-current Interest Period plus an
additional two percent (2%) per annum; thereafter, at the rate in
effect for Base Rate Loans plus an additional two percent (2%) per
annum;
(ii) in the case of Loans outstanding as Base Rate Loans and
all other Obligations hereunder, at a rate in effect for Base Rate
Loans plus an additional two percent (2%) per annum;
provided that no Loan shall bear interest after maturity (whether by
acceleration, notice of prepayment or otherwise) at a rate per annum less than
two percent (2%) per annum in excess of the original rate of interest applicable
thereto at maturity.
Section 5.05 Fees.
(a) On the Closing Date, the Borrower agrees to pay the Underwriting
Fee to the Agent, on behalf of the Arranger, and the Agency Fee to the Agent for
its own account, in each case on the terms set forth in the Fee Letter.
(b) The Borrower agrees to pay to the Agent, for the ratable benefit of
each Revolving Lender based upon its respective Pro Rata Share of the Revolving
Credit Commitments, a commitment fee (the "Revolving Credit Commitment Fee"),
for the period commencing on the Closing Date to and including the Revolving
Credit Termination Date, equal to the average daily unused portion of the
Revolving Credit Commitments multiplied by the Applicable Commitment Fee
Percentage. The Revolving Credit Commitment Fee shall be payable quarterly in
arrears on the last day of each calendar quarter, commencing on March 31, 2000,
and on the Revolving Credit Termination Date. For purposes of calculating the
Revolving Credit Commitment Fee, all outstanding Letter of Credit Obligations
and outstanding Swingline Loans shall be considered "usage" of the Revolving
Credit Commitments.
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(c) The Borrower agrees to pay to the Agent, for the ratable benefit of
each Revolving Lender based upon its respective Pro Rata Share of the Revolving
Credit Commitments, a letter of credit fee (the "Letter of Credit Fee") for the
period commencing on the Closing Date to and including the Revolving Credit
Termination Date, equal to the Applicable LIBOR Margin then in effect multiplied
by the Letter of Credit Obligations; provided, however, that if an Event of
Default has occurred and is continuing, the Letter of Credit Fee shall be
increased to an amount equal to two percentage points above the Applicable LIBOR
Margin then in effect multiplied by the Letter of Credit Obligations. The Letter
of Credit Fee shall be payable quarterly in arrears on the last day of each
calendar quarter, commencing on the last day of the calendar quarter in which
the first Letter of Credit is issued, and on the Revolving Credit Termination
Date.
(d) The Borrower agrees to pay to the Issuing Bank for its own account
a facing fee (the "Facing Fee") for the period commencing on the Closing Date to
and including the Revolving Credit Termination Date, equal to 0.25% per annum
multiplied by the Letter of Credit Obligations, plus customary issuance and
administration fees. The Facing Fee shall be payable quarterly in arrears on the
last day of each calendar quarter, commencing on the last day of the calendar
quarter in which the first Letter of Credit is issued, and on the Revolving
Credit Termination Date.
Section 5.06 Voluntary Prepayments of Revolving Loans.
(a) The Borrower may at its option, prepay Borrowings of Revolving
Loans in Dollars without premium or penalty, in full or in amounts aggregating
$500,000 or any greater integral multiple of $100,000 by paying the principal
amount to be prepaid together with interest accrued and unpaid thereon to the
date of prepayment, and if the Borrower elects to prepay a Borrowing consisting
of LIBOR Loans on a date other than the last day of an Interest Period
applicable thereto, all compensation payments required pursuant to Section 5.16.
The Borrower may designate the Types of Loans and the specific Borrowings of
Loans that are to be prepaid as part of any prepayment pursuant to this Section
5.06(a), provided that (i) if any prepayment of LIBOR Loans made pursuant to a
single Revolving Borrowing shall reduce the outstanding Loans made pursuant to
such Borrowing to an amount less than $1,000,000, such Borrowing shall
immediately be converted into Base Rate Loans, and (ii) each prepayment made
pursuant to a single Borrowing shall be applied pro rata among the Loans
comprising such Borrowing. In the absence of a designation by the Borrower, the
Agent shall make such designation in its sole discretion.
(b) The Borrower shall give written notice (or telephonic notice
confirmed in writing) to the Agent of any intended prepayment of Borrowings of
Revolving Loans pursuant to Section 5.06(a), no later than 1:00 p.m. (Atlanta,
Georgia) not less than three (3) Business Days prior to any prepayment of such
Revolving Loans. Such notice, once given, shall be irrevocable. Upon receipt of
such notice of prepayment, the Agent shall promptly notify each Revolving Lender
of the contents of such notice and of such Revolving Lender's share of such
prepayment.
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Section 5.07 Voluntary Prepayments of Term Loans.
(a) The Borrower may, at its option, without penalty or premium, prepay
the Term Loans in full or in amounts aggregating $500,000 or any integral
multiple of $100,000, by paying the principal amount to be prepaid, plus all
interest accrued and unpaid thereon to the date of prepayment.
(b) The Borrower shall give written notice (or telephonic notice
confirmed in writing) to the Agent, of any intended prepayment of Term Loans,
pursuant to Section 5.07(a) no later than 11:00 a.m. (Atlanta, Georgia) not less
than fifteen (15) days (nor more than ninety (90) days) prior to any prepayment
of such Term Loans, which notice shall specify (i) the date of prepayment (which
date shall be the last day of a calendar month), (ii) whether such prepayment
shall be applied to Term A Loans or Term B Loans and (iii) the principal amount
to be prepaid.
(c) Each payment made pursuant to this Section 5.07 shall be applied to
the Term A Notes or Term B Notes, as the case may be, in accordance with Section
5.08(d).
Section 5.08 Mandatory Prepayments of Loans.
(a) The Borrower shall, prepay the Term Loans in accordance with
Section 5.08(d) below in an amount equal to fifty percent (50%) of the Net Cash
Proceeds of all sales or dispositions consummated after the Closing Date by the
Consolidated Companies of non-current assets (except for sales and dispositions
permitted by Section 9.03); provided, however, that the Borrower shall have no
obligation to so prepay the Term Loans if, within 180 days of receipt of such
Net Cash Proceeds, the Borrower or any of its Domestic Subsidiaries shall have
used such Net Cash Proceeds for acquisitions or capital investments to replace
the sold or disposed assets or for capital investments in the business or
executed a binding definitive contract for such acquisitions or capital
investments. To the extent any prepayment is required under this Section 5.08(a)
such prepayment shall be due no later than five (5) Business Days after the
expiration of the applicable acquisition or capital investment period set forth
above along with a detailed calculation showing all deductions from gross
proceeds in order to arrive at Net Cash Proceeds.
(b) The Borrower shall, prepay the Obligations in an amount equal to
fifty percent (50%) of the Net Cash Proceeds from the issuance by Borrower of
Stock; provided, however, that so long as no Event of Default shall have
occurred and be continuing, no prepayment shall be required if and to the extent
that (i) CVC, its directors of officers makes an equity contribution to
Borrower, (ii) such Stock is issued (A) to raise cash to fund Capital
Expenditures permitted by this Agreement, (B) to fund management options
existing on the Closing Date, or (iii) such Stock is issued (A) prior to the
occurrence of a fully distributed public offering of Stock or other securities
of the Borrower, and (B) in compliance with the other provisions of this
Agreement and the Subordinated Note Documents, including, without limitation,
after giving effect to such issuance of Stock no Change in Control shall have
occurred. Such prepayment shall be made no later than the Business Day following
the date of receipt by Borrower of any such Net Cash Proceeds along with a
detailed calculation showing all deductions from gross proceeds in order to
arrive at Net Cash Proceeds.
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(c) The Borrower shall, concurrently with the delivery of the financial
information required under Section 8.07(a) with respect to each Fiscal Year (but
in no event later than the date such information is required to be delivered)
commencing with the delivery of the financial information with respect to Fiscal
Year 2000, make a mandatory prepayment of the outstanding principal amount of
the Term Loans (i) in an amount equal to fifty percent (50%) of Excess Cash
Flow, for each Fiscal Year for which the Total Funded Debt to Adjusted EBITDA
Ratio, as reported in the compliance certificate required by Section 8.07(c) and
delivered with the financial information required under Section 8.07(a) with
respect to such Fiscal Year, is less than 3.25:1.00, or (ii) in an amount equal
to seventy five percent (75%) of Excess Cash Flow, for each Fiscal Year for
which the Total Funded Debt to Adjusted EBITDA Ratio, as reported in the
compliance certificate required by Section 8.07(c) and delivered with the
financial information required under Section 8.07(a) with respect to such Fiscal
Year, is equal to or exceeds 3.25:1.0.
(d) Prepayments required under this Section 5.08 shall be applied as
follows: first to the Agency Fee and reimbursable expenses of the Agent then due
and payable pursuant to any of the Credit Documents; second to all other Fees
and reimbursable expenses of the Lenders and the Issuing Bank then due and
payable pursuant to any of the Credit Documents, pro rata to the Lenders and the
Issuing Bank based on their respective pro rata share of such expenses; third,
to interest then due and payable on the Term Loans made pro rata to the Term
Lenders based on their respective Pro Rata Shares of the Term Loan Commitments,
and fourth, to the principal balance of the Term Loans applied pro rata against
the remaining installments of principal due in respect of the Term Loans, until
the same shall have been paid in full, pro rata to the Term Lenders based on
their respective Pro Rata share of the Term Loan Commitments.
(e) Notwithstanding anything else contained herein to the contrary, the
Term B Lenders have the option to not accept prepayments required under this
Section 5.08, in which case such refused prepayment would only be applied to
such Lender's Term A Loan, if any.
Section 5.09 Payments, etc.
(a) All scheduled payments and voluntary prepayments of principal,
interest and fees with respect to the Loans shall be made without set-off or
counterclaim to the Agent not later than 1:00 p.m. (Atlanta, Georgia time) on
the date when due, in immediately available funds at the Payment Office of the
Agent in U.S. Dollars. All mandatory prepayments of principal required under
Section 5.08 shall be made without defense, set-off or counterclaim to the
Lenders on the date when due in immediately available funds at the Payment
Office of the Agent. Except as otherwise specifically provided herein, all other
payments under this Agreement and all other Credit Documents shall be made
without defense, set-off or counterclaim to the Agent not later than 1:00 p.m.
(Atlanta, Georgia time) on the date when due and in immediately available funds
in U.S. Dollars at the Agent's Payment Office.
(b) (i) Any and all payments by the Borrower hereunder or under the
Notes shall be made free and clear of and without deduction for any and all
present or future taxes, levies, imposts, deductions, charges or withholdings,
and all liabilities with respect thereto,
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excluding, in the case of each Lender, taxes imposed on or measured by its net
income, net profits, and franchise taxes (all such excluded net income taxes,
taxes on net profits and franchise taxes, collectively referred to as the
"Excluded Taxes"; all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being collectively referred to in this
Section 5.09(b) as "Taxes"). If the Borrower shall be required by law to deduct
any Taxes from or in respect of any sum payable hereunder or under any Note to
any Lender, (x) the sum so payable shall be increased by such amount (the
"Gross-up Amount") as may be necessary so that after making all required
deductions (including deductions with respect to Taxes owed by such Lender on
the Gross-up Amount payable under this Section 5.09(b)(i)) such Lender receives
an amount equal to the sum it would have received had no such deductions been
made, (y) the Borrower shall make such deductions, and (z) the Borrower shall
pay the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law.
(ii) The Borrower will indemnify each Lender for the full
amount of Taxes (together with any Taxes or Excluded Taxes owed by such
Lender applicable to the Gross-up Amount payable under clause (x) of
Section 5.09(b)(i) or on the indemnification payments made by the
Borrower under this Section 5.09(b)(ii), but without duplication
thereof), and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not
such Taxes or such Excluded Taxes were correctly or legally asserted,
so as to compensate such Lender for any loss, cost, expense or
liability incurred as a consequence of any such Taxes. Payment pursuant
to such indemnification shall be made within ten (10) days from the
date such Lender makes written demand therefor. Within thirty (30) days
after the date of the Borrower's payment of Taxes, the Borrower will
furnish to the relevant Lender, at its appropriate Lending Office, the
original or a certified copy of a receipt evidencing payment thereof.
In the event a Lender or the Agent receives a refund of, or credit with
respect to, any Taxes or Excluded Taxes paid by the Borrower pursuant
to Section 5.09(b)(i) or this Section 5.09(b)(ii), such Lender or the
Agent shall pay the amount of such refund or credit to the Borrower
within thirty (30) days of receipt of such refund or application of
such credit.
(iii) Each Lender that is not a "United States Person" (as
defined in the Internal Revenue Code of 1986, as amended) hereby agrees
that:
(A) it shall, prior to the time it becomes a Lender
hereunder, deliver to the Borrower and the Agent:
(1) for each Lending Office located in the
United States, three (3) accurate and complete signed
originals of Internal Revenue Service Form W-8ECI or
any successor thereto ("Form W-8ECI"), and/or
(2) for each Lending Office located outside
the United States, three (3) accurate and complete
signed originals of Internal
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Revenue Service Form W-8BEN or any successor thereto
("Form W-8BEN");
in each case indicating and establishing that such Lender, on
the date of delivery thereof, is entitled to receive payments
of principal, interest and fees for the account of such
Lending Office under this Agreement and the Notes are free
from withholding of any United States Federal income tax;
provided, that if the Form W-8ECI or Form W-8BEN, as the case
may be, supplied by a Lender fails to establish a complete
exemption from United States withholding tax as of the date
such Lender becomes a Lender, such Lender shall, within 15
days after a written request from the Borrower or the Agent,
deliver to the Borrower and the Agent the forms or other
documents necessary to establish a complete exemption from
United States withholding tax as of such date;
(B) if at any time such Lender changes its Lending
Office or selects an additional Lending Office, it shall, at
the same time or reasonably promptly thereafter (but only to
the extent the forms previously delivered by it hereunder are
no longer effective or do not meet the requirements of Section
5.09(b)(iii)A)) deliver to the Borrower and the Agent in
replacement for the forms previously delivered by it
hereunder:
(1) for such changed or additional
applicable Lending Office located in the United
States of America, three (3) accurate and complete
signed originals of Form W-8ECI; or
(2) otherwise, three (3) accurate and
complete signed originals of Form W-8BEN;
in each case indicating and establishing that such Lender is
on the date of delivery thereof entitled to receive payments
of principal, interest and fees for the account of such
changed or additional Lending Office under this Agreement and
the Notes are free from withholding of any United States
Federal income tax.
(iv) In addition to the documents to be furnished pursuant to
Section 5.09(b)(iii), each Lender shall, promptly upon the reasonable
written request of the Agent to that effect, deliver to the Borrower
and the Agent such other accurate and complete forms or similar
documentation as such Lender is legally able to provide and as may be
required from time to time by any applicable law, treaty, rule or
regulation of any jurisdiction in order to establish such Lender's tax
status for withholding purposes or as may otherwise be appropriate to
eliminate or minimize any Taxes on payments under this Agreement and
the Notes.
(v) Each Lender shall use reasonable efforts to avoid or
minimize any amounts which might otherwise be payable by the Borrower
pursuant to this Section 5.09(b), except to the extent that a Lender
determines that such efforts would be
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disadvantageous to such Lender, as reasonably determined by such Lender
and which determination, if made in good faith, shall be binding and
conclusive on all parties hereto.
(vi) Without prejudice to the survival of any other agreement
of the Borrower hereunder, the agreements and obligations of the
Borrower and the Lenders contained in this Section 5.09(b) shall
survive the termination of this Agreement and the payment in full of
the principal of, premium, if any, interest, and fees hereunder and
under the Notes.
(c) Subject to Section 5.03(ii), whenever any payment to be made
hereunder or under any Note 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 and, with respect to payments of principal, interest thereon shall
be payable at the applicable rate during such extension.
(d) All computations of interest accruing at the Base Rate shall be
made on the basis of a year of 365 days for the actual number of days (including
the first day but excluding the last day) occurring in the period for which the
Base Rate is payable (to the extent computed on the basis of days elapsed), and
all computations of Fees and interest accruing at rates other than the Base Rate
hereunder and under the Notes shall be made on the basis of a year of 360 days
for the actual number of days (including the first day but excluding the last
day) occurring in the period for which such interest or fees are payable (to the
extent computed on the basis of days elapsed). Interest on Base Rate Loans shall
be calculated based on the Base Rate from and including the date of such Loan to
but excluding the date of the repayment or conversion thereof. Interest on LIBOR
Loans, shall be calculated on the basis of a year of 360 days for the actual
number of days elapsed as to each Interest Period from and including the first
day thereof to but excluding the last day thereof. Interest on the Term Loans
shall be calculated from and including the Closing Date but excluding the date
of the repayment of all or any portion thereof. Each determination by the Agent
of the Base Rate, LIBOR, the rates applicable after an Event of Default or any
Fee hereunder shall be made in good faith and, except for manifest error, shall
be final, conclusive and binding for all purposes.
(e) Payment by the Borrower to the Agent in accordance with the terms
of this Agreement shall, as to the Borrower, constitute payment to the
applicable Lenders under this Agreement.
Section 5.10 Apportionment of Payments; Allocation of Proceeds from
Collateral.
(a) Aggregate principal and interest payments in respect of Loans shall
be apportioned among all outstanding Loans to which such payments relate,
proportionately to the Lenders' respective Pro Rata Shares of such outstanding
Loans. The Agent shall promptly distribute to each Revolving Lender at its
primary address set forth beside its name on the appropriate signature page
hereof or such other address as any Lender may request, its Pro Rata Share of
all such payments received by the Agent.
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(b) Any payments received by the Agent as a result of the exercise of
remedies under Collateral Documents shall be applied as follows: first, to the
Fees and reimbursable expenses of the Agent then due and payable pursuant to any
of the Credit Documents; second, to the reimbursable expenses of the Lenders and
Issuing Bank then due and payable pursuant to any of the Credit Documents, pro
rata to such Lenders and Issuing Bank based upon their respective pro rata
shares of such expenses; third, to the Fees and interest then due and payable to
the Lenders, the Issuing Bank and the Swingline Lender pursuant to any of the
Credit Documents, pro rata to the Lenders, the Issuing Bank and the Swingline
Lender based upon their respective pro rata shares of such Fees and interest;
fourth, to the principal balance of the Term Loans and the Revolving Credit
Commitments, until the same shall have been paid in full, pro rata to the Term
Lenders and the Revolving Lenders based their respective pro rata shares of the
aggregate Term Loans and Revolving Loans outstanding at the time of application
of proceeds; fifth, to the principal balance of the outstanding Swingline Loans,
until the same shall have been paid in full, to the Swingline Lenders; sixth,
the L/C Cash Collateral Account to be held by the Issuing Bank as cash
collateral for the Letter of Credit Obligations then outstanding in an amount
equal to the then outstanding Letter of Credit Obligations; seventh, to the
payment of any amounts then due and payable to the Lenders under any Interest
Rate Contracts to which any Credit Party is a party and any Lender is a
counterparty, pro rata to the Lenders based on their respective pro rata shares
of all such obligations owed to the Lenders at such time. The Revolving Credit
Commitments shall be permanently reduced by the amount of any prepayments made
pursuant to clause sixth and seventh above.
Section 5.11 Sharing of Payments, Etc. If any Lender shall obtain any
payment or reduction (including, without limitation, any amounts received as
adequate protection of a deposit treated as cash collateral under the Bankruptcy
Code but excluding principal and interest payments in respect of the Loans and
Fees paid under Section 5.05 prior to the exercise of remedies under the
Collateral Documents) of any Obligation of the Borrower hereunder (whether
voluntary, involuntary, through the exercise of any right of set-off, or
otherwise) in excess of its Pro Rata Share of payments or reductions on account
of such obligations obtained by all Lenders, such Lender shall forthwith (i)
notify the Agent of such receipt, and (ii) purchase from the other Lenders such
participations in the affected Obligations as shall be necessary to cause such
purchasing Lender to share the excess payment or reduction, net of costs
incurred in connection therewith, ratably with each of them, provided that if
all or any portion of such excess payment or reduction is thereafter recovered
from such purchasing Lender or additional costs are incurred, the purchase shall
be rescinded and the purchase price restored to the extent of such recovery or
such additional costs, but without interest unless such Lender obligated to
return such funds is required to pay interest on such funds. The Borrower agrees
that any Lender so purchasing a participation from another Lender pursuant to
this Section 5.11 may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of set-off) with respect to such
participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.
Section 5.12 Interest Rate Not Ascertainable, etc. In the event that
the Agent shall have determined (which determination shall be made in good faith
and, absent manifest error, shall be final, conclusive and binding upon all
parties) that on any date for determining LIBOR
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for any Interest Period, by reason of any changes arising after the date of this
Agreement affecting the London interbank market or the Agent's position in such
markets, adequate and fair means do not exist for ascertaining the applicable
interest rate on the basis provided for in the definition of LIBOR, then and in
any such event, the Agent shall forthwith give notice (by telephone confirmed in
writing) to the Borrower and to the Lenders of such determination and a summary
of the basis for such determination. Until the Agent notifies the Borrower that
the circumstances giving rise to the suspension described herein no longer
exist, (i) the obligations of the Lenders to permit portions of the Loans to
remain outstanding as LIBOR Loans shall be suspended and (ii) all such affected
LIBOR Loans shall bear the same interest as Base Rate Loans.
Section 5.13 Illegality.
(a) In the event that any Lender shall have determined (which
determination shall be made in good faith and, absent manifest error, shall be
final, conclusive and binding upon all parties) at any time that the making or
continuance of any LIBOR Loan has become unlawful by compliance by such Lender
in good faith with any applicable law, governmental rule, regulation, guideline
or order (whether or not having the force of law and whether or not failure to
comply therewith would be unlawful), then, in any such event, such Lender shall
give prompt notice (by telephone confirmed in writing) to the Borrower and to
the Agent of such determination and a summary of the basis for such
determination (which notice the Agent shall promptly transmit to the other
Lenders).
(b) Upon the giving of the notice to the Borrower referred to in
subsection (a) above, the Borrower's right to request and such Lender's
obligation to fund its portion of LIBOR Loans shall be immediately suspended,
whereupon any request for a LIBOR Loan shall, as to such Lender only, be deemed
to have been a request for a Base Rate Loan, unless and until such Lender shall
advise the Agent that the circumstances giving rise to such suspension no longer
exist. In addition, such Lender may require that all outstanding LIBOR Loans
made by it be converted to Base Rate Loans; provided that if more than one
Lender is affected at any time, then all affected Lenders must be treated the
same pursuant to this Section 5.13(b).
(c) For purposes of this Section 5.13, a notice to the Borrower by any
Lender shall be effective as to each such Loan, if lawful, on the last day of
the Interest Period currently applicable thereto and in all other cases, such
notice shall be effective on the date of receipt by the Borrower.
Section 5.14 Increased Costs.
(a) If, by reason of (x) after the date hereof, the introduction of or
any change (including, without limitation, any change by way of imposition or
increase of reserve requirements) in or in the interpretation of any law or
regulation, or (y) the compliance with any guideline or request from any central
bank or other Governmental Authority or quasi-governmental authority exercising
control over banks or financial institutions generally (whether or not having
the force of law):
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(i) any Lender (or its applicable Lending Office) shall be
subject to any tax, duty or other charge with respect to its portion of
a Borrowing consisting of LIBOR Loans or its obligation to fund a
portion of a Borrowing consisting of LIBOR Loans or the basis of
taxation of payments to any Lender of the principal of or interest on
its portion of a Borrowing consisting of LIBOR Loans or its obligation
to fund a portion of a Borrowing consisting of LIBOR Loans shall have
changed (except for changes in the tax relating to the net income of
such Lender or its applicable Lending Office imposed by the
jurisdiction in which such Lender's principal executive office or
applicable Lending Office is located, which changes shall be addressed
by Section 5.09(b)); or
(ii) any reserve (including, without limitation, any imposed
by the Board of Governors of the Federal Reserve System), special
deposit or similar requirement against assets of, deposits with or for
the account of, or credit extended by, any Lender's applicable Lending
Office shall be imposed or deemed applicable or any other condition
affecting its portion of a Borrowing consisting of LIBOR Loans or its
obligation to fund a portion of a Borrowing consisting of LIBOR Loans
shall be imposed on any Lender or its applicable Lending Office or the
London interbank market;
and as a result thereof there shall be any increase in the cost to such Lender
of agreeing to make or making, funding or maintaining a portion of a Borrowing
consisting of LIBOR Loans (except to the extent already included in the
determination of the applicable interest rate in effect for such portion of the
Borrowing consisting of LIBOR Loans), or there shall be a reduction in the
amount received or receivable by such Lender or its applicable Lending Office,
in each case, by an amount in good faith deemed by such Lender to be material,
then the Borrower shall from time to time (subject, in the case of certain
Taxes, to the applicable provisions of Section 5.09(b)), upon written notice
from and demand by such Lender on the Borrower (with a copy of such notice and
demand to the Agent), pay to the Agent for the account of such Lender, within
five (5) Business Days after the date of such notice and demand, additional
amounts sufficient to indemnify such Lender against such increased cost. A
certificate as to the amount of such increased cost, submitted to the Borrower
and the Agent by such Lender in good faith and accompanied by a statement
prepared by such Lender describing in reasonable detail the basis for and
calculation of such increased cost, shall, except for manifest error, be final,
conclusive and binding for all purposes.
(b) If any Lender shall advise the Agent that at any time, because of
the circumstances described in clauses (x) or (y) in Section 5.14(a) or any
other circumstances beyond such Lender's reasonable control arising after the
date of this Agreement affecting such Lender or the London interbank market or
such Lender's position in such market, that LIBOR, as determined by the Agent,
will not adequately and fairly reflect the cost to such Lender of funding its
portion of a LIBOR Loan, then, and in any such event:
(i) the Agent shall forthwith give notice (by telephone
confirmed in writing) to the Borrower and to the other Lenders of such
advice;
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(ii) the Borrower's right to request and such Lender's
obligation to make or permit portions of the Borrowings to remain
outstanding as a LIBOR Loan as the case may be, shall be immediately
suspended until such Lender advises the Agent that the reasons for such
suspension no longer exist; and
(iii) such Lender shall make a Loan as part of the requested
Borrowing consisting of a LIBOR Loan, as a Base Rate Loan which such
Base Rate Loan shall, for all other purposes, be considered part of
such Borrowing.
Section 5.15 Lending Offices.
(a) Each Lender agrees that, if requested by the Borrower, it will use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate an alternate Lending Office with respect to any of its of LIBOR Loans
affected by the matters or circumstances described in Sections 5.12, 5.13 and
5.14, to reduce the liability of the Borrower or avoid the results provided
thereunder, so long as such designation is not disadvantageous to such Lender as
determined by such Lender, which determination if made in good faith, shall be
conclusive and binding on all parties hereto. Nothing in this Section 5.15 shall
affect or postpone any of the obligations of the Borrower or any right of any
Lender provided hereunder.
(b) If any Lender that is organized under the laws of any jurisdiction
other than the United States issues a public announcement with respect to the
closing of its lending offices in the United States such that any withholdings
or deductions and additional payments with respect to Taxes may be required to
be made by the Borrower thereafter pursuant to Section 5.09(b), such Lender
shall use reasonable efforts to furnish the Borrower notice thereof as soon as
practicable thereafter; provided, however, that no delay or failure to furnish
such notice shall in any event release or discharge the Borrower from their
obligations to such Lender pursuant to Section 5.09(b) or otherwise result in
any liability of such Lender.
Section 5.16 Funding Losses. The Borrower severally agrees to
compensate each Lender, upon such Lender's written request to the Borrower
(which request shall set forth the basis for requesting such amounts in
reasonable detail and which request shall be made in good faith and, absent
manifest error, shall be final, conclusive and binding upon all of the parties
hereto), for all losses, expenses and liabilities (including, without
limitation, any interest paid by such Lender to lenders of funds borrowed by it
to make or carry its portions of LIBOR Loans to the extent not recovered by such
Lender in connection with the re-employment of such funds and including loss of
anticipated profits), which such Lender may sustain: (i) if for any reason
(other than a default by such Lender) a borrowing of, or conversion to or
continuation of, LIBOR Loans to the Borrower does not occur on the date
specified therefor in a Notice of Borrowing given by the Borrower to the Agent
as provided herein (whether or not withdrawn), (ii) if any repayment (including
mandatory prepayments and any conversions pursuant to Section 5.13(b) or Section
5.14) of any LIBOR Loans to the Borrower occurs on a date which is not the last
day of an Interest Period applicable thereto, or (iii), if, for any reason, the
Borrower defaults in its obligation to repay its LIBOR Loans when required by
the terms of this Agreement.
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Section 5.17 Intentionally Omitted.
Section 5.18 Assumptions Concerning Funding of LIBOR Loans. Calculation
of all amounts payable to a Lender under this Agreement shall be made as though
that Lender had actually funded its portions of relevant LIBOR Loans through the
purchase of deposits in the relevant market bearing interest at the rate
applicable to such LIBOR Loans in an amount equal to the amount of its portions
of the LIBOR Loans and having a maturity comparable to the relevant Interest
Period and, in the case of LIBOR Loans through the transfer of such LIBOR Loans
from an offshore office of that Lender to a United States office of that Lender
in the United States; provided, however, that each Lender may fund its portions
of each of the LIBOR Loans in any manner it sees fit and the foregoing
assumption shall be used only for calculation of amounts payable under Sections
5.13 through 5.16.
Section 5.19 Capital Adequacy. Without limiting any other provision of
this Agreement, in the event that any Lender shall have determined that any law,
treaty, governmental (or quasi-governmental) rule, regulation, guideline or
order regarding capital adequacy not currently in effect or fully applicable as
of the Closing Date, or any change therein or in the interpretation or
application thereof, or compliance by such Lender with any request or directive
regarding capital adequacy not currently in effect or fully applicable as of the
Closing Date (whether or not having the force of law and whether or not failure
to comply therewith would be unlawful) from a central bank or Governmental
Authority or body having jurisdiction, does or shall have the effect of reducing
the rate of return on the capital of such Lender or any corporation owning or
controlling such Lender as a consequence of its obligations hereunder to a level
below that which such Lender could have achieved but for such law, treaty, rule,
regulation, guideline or order, or such change or compliance (taking into
consideration such Lender's policies with respect to capital adequacy) by an
amount in good faith deemed by such Lender to be material, then within ten (10)
days after written notice and demand by such Lender to the Borrower (with copies
thereof to the Agent), the Borrower agrees to pay such Lender additional amounts
sufficient to compensate such Lender for such reduction. Each certificate as to
the amount payable under this Section 5.19 (which certificate shall set forth
the basis for requesting such amounts in reasonable detail), submitted to the
Borrower by any Lender in good faith, shall, absent manifest error, be final,
conclusive and binding for all purposes.
ARTICLE VI.
CONDITIONS PRECEDENT TO LOANS
The obligation of each Lender to make the Loans to the Borrower, the
obligation of the Swingline Lender to make the Swingline Loans to the Borrower
and the obligation of the Issuing Bank to issue any Letter of Credit for the
account of, the Borrower is subject to the satisfaction of the following
conditions:
Section 6.01 Conditions Precedent to Effectiveness of this Agreement.
On the Closing Date, at the time of the making of the Term A Loans, the Term B
Loans, the initial Revolving Loans, Swingline Loans and initial Letters of
Credit on the Closing Date:
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(a) all Obligations of the Borrower incurred at or prior to such date
(including, without limitation, the obligation of the Borrower to pay the Fees
due on the Closing Date and to reimburse the reasonable fees and expenses of
King & Spalding, special counsel to the Agent and any expenses payable to the
Arranger, the Agent and the Lenders as previously agreed with the Borrower),
shall have been paid in full;
(b) no action, proceeding, investigation, regulation or legislation
shall have been instituted, or to the knowledge of the Borrower, threatened or
proposed before any court, governmental agency or legislative body to enjoin,
restrain, or prohibit, or to obtain substantial damages in respect of, or which
is related to or arises out of, this Agreement, the Merger Documents or the
consummation of the transactions contemplated hereby or thereby, or which, in
Agent's and Lender's reasonable discretion, would make it inadvisable to
consummate the transactions contemplated by this Agreement;
(c) the Company, Holdings and Conso International shall have entered
into or adopted, as applicable, the Merger Documents in form and substance
satisfactory to the Agent and Lenders and the Agent and Lenders shall be
satisfied that the Merger will take place prior to or simultaneously with the
funding of the Loans hereunder;
(d) Borrower shall have received a minimum capital contribution of
$25,000,000 of which (i) a capital contribution in the minimum amount of
$19,999,600 shall come from CVC, and (ii) a capital contribution of $4,800,400
shall come from J. Cary Findlay, and Borrower shall have received, in the
aggregate, $25,000,000 in cash and capital contributions, and Agent and Lenders
shall have received assurances to such effect in form and substance satisfactory
to the Agent and Lenders;
(e) the Borrower and the Subordinated Noteholders shall have executed
and delivered the Subordinated Note Purchase Agreement which Subordinated Note
Purchase Agreement shall be in form and substance satisfactory to the Agent and
Lenders, and the Agent shall have received certified copies thereof, and the
Agent and Lenders shall be satisfied that all conditions precedent to the
initial funding thereunder shall have been satisfied or waived;
(f) the Agent shall have received the following, in form and substance
satisfactory in all respects to the Lenders;
(i) the duly executed counterparts of this Agreement;
(ii) the duly completed and executed Notes,
(iii) the duly executed counterparts of the Fee Letter
(iv) the duly executed counterparts of the Guaranty
Agreements;
(v) the duly executed counterparts of the Security Agreements;
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(vi) (A) UCC-1 financing statements and other applicable
documents under the laws of the jurisdictions with respect to the
perfection of the Liens granted under the Security Agreements, as
requested by the Agent in order to perfect such Liens, duly executed by
the Credit Parties, (B) copies of favorable UCC, tax, judgment and
fixture lien search reports in all necessary or appropriate
jurisdictions and under all legal and trade names of the Credit Parties
requested by the Lenders, indicating that there are no prior Liens on
any of the Collateral other than Permitted Liens, (C) a Perfection
Certificate duly completed and executed by the Credit Parties, and (D)
duly executed landlord waivers and/or warehouseman agreements with
respect to all Inventory of the Borrower to be included in the
Borrowing Base located at leased locations or in warehouses;
(vii) Copies of a duly executed payoff letter, in form and
substance satisfactory to Agent, executed by Bank of America, N.A.,
together with (a) UCC-3 or other appropriate termination statements, in
form and substance satisfactory to Agent, manually signed by Bank of
America, N.A., releasing all liens of Bank of America, N.A. upon any of
the personal property of each Credit Party, (b) termination of all
blocked account agreements, bank agency agreements or other similar
agreements or arrangements or arrangements in favor of Bank of America,
N.A., and (c) any other releases, terminations or other documents
reasonably required by the Agent to evidence the payoff of Bank of
America, N.A.;
(viii) duly executed and perfected Mortgages covering all of
the owned Real Estate and duly executed counterparts of the other Real
Estate Documents together with: (a) title insurance policies, current
as-built surveys, zoning letters and certificates of occupancy, in each
case satisfactory in form and substance to Agent; (b) evidence that
counterparts of the Mortgages have been delivered to the appropriate
title agents for recording in all places to the extent necessary or
desirable, in the judgment of Agent, to create a valid and enforceable
first priority lien (subject to Permitted Liens) on each Mortgaged
Property in favor of Agent for the benefit of itself and Lenders (or in
favor of such other trustee as may be required or desired under local
law); and (c) an opinion of counsel in each state or jurisdiction in
which any Mortgaged Property is located in form and substance and from
counsel satisfactory to Agent;
(ix) the Environmental Review in respect of Conso Products
Company, Inc., prepared for Kirkland & Ellis, on behalf of Citicorp
Venture Capital, Ltd., prepared by Strata Environmental, August 1999,
together with underlying documents requested by the Agent. Agent shall
have received letters executed by the environmental firms preparing
such environmental reports, in form and substance satisfactory to
Agent, authorizing Agent and Lenders to rely on such reports;
(x) a duly executed Blocked Account Agreement with respect to
each Blocked Account listed on Schedule 8.11, a duly executed
Concentration Account Agreement with respect to each Concentration
Account listed on Schedule 8.11 and a
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duly executed Disbursement Account Agreement with respect to the
Disbursement Account listed on Schedule 8.11;
(xi) the duly executed counterparts of the Pledge Agreements,
together with (A) original stock certificates evidencing the issued and
outstanding shares of capital stock pledged to the Agent pursuant to
the Pledge Agreements, (B) stock powers executed in blank, and in the
case of the Stock pledged pursuant to the Mexican Guaranty Trust
Agreement, the share certificates shall be endorsed in property (en
propiedad) in favor of the Mexican Trustee, as required in the Mexican
Guaranty Trust Agreement, and (C) original executed Intercompany Notes;
(xii) the duly executed counterparts of the Trademark Security
Agreements, the Patent Security Agreement and Copyright Security
Agreements together with copies of lien search reports from the U.S.
Patent and Trademark Office and the U.S. Copyright Office listing all
Liens filed with respect to trademarks, patents, copyrights and
licenses of the Credit Parties in the appropriate federal offices, none
of which shall cover any of the collateral to be pledged to the Agent;
(xiii) a certificate of the Borrower in substantially the form
of Exhibit F attached hereto and appropriately completed;
(xiv) certificates of the Secretary or Assistant Secretary of
each Credit Party and Holdings, attaching and certifying copies of its
bylaws and of the resolutions of its boards of directors, authorizing
the execution, delivery and performance of the Credit Documents and
certifying the name, title and true signature of each officer of such
entities executing the Credit Documents;
(xv) certified copies of the certified articles of
incorporation or organizational documents, as the case may be, of each
Credit Party and Holdings, together with certificates of good standing
or existence, as may be available from the jurisdiction of
incorporation of such Credit Party and each other jurisdiction where
such Credit Party is required to be qualified to do business as a
foreign corporation;
(xvi) a duly executed Borrowing Base Certificate dated as of
the Closing Date, which shall show that after giving effect to the
Revolving Loans to be made on the Closing Date and any Letters of
Credit to be issued on the Closing Date, Borrowing Availability is at
least $4,000,000;
(xvii) a duly executed initial Notice of Revolving Credit
Advance;
(xviii) a disbursement letter executed by the Borrower
authorizing the disbursement of the initial Loans;
(xix) copies of all material consents, approvals,
authorizations, registrations and filings and orders required or
advisable to be made or obtained under
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any Requirement of Law or by any material Contractual Obligation of
each Credit Party, in connection with the execution, delivery,
performance, validity and enforceability of the Transaction Documents
or any of the transactions contemplated thereby, and such consents,
approvals, authorizations, registrations, filings and orders shall be
in full force and effect and all applicable waiting periods shall have
expired;
(xx) certificates of insurance, in form and detail acceptable
to the Agent, describing the types and amounts of insurance (property
and liability) covering any of the tangible insurable Collateral
maintained by the Credit Parties, in each case naming the Agent as loss
payee or additional insured, as the case may be, together with a
lender's loss payable endorsement in form and substance satisfactory to
the Agent;
(xxi) the favorable legal opinion of (i) Kirkland & Ellis,
counsel to the Borrower and the Domestic Subsidiaries, and (ii) Dykema
Gosset, special Michigan counsel to Simplicity, (iii) Nexsen Pruet
Jacobs & Pollard, LLP, special South Carolina counsel to the Borrower,
(iv) Cumberland Ellis Peirs, special English counsel to BT, (v)
Clifford Chance, special English counsel to the Agent and Lenders, and
(v) Bryan, Gonzalez Vargas y Gonzalez Baz, S.C., special Mexico counsel
to Val-Mex, each in form and substance satisfactory to the Lenders,
addressed to the Agent and each of the Lenders, and covering matters as
the Lenders and Agent may request;
(xxii) certified copies of the executed Subordinated Note
Documents, together with evidence that all conditions precedent to the
effectiveness of Subordinated Note Documents have been satisfied or
waived, all transactions contemplated by the Subordinated Note
Documents have been consummated and the Borrower has received
$20,000,000 in proceeds from the Subordinated Noteholders;
(xxiii) the duly executed counterparts of the Subordination
Agreement;
(xxiv) certified copies of the executed Merger Documents and
all documents required to be delivered pursuant thereto (including,
without limitation (A) resolutions of the boards of directors of the
Borrower and Conso International approving the Merger and (B) copies of
all consents, approvals and permits necessary or advisable to be
obtained in connection therewith), and evidence that all conditions
precedent to the effectiveness of the Merger Documents have been
satisfied, and the Merger will be consummated substantially in
accordance with the terms and conditions of the Merger Documents;
(xxv) the duly executed counterparts of the Assumption
Agreement;
(xxvi) certified copies of the executed BT Intercompany Debt
Documents in form and substance satisfactory to the Lenders and Agent,
together with evidence that all conditions precedent to the
effectiveness of the BT Intercompany Debt Documents have been waived or
satisfied, all transactions contemplated by the BT Intercompany Debt
Documents have been consummated;
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(xxvii) copies of the internally prepared quarterly
consolidated financial statements of Conso International for the Fiscal
Quarter ending January 1, 2000 and copies of the audited consolidated
financial statements for Conso International for the Fiscal Year ending
July 3, 1999;
(xxviii) a solvency certificate executed by the chief
financial officer of each Credit Party;
(xxix) evidence that Adjusted EBITDA of the Consolidated
Companies for the 12-month period ending December 31, 1999 was at least
$19,000,000;
(xxx) documents related to pledge by Borrower of shares of
Val-Mex as described more particularly in the Mexican Guaranty Trust
Agreement;
(xxxi) the duly executed Post-Closing Agreement;
(xxxii) the duly executed Fee Letter;
(xxxiii) receipt of satisfactory appraisals of all Accounts
and Inventory to be pledged on the Closing Date, together with
satisfactory collateral audits of all Accounts, Inventory and other
personal property requested by the Lenders (including field audit and
survey conducted by the Agent);
(xxxiv) certificates, reports and other information as the
Agent may request from any Consolidated Company in order to satisfy
itself as to the absence of any material liabilities or obligations
arising from matters relating to employees of the Consolidated
Companies, including employee relations, collective bargaining
agreements, Plans, and other compensation and employee benefit plans;
(xxxv) certificates, reports, environmental audits and
investigations, and other information as the Agent may request from any
Consolidated Company in order to satisfy itself as to the absence of
any material liabilities or obligations arising from environmental and
employee health and safety exposures to which the Consolidated
Companies may be subject, and the plans of the Consolidated Companies
with respect thereto; and
(xxxvi) certificates, reports and other information as the
Agent may request from any Consolidated Company in order to satisfy the
Agent as to the absence of any material liabilities or obligations
arising from litigation (including without limitation, products,
liability and patent infringement claims) pending or threatened against
the Consolidated Companies.
Section 6.02 Conditions Precedent to Each Loan and Each Letter of
Credit. It shall be a further condition precedent that at the time of the making
of each Loan and the issuance of
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each Letter of Credit (before as well as after giving effect to such Loans and
Letters of Credit and the proposed use of the proceeds thereof) the following
statements must be true:
(a) with respect to each Revolving Loan, Swingline Loan and each Letter
of Credit, the most recent Borrowing Base Certificate delivered to the Agent
pursuant to Section 8.07(e) shall demonstrate that, after giving effect to the
making of such Revolving Loan, Swingline Loan or the issuance of such Letter of
Credit, as the case may be, the Borrowing Availability will not be less than
zero; and
(b) the use of proceeds from such Loan will not contravene, violate or
conflict with, or involve the Agent or any Lender in a violation of, any law,
rule, injunction or regulation, or determination of any court of law or other
Governmental Authority;
(c) all legal proceedings and all other legal matters in connection
with the authorization, legality, validity and enforceability of the Credit
Documents shall have been reasonably satisfactory in form and substance to the
Required Lenders;
(d) no Default or Event of Default shall exist at such time or arise
from the making of such Loan or the issuing of such Letter of Credit;
(e) all representations and warranties contained in the Credit
Documents shall be true and correct in all material respects with the same
effect as though such representations and warranties had been made on and as of
the date that such Loan is made or such Letter of Credit is issued except where
such representation or warranty specifically refers to an earlier date; and
(f) since the date of the most recent financial statements of Conso
International described in Section 7.14 or, if later, the most recent financial
statements of the Consolidated Companies delivered to the Lenders pursuant to
Section 8.07(a) or (b), there shall have been no event or change which has had
or could reasonably be expected to have a Materially Adverse Effect; and
(g) the Agent shall have received such other documents, certificates,
information or legal opinions as the Agent and Lenders may reasonably request,
all in form and substance reasonably satisfactory to the Agent and Lenders.
Each Notice of Borrowing given by the Borrower in accordance with the terms
hereof and the acceptance by the Borrower of the proceeds of any Loan, and each
request for a Letter of Credit given by the Borrower in accordance with the
terms hereof, shall constitute a representation and warranty by the Borrower,
made as of the time of the making of such Loan or the issuance of such Letter of
Credit that the conditions specified in this Section 6.02 have been fulfilled as
of such time. In the event that, in connection with the delivery of any such
Notice of Borrowing, the Borrower is required to amend any item of any Schedule
of this Agreement in order that the statement set forth in Section 6.02(e) shall
be true and correct, the Borrower shall deliver to the Agent at least five (5)
Business Days prior to the date of Borrowing requested or to be requested,
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a request that such item of such Schedule be amended, and the Agent shall
promptly forward such request to the Lenders. To the extent that the Required
Lenders, agree in their sole and absolute discretion to such requested amendment
or otherwise agree, in their sole and absolute discretion, to make any Loans
after receipt of such request, the representations and warranties proposed to be
amended by such requested amendment to such Schedule will be deemed amended for
purposes of this Agreement.
ARTICLE VII.
REPRESENTATIONS AND WARRANTIES
The Borrower (as to itself and all other Consolidated Companies)
represents and warrants that the following statements are, and after giving
effect to the Merger will be, true and correct:
Section 7.01 Organizational Existence; Compliance with Law. Each of the
Consolidated Companies (i) is duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its organization, (ii) has the
corporate or other organizational power and authority and the legal right to own
and operate its property and to conduct its business, (iii) is duly qualified as
a foreign corporation or other organization and in good standing under the laws
of each jurisdiction where its ownership of property or the conduct of its
business requires such qualification, except where a failure to be so qualified
could not reasonably be expected to have a Materially Adverse Effect, and (iv)
is in compliance with all Requirements of Law except where the failure to be in
compliance could not reasonably be expected to have a Materially Adverse Effect
and has not received any notice of any violation of any Requirement of Laws that
could reasonably be expected to have a Materially Adverse Effect.
Section 7.02 Organizational Power; Authorization. Each Credit Party has
the corporate or other organizational power and authority to make, deliver and
perform the Transaction Documents to which it is a party and has taken all
necessary corporate or other organizational action to authorize the execution,
delivery and performance of the Transaction Documents to which it is a party.
Except as disclosed on Schedule 7.02, no consent, approval, authorization of, or
registration or filing with, any Person under any material Contractual
Obligation, with any Person under the articles of incorporation or bylaws of any
Credit Party, or with any Governmental Authority is required in connection with
the execution, delivery or performance by any Credit Party, or the validity or
enforceability against any Credit Party of the Transaction Documents to which it
is a party or any of the transactions contemplated thereby, other than such
consents, approvals, authorizations, registrations or filings which have been
made or obtained and are in full force and effect.
Section 7.03 Enforceable Obligations. This Agreement has been duly
executed and delivered, and each other Credit Document will be duly executed and
delivered, by the Credit Parties, and this Agreement constitutes, and each other
Credit Document when executed and delivered will constitute, legal, valid and
binding obligations of the Credit Parties, enforceable against them in
accordance with their respective terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting
the enforcement of creditors' rights generally and by general principles of
equity.
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Section 7.04 No Legal Bar. The execution, delivery and performance by
the Credit Parties of the Transaction Documents to which it is a party will not
violate any Requirement of Law or cause a breach or default under any of their
respective Contractual Obligations, articles of incorporation or bylaws, except
as could not reasonably be expected to have a Materially Adverse Effect.
Section 7.05 No Material Litigation. Except as set forth on Schedule
7.05, no litigation, investigations or proceedings of or before any Governmental
Authority are pending or, to the knowledge of any Credit Party, threatened by or
against any of the Consolidated Companies, or against any of their respective
properties or revenues, existing or future (a) with respect to any Transaction
Document or any of the transactions contemplated hereby or thereby, or (b) which
could reasonably be expected to have a Materially Adverse Effect.
Section 7.06 Investment Company Act, Etc. No Credit Party is an
"investment company" or a company "controlled" by an "investment company" (as
each of the quoted terms is defined or used in the Investment Company Act of
1940, as amended). No Credit Party is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, or any foreign,
federal or local statute or regulation limiting its ability to incur
indebtedness for money borrowed, guarantee such indebtedness, or pledge its
assets to secure such indebtedness, as contemplated hereby or by any other
Credit Document.
Section 7.07 Margin Regulations. No part of the proceeds of any of the
Loans will be used for any purpose which violates, or which would be
inconsistent or not in compliance with, the provisions of the applicable Margin
Regulations.
Section 7.08 Compliance With Environmental Laws. Except as set forth on
Schedule 7.08 or as would not reasonably be expected to result in penalties,
fines, claims or other liabilities (including, without limitation, remediation
costs and expenses) to the Consolidated Companies in amounts in excess of
$50,000 either individually or in the aggregate:
(a) The Consolidated Companies have received no notices of claims or
potential liability under, and are in compliance with, all applicable
Environmental Laws.
(b) None of the Consolidated Companies has received during the period
from January 1, 1990 through the date of this Agreement, any notice of
violation, or notice of any action, either judicial or administrative, from any
Governmental Authority (whether United States or foreign) relating to the actual
or alleged violation of any Environmental Law, including, without limitation,
any notice of any actual or alleged spill, leak, or other release of any
Hazardous Substance, waste or hazardous waste by any Consolidated Company or its
employees or agents, or as to the existence of any contamination on any
properties owned by any Consolidated Company.
(c) The Consolidated Companies have obtained, and are in compliance
with, all necessary governmental permits, licenses and approvals which are
material to the operations
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conducted on their respective properties, including without limitation, all
required permits, licenses and approvals for (i) the emission of air pollutants
or contaminates, (ii) the treatment or pretreatment and discharge of waste water
or storm water, (iii) the treatment, storage, disposal or generation of
hazardous wastes, (iv) the withdrawal and usage of ground water or surface
water, and (v) the disposal of solid wastes.
(d) Borrower hereby acknowledges and agrees that Agent is not now, and
has not ever been, in control of any of the Real Estate of any Credit Party's
affairs.
Section 7.09 Insurance. The Consolidated Companies currently maintain
insurance with respect to their respective properties and businesses, with
financially sound and reputable insurers, having coverages against losses or
damages of the kinds customarily insured against by reputable companies in the
same or similar businesses, such insurance being in amounts no less than those
amounts which are customary for such companies under similar circumstances. The
Consolidated Companies have paid all of insurance premiums now due and owing
with respect to such insurance policies and coverages, and such policies and
coverages are in full force and effect.
Section 7.10 No Default. None of the Consolidated Companies is in
default under any Contractual Obligation which has had or is reasonably expected
to have a Materially Adverse Effect.
Section 7.11 No Burdensome Restrictions. None of the Consolidated
Companies is a party to or bound by any Contractual Obligation or Requirement of
Law which has had or could reasonably be expected to have a Materially Adverse
Effect.
Section 7.12 Taxes. Each of the Consolidated Companies has filed or
caused to be filed all declarations, reports and tax returns which are required
to have been filed, and has paid all taxes, custom duties, levies, charges and
similar contributions ("taxes" in this Section 7.12) shown to be due and payable
on said returns or on any assessments made against it or its properties, and all
other taxes, fees or other charges imposed on it or any of its properties by any
Governmental Authority (other than those (i) the amount or validity of which is
currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided in its
books and (ii) for which an extension has been filed); and no tax liens have
been filed and, to the knowledge of any Consolidated Company, no claims are
being asserted with respect to any such taxes, fees or other charges.
Section 7.13 Subsidiaries; Dormant Subsidiaries. Except as set forth on
Schedule 7.13 (as amended from time to time), the Borrower has no Subsidiaries,
and no Consolidated Company is a joint venture partner or general partner in any
partnership. Each Subsidiary listed in Part A of Schedule 7.13 is an Active
Subsidiary and each Subsidiary listed in Part B of Schedule 7.13 is a Dormant
Subsidiary.
Section 7.14 Financial Statements. The Borrower has furnished to the
Agent:
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(a) the audited consolidated and consolidating balance sheet of Conso
International and its Subsidiaries as at July 3, 1999 and the related
consolidated and consolidating statements of income, shareholders' equity and
cash flows for the Fiscal Year then ended, including in each case the related
schedules and notes, and (ii) the unaudited consolidated and consolidating
balance sheet of Conso International and its Subsidiaries as at the end of the
October 2, 1999 Fiscal Quarter, and the related unaudited consolidated and
consolidating statements of income, shareholders' equity, and cash flows for the
period then ended, setting forth in each case in comparative form the figures
for the previous Fiscal Year and Fiscal Quarter, as the case may be. The
foregoing financial statements fairly present in all material respects the
financial condition of Conso International and its Subsidiaries as at the dates
thereof and results of operations for such periods in conformity with GAAP.
Conso International and its Subsidiaries taken as a whole do not have any
material contingent obligations, contingent liabilities, or material liabilities
for known taxes, long-term leases or unusual forward or long-term commitments
not reflected in the foregoing financial statements or the notes thereto. Since
the most recently delivered audited consolidated and consolidating balance sheet
of Conso International, there have been no changes with respect to Conso
International and its Subsidiaries which have had or could reasonably be
expected to have, as to any Credit Party, BT Credit Party, or in the aggregate,
a Materially Adverse Effect.
(b) the unaudited pro forma balance sheet of the Consolidated Companies
on a consolidated basis setting forth as of the Closing Date (after giving
effect to the Merger) the pro forma financial position of the Borrower and its
Subsidiaries on a consolidated basis, copies of which have been delivered to the
Agent, fairly present, on a pro forma basis, in conformity with GAAP applied on
a basis consistent with the financial statements referred to in clause (a)
above, the financial position of the Consolidated Companies on a consolidated
basis, as of such date and time, as if the Merger occurred as of October 2,
1999. Neither the Borrower nor any Subsidiary of the Borrower has any material
contingent obligations, contingent liabilities or other obligations which are
not reflected in the balance sheet referenced above (the "Pro Forma Financial
Statements").
(c) the projections attached to the solvency certificates delivered by
the Borrower pursuant to Section 6.01, prepared for the Consolidated Companies
on a consolidated basis with respect to the 1999 fiscal year (on a month by
month basis) and with respect to the 2000 and 2001 fiscal years (on an annual
basis), copies of which have been furnished to the Agent, have been prepared
based upon the reasonable assumptions set forth therein which are believed by
the Borrower to be reasonable and fair in light of the current condition and
past performance of Conso International and to reflect a reasonable estimate of
the projected balance sheets, results of operations, cash flows and other
information presented therein.
Section 7.15 Employee Benefits. Except as disclosed on Schedule 7.15:
(a) Identification of Plans. (1) None of the Consolidated Companies
maintains or contributes to or has an obligation to contribute to, a Plan that
is an "employee pension benefit plan" as defined in Section 3(2) of ERISA or any
plan, program or arrangement that provides for deferred compensation, (2) none
of the Consolidated Companies nor any of their respective
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ERISA Affiliates in the last five years has maintained or contributed to, or has
had an obligation to contribute to, a Plan that is subject to Title IV of ERISA
and (3) none of the Consolidated Companies maintains or contributes to any
Foreign Plan;
(b) Compliance. Except as could not reasonably be expected to result in
a Materially Adverse Effect, each Plan maintained by a Consolidated Company is
by its terms and in operation, in substantial compliance with all applicable
laws, and no Consolidated Company has been assessed, and to the knowledge of the
Borrower, is subject to, any tax or penalty with respect to any Plan of such
Consolidated Company or any ERISA Affiliate thereof, including without
limitation, any tax or penalty under Title I or Title IV of ERISA or under
Chapter 43 of the Tax Code, or any tax or penalty resulting from a loss of
deduction under Sections 162, 404, or 419 of the Tax Code;
(c) Liabilities. The Consolidated Companies have not been assessed and
to the knowledge of the Borrower are not subject to, any material monetary
liabilities (including withdrawal liabilities) with respect to any Plans or
Foreign Plans of such Consolidated Companies or any of their ERISA Affiliates,
including without limitation, any liabilities arising from Titles I or IV of
ERISA, other than obligations to fund benefits under an ongoing Plan and to pay
current contributions, expenses and premiums with respect to such Plans or
Foreign Plans;
(d) Funding. The Consolidated Companies and, with respect to any Plan
which is subject to Title IV of ERISA, each of their respective ERISA
Affiliates, have made full and timely payment of all amounts (A) required to be
contributed under the terms of each Plan and applicable law, and (B) required to
be paid as expenses (including PBGC or other premiums) of each Plan, and no Plan
subject to Title IV of ERISA has an "amount of unfunded benefit liabilities" (as
defined in Section 4001 (a)(18) of ERISA), determined as if such Plan terminated
on any date on which this representation and warranty is deemed made. The
Consolidated Companies are subject to no liabilities with respect to
post-retirement medical benefits;
(e) Prohibited Transactions. No Consolidated Company has engaged in, or
has any knowledge of, any non-exempt prohibited transaction (within the meaning
of Section 406 of ERISA or Section 4975 of the Tax Code) with respect to any
Plan.
(f) Qualification of Plans. A favorable determination as to the
qualification under Section 401(a) of the Tax Code has been made by the Internal
Revenue Service with respect to each Plan intended to be qualified under Section
401(a) of the Tax Code and, to the best knowledge of each of the Consolidated
Companies, nothing has occurred since the date of such determination that would
adversely affect such qualification.
(g) Withdrawal. Except as could not reasonably be expected to result in
a Materially Adverse Effect, none of the Consolidated Companies nor any of their
respective ERISA Affiliates has:
(i) ceased operations at a facility so as to become subject to
the provisions of Section 4062(e) of ERISA,
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(ii) withdrawn as a substantial employer so as to become
subject to the provisions of Section 4063 of ERISA,
(iii) ceased making contributions to any "employee pension
benefit plan" subject to the provisions of Section 4064(a) of ERISA to
which any of the Consolidated Companies or any of their respective
ERISA Affiliates made contributions,
(iv) incurred or caused to occur a "complete withdrawal"
(within the meaning of Section 4203 of ERISA) or a "partial withdrawal"
(within the meaning of Section 4205 of ERISA) from a Multiemployer Plan
so as to incur withdrawal liability under Section 4201 of ERISA
(without regard to subsequent reduction or waiver of such liability
under Sections 4207 or 4208 of ERISA), or
(v) been a party to any transaction or agreement under which
the provisions of Section 4204 of ERISA were applicable and which could
reasonably be expected to result in liability for any of the
Consolidated Companies.
(h) Proceedings. Except as could not reasonably be expected to result
in a Materially Adverse Effect, there are no actions, suits or claims pending
(other than routine claims for benefits) or, to the knowledge of any of the
Consolidated Companies, which could reasonably be expected to be asserted,
against any Plan maintained for employees or the assets of any such Plan. No
civil or criminal action brought pursuant to the provisions of Title I, Subtitle
B, Part 5 of ERISA, is pending or, to the best knowledge of any of the
Consolidated Companies, threatened against any fiduciary or any Plan.
Section 7.16 Patents, Trademarks, Copyrights, Licenses, Etc (x) The
Consolidated Companies have obtained and hold in full force and effect or have
the right to use all material patents, trademarks, service marks, trade names,
copyrights, licenses and other such rights, free from burdensome restrictions,
which are necessary for the operation of their respective businesses as
presently conducted, and (y) no product, process, method, service or other item
presently sold by or employed by any Consolidated Company in connection with
such business infringes any patents, trademark, service mark, trade name,
copyright, license or other right owned by any other Person except to the extent
any such infringement could not reasonably be expected to have a Materially
Adverse Effect, and (z) there is not presently pending, or to the knowledge of
any Consolidated Company, threatened, any claim or litigation against or
affecting any Consolidated Company contesting such Person's right to sell or use
any such product, process, method, substance or other item.
Section 7.17 Ownership of Property. On the Closing Date, the real
estate (the "Real Estate") listed on Schedule 7.17 constitutes all of the real
property owned, leased, subleased, or used by the Consolidated Companies. Each
Consolidated Company has good and marketable fee simple title to all of its
owned real property or a valid leasehold interest in all of its leased real
property and good title to, or a valid leasehold interest in, all of its other
property, including the properties and assets reflected in the balance sheet of
Conso International at July 3, 1999 and
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the Pro Forma Financial Statements hereinabove described, other than properties
disposed of in the ordinary course of business since such date, subject to no
Lien or title defect of any kind, except Permitted Liens. The Consolidated
Companies enjoy peaceful and undisturbed possession under all of their
respective leases under which they are tenants. Schedule 7.17 also describes any
purchase options, rights of first refusal or other similar contractual rights
pertaining to any Real Estate. As of the Closing Date, no portion of any Credit
Party's owned Real Estate has suffered any material damage by fire or other
casualty loss which has not heretofore been repaired and restored in all
material respects to its original condition or otherwise remedied.
Section 7.18 Indebtedness. Except as set forth on Schedule 9.01, as of
the Closing Date, none of the Consolidated Companies is an obligor in respect of
any Indebtedness for borrowed money in a principal amount of $250,000 or more,
or any commitment to create or incur any Indebtedness for borrowed money in a
principal amount of $250,000 or more.
Section 7.19 Financial Condition. On the Closing Date and after giving
effect to the Merger and the other transactions contemplated by this Agreement,
the other Credit Documents, , the Merger Documents, the Subordinated Note
Documents and the other Transaction Documents, (i) the assets of each Credit
Party, at fair valuation and based on their present fair saleable value, will
exceed such Credit Party's debts, including contingent liabilities, as such
liabilities may be limited under the express terms of any Guaranty Agreement,
(ii) the remaining capital of each Credit Party will not be unreasonably small
to conduct such Credit Party's business, and (iii) no Credit Party will have
incurred debts, or have intended to incur debts, beyond its ability to pay such
debts as they mature. For purposes of this Section 7.19, "debt" means any
liability on a claim, and "claim" means (a) the right to payment, whether or not
such right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or
unsecured, or (b) the right to an equitable remedy for breach of performance if
such breach gives rise to a right to payment, whether or not such right to an
equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured,
disputed, undisputed, secured or unsecured.
Section 7.20 Labor Matters. Since January 1, 1997, the Consolidated
Companies have experienced no strikes, labor disputes, slow downs or work
stoppages due to labor disagreements and, to the best knowledge of any Credit
Party, there are no such strikes, disputes, slow downs or work stoppages
threatened against any Consolidated Company. The hours worked and payment made
to employees of the Consolidated Companies have not been in violation in any
material respect of the Fair Labor Standards Act or any other applicable law
dealing with such matters. All material payments due from the Consolidated
Companies, or for which any claim may be made against the Consolidated
Companies, on account of wages and employee health and welfare insurance and
other benefits have been paid or accrued as liabilities on the books of the
Consolidated Companies.
Section 7.21 Payment or Dividend Restrictions. Except as described on
Schedule 7.21, none of the Consolidated Companies is party to or subject to any
agreement or understanding restricting or limiting the payment of any dividends
or other distributions by such Consolidated Company.
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Section 7.22 Year 2000 Issues. The Borrower and the other Consolidated
Companies (i) have done a comprehensive review of their computer programs to
identify the systems that would be affected by Year 2000 Issues as such Year
2000 Issues pertain to the computer programs and systems of the Consolidated
Companies, (ii) have reviewed their Year 2000 exposure to their material third
party customers, suppliers, or vendors and have evaluated the costs of
modifications to program logic control systems, (iii) developed a program for
remediating in all material respects all currently known Year 2000 Issues and
successfully implemented such program, and (iv) based on their review,
consultants' reports, and all other information currently available to them, the
Year 2000 Issues could not reasonably be expected to have a Materially Adverse
Effect.
Section 7.23 Representations and Warranties Relating to Accounts. With
respect to all Eligible Accounts, the Borrower hereby warrants and represents to
the Agent and the Lenders that:
(a) They are genuine and in all respects what they purport to be, and
they are not evidenced by judgments;
(b) They arise out of completed, bona fide sales of goods or rendition
of services by the Borrower or one of its Domestic Subsidiaries in the ordinary
course of its business and in accordance with the terms and conditions of all
purchase orders, contracts or other documents relating thereto and forming a
part of the contract between the Borrower or its Domestic Subsidiary and the
Account Debtor,
(c) They are for liquidated amounts maturing as stated in the duplicate
invoice covering such sale or rendition of services, copies of which have been
furnished or are available to the Agent;
(d) Neither the Borrower nor any of its Domestic Subsidiary have made
an agreement with any Account Debtor thereunder for any deduction therefrom,
except discounts or allowances which are granted by the Borrower or any of its
Domestic Subsidiaries, as the case may be, in the ordinary course of its
business for prompt payment or volume purchases and which are reflected in the
calculation of the net amount of each respective invoice related thereto;
(e) There are no facts, events or occurrences of which the Borrower or
any of its Domestic Subsidiaries has knowledge which in any way impair the
validity or enforceability thereof or which will reduce the amount payable
thereunder from the face amount of the invoice and statements delivered to the
Agent with respect thereto;
(f) To the best of the Borrower's and its Domestic Subsidiaries'
knowledge, the Account Debtors thereunder had the capacity to contract at the
time any contract or other document giving rise to the Accounts were executed
and such Account Debtors are solvent; and
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(g) The Borrower has no knowledge of any fact or circumstance which
would impair the validity or collectibility of the Accounts, and to the best of
the Borrower's and its Subsidiaries' knowledge there are no proceedings or
actions which are threatened or pending against any Account Debtor thereunder
which might result in any material adverse change in such Account Debtor's
financial condition or the collectibility of such Account.
Section 7.24 Representations and Warranties Relating to Inventory.
Except as specifically disclosed to and acknowledged by the Agent in writing,
with respect to all Eligible Inventory reflected in a Borrowing Base
Certificate, the Agent may rely upon all statements, warranties, or
representations made in such Borrowing Base Certificate in determining the
classification of such Inventory and in determining which items of Inventory
listed in such Borrowing Base Certificate are Eligible Inventory as of the date
of such Borrowing Base Certificate.
Section 7.25 Subordination of Subordinated Indebtedness. This
Agreement, and all amendments, modifications, extensions, renewals, refinancings
and refundings hereof, constitute the "Senior Credit Agreement" within the
meaning of the Subordination Agreement; this Agreement, together with each of
the other Credit Documents and all amendments, modifications, extensions,
renewals, refinancings and refundings hereof and thereof, constitute "Senior
Credit Documents" within the meaning of the Subordination Agreement; and the
Term Loans, the Revolving Loans, the Swingline Loans, the Letter of Credit
Obligations and all other Obligations of the Borrower to the Lenders, the
Issuing Bank, the Swingline Lender and the Agent under this Agreement, the Notes
and all other Credit Documents, and all amendments, modifications, extensions,
renewals, refundings or refinancings of any of the foregoing constitute "Senior
Indebtedness" of the Borrower within the meaning of the Subordination Agreement,
and the holders thereof from time to time shall be entitled to all of the rights
of a holder of "Senior Indebtedness" pursuant to the Subordination Agreement.
Section 7.26 Disclosure. No representation or warranty contained in the
Credit Documents or in any other document furnished from time to time to the
Agent or the Lenders by the Borrower, Conso International, their advisors,
counsel or representatives pursuant to the terms of this Agreement, contains or
will contain any untrue statement of a material fact or omits or will omit to
state any material fact necessary to make the statements herein or therein not
misleading as of the date made or deemed to be made. Except as may be set forth
herein, there is no fact known to any Credit Party which has had, or is
reasonably expected to have, a Materially Adverse Effect.
Section 7.27 Bank Accounts. Except for the bank accounts set forth on
Schedule 8.11 the Credit Parties have no other bank accounts.
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ARTICLE VIII.
AFFIRMATIVE COVENANTS
Until all Commitments have been terminated and all Obligations then due
and payable have been paid in full, the Borrower agrees to, and to cause each of
its Subsidiaries to:
Section 8.01 Organizational Existence, Etc. Except as permitted by
Section 9.03, preserve and maintain its corporate or other organizational
existence, its rights, franchises, and licenses, and its patents and copyrights
(for the scheduled duration thereof), trademarks, trade names, and service
marks, necessary or desirable in the normal conduct of its business, and its
qualification to do business as a foreign corporation or other organization in
all jurisdictions where it conducts business or other activities making such
qualification necessary except where a failure to be so qualified could not
reasonably be expected to have a Materially Adverse Effect.
Section 8.02 Compliance with Laws, Etc. Comply with all Requirements of
Law (including, without limitation, the Environmental Laws and ERISA) and
Contractual Obligations applicable to or binding on any of them, except where a
failure to comply could not reasonably be expected to have a Materially Adverse
Effect.
Section 8.03 Payment of Taxes and Claims, Etc. Pay (i) all taxes,
assessments and governmental charges imposed upon it or upon its property, and
(ii) all claims (including, without limitation, claims for labor, materials,
supplies or services) which might, if unpaid, become a Lien upon its property,
unless, in each case, the validity or amount thereof is being contested in good
faith by appropriate proceedings and adequate reserves are maintained with
respect thereto in accordance with GAAP, or in the case of any Foreign
Subsidiary, generally accepted accounting principles in such Foreign
Subsidiary's jurisdiction of organization, and subject to maintenance of
reasonable reserves and extensions permitted by the relevant taxing authorities.
Section 8.04 Keeping of Books. Keep proper books of record and account,
containing complete and accurate entries of all their respective financial and
business transactions which are required to be maintained in order to prepare
the consolidated financial statements of the Borrower and its Subsidiaries in
conformity with GAAP, or in the case of any Foreign Subsidiary, generally
accepted accounting principles in such Foreign Subsidiary's jurisdiction of
organization, in all material respects.
Section 8.05 Visitation, Inspection, Collateral Appraisals and Audits,
Etc.
(a) Permit any representative of the Agent or any Lender to visit and
inspect any of its property, including without limitation, the Real Estate, to
conduct audits of the Collateral (including without limitation all Accounts and
Inventory and all records relating thereto), to examine its books and records
and to make copies and take extracts therefrom, and to discuss its affairs,
finances and accounts with its officers, all at such reasonable times and as
often as the Agent or any Lender may reasonably request after reasonable prior
notice to the Borrower; provided, however, if a Default or an Event of Default
has occurred and is continuing,
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no prior notice shall be required. All reasonable expenses incurred by the Agent
or its designee and, at anytime after the occurrence and during the continuance
of a Default or an Event of Default, any Lenders in connection with any such
visit, inspection, audit, examination and discussions shall be borne by the
Borrower; provided, however, that prior to the occurrence and continuation of a
Default or Event of Default the Borrower shall not be required to pay the
reasonable expenses of each visit of Agent under this Section 8.05(a) in excess
of one visit per Fiscal Quarter.
(b) Deliver to the Lenders (x) such field audits of all Accounts and
Inventory of the Credit Parties as the Required Lenders may reasonably request
at any time and from time to time, such field audits to be conducted by
auditors, and in form and substance, satisfactory to the Required Lenders, and
(y) such appraisals of the fixed assets of the Credit Parties (including,
without limitation all Equipment) as the Required Lenders may request at any
time and from time to time, such appraisals to be conducted by an appraiser, and
in form and substance, reasonably satisfactory to the Required Lenders, in each
case conducted at the expense of the Borrower no more frequently than annually,
unless an Event of Default has occurred and is continuing, at which time such
field audits and appraisals shall be conducted at the expense of the Borrower as
frequently as the Required Lenders shall request. The Lenders agree that the
appraiser used by the Borrower in connection with the appraisals delivered to
Lenders on or before the Closing Date shall be acceptable to Lenders.
Section 8.06 Insurance; Maintenance of Properties; Net
Casualty/Insurance Proceeds.
(a) Maintain or cause to be maintained with financially sound and
reputable insurers, insurance with respect to its properties and business, and
the properties and business of its Subsidiaries, against loss or damage of the
kind customarily insured against by reputable companies in the same or similar
businesses, such insurance to be of such types and in such amounts as is
customary for such companies under similar circumstances; provided, however,
that in any event the Borrower shall use its best efforts to maintain, or cause
to be maintained, insurance in amounts and with coverages not materially less
favorable to any Consolidated Company as in effect on the date of this
Agreement.
(b) Cause all properties used or useful in the conduct of its business
to be maintained and kept in good condition, repair and working order (normal
wear and tear and any damage being repaired or restored in accordance with
subsection (c) below excepted) and supplied with all necessary equipment and
will cause to be made all necessary repairs, renewals, replacements, settlements
and improvements thereof, all as in the judgment of the Borrower as may be
necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times and except where a failure to
do so could not have a Materially Adverse Effect;
(c) Net Casualty/Insurance Proceeds must be applied either (i) to the
payment of the Obligations, or (ii) the repair and or restoration of the
Collateral within one hundred eighty days (180) days of the receipt of the
proceeds of such Casualty or Condemnation. If either an
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Event of Default has occurred and is continuing or the cost to repair the
Collateral exceeds $1,000,000, then, in such event, the Agent, at the direction
of the Required Lenders, shall determine the manner in which the Net
Casualty/Insurance Proceeds are to be applied.
Section 8.07 Reporting Covenants. Furnish to each Lender
(a) Annual Financial Statements. As soon as available and in any event
within 120 days after the end of each Fiscal Year, balance sheets of the
Consolidated Companies as at the end of such year, presented on a consolidated
and consolidating basis, and the related statements of income, retained earnings
and cash flows of the Consolidated Companies for such Fiscal Year, presented on
a consolidated basis, setting forth in each case in comparative form the figures
for the previous Fiscal Year, all in reasonable detail and accompanied by a
report thereon of Deloitte & Touche L.L.P. or other independent public
accountants of comparable recognized national standing, which such report shall
be unqualified as to going concern and scope of audit and shall state that such
financial statements present fairly in all material respects the financial
condition as at the end of such Fiscal Year, and the results of operations and
statements of cash flows of the Consolidated Companies for such Fiscal Year in
accordance with GAAP and that the examination by such accountants in connection
with such financial statements has been made in accordance with generally
accepted auditing standards;
(b) Monthly Financial Statements. As soon as available and in any event
within 45 days after the end of each Fiscal Month that is not the end of a
Fiscal Year, balance sheets of the Consolidated Companies as at the end of such
Fiscal Month presented on a consolidated and consolidating basis and the related
statements of income, retained earnings and cash flows of the Consolidated
Companies for such Fiscal Month and for the portion of the Fiscal Year ended at
the end of such Fiscal Month, presented on a consolidated and consolidating
basis setting forth in each case in comparative form the figures for the
corresponding month and the corresponding portion of the Borrower's previous
Fiscal Year, a summary of the outstanding balance of all Intercompany Notes as
of the last day of that Fiscal Month, and a summary of the outstanding balance
of the BT Intercompany Notes as of the last day of that Fiscal Month, all in
reasonable detail, and certified by the chief financial officer or principal
accounting officer of the Borrower that such financial statements fairly present
in all material respects the financial condition of the Consolidated Companies
as at the end of such Fiscal Month on a consolidated basis, and the results of
operations and statements of cash flows of the Consolidated Companies for such
Fiscal Month and such portion of the Fiscal Year, in accordance with GAAP
(subject to normal year-end audit adjustments and the absence of certain
footnotes);
(c) No Default/Compliance Certificate. Together with the financial
statements required pursuant to subsection (a) and with the financial statements
required pursuant to subsection (b) above for the third Fiscal Month of each
Fiscal Quarter, a certificate of the chief financial officer or treasurer of the
Borrower substantially in the form of Exhibit G, to the effect that, based upon
a review of the activities of the Consolidated Companies and such financial
statements during the period covered thereby, to his knowledge, (i) there exists
no Event of Default and no Default under this Agreement, or if there exists an
Event of Default or a Default hereunder, specifying the nature thereof and the
proposed response thereto, and (ii)
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demonstrating in reasonable detail compliance as at the end of such Fiscal Year
or such Fiscal Month with Section 8.09 and Section 9.12;
(d) Auditor's No Default Certificate. Together with the financial
statements required pursuant to subsection (a) above, a certificate of the
accountants who prepared the report referred to therein, (i) to the effect that
during the course of their audit, they have found no Default or Event of Default
under this Agreement, or if there exists a Default or Event of Default
hereunder, specifying the nature thereof and (ii) demonstrating in reasonable
detail compliance as at the end of such Fiscal Year with Section 8.09 and
Section 9.12;
(e) Borrowing Base Certificates and Accounts Receivable Aging Report.
No later than twenty (20) days after the end of each Fiscal Month, or upon an
Event of Default as frequently as requested by the Agent, (x) a Borrowing Base
Certificate as of the end of the immediately preceding Fiscal Month, setting
forth the Eligible Accounts and Eligible Inventory owned by the Borrower and its
Subsidiaries and a categorical breakdown (based on the definitions of Eligible
Accounts and Eligible Inventory) of all Eligible Accounts and Eligible Inventory
as of such date, and (y) an accounts receivable aging report as of the end of
the immediately preceding Fiscal Month; provided, however, in connection with an
audit of the Accounts and Inventory performed on behalf of the Agent, once per
rolling six month period Agent can, with two Business Days notice to the
Borrower, require a recalculation of the Borrowing Base, at which time a new
Borrowing Base Certificate shall be deemed to have been delivered under this
Agreement;
(f) Notice of Default under Credit Documents or BT Intercompany Debt
Documents. Promptly after any Credit Party has notice or knowledge of the
occurrence of an Event of Default or a Default hereunder or under the BT
Intercompany Debt Documents, a certificate of the chief financial officer or
principal accounting officer of the Borrower specifying the nature thereof and
the proposed response thereto;
(g) Notice of Default under Other Indebtedness. Promptly upon its
receipt thereof, furnish to the Agent a copy of any notice received by it or any
other Consolidated Company from the holder(s) of any Subordinated Debt or any
other Indebtedness referred to in Section 9.01 (or from any trustee, agent,
attorney, or other party acting on behalf of such holder(s)), where such notice
states or claims the existence or occurrence of any default or event of default
with respect to such Indebtedness under the terms of any indenture, loan or
credit agreement, debenture, note, or other document evidencing or governing
such Indebtedness;
(h) Litigation. Promptly after (i) the occurrence thereof, notice of
the institution of or any material adverse development in any action, suit or
proceeding or any governmental investigation or any arbitration, before any
court or arbitrator or any governmental or administrative body, agency or
official, against any Consolidated Company, or any property of any thereof, or
(ii) actual knowledge thereof, notice of the threat of any such action, suit,
proceeding, investigation or arbitration;
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(i) Environmental Notices. Promptly after receipt thereof, notice of
any actual or alleged violation, or notice of any action, claim or request for
information, either judicial or administrative, from any Governmental Authority
relating to any actual or alleged claim, notice of potential responsibility
under or violation of any Environmental Law, or any actual or alleged spill,
leak, disposal or other release of any waste, petroleum product, or hazardous
waste or Hazardous Substance by any Consolidated Company which could result in
penalties, fines, claims or other liabilities to any Consolidated Company in
amounts in excess of $500,000;
(j) ERISA. Promptly after the occurrence thereof with respect to any
Plan of any Consolidated Company or any ERISA Affiliate thereof, or any trust
established thereunder, notice of (A) a "reportable event" described in Section
4043 of ERISA and the regulations issued from time to time thereunder (other
than a "reportable event" not subject to the provisions for 30-day notice to the
PBGC under such regulations), or (B) any other event which could subject any
Consolidated Company to any tax, penalty or liability under Title I or Title IV
of ERISA or Chapter 43 of the Tax Code, or any tax or penalty resulting from a
loss of deduction under Sections 162, 404 or 419 of the Tax Code, or any tax,
penalty or liability (other than amounts that become payable in the normal
operation of any Plan) under any Requirement of Law applicable to any Foreign
Plan, where any such taxes, penalties or liabilities exceed or could exceed
$500,000 in the aggregate;
(i) Promptly after such notice must be provided to the PBGC,
or to a Plan participant, beneficiary or alternative payee, any notice
required under Section 101(d), 302(f)(4), 303, 304, 307, 4041(a)(2) of
ERISA or under Section 401(a)(29) or 412 of the Tax Code with respect
to any Plan of any Consolidated Company or any ERISA Affiliate thereof,
(ii) Promptly after receipt, any notice received by any
Consolidated Company or any ERISA Affiliate thereof concerning the
intent of the PBGC or any other Governmental Authority to terminate a
Plan of such Company or ERISA Affiliate thereof which is subject to
Title IV of ERISA, to impose any liability on such Company or ERISA
Affiliate under Title IV of ERISA or Chapter 43 of the Tax Code;
(iii) Upon the request of the Agent, promptly upon the filing
thereof with the Internal Revenue Service ("IRS") or the Department of
Labor ("DOL"), a copy of IRS Form 5500 or annual report for each Plan
of any Consolidated Company or ERISA Affiliate thereof which is subject
to Title IV of ERISA;
(iv) Upon the request of the Agent, (A) true and complete
copies of any and all documents, government reports and IRS
determination or opinion letters or rulings for any Plan of any
Consolidated Company from the IRS, PBGC or DOL, (B) any reports filed
with the IRS, PBGC or DOL with respect to a Plan of the Consolidated
Companies or any ERISA Affiliate thereof, or (C) a current statement of
withdrawal liability for each Multiemployer Plan of any Consolidated
Company or any ERISA Affiliate thereof,
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(v) Promptly upon any Consolidated Company becoming aware
thereof, notice that (i) any material contributions to any Foreign Plan
have not been made by the required due date for such contribution and
such default cannot immediately be remedied, (ii) any Foreign Plan is
not funded to the extent required by the law of the jurisdiction whose
law governs such Foreign Plan based on the actuarial assumptions
reasonably used at any time, or (iii) a material change is anticipated
to any Foreign Plan that could reasonably be expected to have a
Materially Adverse Effect.
(k) Liens. Promptly upon any Consolidated Company becoming aware
thereof, notice of the filing of any federal statutory Lien, tax or other state
or local government Lien or any other Lien affecting their respective
properties, other than Permitted Liens;
(l) Public Filings, Etc. Promptly upon the filing thereof or otherwise
becoming available, copies of all financial statements, annual, quarterly,
monthly and special reports, proxy statements and notices sent or made available
generally by the Borrower to its public security holders, of all regular and
periodic reports and all registration statements and prospectuses, if any, filed
by it with any securities exchange, and of all press releases and other
statements made available generally to the public containing material
developments in the business or financial condition of the Borrower and the
other Consolidated Companies;
(m) Accountants' Reports. Promptly upon receipt thereof, copies of all
financial statements of, and all reports submitted by, independent public
accountants to the Borrower in connection with each annual, interim, or special
audit of the Borrower's financial statements, including without limitation, the
comment letter submitted by such accountants to management in connection with
their annual audit;
(n) Subordinated Debt and Equity Notices. As soon as practicable,
copies of all material written notices given or received by any Credit Party
with respect to any Subordinated Debt or Stock of such Person, and, promptly
after any Credit Party obtains knowledge of any matured or unmatured event of
default with respect to any Subordinated Debt, notice of such event of default;
(o) Other Information. With reasonable promptness, such other
information about the Consolidated Companies as the Agent or any Lender may
reasonably request from time to time.
Section 8.08 Year 2000 Issues. Take all actions reasonably necessary to
assure that the Year 2000 Issues could not reasonably be expected to have a
Materially Adverse Effect. The Borrower and the other Consolidated Companies
will use their best efforts to assure that its material third-party customers,
suppliers and vendors develop and implement programs to remediate in all
material respects all Year 2000 Issues that could not reasonably be expected to
have a Materially Adverse Effect. Upon reasonable request by the Agent or
Lender, the Borrower will provide the Agent and Lenders a written description of
its Year 2000 program,
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including updates and progress reports. The Borrower will advise the Agent and
the Lenders promptly of any reasonably anticipated Materially Adverse Effect as
a result of Year 2000 Issues.
Section 8.09 Financial Covenants.
(a) Maximum Total Funded Debt to Adjusted EBITDA Ratio. As of the last
day of each Fiscal Quarter, commencing with the Fiscal Quarter ending on the
third Fiscal Quarter of Fiscal Year 2000, the Total Funded Debt to Adjusted
EBITDA Ratio for the following periods shall be not greater than the following
ratios:
Fiscal Quarter Ratio
-------------- -----
Third and Fourth
Fiscal Quarter in
Fiscal Year 2000 4.50:1.00
First and Second
Fiscal Quarter in
Fiscal Year 2001 4.35:1.00
Third Fiscal Quarter
in Fiscal Year 2001 4.25:1.00
Fourth Fiscal Quarter
in Fiscal Year 2001 4.00:1.00
First Fiscal Quarter in
Fiscal Year 2002 3.85:1.00
Second Fiscal Quarter in
Fiscal Year 2002 3.75:1.00
Third Fiscal Quarter in
Fiscal Year 2002 3.50:1.00
Fourth Fiscal Quarter in
Fiscal Year 2002 3.35:1.00
First Fiscal Quarter in Fiscal
Year 2003 3.25:1.00
Second Fiscal Quarter in
Fiscal Year 2003 3.15:1.00
Third Fiscal Quarter in
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Fiscal Year 2003 and
thereafter 3.00:1.00
(b) Minimum Fixed Charge Coverage Ratio. As of the last day of each
Fiscal Quarter, commencing with the third Fiscal Quarter of Fiscal Year 2000,
the Fixed Charge Coverage Ratio shall be not less than 1.25:1.00.
(c) Interest Coverage Ratio. As of the last day of each Fiscal Quarter
commencing with the third Fiscal Quarter of Fiscal Year 2000, the Interest
Coverage Ratio for the following periods shall be not less than the following
ratios:
Fiscal Quarter Ratio
-------------- -----
Third Fiscal Quarter in
Fiscal Year 2000 through
the Third Fiscal Quarter
in Fiscal Year 2001 2.25:1.00
Fourth Fiscal Quarter in
Fiscal Year 2001 2.40:1.00
First and Second
Fiscal Quarter in
Fiscal Year 2002 2.50:1.00
Third Fiscal Quarter in
Fiscal Year 2002 and thereafter 2.75:1.00
Section 8.10 Additional Credit Parties.
(a) In the event that, subsequent to the Closing Date, any Person
becomes a Domestic Subsidiary of the Borrower, whether pursuant to an
acquisition or otherwise, (x) the Borrower shall promptly notify the Agent and
the Lenders of the creation or acquisition of such Domestic Subsidiary and (y)
the Borrower shall cause such Person (i) to become a party to the Subsidiary
Guaranty as a new Subsidiary Guarantor, (ii) to grant a lien in all of its
personal property by joining the Subsidiary Security Agreement and filing such
UCC-1 financing statements or similar instruments required by the Agent and
grant a lien in all of its Real Estate by executing a Mortgage and filing such
other real estate collateral documents required by the Agent, (iii) if such
Domestic Subsidiary owns Stock in another Person, to become a party to the
Subsidiary Pledge Agreement, and (iv) to provide all relevant documentation with
respect thereto and to take such other actions as such Domestic Subsidiary would
have provided and taken pursuant to Section 6.01 if such Subsidiary had been a
Credit Party on the Closing Date. In addition, the Borrower shall, or shall
cause its Domestic Subsidiary owning such Person, to pledge all of the stock of
such Person owned by the Borrower or such Subsidiary to the Agent as security
for the Obligations pursuant to a pledge agreement in form and substance
satisfactory to
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the Agent and the Required Lenders, and to deliver the original stock
certificates evidencing such shares to the Agent, together with appropriate
stock powers executed in blank.
(b) In the event that, subsequent to the Closing Date, any Person
becomes a Foreign Subsidiary of the Borrower, whether pursuant to an acquisition
or otherwise, the Borrower shall promptly notify the Agent and the Lenders of
the creation or acquisition of such Foreign Subsidiary. In addition, the
Borrower shall, or shall cause its Domestic Subsidiary owning such Person, to
pledge sixty-six percent (66%) of the voting stock of such Person owned by the
Borrower or such Domestic Subsidiary to the Agent as security for the
Obligations pursuant to a pledge agreement in form and substance satisfactory to
the Agent and the Required Lenders, and to deliver the original stock
certificates evidencing such shares to the Agent, together with appropriate
stock powers executed in blank.
(c) For purposes of this Section 8.10, if any Subsidiary that is a
Dormant Subsidiary as of the Closing Date becomes an Active Subsidiary, the
Borrower shall and shall cause its Subsidiaries to take all actions as would be
required of the Borrower and its Subsidiaries under Section 8.10(a) and Section
8.10(b) if such Active Subsidiary were acquired by the Borrower or any of its
Subsidiaries after the Closing Date.
(d) The Borrower agrees that, following the delivery of any Collateral
Documents required to be executed and delivered by this Section 8.10, the Agent
shall have a valid and enforceable (except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditor's rights generally and by general
principal of equity) first priority Lien on the respective Collateral covered
thereby, free and clear of all Liens other than Permitted Liens. All actions to
be taken pursuant to this Section 8.10 shall be at the expense of the Borrower
or the applicable Credit Party, shall be taken to the reasonable satisfaction of
the Agent, and shall be taken within thirty (30) days following the date such
Person becomes a Credit Party, whether pursuant to an acquisition or otherwise.
(e) Notwithstanding anything else to the contrary herein or any other
Credit Document, (i) in no event shall any Foreign Subsidiary guarantee or act
as a Guarantor for the Obligations; (ii) each of the Borrower and any Domestic
Subsidiary may pledge its assets for the Obligations, provided that it shall not
pledge or grant more than 66% of its voting Stock in any Foreign Subsidiary to
secure the Obligations; and (iii) a Foreign Subsidiary may not pledge or grant
any of its assets for the Obligations.
Section 8.11 Cash Management Arrangement. Establish and maintain the
cash management system described below:
(a) On or before the Closing Date and until the Revolving Credit
Termination Date, the Borrower shall (and shall cause its Domestic Subsidiaries
to) deposit, on the date of receipt thereof, all cash, checks, notes, drafts or
other similar items relating to or constituting proceeds of or payments made in
respect of any and all Collateral and all other receipts into accounts in the
name of the Borrower or such Domestic Subsidiary (collectively, the "Blocked
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Accounts") at the banks set forth on Schedule 8.11. On or before the Closing
Date and until the Revolving Credit Termination Date each of Simplicity Pattern
and Conso International shall have established a concentration account
(collectively, the "Concentration Accounts") at the banks set forth on Schedule
8.11.
(b) On or before April 14, 2000, each bank at which a Blocked Account
is located each bank at which a Concentration Account is located shall have
entered into Blocked Account Agreements or Concentration Account Agreements, as
applicable, providing, among other things, that (i) the bank executing such
Blocked Account Agreement or Concentration Account Agreement has no rights of
setoff or recoupment or any other claim against such Blocked Account, other than
for payment of its service fees and other charges directly related to the
administration of such account, and (ii) the bank agrees, from and after the
Closing Date (A) with respect to banks at which a Blocked Account is located, to
sweep on a daily basis all amounts in such Blocked Account to such Credit
Party's Concentration Account, and (B) with respect to all banks at which a
Concentration Account is located, to sweep on a daily basis all amounts in such
Concentration Account to the designated account of the Agent. No Credit Party
shall, or shall cause or permit any Subsidiary thereof to, accumulate or
maintain cash in disbursement or payroll accounts as of any date of
determination in excess of checks outstanding against such accounts as of that
date and amounts necessary to meet minimum balance requirements.
(c) So long as no Default or Event of Default has occurred and is
continuing, the Borrower may amend Schedule 8.11 to add or replace a bank at
which a Blocked Account or Concentration Account is located; provided, however,
that (i) Agent shall have consented in writing in advance to the opening of such
account with the relevant account, and (ii) prior to the time the opening of
such account, the applicable Credit Party and/or Subsidiaries thereof, as
applicable, and such bank shall have executed and delivered to Agent a Blocked
Account Agreement or Concentration Account Agreement, as applicable.
(d) On or before April 14, 2000 and until the Revolving Credit
Termination Date, the Borrower shall have established a disbursement account
(the "Disbursement Account") with the Agent as set forth on Schedule 8.11, into
which Agent shall, from time to time, deposit proceeds of the Revolving Loans
and Swingline Loans made to the Borrower for use by Borrower solely in
accordance with the provisions of this Agreement.
(e) Borrower shall and shall cause its Affiliates, officers, employees,
agents, directors or other Persons acting for or in concert with such Credit
Party to (i) hold in trust for Agent all checks, cash and other items of payment
received by such Credit Party or other Person, and (ii) within one (1) Business
Day after receipt by such Credit Party or related Person of any checks, cash or
other items or payment, deposit the same into a Blocked Account of such Credit
party. All cash, checks or items of payment constituting proceeds of Collateral
are the property of Agent, for the benefit of itself and the Lenders.
Section 8.12 Key Man Life Insurance. The Borrower shall, on or prior to
April 2, 2000 (i) purchase a life insurance policy on the life of J. Cary
Findlay in a minimum amount of
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$10,000,000 (the "Life Insurance Policy") and (ii) deliver to the Agent an
Assignment of Life Insurance Policy in form and substance satisfactory to the
Agent. The Borrower shall maintain in full force and effect, so long as J. Cary
Findlay is an officer of the Borrower or otherwise actively involved in the
management or operations of the Borrower, the Life Insurance Policy and pay all
insurance premiums at any time due and owing with respect to the Life Insurance
Policy.
Section 8.13 Interest Rate Contract. On or prior to the thirtieth day
after the Closing Date the Borrower shall have entered into, and shall maintain
until payment and performance in full of the Obligations, an Interest Rate
Contract in form and substance satisfactory to the Agent and Lenders, hedging at
least an amount equal to fifty percent (50%) of the sum of (i) aggregate
Revolving Credit Commitments, plus, (ii) the outstanding balance of the Term A
Loans, plus, (iii) the outstanding balance of the Term B Loans.
Section 8.14 Compliance with South Carolina Ground Lease. Borrower
hereby covenants and agrees that in connection with the conveyance of the
Mortgaged Property located at 513 North Duncan Bypass, Union, South Carolina,
29379 pursuant to the Mortgage applicable to such property, it shall comply with
Article IX of the South Carolina Ground Lease and the provisions of Section
4-12-30(M) of the Code of Laws of South Carolina 1976, as amended.
Section 8.15 Additional BT Credit Parties. In the event that,
subsequent to the Closing Date, any Person becomes a Material Foreign Subsidiary
(whether or not such Person is already a Subsidiary of the Borrower on the
Closing Date) of the Borrower, whether pursuant to an acquisition or otherwise,
(x) the Borrower shall promptly notify the Agent of the existence of such
Material Foreign Subsidiary (y) the Borrower shall cause such Person (i) to
become a "Guarantor" under the BT Intercompany Loan Agreement, (ii) to grant a
security interest in all of its personal property to the "Lender" under the BT
Intercompany Loan Agreement by executing such documents or instruments
reasonably required by the Agent and grant a lien in all of its Real Estate by
executing a such real estate collateral documents required by the Agent, which
security interest shall then be pledged to the Agent pursuant to the Collateral
Assignment, (iii) to cause the Person owning the stock of such Material Foreign
Subsidiary to pledge the stock of such Material Foreign Subsidiary to the
"Lender" under the BT Intercompany Loan Agreement pursuant to documents
reasonably required by the Agent, which security interest shall then be assigned
to the Agent pursuant to the Collateral Assignment, and (iv) to provide all
relevant documentation with respect thereto and to take such other actions as,
in the reasonable discretion of the Agent, such Material Foreign Subsidiary
would have provided and taken pursuant to the BT Intercompany Debt Documents on
the Closing Date.
ARTICLE IX.
NEGATIVE COVENANTS
Until all Commitments have been terminated and all Obligations (other
than indemnification and similar obligations that survive beyond the termination
of this Agreement) have been paid in full, the Borrower will not, and will not
permit any of its Subsidiaries to:
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Section 9.01 Indebtedness. Create, incur, assume or suffer to exist any
Indebtedness, other than:
(a) Indebtedness under this Agreement and any other Credit Document;
(b) Indebtedness evidenced by the Subordinated Notes;
(c) Indebtedness evidenced by the BT Intercompany Notes;
(d) Indebtedness existing on the Closing Date and described on Schedule
9.01;
(e) purchase money Indebtedness and Capital Lease Obligations to the
extent secured by a Lien permitted by Section 9.02(h);
(f) (A) unsecured current liabilities and other ordinary course
operating liabilities incurred in the ordinary course of business as conducted
on the Closing Date (other than liabilities for borrowed money or liabilities
evidenced by promissory notes, bonds or similar instruments) and (B)
Indebtedness to trade creditors incurred in the ordinary course of business and
either (i) not more than 90 days past due, or (ii) being disputed in good faith
by appropriate proceedings with reserves for such disputed liability maintained
in conformity with GAAP;
(g) Indebtedness consisting of contingent obligations under
indemnities, guarantees, and reimbursement agreements in favor of Persons
issuing surety bonds, guarantees and similar undertakings issued to support
performance obligations of any of the Consolidated Companies incurred in the
ordinary course of business;
(h) the Interest Rate Contract required under Section 8.13;
(i) Indebtedness consisting of intercompany loans and advances made by
the Borrower to any Subsidiary Guarantor, or made by BT to Val-Mex or India
Trimmings; provided that (i) each Subsidiary Guarantor, BT and Val-Mex shall
execute a demand note on the Closing Date (the "Intercompany Notes") to evidence
any such intercompany Indebtedness, which Intercompany Notes shall be in form
and substance satisfactory to Agent, and, with respect to Intercompany Notes by
the Subsidiary Guarantors, shall be pledged pursuant to the Borrower Pledge
Agreement as collateral for the Obligations, or, with respect to the
Intercompany Notes being executed by BT and Val-Mex, shall be pledged to Conso
International pursuant to the Debenture as collateral for the BT Intercompany
Obligations, (ii) the Borrower and BT shall record all intercompany transactions
on its books and records in a manner reasonably satisfactory to Agent, (iii) the
obligations of each borrower under any such Intercompany Notes shall be
subordinated to its obligations under its respective guarantee, if any, (iv) at
the time any such intercompany loan or advance is made by the Borrower to any
Subsidiary Guarantor, or by BT to Val-Mex or India Trimmings, as the case may
be, and after giving effect thereto, the representation and warranty set forth
in Section 7.19 is true and correct, and (v) no Default or Event of Default
shall have occurred and be continuing or would occur and be continuing after
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giving effect to any such proposed intercompany loan; provided, further, that
the Intercompany Notes by Val-Mex and India Trimmings in favor of BT shall be in
a principal amount not to exceed $4,000,000, of which up to $2,000,000 may be
used for Capital Expenditures permitted pursuant to Section 9.12 and up to
$2,000,000 may be used for purposes other than Capital Expenditures;
(j) Indebtedness secured by Permitted Liens;
(k) refinancing of the Revolving Loans on the Revolving Credit
Termination Date so long as: (i) no Default or Event of Default has occurred and
is continuing, (ii) the Consolidated Companies will be in compliance with
Section 8.09 and Section 9.12 after giving effect to the refinancing on a pro
forma basis; (iii) the refinancing is on terms no more restrictive than the
Credit Documents as determined by the Agent and Lenders in their reasonable
discretion, (iv) the Borrower has requested an extension of the Revolving Credit
Commitment Date pursuant to Section 2.13 and the Required Lenders have not
approved the request, and (v) the Borrower has delivered to the Agent a
certificate certifying that each of the conditions set forth in clauses (i) and
(ii) above have been satisfied;
(l) Indebtedness for borrowed money not otherwise permitted pursuant to
this Section 9.01 in an aggregate amount at any one time outstanding not to
exceed $500,000; and
(m) Indebtedness arising out of judgements and awards, not to exceed
$500,000 in the aggregate at any one time outstanding, which do not otherwise
constitute an Event of Default under the terms of this Agreement, including
without limitation, Section 10.09 hereof.
Section 9.02 Liens. Create, incur, assume or suffer to exist any Lien
on any of its property now owned or hereafter acquired other than:
(a) Liens in favor of the Agent for the benefit of the Lenders;
(b) Liens existing on the Closing Date and disclosed on Schedule 9.02;
(c) Liens in favor of the Borrower to secure the BT Intercompany Notes,
provided that the Borrower's interest in all such Liens are pledged to the
Agent, for the benefit of the Lenders.
(d) Liens for taxes not yet due and payable, and Liens for taxes or
Liens imposed by ERISA which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves are being maintained in
accordance with GAAP;
(e) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and other Liens imposed by law created in the ordinary
course of business for amounts not yet due or which are being contested in good
faith by appropriate
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proceedings and with respect to which adequate reserves are being maintained in
accordance with GAAP;
(f) Liens incurred or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other types
of social security, or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, trade contracts, leases, government
contracts, performance and return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money);
(g) zoning, building and other land use laws imposed by any
Governmental Authority having jurisdiction over such parcel which are not
violated by the current use and occupancy of such parcel or the operation of the
business thereon, and easements, covenants, conditions, restrictions and other
similar matters of record affecting title to such parcel, which would not
materially impair the use or occupancy of such parcel in the operation of the
business;
(h) Liens incurred in connection with purchase money Indebtedness with
respect to assets acquired by any Credit Party in the ordinary course of
business (provided that such Liens attach only to the assets subject to such
purchase money debt and such Indebtedness does not exceed 100% of the purchase
price of the subject assets); and
(i) Liens incurred in connection with capital leases permitted under
Section 9.07; and
(j) any extension, renewal or replacement (or successive extensions,
renewals or replacements), in whole or in part, of any Lien referred to in the
foregoing clauses; provided that such extension, renewal or replacement Lien
shall be limited to all or a part of the property which secured the Lien so
extended, renewed or replaced (plus improvements on such property).
Section 9.03 Mergers, Consolidations, Acquisitions, Sales, Etc.
(a) Enter into any transaction of merger, consolidation, pooling of
interest or other combination with any other Person other than (i) the Merger,
(ii) a consolidation or merger between the Borrower and a Subsidiary, provided
the Borrower is the surviving entity, or (iii) any Subsidiary may merge with and
into any Credit Party, provided such Credit Party is the surviving entity, and
any Subsidiary of any BT Credit Party may merge with and into such BT Credit
Party provided such BT Credit Party is the surviving entity;
(b) Sell, lease, or otherwise dispose of its accounts, property or
other assets (including capital stock of Subsidiaries), other than (i) sales,
leases or other dispositions of assets by the Borrower to another Credit Party,
(ii) sales, leases or other dispositions of assets by a Subsidiary to a Credit
Party, (iii) sales, leases or other dispositions of assets by a Foreign
Subsidiary to a BT Credit Party, (iv) sales of inventory in the ordinary course
of business, (v) grants of licenses of intellectual property in the ordinary
course of business as conducted on the Closing Date, (vi) sales of obsolete,
worn out, excessively damaged or unusable equipment,
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Fixtures or inventory, and (vii) the sale of property in Niles, Michigan
referred to in paragraph B3(b) of Schedule 7.17;
(c) Purchase, lease or otherwise acquire all or any substantial portion
of the property or assets (including capital stock) of another Person (each an
"Acquisition") provided, however, that the foregoing restriction on Acquisitions
shall not apply to Acquisitions (A) as are otherwise permitted under Section
9.03(a), and (B) by any Consolidated Company so long as: (i) after giving effect
to such Acquisition, no Default or Event of Default will have occurred and be
continuing, (ii) the Consolidated Companies would have been in compliance with
Section 8.09 and Section 9.12, as of the last day of the most recently ended
Fiscal Quarter, after giving effect to such Acquisition on a pro forma basis as
if such Acquisition had occurred on the first day of any period tested in the
covenants set forth in such Sections, (iii) the Board of Directors of the Person
being acquired has approved the Acquisition, (iv) after giving effect to such
Acquisition, the representation and warranty set forth in Section 7.19 is true
and correct with respect to the Consolidated Company making such Acquisition,
(v) the assets or property being acquired belong to the same, or a substantially
related, line of business as the Consolidated Companies taken as a whole or
logical extensions thereof, (vi) after giving effect to the Acquisition
Borrowing Availability is at least $4,000,000, and (vii) the Borrower has
notified the Agent of such Acquisition and delivered to the Agent a certificate
certifying that each of the conditions set forth above has been satisfied,
demonstrating compliance with the covenants set forth in Section 8.09 and
Section 9.12 after giving effect to such Acquisition on a pro forma basis; and
(d) Sales or other dispositions of assets not otherwise permitted by
this Section 9.03 in an aggregate amount per Fiscal Year not to exceed $350,000.
Section 9.04 Investments, Loans, Etc. Make, permit or hold, any
Investments in any Person, or otherwise create, acquire or hold any
Subsidiaries, other than:
(a) Investments from time to time in any Credit Party;
(b) Investments existing on the date hereof and described on Schedule
9.04;
(c) Investments consisting of intercompany Indebtedness permitted by
Section 9.01;
(d) direct obligations of the United States of America or any agency
thereof, or obligations guaranteed by the United States of America or any agency
thereof, in each case supported by the full faith and credit of the United
States of America and maturing within one year from the date of creation
thereof;
(e) commercial paper maturing within one year from the date of creation
thereof rated in the highest grade by a nationally recognized credit rating
agency;
(f) time deposits maturing within one year from the date of creation
thereof, including certificates of deposit issued by, any office located in the
United States of America of
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any bank or trust company which is organized under the laws of the United States
of America or any state thereof and has capital, surplus and undivided profits
aggregating at least $500,000,000, including without limitation, any such
deposits in Eurodollars issued by a foreign branch of any such bank or trust
company;
(g) Investments made by Plans;
(h) time deposits maturing within one year from the date of creation
thereof, including certificates of deposits, or the equivalent, issued by any
office located in England of any bank which is organized under the laws of the
United Kingdom and has capital, surplus and undivided profits aggregating at
least $500,000,000;
(i) loans and advances in an aggregate principal amount outstanding at
any one time not to exceed $250,000 to management and other employees of the
Borrower, the proceeds of which are used in their entirety to purchase Stock in
Borrower and make other investments pursuant to retirement savings programs;
(j) Investments made in connection with Acquisitions otherwise
permitted under Section 9.03(c); and
(k) Investments consisting of promissory notes or other non-cash
consideration received as proceeds of asset sales and dispositions by any Credit
Party or BT Credit Party or permitted under Section 9.03 above, provided, that
any such promissory note made in favor of any Credit Party shall be pledged to
the Agent, for the benefit of the Lenders; and
(l) Investments not otherwise permitted under this Section 9.04 made
after the Closing Date; provided that the aggregate amount of all such
Investments does not exceed $500,000.
Section 9.05 Lease Obligations. Create or suffer to exist any
obligations for the payment under operating leases or agreements to lease
(including all Synthetic Lease Obligations but excluding any obligations under
leases required to be classified as capital leases under GAAP) having a term of
one year or more which would cause the direct or contingent liabilities of the
Consolidated Companies under such leases or agreements to lease, on a
consolidated basis, to exceed $5,000,000 in the aggregate in any Fiscal Year.
Section 9.06 Restricted Payments. (a) Declare or pay any dividend or
distribution on any class of its stock, or (b) make any payment to purchase,
redeem, retire or acquire any capital stock or Subordinated Debt or any option,
warrant, or other right to acquire such capital stock or such Indebtedness (each
payment under clause (a) or (b), a "Restricted Payment"), other than (i)
dividends payable solely in shares of any class of its stock, (ii) Restricted
Payments made by any Subsidiary to any Credit Party or BT, and (iii) payments in
an aggregate amount not exceeding $218,000 in respect of option surrender
payments to be made to Persons who were option holders of stock in the Borrower
prior to the Merger.
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Section 9.07 Sale and Leaseback Transactions. Sell or transfer any
property, real or personal, whether now owned or hereafter acquired, and
thereafter rent or lease such property for substantially the same purpose or
purposes as the property being sold or transferred, other than in connection
with assets acquired in contemplation of the creation of a capital lease which
are, within six months from the date of purchase of such assets, sold to another
Person and leased back to a Consolidated Company pursuant to a Capital Lease
arrangement permitted hereunder ("Permitted Sale Leaseback"), provided that the
aggregate amount of such Permitted Sale Leasebacks does not exceed $1,000,000 in
the aggregate.
Section 9.08 Transactions with Affiliates. Other than transactions
described on Schedule 9.08:
(a) Enter into any transaction or series of related transactions,
whether or not in the ordinary course of business, with any Affiliate of any
Consolidated Company, other than on terms and conditions at least as favorable
to such Consolidated Company as would be obtained by such Consolidated Company
at the time in a comparable arm's-length transaction with a Person other than an
Affiliate.
(b) Make any payment or any loan owing to any officer, shareholder,
subsidiary or Affiliate, or convey or transfer to any other Person any real
property, buildings, or Fixtures used in the manufacturing or production
operations of any Consolidated Company, or convey or transfer to any other
Consolidated Company any other assets (excluding conveyances or transfers in the
ordinary course of business) if at the time of such payment, conveyance or
transfer any Default or Event of Default exists or would exist as a result of
such payment, conveyance or transfer.
Section 9.09 ERISA. Take or fail to take any action with respect to any
Plan of any Consolidated Company or, with respect to its ERISA Affiliates, any
Plans which are subject to Title IV of ERISA or to continuation health care
requirements for group health plans under the Tax Code which could reasonably be
expected to result in a Materially Adverse Effect, including without limitation
(i) establishing any such Plan, (ii) amending any such Plan (except where
required to comply with applicable law), (iii) terminating or withdrawing from
any such Plan, or (iv) incurring an amount of unfunded benefit liabilities, as
defined in Section 4001(a)(18) of ERISA, or any withdrawal liability under Title
IV of ERISA with respect to any such Plan, without first obtaining the written
approval of the Required Lenders.
Section 9.10 Additional Negative Pledges. Create or otherwise cause or
suffer to exist or become effective, directly or indirectly, any prohibition or
restriction on the creation or existence of any Lien upon any asset of any
Consolidated Company, other than pursuant to (i) this Agreement, (ii) the
Subordinated Note Documents, (iii) the terms of any agreement, instrument or
other document pursuant to which any Indebtedness permitted by Section 9.01(e)
is incurred by any Consolidated Company, so long as such prohibition or
restriction applies only to the property or asset being financed by such
Indebtedness, and (iv) any requirement of
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applicable law or any regulatory authority having jurisdiction over any of the
Consolidated Companies.
Section 9.11 Limitation on Payment Restrictions Affecting Consolidated
Companies. Create or otherwise cause or suffer to exist or become effective any
consensual encumbrance or restriction on the ability of any Consolidated Company
to (i) pay dividends or make any other distributions on such Consolidated
Company's stock, or (ii) pay any Indebtedness owed to any Credit Party or any
other Consolidated Company, or (iii) transfer any of its property or assets to
any Credit Party or any other Consolidated Company, except any consensual
encumbrance or restriction existing under the Credit Documents or the
Subordinated Note Documents.
Section 9.12 Capital Expenditures. Make Capital Expenditures during any
Fiscal Year in excess of (i) $5,700,000 during Fiscal Year 2000, (ii) $2,000,000
during Fiscal Year 2001, and (iii) for each Fiscal Year thereafter, the sum of
(y) $2,000,000 plus (z) an amount equal to fifty percent (50%) of Excess Cash
Flow for the immediately preceding Fiscal Year measured at the end of such
immediately preceding Fiscal Year; provided, however, commencing with Fiscal
Year 2001, if the actual aggregate amount of Capital Expenditures made by the
Borrower and its Subsidiaries during any Fiscal Year (the "Current CapEx") is
less than the respective limit specified above for such Fiscal Year (the
"Specified CapEx"), then the applicable limit for the immediately succeeding
Fiscal Year shall be increased by an amount equal to the difference between the
Current CapEx and the Specified CapEx (the "Carryover Amount"). For purposes of
this Section 9.12 Capital Expenditures made by the Borrower in any Fiscal Year
shall be deemed to be made first with Specified CapEx for such Fiscal Year,
then, from the Carryover Amount, if any. In addition, for purposes of this
Section 9.12, Capital Expenditures shall not include (A) Capital Expenditures
made with Net Casualty/Insurance Proceeds, and (B) up to a maximum amount of
$3,000,000 in the aggregate during the term of this Agreement, of Capital
Expenditures incurred in connection with Acquisitions that are permitted under
Section 9.03(c), and which are not solely for the purchase of assets but are
made in connection with Acquisitions of an additional line of business or
business entity.
Section 9.13 Change in Business. Enter into, or permit any of their
respective Subsidiaries to enter into, any business other than the business
presently conducted by the Consolidated Companies taken as a whole or any
business reasonably related or complementary thereto.
Section 9.14 Modification of Corporate Name, Charter, Etc. Make any
change in any of their (i) corporate names, articles of incorporation, or
similar documents or capital structure that would materially adversely affect
the Borrower's ability to perform under any Transaction Document, or (ii)
accounting practices, business objectives, purposes of operations, Fiscal Month,
Fiscal Quarter or Fiscal Year.
Section 9.15 Modification of the Subordinated Note Documents. Make any
change to, or amendment of, any Subordinated Note Document that would have the
effect of (i) shortening the maturity of the Subordinated Notes or accelerating
the dates of any scheduled
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payments of principal or interest thereunder, (ii) increasing the interest rate
applicable to the Subordinated Notes (but this restriction shall not prohibit
the Subordinated Notes from accruing interest at the default rates set forth in
the Subordinated Note Documents as of the Closing Date, (iii) making the
covenants (including without limitation, financial covenants) contained in the
Subordinated Note Documents more restrictive than the covenants contained
therein as in effect on the Closing Date, and (iv) making the events of default
contained in the Subordinated Note Documents more restrictive than the events of
default contained therein on the Closing Date.
Section 9.16 Modification of BT Intercompany Debt Documents. Make any
change to, or amendment of, any BT Intercompany Debt Document; provided,
however, that the BT Lender may, in its sole discretion, from time to time,
agree that to BT Borrower may defer interest payments required under the BT
Intercompany Loan Agreement.
ARTICLE X.
EVENTS OF DEFAULT
Upon the occurrence and during the continuance of any of the following
specified events (each an "Event of Default"):
Section 10.01 Payments. The Borrower shall fail to pay when due (after
giving effect to any applicable grace period) (including, without limitation, by
mandatory prepayment) any principal, or the Borrower shall fail to pay any
interest, fees or other amount payable in respect of any Obligation and such
failure to pay interest, fees or other amounts continues for five (5) days after
the date such amount becomes due;
Section 10.02 Covenants Without Notice. The Borrower shall fail to
observe or perform (after giving effect to any applicable grace period) any
covenant or agreement contained in Sections 8.01, 8.05, 8.07, 8.09 or Article
IX;
Section 10.03 Other Covenants. Any Credit Party shall fail to observe
or perform (after giving effect to any applicable grace period) any covenant or
agreement contained in this Agreement, other than those referred to in Sections
10.01 and 10.02, or in any other Credit Document and, if capable of being
remedied, such failure shall remain unremedied for 30 days after the earlier of
(i) the Borrower's obtaining knowledge thereof, or (ii) written notice thereof
shall have been given to the Borrower by the Agent or any Lender;
Section 10.04 Representations. Any representation or warranty made or
deemed to be made by any Credit Party or by any of its officers under this
Agreement or any other Credit Document (including the Schedules attached
thereto), or any certificate or other document submitted to the Agent or the
Lenders by any such Person pursuant to the terms of this Agreement or any other
Credit Document, shall be incorrect in any material respect when made or deemed
to be made or submitted;
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Section 10.05 Non-Payments of Other Indebtedness. Any Consolidated
Company shall fail to make when due (whether at stated maturity, by
acceleration, on demand or otherwise, and after giving effect to any applicable
grace period and any cure with respect thereto) any payment of principal of or
interest on any Indebtedness (other than interest on the BT Intercompany Notes
deferred in accordance with Section 9.16) with an aggregate outstanding or
committed principal amount of $500,000 (or the equivalent in other relevant
currency) or more;
Section 10.06 Defaults Under Other Agreements. Any Consolidated Company
shall fail to observe or perform within any applicable grace period any
covenants or agreements contained in any agreements or instruments relating to
any Subordinated Debt, the BT Intercompany Debt (other than payment of interest
or principal thereon), or any other Indebtedness with an aggregate outstanding
or committed principal amount of $1,000,000 (or the equivalent in other relevant
currency) or more, or any other event shall occur if the effect of such failure
or other event, after taking into account any cure thereof, is to accelerate, or
to permit the holder of such Subordinated Debt or such other Indebtedness or any
other Person to accelerate, the maturity of such Indebtedness; or any
Subordinated Debt or any such other Indebtedness shall be required to be prepaid
(other than by a regularly scheduled required prepayment) in whole or in part
prior to its stated maturity;
Section 10.07 Bankruptcy. Any Credit Party or BT Credit Party shall
commence a voluntary case concerning itself under the Bankruptcy Code or
applicable foreign bankruptcy laws, or an involuntary case for bankruptcy (or a
petition for a receiving order) is commenced against any Credit Party or BT
Credit Party and the petition is not controverted within 10 days, or is not
dismissed within 60 days, after commencement of the case, or a custodian,
trustee, interim receiver or coordinator (as defined in the Bankruptcy Code) or
if a sequestrator, administrator or similar official under applicable foreign
bankruptcy laws is appointed for, or takes charge of, all or any substantial
part of the property of any Credit Party or BT Credit Party; or any Credit Party
or BT Credit Party commences proceedings to be granted a suspension of payments
or any other proceeding under any reorganization, arrangement, adjustment of
debt, relief of debtors, dissolution, insolvency or liquidation or similar law
of any jurisdiction, whether now or hereafter in effect, relating to any Credit
Party or BT Credit Party or there is commenced against any Credit Party or BT
Credit Party any such proceeding which remains undismissed for a period of 60
days; or any Credit Party or BT Credit Party is adjudicated insolvent or
bankrupt; or any order of relief or other order approving any such case or
proceeding is entered; or any Credit Party or BT Credit Party suffers any
appointment of any custodian or the like for it or any substantial part of its
property to continue undischarged or unstayed for a period of 60 days; or any
Credit Party or BT Credit Party makes a general assignment for the benefit of
creditors; or any Credit Party or BT Credit Party shall fail to pay, or shall
state that it is unable to pay, or shall be unable to pay, its debts generally
as they become due; or any Credit Party or BT Credit Party shall call a meeting
of its creditors with a view to arranging a composition or adjustment of its
debts; or any Credit Party or BT Credit Party shall by any act or failure to act
indicate its consent to, approval of or acquiescence in any of the foregoing or
any corporate action is taken by any Credit Party for the purpose of effecting
any of the foregoing;
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Section 10.08 ERISA. A Plan or Foreign Plan of a Consolidated Company
or a Plan subject to Title IV of ERISA of any of its ERISA Affiliates:
(a) shall fail to be funded in accordance with the minimum funding
standard required by applicable law, the terms of such Plan or Foreign Plan,
Section 412 of the Tax Code or Section 302 of ERISA for any plan year or a
waiver of such standard is sought or granted with respect to such Plan or
Foreign Plan under applicable law, the terms of such Plan or Foreign Plan or
Section 412 of the Tax Code or Section 303 of ERISA; or
(b) is being, or has been, terminated or the subject of termination
proceedings under applicable law or the terms of such Plan or Foreign Plan; or
(c) shall require a Consolidated Company to provide security under
applicable law, the terms of such Plan or Foreign Plan, Section 401 or 412 of
the Tax Code or Section 306 or 307 of ERISA; or
(d) results in a liability to a Consolidated Company under applicable
law, the terms of such Plan or Foreign Plan, or Title IV of ERISA;
and there shall result from any such failure, waiver, termination or other event
a liability to the PBGC (or any similar Person with respect to any Foreign Plan)
or to a Plan that could reasonably be expected to have a Materially Adverse
Effect.
Section 10.09 Judgment. A final judgment or order for the payment of
damages in an amount equal to $500,000 (or the equivalent in other relevant
currency) or more or otherwise having a Materially Adverse Effect shall be
rendered against the Borrower or any other Consolidated Company and in either
case such judgment or order shall continue unsatisfied (in the case of a money
judgment) and in effect for a period of 60 days during which execution shall not
be effectively stayed or deferred (whether by action of a court, by agreement or
otherwise). A final judgment or order for the payment of damages for which the
Borrower is indemnified shall not constitute an Event of Default hereunder, so
long as (i) the Agent has received written confirmation of such indemnification,
(ii) the terms of such indemnification has been approved by the Agent and the
Required Lender in their reasonable credit judgment, and (iii) the Person
indemnifying the Borrower or other Consolidated Company is acceptable to the
Agent and the Required Lenders in their reasonable credit judgment.
Section 10.10 Change in Control. A Change in Control shall occur or
exist;
Section 10.11 Default Under Other Credit Documents. There shall exist
or occur any "Event of Default" as provided under the terms of any other Credit
Document, or any Credit Document ceases to be in full force and effect or the
validity or enforceability thereof is disaffirmed by or on behalf of any Credit
Party, or at any time it is or becomes unlawful for any Credit Party to perform
or comply with its obligations under any Credit Document or the obligations of
any Credit Party under any Credit Document are not or cease to be legal, valid
and binding on such Credit Party;
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Section 10.12 Default Under Subordinated Note Documents. There shall
exist or occur any "Event of Default" as provided under the terms of any
Subordinated Note Document or the Subordination Agreement ceases to be in full
force and effect or the validity or enforceability thereof is disaffirmed by or
on behalf of any subordinated lender party thereto, or any Obligations fail to
constitute "Senior Debt" for purposes of the Subordination Agreement;
Section 10.13 Default Under Interest Rate Contract or Currency
Contract. Any event or condition shall occur or exist which causes, or permits
any party thereto (other than the Consolidated Company or Companies party
thereto) to cause, the termination or cancellation of any Interest Rate Contract
or Currency Contract, and such Consolidated Company or Companies party thereto
does not execute a binding replacement Interest Rate Contract or Currency
Contract with five Business Days after such termination or cancellation; or
Section 10.14 Attachments. An attachment or similar action shall be
made on or taken against any of the assets of any Consolidated Company with an
aggregate value of $500,000 or more and such attachment or similar action is not
controverted within 10 days, or is not removed within 60 days;
then, and in any such event, and at any time thereafter if any Event of Default
shall then be continuing, the Agent may, and upon the written request of the
Required Lenders, shall take any or all of the following actions, without
prejudice to the rights of the Agent, any Lender or the holder of any Note to
enforce its claims against the Borrower: (i) declare the Commitments terminated,
whereupon the Commitments of each Lender shall terminate immediately and any
accrued Revolving Credit Commitment Fee shall forthwith become due and payable
without any other notice of any kind; and (ii) declare the principal of and any
accrued interest on the Loans, and all other Obligations owing hereunder, to be,
whereupon the same shall become, forthwith due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrower; provided, however, that if an Event of Default specified in
Section 10.07 shall occur, all Commitments shall automatically terminate and all
Obligations shall automatically become due and payable, without declaration,
demand or notice by the Agent or any Lenders. Upon the termination of the
Commitments, the Borrower shall immediately deposit cash collateral with the
Issuing Bank into the L/C Cash Collateral Account in an amount equal to the then
outstanding Letter of Credit Obligations. In addition, if any Event of Default
shall have occurred and be continuing, the Agent may, and upon the written
request of the Required Lenders, shall exercise all remedies contained in the
Collateral Documents.
ARTICLE XI.
AGENT, ISSUING BANK AND SWING LINE LENDER
Section 11.01 Appointment of Agent; Appointment of Security Agent.
(a) Each Lender hereby designates SunTrust as Agent to administer all
matters concerning the Commitments and the Loans and to act as herein specified
or as specified in any other Credit Document. Each Lender hereby irrevocably
authorizes, and each holder of
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any Note by the acceptance of a Note shall be deemed irrevocably to authorize,
the Agent to take such actions on its behalf under the provisions of this
Agreement, the other Credit Documents, and all other instruments and agreements
referred to herein or therein, and to exercise such powers and to perform such
duties hereunder and thereunder as are specifically delegated to or required of
the Agent by the terms hereof and thereof and such other powers as are
reasonably incidental thereto. The Agent may perform any of its duties hereunder
by or through its agents or employees.
(b) Each Beneficiary hereby designates the Security Agent to act as
trustee in connection with the Share Pledge and authorizes the Security Agent to
exercise such rights, powers and authorities as are specifically delegated to
the Security Agent by the terms of the Share Pledge together with all such
rights, powers and authorities as are reasonably incidental thereto.
Section 11.02 Appointment of Issuing Bank. Each Revolving Lender hereby
designates SunTrust as Issuing Bank to issue Letters of Credit, hold the L/C
Cash Collateral Account and to act as herein specified. Each Revolving Lender
hereby irrevocably authorizes, and each holder of any Revolving Credit Note by
the acceptance of a Revolving Credit Note shall be deemed irrevocably to
authorize, the Issuing Bank to take such actions on its behalf under the
provisions of this Agreement, the other Credit Documents, and all other
instruments and agreements referred to herein or therein, and to exercise such
powers and to perform such duties hereunder and thereunder as are specifically
delegated to or required of the Issuing Bank by the terms hereof and thereof and
such other powers as are reasonably incidental thereto. The Issuing Bank may
perform any of its duties hereunder by or through its agents or employees.
Section 11.03 Appointment of Swingline Lender. Each Revolving Lender
hereby designates SunTrust as Swingline Lender to make Swingline Loans and to
act as herein specified. Each Revolving Lender hereby irrevocably authorizes,
and each holder of any Revolving Credit Note by the acceptance of a Revolving
Credit Note shall be deemed irrevocably to authorize, the Swingline Lender to
take such actions on its behalf under the provisions of this Agreement, the
other Credit Documents, and all other instruments and agreements referred to
herein or therein, and to exercise such powers and to perform such duties
hereunder and thereunder as are specifically delegated to or required of the
Swingline Lender by the terms hereof and thereof and such other powers as are
reasonably incidental thereto. The Swingline Lender may perform any of its
duties hereunder by or through its agents or employees.
Section 11.04 Nature of Duties of Agent, Security Agent, Issuing Bank
and Swingline Lender. The Agent, the Security Agent the Issuing Bank and
Swingline Lender shall have no duties or responsibilities except those expressly
set forth in this Agreement and the other Credit Documents. Neither the Agent,
the Security Agent, the Issuing Bank, the Swingline Lender nor any of their
respective officers, directors, employees or agents shall be liable for any
action taken or omitted by it as such hereunder or in connection herewith,
unless caused by its or their gross negligence or willful misconduct. The duties
of the Agent, the Security Agent, the Issuing Bank and Swingline Lender shall be
ministerial and administrative in nature. The Agent, the Security Agent, the
Issuing Bank and Swingline Lender shall not have by reason of this
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Agreement a fiduciary relationship in respect of any Lender; and nothing in this
Agreement, express or implied, is intended to or shall be so construed as to
impose upon the Agent, the Security Agent, the Issuing Bank or the Swingline
Lender any obligations in respect of this Agreement or the other Credit
Documents except as expressly set forth herein.
Section 11.05 Lack of Reliance on the Agent, Security Agent, the
Issuing Bank and the Swingline Lender.
(a) Independently and without reliance upon the Agent, the Security
Agent, the Issuing Bank or the Swingline Lender, each Lender, to the extent it
deems appropriate, has made and shall continue to make (i) its own independent
investigation of the financial condition and affairs of the Consolidated
Companies in connection with the taking or not taking of any action in
connection herewith, and (ii) its own appraisal of the creditworthiness of the
Consolidated Companies, and, except as expressly provided in this Agreement,
neither the Agent, the Security Agent, the Issuing Bank nor the Swingline Lender
shall have any duty or responsibility, either initially or on a continuing
basis, to provide any Lender with any credit or other information with respect
thereto, whether coming into its possession before the making of any Loans, the
purchasing of participations in any Letter of Credit or any Swingline Loan, or
at any time or times thereafter.
(b) Neither the Agent, the Security Agent, the Issuing Bank nor the
Swingline Lender shall be responsible to any Lender for any recitals,
statements, information, representations or warranties herein or in any
document, certificate or other writing delivered in connection herewith or for
the execution, effectiveness, genuineness, validity, enforceability,
collectibility, priority or sufficiency of this Agreement, the Notes, and the
other Credit Documents, or any other documents contemplated hereby or thereby,
or the financial condition of the Consolidated Companies, or be required to make
any inquiry concerning either the performance or observance of any of the terms,
provisions or conditions of this Agreement, the Notes, and the other Credit
Documents, or the other documents contemplated hereby or thereby, or the
financial condition of the Consolidated Companies, or the existence or possible
existence of any Default or Event of Default.
Section 11.06 Certain Rights of the Agent, the Security Agent, the
Issuing Bank and the Swingline Lender. If the Agent, the Security Agent, the
Issuing Bank or the Swingline Lender shall request instructions or consent from
the Lenders or Required Lenders with respect to any action or actions (including
the failure to act) in connection with this Agreement where such instructions or
consent are required or provided for in this Agreement, the Agent, the Security
Agent, the Issuing Bank or the Swingline Lender, as the case may be, shall be
entitled to refrain from such act or taking such act, unless and until it shall
have received such instructions or consent from such Lenders; and neither the
Agent, the Security Agent, the Issuing Bank nor the Swingline Lender shall incur
liability to any Person by reason of so refraining. Without limiting the
foregoing, no Lender shall have any right of action whatsoever against the
Agent, the Security Agent, the Issuing Bank nor the Swingline Lender, as a
result of the Agent, the Issuing Bank or the Swingline Lender acting or
refraining from acting hereunder in accordance with the instructions or consent
of any Lender, all Lenders or the Required Lenders where such
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instructions or consent are required or provided for by this Agreement. In the
absence of any express provision as to instructions or consent of any or all
Lenders or Required Lenders, the Agent, the Security Agent, the Swingline Lender
and the Issuing Bank may request instructions or consent from the Required
Lenders and, if so requested, shall be entitled to refrain from acting or taking
such acts unless and until it shall have received such instructions or consent,
shall have no liability to any Lender, and shall be fully protected in acting or
refraining from acting hereunder in accordance with instructions or consent of
the Required Lenders.
Section 11.07 Reliance by Agent, the Security Agent, Issuing Bank and
the Swingline Lender. The Agent, the Security Agent, the Issuing Bank and the
Swingline Lender shall be entitled to rely, and shall be fully protected in
relying, upon any note, electronic mail message writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cable gram,
radiogram, order or other documentary, teletransmission or telephone message
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person. The Agent, the Security Agent, the Issuing Bank and the
Swingline Lender may consult with legal counsel (including counsel for the
Borrower), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken by it in good
faith in accordance with the advice of such counsel, accountants or experts.
Section 11.08 Indemnification of Agent, the Security Agent, the Issuing
Bank and the Swingline Lender.
(a) To the extent the Agent or Security Agent is not reimbursed and
indemnified by the Borrower, each Lender will reimburse and indemnify the Agent
and the Security Agent, ratably according to the Commitments and outstanding
Loans held by each Lender, for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including reasonable counsel fees and disbursements) or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by or asserted
against the Agent or Security Agent in performing its duties hereunder, in any
way relating to or arising out of this Agreement or the other Credit Documents;
provided that no Lender shall be liable to the Agent or Security Agent for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Agent's or
Security Agent's gross negligence or willful misconduct.
(b) To the extent the Issuing Bank is not reimbursed and indemnified by
the Borrower, each Revolving Lender will reimburse and indemnify the Issuing
Bank, ratably according to the Revolving Credit Commitments and outstanding
Revolving Loans held by each Revolving Lender, for and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including counsel fees and disbursements) or disbursements of
any kind or nature whatsoever which may be imposed on, incurred by or asserted
against the Issuing Bank in performing its duties hereunder, in any way relating
to or arising out of this Agreement or the other Credit Documents; provided that
no Revolving Lender shall be liable to the Issuing Bank for any portion of such
liabilities, obligations, losses,
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damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from Issuing Bank's gross negligence or willful misconduct.
(c) To the extent the Swingline Lender is not reimbursed and
indemnified by the Borrower, each Revolving Lender will reimburse and indemnify
the Swingline Lender, ratably according to the Revolving Credit Commitments and
outstanding Revolving Loans held by each Revolving Lender, for and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses (including counsel fees and disbursements) or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by or asserted against the Swingline Lender in performing its duties hereunder,
in any way relating to or arising out of this Agreement or the other Credit
Documents; provided that no Revolving Lender shall be liable to the Swingline
Lender for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from Swingline Lender's gross negligence or willful misconduct.
Section 11.09 The Agent, the Security Agent, the Issuing Bank and the
Swingline Lender in Their Individual Capacities. With respect to its obligation
to lend under this Agreement, the Loans made by it, the Letters of Credit issued
by it or in which it purchases a participation, and the Notes issued to it, the
Agent, the Security Agent, the Issuing Bank and the Swingline Lender shall have
the same rights and powers hereunder as any other Lender or holder of a Note and
may exercise the same as though it were not performing the duties specified
herein; and the terms "Lenders", "Required Lenders", "holders of Notes", or any
similar terms shall, unless the context clearly otherwise indicates, include the
Agent, the Security Agent, the Issuing Bank and the Swingline Lender in their
individual capacities. The Agent, the Security Agent, the Swingline Lender and
the Issuing Bank may accept deposits from, lend money to, and generally engage
in any kind of banking, trust, financial advisory or other business with the
Consolidated Companies or any affiliate of the Consolidated Companies as if it
were not performing the duties specified herein, including without limitation
purchasing and holding the Subordinated Notes, and may accept fees and other
consideration from the Consolidated Companies for services in connection with
this Agreement, and otherwise without having to account for the same to the
Lenders.
Section 11.10 Holders of Notes. The Agent may deem and treat the payee
of any Note as the owner thereof for all purposes hereof unless and until a
written notice of the assignment or transfer thereof shall have been filed with
the Agent. Any request, authority or consent of any Person who, at the time of
making such request or giving such authority or consent, is the holder of any
Note shall be conclusive and binding on any subsequent holder, transferee or
assignee of such Note or of any Note or Notes issued in exchange therefor.
Section 11.11 Successor Agent.
(a) The Agent and Security Agent may resign at any time by giving
thirty (30) days prior written notice thereof to the Lenders and the Borrower.
Upon any such resignation, the Required Lenders shall have the right, upon five
days' notice to the Borrower, to appoint a successor Agent acceptable to the
Borrower. If no successor Agent or Security Agent, as the
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case may be, shall have been so appointed and shall have accepted such
appointment within 30 days after the retiring Agent's or Security Agent's giving
of notice of resignation, then, upon five days' notice to the Borrower, the
retiring Agent or Security Agent, may, on behalf of the Lenders, appoint a
successor Agent or Security Agent, which shall be a bank which maintains an
office in the United States, or a commercial bank organized under the laws of
the United States of America or any State thereof, or any Affiliate of such
bank, having a combined capital and surplus of at least $100,000,000.
(b) The Required Lenders shall have the right at any time after giving
thirty (30) days prior written notice to the Agent, the Security Agent, all
Lenders and the Borrower to replace the Agent or Security Agent and to appoint a
successor Agent or Security Agent acceptable to the Borrower. If no successor
Agent or Security Agent, as the case may be, shall have been so appointed and
shall have accepted such appointment within thirty (30) days after the Required
Lender's giving of notice of replacement, then upon five days' notice to the
Borrower, the retiring Agent or Security Agent, may, on behalf of the Lenders,
appoint a successor Agent or Security Agent, which shall be a bank which
maintains an office in the United States, or a commercial bank organized under
the laws of the United States of America or any State thereof, or any Affiliate
of such bank, having a combined capital and surplus of at least $100,000,000.
(c) Upon the acceptance of any appointment as the Agent or Security
Agent hereunder by a successor Agent or Security Agent, such successor Agent or
Security Agent shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Agent or Security Agent, and the
retiring Agent or Security Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Agent's or Security Agent's
resignation or removal hereunder as Agent or Security Agent, the provisions of
this Article XI shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was the Agent or Security Agent, as the case may be,
under this Agreement.
Section 11.12 Collateral Matters.
(a) Release of Collateral. Each Lender and Beneficiary hereby
irrevocably authorizes the Agent, or as the case may be, the Security Agent, as
its option and in its discretion, to release any Lien granted to or held by the
Agent or Security Agent, upon any property covered by this Agreement or the
Credit Documents (i) upon termination of the Commitments and payment and
satisfaction of all Obligations, (ii) constituting property being sold or
disposed of if the Borrower certifies to the Agent or Security Agent, as the
case may be, in writing that the sale or disposition is made in compliance with
this Agreement and specifying the applicable Section of this Agreement (and the
Agent and Security Agent may rely in good faith conclusively on any such
certificate, without further inquiry); or (iii) constituting property leased to
a Credit Party under a lease which has expired or been terminated in a
transaction permitted under this Agreement or is about to expire and which has
not been, and is not intended by a Credit Party to be, renewed or extended.
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(b) Confirmation of Authority; Execution of Releases. Without in any
manner limiting the Agent's or Security Agent's authority to act without any
specific or further authorization or consent by Lenders (as set forth in
subsection 11.12(a)), each Lender and Beneficiary agrees to confirm in writing,
upon request by the Borrower, the authority to release any property covered by
this Agreement or the Credit Documents conferred upon the Agent or Security
Agent under subsection 11.12(a). So long as no Event of Default is then
continuing, upon receipt by Agent or Security Agent, as applicable, of
confirmation from the Required Lenders, of its authority to release any
particular item or types of property covered by this Agreement or the Credit
Documents, and upon at least three (3) Business Days prior written request by
the Borrower, the Agent or Security Agent, as applicable, shall (and is hereby
irrevocably authorized by Lenders to) execute such documents as may be necessary
to evidence the release of the Liens granted to the Agent or Security Agent, for
the benefit of Lenders herein or pursuant hereto upon such Collateral; provided,
however, that such release shall not in any manner discharge, affect or impair
the Obligations or any Liens upon (or obligations of any Credit Party, in
respect of), all interests retained by any Credit Party, including, without
limitation, the proceeds of any sale, all of which shall continue to constitute
part of the property covered by this Agreement or the Credit Documents.
Section 11.13 Security Agent's Discretions.
(a) The Security Agent hereby declares that during the Trust Period it
shall hold the Trust Property as trustee upon trust for the Beneficiaries from
time to time and the obligations, rights and benefits vested or to be vested in
the Security Agent by the Share Pledge or any document entered into pursuant
thereto shall (as well after as before enforcement) be performed and (as the
case may be) exercised in accordance with the provisions of this Section 11.13.
(b) For the purposes of this Section 11.13 the following definitions
shall have the following meanings:
(i) "Trust Period" means the period ending on the earlier of
(A) the last day of the period of 80 years from the date of this
Agreement which period (and no other) shall be the applicable
perpetuity period, and (B) such date as the Security Agent may specify
under Section 11.12(a) hereof; and
(ii) "Trust Property" means all or any part of the rights,
titles, interest, assets and income that may now or hereafter be
mortgaged, charged, assigned or granted or the subject of an Lien in
favor of the Security Agent by or pursuant to the Share Pledge and the
proceeds of any such security.
(c) The Security Agent shall have all the powers and discretions
conferred upon trustees by the Trustee Act 1925 (to the extent not inconsistent
herewith) and upon the Security Agent by this Agreement and the Share Pledge and
upon a receiver appointed under the Share Pledge (as though the Security Agent
were a receiver thereunder).
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ARTICLE XII.
MISCELLANEOUS
Section 12.01 Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including bank wire, telex,
telecopy, electronic mail message or similar teletransmission or writing), shall
be in the English language, and shall be given to such party at its address or
applicable teletransmission number set forth on the signature pages hereof, or
such other address or applicable teletransmission number as such party may
hereafter specify by notice to the Agent and the Borrower. Each such notice,
request or other communication shall be effective (i) if given by telex, when
such telex is transmitted to the telex number specified in this Section and the
appropriate answer back is received, (ii) if given by mail, five Business Days
after such communication is deposited in the mails with first class postage
prepaid, addressed as aforesaid, (iii) if given by telecopy, when such telecopy
is transmitted to the telecopy number specified in this Section and the
appropriate confirmation is received, (iv) if given by a reputable overnight
courier service, the Business Day after such communication is delivered to such
courier device for overnight delivery, or (v) if given by any other means
(including, without limitation, by air courier), when delivered or received at
the address specified in this Section; provided that notices to the Agent shall
not be effective until received.
Section 12.02 Amendments, Etc. No amendment or waiver of any provision
of this Agreement or the other Credit Documents, nor consent to any departure by
the Borrower therefrom, shall in any event be effective unless the same shall be
in writing and signed by the Required Lenders and the Borrower, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no amendment, waiver
or consent shall, unless in writing and signed by all of the Lenders do any of
the following at any time: (i) as to the funding of Loans on the Closing Date,
waive any of the conditions specified in Section 6.01 and 6.02, (ii) change any
of the provisions of the definition of "Required Lenders" or any other provision
of any Credit Documents specifying the number, percentage or type of Lenders
required to waive, amend or modify any rights thereunder or make any
determination or grant any consent thereunder, (iii) release any Guarantor, or
reduce or limit the obligations of any Guarantor under any Guaranty Agreements
or otherwise limit such Guarantor's liability with respect to the Obligations
owing to the Agent, the Issuing Bank, the Swingline Lender and the Lenders, (iv)
release any BT Credit Party, or reduce or limit the obligations of any BT Credit
Party under the BT Intercompany Debt Documents or otherwise limit such BT Credit
Party's liability owing to Conso International with respect to the "Obligations"
under the BT Intercompany Loan Agreement; (v) release any material portion of
the Collateral in any transaction or series of related transactions, (vi) amend
this Section 12.02 or Section 12.06, or (vii) change Section 5.10 in any manner
that would alter the pro rata sharing of the payments required thereby,
provided, further, that no amendment, waiver or consent shall, unless in writing
and signed by the Required Lenders and each Revolving Lender, Term A Lender,
Term B Lender or Swingline Lender, as the case may be, that is directly affected
by such amendment, waiver or consent, (i) increase the Commitments of such
Lender, (ii) reduce the principal of, or interest on, the Notes held by such
Lender or any fees or other amounts payable hereunder to such Lender, (iii)
postpone the maturity of any Loan or the termination of any Commitment, (iv)
postpone, waive or excuse any scheduled date for any payment of principal of,
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or interest on, the Notes held by such Lender or any fees or other amounts
payable hereunder to such Lender, or (iv) change the order of application of any
prepayments as set forth in Section 5.08(d) or Section 5.7(d)) and any payments
as set forth in Section 5.10(b) in any manner that adversely affects such
Lender; provided, further that no amendment, waiver or consent shall, unless in
writing and signed by the Issuing Bank, in addition to the Lenders required
above to take such action, affect the rights or obligations of the Issuing Bank
under this Agreement; provided, further that no amendment, waiver or consent
shall, unless in writing and signed by the Swingline Lender, in addition to the
Lenders required above to take such action, affect the rights or obligations of
the Swingline Lender under this Agreement; and provided further that no
amendment, waiver or consent shall, unless in writing and signed by an Agent in
addition to the Lenders required above to take such action, affect the rights or
duties of such Agent under this Agreement or the other Credit Documents. If the
Borrower or any of its Subsidiaries sells, leases or otherwise disposes of any
property that constitutes Collateral and such sale, lease or other disposition
is permitted under Section 8.03, the Lien on such Collateral in favor of the
Agent for the benefit of the Lenders shall be automatically released and the
Agent shall, upon the reasonable request and at the expense of the Borrower, and
without the necessity of any consent of the Lenders, execute and deliver such
releases, lien terminations and other documents as the Borrower shall reasonably
request to evidence the release of such Liens.
Section 12.03 No Waiver; Remedies Cumulative. No failure or delay on
the part of the Agent, any Lender or any holder of a Note in exercising any
right or remedy hereunder or any other Credit Document, and no course of dealing
between the Borrower and the Agent, any Lender or the holder of any Note shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right or remedy hereunder or any other Credit Document preclude any other or
further exercise thereof or the exercise of any other right or remedy hereunder
or thereunder. The rights and remedies herein expressly provided are cumulative
and not exclusive of any rights or remedies which the Agent, any Lender or the
holder of any Note would otherwise have. No notice to or demand on the Borrower
not required hereunder or any other Credit Document in any case shall entitle
the Borrower to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Agent, the Lenders or
the holder of any Note to any other or further action in any circumstances
without notice or demand.
Section 12.04 Payment of Expenses, Etc. The Borrower agrees to:
(a) whether or not the transactions hereby contemplated are
consummated, pay all reasonable, out-of-pocket costs and expenses of the Agent,
the Security Agent and the Arranger in the administration (both before and after
the execution hereof and including advice of counsel as to the rights and duties
of the Agent, the Security Agent and the Lenders with respect thereto) of, and
in connection with the preparation, execution and delivery of, preservation of
rights under, enforcement of, and refinancing, renegotiation or restructuring
of, this Agreement and the other Credit Documents and the documents and
instruments referred to therein, and any amendment, waiver or consent relating
thereto (including, without limitation, the reasonable fees and disbursements of
one counsel for the Agent and Security Agent), and in the case of enforcement of
this Agreement or any Credit Document, all such reasonable, out-of-
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pocket costs and expenses (including, without limitation, the reasonable fees
and disbursements of counsel) for any of the Lenders;
(b) pay and hold each of the Agent, the Security Agent, the Lenders,
the Swingline Lender and the Issuing Bank harmless from and against any and all
present and future stamp, documentary, and other similar Taxes with respect to
this Agreement, the Notes, the Letters of Credit, the other Credit Documents,
the Collateral and any payments due thereunder, and save the Agent, the Security
Agent, each Lender, the Swingline Lender and the Issuing Bank harmless from and
against any and all liabilities with respect to or resulting from any delay or
omission to pay such Taxes;
(c) indemnify the Agent, the Security Agent, the Arranger, the Issuing
Bank, the Swingline Lender, the Lenders and their respective officers,
directors, employees, representatives and agents (whether or not any of them is
designated a party thereto) (an "Indemnitee") from, and hold each of them
harmless against, any and all costs, losses, liabilities, claims, damages or
expenses incurred by any of them arising out of or by reason of any
investigation, litigation or other proceeding related to any actual or proposed
use of the proceeds of any of the Loans or Letters of Credit or the Borrower's,
any other Credit Party's, Agent's, the Security Agent's or any Lender's entering
into and performing of the Agreement, the Notes or the other Credit Documents,
including, without limitation, the reasonable fees and disbursements of counsel
(including foreign counsel) incurred in connection with any such investigation,
litigation or other proceeding; provided, however, the Borrower shall not be
obligated to indemnify any Indemnitee for any of the foregoing arising solely
out of such Indemnitee's gross negligence or willful misconduct or solely from
the breach by such Indemnitee of its obligations hereunder.
(d) without limiting the indemnities set forth in subsection (iii)
above, indemnify each Indemnitee for any and all expenses and costs (including
without limitation, remedial, removal, response, abatement, cleanup,
investigative, closure and monitoring costs), losses, claims (including claims
for contribution or indemnity and including the cost of investigating or
defending any claim and whether or not such claim is ultimately defeated, and
whether such claim arose before, during or after the Borrower's ownership,
operation, possession or control of its business, property or facilities or
before, on or after the date hereof, and including also any amounts paid
incidental to any compromise or settlement by the Indemnitee or Indemnitees to
the holders of any such claim), lawsuits, liabilities, obligations, actions,
judgments, suits, disbursements, encumbrances, liens, damages (including without
limitation damages for contamination or destruction of natural resources),
penalties and fines of any kind or nature whatsoever (including without
limitation in all cases the reasonable fees, other charges and disbursements of
counsel in connection therewith) incurred, suffered or sustained by that
Indemnitee based upon, arising under or relating to Environmental Laws based on,
arising out of or relating to in whole or in part, the existence or exercise of
any rights or remedies by any Indemnitee under this Agreement, any other Credit
Document or any related documents. If and to the extent that the obligations of
the Borrower under this Section 12.04 are unenforceable for any reason, the
Borrower hereby agrees to make the maximum contribution to the payment and
satisfaction of such obligations which is permissible under applicable law.
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Section 12.05 Right of Setoff. In addition to and not in limitation of
all rights of offset that any Lender or other holder of a Note may have under
applicable law, each Lender or other holder of a Note shall, upon the occurrence
and during the continuance of any Event of Default and whether or not such
Lender or such holder has made any demand to any Credit Party or the Borrower's
obligations are matured, have the right to appropriate and apply to the payment
of the Borrower's obligations hereunder and the other Credit Documents, all
deposits of the Borrower (general or special, time or demand, provisional or
final) then or thereafter held by and other indebtedness or property then or
thereafter owing by such Lender or other holder to the Borrower, whether or not
related to this Agreement or any transaction hereunder, and whether or not the
obligations of the Borrower under the Credit Documents are payable in the same
currency as any such deposits, indebtedness or property.
Section 12.06 Benefit of Agreement.
(a) This 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 the Borrower may not assign or transfer any of its
interest hereunder without the prior written consent of the Lenders.
(b) Any Lender may make, carry or transfer Loans at, to or for the
account of, any of its branch offices or the office of an Affiliate of such
Lender; provided that for tax purposes such Lender remains the owner in all
respects.
(c) Each Lender may assign all or a portion of its interests, rights
and obligations under this Agreement (including all or a portion of any of its
Commitments, the Loans owing to it, its participations in the Letter of Credit
Obligations and the Swingline Loans, and the Notes held by it) to any Eligible
Assignee; provided, however, that (i) the Agent and, so long as no Event of
Default has occurred and is continuing, the Borrower must give their prior
written consent to such assignment, which consents shall not be unreasonably
withheld (it being agreed, without limitation, that it would be reasonable for
the Borrower to withhold consent if, as a result of such assignment, Borrower
would be required to pay additional amounts under Section 5.09, Section 5.13
though 5.16 or Section 5.19), (ii) the aggregate principal amount of the
Revolving Credit Commitment or any Term A Loan or any Term B Loan assigned
(determined as of the date the Assignment and Acceptance with respect to such
assignment is delivered to the Agent) shall be in a minimum amount of $1,000,000
and in integral multiples of $500,000, (iii) such assigning Lender shall assign
a proportionate share of all of its rights and obligations with respect to such
Lender's Pro Rata Share of its Revolving Credit Commitment, Term A Loan
Commitment or Term B Loan Commitment, (iv) the parties to each such assignment
shall execute and deliver to the Agent an Assignment and Acceptance, together
with the Note or Notes subject to such assignment and a processing and
recordation fee of $1,000 paid by the assigning Lender or the assignee Lender;
provided, further, that the minimum amounts required in clause (ii) above shall
not apply to any assignments made (x) at any time an Event of Default has
occurred and is continuing, (y) by a Lender assigning the entire amount of its
Revolving Credit Commitment (including its Revolving Loans, Revolving Credit
Notes and its
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participations in any Letter of Credit Obligations and Swingline Loans) or its
Term A Loan, or its Term B Loan, or (z) by a Lender assigning any portion of its
Revolving Credit Commitment (including its Revolving Loans, Revolving Credit
Notes and its participations in any Letter of Credit Obligations and Swingline
Loans) or its Term A Loan or its Term B Loan to one of its Affiliates or to a
Person that is already a Lender under this Agreement prior to giving effect to
such assignment. From and after the effective date specified in each Assignment
and Acceptance, which effective date shall be at least five (5) Business Days
after the execution thereof and after the recording of such transfer or
assignment by the Agent on the Register pursuant to Section 12.06(f) of this
Agreement, the assignee thereunder shall be a party hereto and, to the extent of
the interest assigned by such Assignment and Acceptance, have the rights and
obligations of a Lender under this Agreement. Within five (5) Business Days
after receipt of the notice and the Assignment and Acceptance and after the
recording of such transfer or assignment by the Agent on the Register pursuant
to Section 12.06(f) of this Agreement, the Borrower, at its own expense, shall
execute and deliver to the Agent, in exchange for the surrendered Note or Notes,
a new Note or Notes to the order of such assignee in a principal amount equal to
the applicable Revolving Credit Commitment, Term A Loan or Term B Loan, as the
case may be, assumed by it pursuant to such Assignment and Acceptance and new
Note or Notes to the assigning Lender in the amount of its retained Revolving
Credit Commitment and Loans. Such new Note or Notes shall be in an aggregate
principal amount equal to the aggregate principal amount of such surrendered
Note or Notes, shall be dated the date of the surrendered Note or Notes which
they replace, and shall otherwise be in substantially the form attached hereto.
(d) Each Lender may, without the consent of, the Borrower or the Agent,
sell participations to one or more banks, financial institutions, insurance
companies or other entities in all or a portion of its rights and obligations
under this Agreement (including all or a portion of any of its Commitments, its
Loans and its participation in Letter of Credit Obligations and Swingline Loan
and the Notes held by it); provided, however, that (i) such Lender's obligations
under this Agreement shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, (iii) the participating bank, financial institution, insurance
company or other entity shall not be entitled to the benefit (except through its
selling Lender) of the cost protection provisions contained in Section 5.09,
Sections 5.12 through 5.17 or Section 5.19 or of this Agreement, (iv) the
Borrower, the Agent, the Issuing Bank, the Swingline Lender and other Lenders
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement and the other Credit
Documents, and such Lender shall retain the sole right to enforce the
obligations of the Borrower relating to its Commitments, its Loans and its
participation in Letter of Credit Obligations and Swingline Loans, and (v) the
Borrower shall not be obligated to pay under Section 5.09 of this Agreement to
any Person to who a Lender sells participation to under this Section 12.06(d) in
excess of the sum which the Borrower would have been obligated to pay to the
Lender that sold the participation had such participation not been sold. Any
Lender or participant may, in connection with the assignment or participation or
proposed assignment or participation, pursuant to this Section, disclose to the
assignee or participant or proposed assignee or participant any information
relating to the Borrower or the other Consolidated
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Companies furnished to such Lender by or on behalf of the Borrower or any other
Consolidated Company.
(e) Any Lender may at any time assign all or any portion of its rights
in this Agreement and the Notes issued to it to a Federal Reserve Bank; provided
that no such assignment shall release any Lender from any of its obligations
hereunder.
(f) The Borrower hereby designates the Agent to serve as its agent,
solely for purposes of this Section 12.06(f) of this Agreement, to maintain a
register (the "Register") on which it will record the Commitments from time to
time of each of the Lenders, the Loans made by each of the Lenders and each
repayment in respect of the principal amount of, and interest on, each Loan of
each Lender. Failure to make any such recordation, or any error in such
recordation, shall not affect the Borrower's obligations in respect of such
Loans. With respect to any Lender, the transfer or assignment of all or part of
the Commitments of such Lender and the rights to all or part of the principal
of, and interest on, any Loan made pursuant to such Commitments (i) shall not be
effective until such transfer or assignment, respectively, is recorded on the
Register maintained by the Agent with respect to ownership of such Commitments
and Loans and (ii) prior to such recordation of all amounts (including interest)
owing to the transferor with respect to such Commitments and Loans shall remain
owing to the transferor. The registration of assignment or transfer of all or
part of any Commitments and Loans shall be recorded by the Agent on the Register
only upon the acceptance by the Agent of a properly executed and delivered
Assignment and Acceptance Agreement pursuant to Section 12.06(c) of this
Agreement. The Borrower agrees to indemnify the Agent from and against any and
all losses, claims, damages and liabilities of whatsoever nature which may be
imposed on, asserted against or incurred by the Agent in performing its duties
under this Section 12.06(f), unless such losses, claims, damages and liabilities
are caused by the gross negligence or willful misconduct of the Agent.
Section 12.07 Governing Law; Submission to Jurisdiction.
(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER AND UNDER THE NOTES SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE
GOVERNED BY THE LAW (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES
THEREOF) OF THE STATE OF NEW YORK.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT, THE
NOTES, OR ANY OTHER CREDIT DOCUMENT MAY BE BROUGHT IN ANY COURT OF THE STATE OF
NEW YORK OR IN ANY COURT OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE
BORROWER HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVE TRIAL BY JURY, AND THE BORROWER HEREBY IRREVOCABLY
WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING
OF VENUE OR BASED ON
-109-
<PAGE> 116
THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.
(c) THE BORROWER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS 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 THE BORROWER
AT ITS SAID ADDRESS, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH
MAILING.
(d) Nothing herein shall affect the right of the Agent, the Issuing
Bank, the Swingline Lender, any Lender, any holder of a Note or the Borrower to
serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against the Borrower in any other jurisdiction.
(e) The Borrower hereby irrevocably designates, appoints and empowers
CT Corporation System, whose present address is 111 Eighth Avenue, 13th Floor,
New York, New York, 10011, as its authorized agent to receive, for and on its
behalf and its property, service of process in the State of New York when and as
such legal actions or proceedings may be brought in the courts of the State of
New York or of the United States of America sitting in New York, and such
service of process shall be deemed complete upon the date of delivery thereof to
such agent whether or not such agent gives notice thereof to the Borrower, or
upon the earliest of any other date permitted by applicable law. The Borrower
shall furnish the consent of CT Corporation System so to act to the Agent on or
prior to the Closing Date. It is understood that a copy of said process served
on such agent will as soon as practicable be forwarded to the Borrower, at its
address set forth below, but its failure to receive such copy shall not affect
in any way the service of said process on said agent as the agent of the
Borrower. The Borrower irrevocably consents to the service of process out of any
of the aforementioned courts in any such action or proceeding by the mailing of
the copies thereof by certified mail, return receipt requested, postage prepaid,
to it at its address set forth herein, such service to become effective upon the
earlier of (i) the date 10 calendar days after such mailing or (ii) any earlier
date permitted by applicable law. The Borrower agrees that it will at all times
continuously maintain an agent to receive service of process in the State of New
York on behalf of itself and its properties and in the event that, for any
reason, the agent named above or its successor shall no longer serve as its
agent to receive service of process in the State of New York on its behalf, it
shall promptly appoint a successor so to serve and shall advise the Agent and
the Lenders thereof (and shall furnish to the Agent the consent of any successor
agent so to act). Nothing in this Section 12.07 shall affect the right of the
Agent or any Lender to bring proceedings against the Borrower in the courts of
any other jurisdiction or to serve process in any other manner permitted by
applicable law.
Section 12.08 Independent Nature of Lenders' Rights. The amounts
payable at any time hereunder to each Lender shall be a separate and independent
debt, and each Lender shall be entitled to protect and enforce its rights
pursuant to this Agreement and its Notes, and it shall not
-110-
<PAGE> 117
be necessary for any other Lender to be joined as an additional party in any
proceeding for such purpose.
Section 12.09 Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument.
Section 12.10 Survival. The obligations of the Borrower under Sections
5.12, 5.13, 5.14, 5.16, 5.18, 5.19, 5.09(b) and 12.04 hereof shall survive the
payment in full of the Notes after the Revolving Credit Termination Date, the
Term A Loan Maturity Date and the Term B Loan Maturity Date. All representations
and warranties made herein and in the other Credit Documents, in the
certificates, reports, notices, and other documents delivered pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
other Credit Documents, the making of the Loans and the issuance of the Letters
of Credit and shall continue until the Notes are paid in full and the
Commitments are terminated.
Section 12.11 Severability. In case any provision in or obligation
under this Agreement or the other Credit Documents shall be invalid, illegal or
unenforceable, in whole or in part, in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
Section 12.12 Independence of Covenants. All covenants hereunder and
under the other Credit Documents shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or be otherwise within the
limitation of, another covenant, shall not avoid the occurrence of a Default or
an Event of Default if such action is taken or condition exists.
Section 12.13 Change in Accounting Principles, Fiscal Year or Tax Laws.
If (i) any preparation of the financial statements referred to in Section 8.07
hereafter occasioned by the promulgation of rules, regulations, pronouncements
and opinions by or required by the Financial Accounting Standards Board or the
American Institute of Certified Public Accountants (or successors thereto or
agencies with similar functions) result in a material change in the method of
calculation of financial covenants, standards or terms found in this Agreement,
(ii) there is any change in the Borrower's Fiscal Month, Fiscal Quarter or
Fiscal Year, or (iii) there is a material change in U.S. tax laws or the tax
laws of the United Kingdom which materially affects any of the Consolidated
Companies' ability to comply with the financial covenants, standards or terms
found in this Agreement, the parties agree to enter into negotiations in order
to amend such provisions so as to equitably reflect such changes with the
desired result that the criteria for evaluating any of the Consolidated
Companies' financial condition shall be the same after such changes as if such
changes had not been made. Unless and until such provisions have been so
amended, the provisions of this Agreement shall govern.
-111-
<PAGE> 118
Section 12.14 Headings Descriptive; Entire Agreement. The headings of
the several sections and subsections of this Agreement are inserted for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Agreement. This Agreement, the other Credit Documents, and
the agreements and documents required to be delivered pursuant to the terms of
this Agreement constitute the entire agreement among the parties hereto and
thereto regarding the subject matters hereof and thereof and supersede all prior
agreements, representations and understandings related to such subject matters
Section 12.15 Maximum Interest Rate. Nothing contained in this
Agreement or any Note shall require the Borrower to pay interest at a rate
exceeding the Maximum Permissible Rate. If interest payable to any Lender for
any period would exceed the Maximum Permissible Rate, such interest shall be
reduced automatically to the maximum amount that would not exceed the Maximum
Permissible Rate, and interest payable to any Lender for any subsequent period,
to the extent less than the Maximum Permissible Rate, shall, to that extent, be
increased by the aggregate amount of all such reductions.
[Signatures appear on next page]
-112-
<PAGE> 119
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in New York, New York, by their duly authorized
officers as of the day and year first above written.
Address for Notices: CIC ACQUISITION SUB, INC.,
- -------------------- as Borrower
513 North Duncan Bypass
Union, South Carolina 29379
Attention: J. Cary Findlay By: /s/ Michael Bradley
Telecopy No.: (864) 427-8820 --------------------------
Name: Michael Bradley
Title: Vice President
[SIGNATURE PAGE TO REVOLVING CREDIT AND TERM LOAN AGREEMENT]
<PAGE> 120
Address for Notices: SUNTRUST BANK,
- -------------------- as Agent, as Security Agent, as Issuing
Bank, as Swingline Lender, as a Lender
303 Peachtree St., 3rd Floor
Atlanta, GA 30308
Attention: Bradley Staples
Telecopy: (404) 230-5099 By: /s/ Bradley Staples
-----------------------------
Name: Bradley Staples
Title: Director
Agent's Payment Office:
- -----------------------
25 Park Place, N.E.
Atlanta, GA 30303
Lending Office:
- ---------------
25 Park Place, N.E.
Atlanta, GA 30303
LIBOR Lending Office:
- ---------------------
25 Park Place, NE.
Atlanta, Georgia 30303
AMOUNT PRO RATA SHARE
------ --------------
REVOLVING CREDIT COMMITMENT $2,116,071.43 14.1071%
TERM A LOAN COMMITMENT $3,526,785.71 14.1071%
TERM B LOAN COMMITMENT $13,357,142.86 44.5238%
<PAGE> 121
Address for Notices: GMAC COMMERCIAL CREDIT LLC,
- -------------------- as Syndication Agent and as a Lender
100 Ashford Court N.
Atlanta, Georgia 30338
Attention: Kristy Loucks
Telecopy No.: (770) 698-5960 By: /s/ Frank Imperato
----------------------------
Name: Frank Imperato
Title: Vice President
Lender Payment Office:
- ----------------------
1 Penn Plaza
New York, New York 10018
Lending Office:
- ---------------
1 Penn Plaza
New York, New York 10018
LIBOR Lending Office:
- ---------------------
1 Penn Plaza
New York, New York 10018
AMOUNT PRO RATA SHARE
------ --------------
REVOLVING CREDIT COMMITMENT $4,071,428.57 27.1429%
TERM A LOAN COMMITMENT $6,785,714.29 27.1429%
TERM B LOAN COMMITMENT $8,142,857.14 27.1429%
<PAGE> 122
Address for Notices: HELLER FINANCIAL, INC., as
- -------------------- Documentation Agent and as a Lender
500 W. Monroe
Chicago, Illinois 60661
Attention: Patty Weitzman
Telecopy No.: (312) 441-7367 By: /s/ Bruce Robertson
----------------------------
Name: Bruce Robertson
Title: Vice President
Lender Payment Office:
- ----------------------
500 W. Monroe
Chicago, Illinois 60661
Lending Office:
- ---------------
500 W. Monroe
Chicago, Illinois 60661
LIBOR Lending Office:
- ---------------------
500 W. Monroe
Chicago, Illinois 60661
AMOUNT PRO RATA SHARE
------ --------------
REVOLVING CREDIT COMMITMENT $2,437,500.00 16.2500%
TERM A LOAN COMMITMENT $4,062,500.00 16.2500%
TERM B LOAN COMMITMENT $8,500,000.00 28.3333%
<PAGE> 123
Address for Notices: THE CIT GROUP/EQUIPMENT
- -------------------- FINANCING, INC., as a Lender
900 Ashwood Parkway, Suite 600
Atlanta, Georgia 30338
Attention: Dan Nichols
Telecopy No.: (770) 206-9295 By: /s/ Mike Hampton
--------------------------
Name: Mike Hampton
Title: Assistant Vice President
Lender Payment Office:
- ----------------------
900 Ashwood Parkway, Suite 600
Atlanta, Georgia 30338
Lending Office:
- ---------------
900 Ashwood Parkway, Suite 600
Atlanta, Georgia 30338
LIBOR Lending Office:
- ---------------------
900 Ashwood Parkway, Suite 600
Atlanta, Georgia 30338
AMOUNT PRO RATA SHARE
------ --------------
REVOLVING CREDIT COMMITMENT $3,562,500.00 23.7500%
TERM A LOAN COMMITMENT $5,937,500.00 23.7500%
<PAGE> 124
Address for Notices: ALLFIRST BANK, as a Lender
- --------------------
25 South Charles Street
Baltimore, Maryland 21201
Attention: John T. Penny
Telecopy No.: (410) 244-4295 By: /s/ John T. Penny
-----------------------
Name: John T. Penny
Title: Vice President
Lender Payment Office:
- ----------------------
25 South Charles Street
Baltimore, Maryland 21201
Lending Office:
- ---------------
25 South Charles Street
Baltimore, Maryland 21201
LIBOR Lending Office:
- ---------------------
25 South Charles Street
Baltimore, Maryland 21201
AMOUNT PRO RATA SHARE
------ --------------
REVOLVING CREDIT COMMITMENT $2,812,500.00 18.7500%
TERM A LOAN COMMITMENT $4,687,500.00 18.7500%
<PAGE> 1
EXHIBIT (a)(4)
EXECUTION COUNTERPART
THIS SUBORDINATED NOTE AND WARRANT PURCHASE AGREEMENT IS SUBJECT TO THAT CERTAIN
SUBORDINATION AGREEMENT, DATED AS OF THE DATE HEREOF, AMONG CIC ACQUISITION SUB,
INC., SUNTRUST BANKS, INC., THE LINCOLN NATIONAL LIFE INSURANCE COMPANY AND
LINCOLN NATIONAL INCOME FUND, INC. AS SUBORDINATED CREDITORS, AND SUNTRUST BANK,
AS AGENT FOR THE SENIOR CREDITORS AS AMENDED FROM TIME TO TIME.
SUBORDINATED NOTE
AND WARRANT PURCHASE AGREEMENT
Dated as of March 6, 2000
by and among
CIC ACQUISITION SUB, INC., as assumed by
CONSO INTERNATIONAL CORPORATION,
as the Company,
THE SUBSIDIARY GUARANTORS SET FORTH
ON THE SIGNATURE PAGES HERETO,
and
SUNTRUST BANKS, INC.,
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
and
LINCOLN NATIONAL INCOME FUND, INC.
as the Purchasers
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE 1. DEFINITIONS.................................................................................2
Section 1.1 Definitions.......................................................................2
Section 1.2 Accounting Terms and Determination...............................................15
Section 1.3 Other Definitional Terms.........................................................15
Section 1.4 Exhibits and Schedules...........................................................15
Section 1.5 Plural Terms.....................................................................15
ARTICLE 2. ISSUANCE AND PURCHASE OF NOTES AND WARRANTS................................................16
Section 2.1 Authorization of Issuance of Notes and Warrants..................................16
Section 2.2 Purchase and Sale of Notes and Warrants..........................................16
Section 2.3 Allocation of Purchase Price.....................................................16
Section 2.4 Interest on the Notes............................................................16
Section 2.5 Amortization and Maturity of Notes; Prepayments; Funding Losses..................17
Section 2.6 Prepayment Fee...................................................................17
ARTICLE 3. OTHER PROVISIONS RELATING TO THE NOTES.....................................................18
Section 3.1 Making of Payments...............................................................18
Section 3.2 Increased Costs..................................................................18
Section 3.3 Capital Adequacy.................................................................18
Section 3.4 Default Rate of Interest.........................................................19
Section 3.5 Calculation of Interest..........................................................19
Section 3.6 Usury............................................................................19
Section 3.7 Payments, etc....................................................................20
ARTICLE 4. GUARANTY...................................................................................22
Section 4.1 The Guaranty.....................................................................22
Section 4.2 Obligations Unconditional........................................................22
Section 4.3 Reinstatement....................................................................23
Section 4.4 Certain Additional Waivers.......................................................23
Section 4.5 Remedies.........................................................................24
Section 4.6 Guarantee of Payment; Continuing Guarantee.......................................24
ARTICLE 5. CONDITIONS PRECEDENT TO PURCHASE OF THE NOTES AND THE WARRANTS.............................24
Section 5.1 Closing Date Conditions..........................................................24
ARTICLE 6. REPRESENTATIONS AND WARRANTIES.............................................................27
Section 6.1 Representations and Warranties Generally.........................................27
6.1.1 Organizational Existence; Compliance with Law....................................27
6.1.2 Organizational Power; Authorization..............................................27
6.1.3 Enforceable Obligations..........................................................27
6.1.4 No Legal Bar.....................................................................28
6.1.5 No Material Litigation...........................................................28
6.1.6 Investment Company Act, Etc......................................................28
6.1.7 Margin Regulations...............................................................28
6.1.8 Compliance With Environmental Laws...............................................28
6.1.9 Insurance........................................................................29
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
6.1.10 No Default.......................................................................29
6.1.11 No Burdensome Restrictions.......................................................29
6.1.12 Taxes............................................................................29
6.1.13 Subsidiaries; Dormant Subsidiaries...............................................29
6.1.14 Financial Statements.............................................................29
6.1.15 Employee Benefits................................................................30
6.1.16 Patents, Trademarks, Licenses, Etc...............................................32
6.1.17 Ownership of Property............................................................32
6.1.18 Indebtedness.....................................................................33
6.1.19 Financial Condition..............................................................33
6.1.20 Labor Matters....................................................................33
6.1.21 Payment or Dividend Restrictions.................................................33
6.1.22 Year 2000 Issues.................................................................34
6.1.23 Disclosure.......................................................................34
ARTICLE 7. AFFIRMATIVE COVENANTS......................................................................34
Section 7.1 Affirmative Covenants............................................................34
7.1.1 Organizational Existence, Etc....................................................34
7.1.2 Compliance with Laws, Etc........................................................34
7.1.3 Payment of Taxes and Claims, Etc.................................................35
7.1.4 Keeping of Books.................................................................35
7.1.5 Visitation, Inspection and Audits, Etc...........................................35
7.1.6 Insurance; Maintenance of Properties; Net Casualty/Insurance Proceeds............35
7.1.7 Reporting Covenants..............................................................36
7.1.8 ERISA............................................................................37
7.1.9 Liens............................................................................38
7.1.10 Public Filings, Etc..............................................................38
7.1.11 Accountants' Reports.............................................................39
7.1.12 Senior Debt and Equity Notices...................................................39
7.1.13 Other Information................................................................39
7.1.14 Year 2000 Issues.................................................................39
7.1.15 Maximum Total Funded Debt to Adjusted EBITDA Ratio...............................39
7.1.16 Minimum Fixed Charge Coverage Ratio..............................................40
7.1.17 Interest Coverage Ratio..........................................................40
7.1.18 Additional Credit Parties........................................................41
7.1.19 Issuance of Relacement Warrants..................................................41
ARTICLE 8. NEGATIVE COVENANTS.........................................................................41
Section 8.1 Negative Covenants...............................................................41
8.1.1 Indebtedness.....................................................................41
8.1.2 Liens............................................................................42
8.1.3 Mergers, Consolidations, Acquisitions, Sales, Etc................................43
8.1.4 Investments, Loans, Etc..........................................................44
8.1.5 Lease Obligations................................................................45
8.1.6 Restricted Payments..............................................................46
8.1.7 Sale and Leaseback Transactions..................................................46
8.1.8 Transactions with Affiliates.....................................................46
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
8.1.9 ERISA............................................................................46
8.1.10 Additional Negative Pledges......................................................46
8.1.11 Limitation on Payment Restrictions Affecting Consolidated Companies..............47
8.1.12 Capital Expenditures.............................................................47
8.1.13 Change in Business...............................................................47
8.1.14 Modification of Corporate Name, Charter, Etc.....................................47
ARTICLE 9. EVENTS OF DEFAULT..........................................................................48
Section 9.1 Events of Default...................................................................48
Section 9.2 Remedies on Default.................................................................49
ARTICLE 10. MISCELLANEOUS..............................................................................50
Section 10.1 Notices.............................................................................50
Section 10.2 No Waiver...........................................................................52
Section 10.3 Expenses............................................................................53
Section 10.4 Amendments, Etc.....................................................................53
Section 10.5 Successors and Assigns..............................................................54
Section 10.6 GOVERNING LAW.......................................................................54
Section 10.7 Survival of Representations and Warranties..........................................54
Section 10.8 Severability........................................................................54
Section 10.9 Counterparts........................................................................54
Section 10.10 Set-Off.............................................................................54
Section 10.11 Termination of Agreement............................................................54
Section 10.12 JURISDICTION AND VENUE..............................................................55
Section 10.13 WAIVER OF JURY TRIAL................................................................55
Section 10.14 Entire Agreement....................................................................55
</TABLE>
Exhibits and Schedules
Exhibit A - Form of Note
Exhibit B - Form of Warrant Agreement
Exhibit C - Form of Warrant
Exhibit D - Form of Registration Rights Agreement
Exhibit E - Form of Compliance Certificate As To Financial Covenants
Exhibit F - Form of Subordination Agreement
Exhibit G - Form of Assignment and Assumption Agreement
Exhibit H - Form of Stockholders Agreement
Schedule 5.16 - Material Contracts
Schedule 5.21 - Ownership of Stock of Company
Schedule 7.6 - Existing Debt
iii
<PAGE> 5
SUBORDINATED NOTE AND WARRANT
PURCHASE AGREEMENT
THIS SUBORDINATED NOTE AND WARRANT PURCHASE AGREEMENT dated as of March
6, 2000 by and between CIC ACQUISITION SUB, INC., a corporation organized under
the laws of the State of South Carolina, as issuer of the Subordinated Notes and
the Warrants (the "Company"), the Subsidiaries of the Company listed on the
signature pages hereto, as guarantors (the "Subsidiary Guarantors"), SUNTRUST
BANKS, INC., a corporation organized under the laws of the State of Georgia
("SunTrust"), THE LINCOLN NATIONAL LIFE INSURANCE COMPANY, a corporation
organized under the laws of the State of Indiana ("Lincoln National") and
LINCOLN NATIONAL INCOME FUND, INC., a corporation organized under the laws of
the State of Maryland ("Lincoln National Income Fund"; Lincoln National and
Lincoln National Income Fund, collectively, "Lincoln"; SunTrust and Lincoln
individually, a "Purchaser" and, collectively, the "Purchasers").
WHEREAS, pursuant to a Merger Agreement, dated as of October 5, 1999,
between CIC Acquisition Co., a Delaware corporation, the Company, and Conso
International Corporation, a South Carolina corporation ("Conso International"),
Conso International will merge with and into the Company with Conso
International as the surviving corporation (the "Merger") and upon effectiveness
of the Merger, Conso International will assume all obligations of the Company
hereunder and shall be deemed to be the Company hereunder;
WHEREAS, on the date hereof, the Company entered into that certain
Revolving Credit and Term Loan Agreement with, amongst others, SunTrust Bank, as
agent (the "Agent") for the senior lenders party thereto (the "Senior Lenders"),
providing a $70,000,000 credit facility to the Company;
WHEREAS, the Company has requested that the Purchasers make a certain
subordinated debt investment in the Company, the proceeds of which will be used
by the Company to effect the Merger, to pay related fees and expenses, and for
general corporate purposes;
WHEREAS, each Purchaser has severally agreed to make its Pro Rata Share
of a $20,000,000 subordinated debt investment in the Company on the terms and
subject to the conditions set forth herein, such investment to be evidenced by
subordinated notes in such amount from the Company and certain warrants issued
by the Company as more fully described below;
NOW, THEREFORE, for and in consideration of the mutual premises,
covenants and conditions contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, agree as follows:
<PAGE> 6
ARTICLE 1.
DEFINITIONS
Section 1.1 Definitions. In addition to the other terms defined herein, the
following terms used herein shall have the meanings herein specified (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
"Active Subsidiary" shall mean each Subsidiary of the Company that has
any assets, liabilities or conducts any business whatsoever.
"Adjusted EBITDA" shall mean (a) for any period ending after the last
day of the second Fiscal Quarter of Fiscal Year 2001, EBITDA, and (b) for any
period ending on or prior to the last day of the second Fiscal Quarter of Fiscal
Year 2001, EBITDA, plus:
(i) for the period ending on the last day of the third Fiscal Quarter
of Fiscal Year 2000, $366,000;
(ii) for the period ending on the last day of fourth Fiscal Quarter of
Fiscal Year 2000, $117,500;
(iii) for the period ending on the last day of the first Fiscal Quarter
of Fiscal Year 2001, $40,000; or
(iv) for the period ending on the last day of the second Fiscal Quarter
of Fiscal Year 2001, $15,000.
"Affiliate" of any Person shall mean any other Person directly or
indirectly controlling, controlled by, or under common control with, such
Person, whether through the ownership of voting securities, by contract or
otherwise. For purposes of this definition, "control" (including with
correlative meanings, the terms "controlling", "controlled by", and "under
common control with") as applied to any Person, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of that Person.
"Agent" shall have the meaning given to such term in the recitals
hereof.
"Agreement" shall mean this Subordinated Note and Warrant Purchase
Agreement, as the same may be amended, restated, supplemented or modified from
time to time in accordance with the terms hereof.
"Amortization" shall mean, for any period, amortization expense of the
Consolidated Companies determined on a consolidated basis in accordance with
GAAP.
"Applicable Law" shall mean all applicable provisions of constitutions,
statutes, rules, regulations and orders of all governmental bodies and all
orders and decrees of all courts, tribunals and arbitrators.
2
<PAGE> 7
"Assumption Agreement" shall mean the Assumption Agreement dated as of
the Closing Date, executed and delivered by Conso International in favor of the
Purchasers in the form of Exhibit G.
"Bankruptcy Code" shall mean The Bankruptcy Code of 1978, as amended
and in effect from time to time (11 U.S.C. ss. 101 et seq.).
"BT" shall mean British Trimmings Limited, a corporation organized
under the laws of England (Registered in England No. 2150914).
"BT Credit Party" shall mean "Credit Party" as such term is defined in
the BT Intercompany Loan Agreement.
"BT Intercompany Debt Documents" shall mean, collectively, the BT
Intercompany Loan Agreement, the BT Intercompany Note and all other "Loan
Documents" as defined in the BT Intercompany Loan Agreement.
"BT Intercompany Loan Agreement" shall mean the Loan Agreement, dated
as of the date hereof, between BT and the Company, as amended, restated,
supplemented, or otherwise modified from time to time in accordance with this
Agreement.
"BT Intercompany Note" shall mean the intercompany note, in the
principal amount of [$11,500,000], in form and substance reasonably satisfactory
to the Purchasers and Lenders, issued by BT to the Company, together with all
replacements and substitutions therefor, in each case as amended, restated,
supplemented, or otherwise modified from time to time in accordance with this
Agreement.
"Business Day" shall mean any day on which commercial banks located in
Atlanta, Georgia are required or permitted by law to be open for the purpose of
conducting a commercial banking business.
"Capital Expenditures" shall mean, for any period, the aggregate of
expenditures of the Consolidated Companies for the acquisition or leasing
pursuant to capital leases of fixed or capital assets or additions to property,
plants and equipment (including, but not limited to, replacements, capitalized
repairs and improvements) which should be capitalized under GAAP.
"Capital Lease" shall mean, as applied to any Person, any lease of any
property (whether real, personal or mixed) by such Person as lessee which would,
in accordance with GAAP, be required to be classified and accounted for as a
capital lease on a balance sheet of such Person, other than, in the case of the
Company or a Subsidiary, any such lease under which the Company or a wholly
owned Subsidiary is the lessor.
"Capital Lease Obligations" of any Person shall mean all obligations of
such Person under leases that are required to be classified and accounted for as
capital leases under GAAP.
3
<PAGE> 8
"Cash Taxes" shall mean for any period, Taxes relating to income paid
by the Consolidated Companies during such period.
"Casualty" means any act or occurrence of any kind or nature that
results in damage, loss or destruction to any Collateral (as such term is
defined in the Senior Credit Agreement).
"Change in Control" shall mean and be deemed to occur on the earliest
of, and upon any subsequent occurrence of:
(a) (i) prior to the occurrence of a fully distributed public offering
of Stock or other securities of the Company, (A) CVC and its officers and
directors ceasing to own and control beneficially and of record, one hundred
percent of the capital stock of CIC, (B) CIC ceasing to own at least fifty-one
percent (51%) in the aggregate on a fully diluted, as if converted basis, of the
issued and outstanding voting Stock of the Company, or (C) for the period
commencing on the Closing Date and ending on the first anniversary of the
Closing Date, J. Cary Findlay or, in the event of his death, his estate or
members of his immediate family, ceasing to own and control beneficially and of
record, at least seventy-five percent (75%) of the voting Stock of the Borrower
held by J. Cary Findlay on the Closing Date, or (ii) approval by the
stockholders or the Board of Directors of the Company or CIC of a merger,
reorganization, consolidation, exchange of shares, recapitalization,
restructuring or other business combination which could result in the occurrence
of any event described in clause (i) of this subparagraph (a); or
(b) following the occurrence of a fully distributed public offering of
Stock or other securities of the Company (i) CVC and its officers and directors
ceasing to own and control beneficially and of record, one hundred percent of
the capital stock of CIC, (ii) CVC, its officers and directors and J. Cary
Findlay ceasing to own and control beneficially and of record thirty-three
percent (33%) in the aggregate on a fully diluted, as if converted basis, of the
issued and outstanding voting Stock of the Company, (iii) any Person or group
(within the meaning of Rule 13d-5 of the Securities Exchange Act of 1934 as in
effect on the date hereof) shall own and control beneficially and of record, a
percentage of the issued and outstanding Voting Stock of the Company on a fully
diluted, as if converted, basis having ordinary voting power in excess of the
percentage then owned beneficially and of record, on a fully diluted, as if
converted basis, by CVC, its officers and directors and J. Cary Findlay, or (iv)
a majority of the seats (except in the case of any vacancy for 30 days or less
resulting from the death or resignation of any director of Company) on the board
of directors of Company shall at any time be occupied by persons who were
neither (A) nominated by the board of directors of the Company nor (B) appointed
by the board of directors so nominated.
"CIC" means CIC Acquisition Co., a Delaware corporation.
"Closing Date" shall mean the date on or before March 6, 2000 or such
later date that the conditions set forth in Section 5.1 are satisfied or waived
in accordance with Section 10.4.
"Common Stock" shall mean, except for purposes of the shares obtainable
upon exercise of the Warrants, any capital stock of any class of the Company
hereafter authorized which is not limited to a fixed sum or percentage of par or
stated value in respect to the rights of the holders
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<PAGE> 9
thereof to participate in dividends or in the distribution of assets upon any
liquidation, dissolution or winding up of the Company.
"Company" shall mean initially CIC Acquisition Sub, Inc., a South
Carolina corporation, and, upon the effectiveness of the Merger, shall mean
Conso International as successor by merger with CIC Acquisition Sub, Inc., and
its successors and assigns.
"Condemnation Awards" mean any and all judgements, awards of damages
(including, but not limited to, severance and consequential damages), payments,
proceeds, settlements, amounts paid for a taking in lieu of Condemnation, or
other compensation heretofore or hereafter made, including interest thereon, and
the right to receive the same, as a result of, or in connection, with, any
Condemnation or threatened Condemnation.
"Condemnation" means any taking of title, of use, or of any other
property interest under the exercise of the power of eminent domain, whether
temporarily or permanently, by any Governmental Authority or by any Person
acting under Governmental Authority.
"Conso International" shall mean Conso International Corporation, a
South Carolina corporation.
"Consolidated Companies" shall mean, collectively, the Company and all
of its Subsidiaries, and "Consolidated Company" shall mean, individually, the
Company or any of its Subsidiaries.
"Contractual Obligation" of any Person shall mean any provision of any
security issued by such Person or of any agreement, instrument or undertaking
under which such Person is obligated or by which it or any of the property in
which it has an interest is bound.
"Credit Party" shall mean the Company and any Guarantor (including any
Person that currently is a Guarantor and any Person who may at any time in the
future become a Guarantor).
"Currency Contracts" shall mean any forward contracts, futures
contracts, foreign exchange contracts, currently swap agreements, and others
similar agreements and arrangements designed to protect against fluctuations in
foreign exchange rates.
"CVC" shall mean Citicorp Venture Capital, Ltd., a New York
corporation, and its Affiliates.
"Default" shall mean any condition or event which, with notice or lapse
of time or both, would constitute an Event of Default.
"Default Rate" shall have the meaning assigned to such term in Section
3.4.
"Depreciation" shall mean, for any period, depreciation expense of the
Consolidated Companies determined on a consolidated basis in accordance with
GAAP.
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"Dollar" and "U.S. Dollar" and the sign "$" shall mean lawful money of
the United States of America.
"Domestic Subsidiary" shall mean any Subsidiary of the Company that is
organized under the laws of one of the fifty states of the United States or the
District of Columbia of the United States.
"Dormant Subsidiary" shall mean each Subsidiary of the Company that has
no assets, no liabilities and does not conduct business in any way.
"EBITDA" shall mean, for any period, determined on a consolidated basis
in accordance with GAAP an amount equal to the sum of (i) Net Income (Loss) for
such period plus (ii) without duplication and to the extent deducted in
computing Net Income (Loss) for such period, (A) Interest Expense for such
period, (B) Cash Taxes for such period, (C) Depreciation for such period, (D)
Amortization for such period, and (E) all other non-cash charges, non-cash
losses and extraordinary one-time losses for such period (including transaction
expenses and the amortization of debt discount) minus (iii) without duplication
and to the extent included in computing Net Income (Loss) for such period,
non-cash gains and extraordinary gains for such period; provided, however, that
with respect to any Person, or substantially all of the assets of a Person, that
became a Subsidiary, of or was merged with or consolidated into, or acquired by
a Consolidated Company in accordance with the terms of this Agreement, during
such period, "EBITDA" shall also include the EBITDA of such Person or the EBITDA
attributable to such assets during such period as if such Person or assets were
acquired as of the first day of such period.
"Environmental Laws" shall mean all federal, state, provincial, local
and other foreign statutes and codes or regulations, rules or ordinances issued,
promulgated, or approved thereunder, now or hereafter in effect (including,
without limitation, those with respect to asbestos or asbestos containing
material or exposure to asbestos or asbestos containing material), relating to
pollution or to protection of the environment or public health and safety,
including without limitation those relating to (a) emissions, discharges,
releases or threatened releases of Hazardous Substances, (b) the manufacture,
processing, distribution, use, generation, treatment, storage, disposal,
transport or handling of Hazardous Substances, and (c) underground storage tanks
and related piping, and emissions, discharges and releases or threatened
releases therefrom, such Environmental Laws to include, without limitation (i)
the Clean Air Act (42 U. S. C. ss. 7401 et seq.), (ii) the Clean Water Act (33
U. S. C. ss. 1251 et seq.), (iii) the Resource Conservation and Recovery Act (42
U.S. C. ss. 6901 et seq.), (iv) the Toxic Substances Control Act (15 U.S.C. ss.
2601 et seq.), and (v) the Comprehensive Environmental Response Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986 (42 U.S. C. ss. 9601 et seq.).
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended and in effect from time to time.
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<PAGE> 11
"ERISA Affiliate" shall mean, with respect to any Person, each trade or
business (whether or not incorporated) that is considered to be a single
employer with such Person within the meaning of the Tax Code and the regulations
promulgated thereunder.
"Event of Default" means any of the events specified in Section 9.1
hereof.
"Excess Cash Flow" shall have the meaning set forth in the Senior
Credit Agreement.
"Fee Letter" shall mean that certain Fee Letter, dated as of the
Closing Date, executed by SunTrust Equitable Securities Corporation and accepted
and agreed to by Conso International.
"Fiscal Month" shall mean a fiscal month of the Company.
"Fiscal Quarter" shall mean a fiscal quarter of the Company.
"Fiscal Year" shall mean a fiscal year of the Company; references to a
Fiscal Year with a number corresponding to any calendar year (e.g., the "Fiscal
Year 2000") refers to the Fiscal Year ending during such calendar year.
"Fixed Charge Coverage Ratio" shall mean, for any period, the ratio of
(a) the greater of (i) the difference of (x) Adjusted EBITDA minus (y) the sum
of (A) Capital Expenditures for such period, (B) Cash Taxes paid during such
period, and (C) to the extent deducted in determining Adjusted EBITDA,
management fees paid during such period, or (ii) zero, to (b) the sum of (i)
principal repayments of Total Funded Debt made during such period, and (ii)
Interest Expense during such period, in each case, measured for the four Fiscal
Quarter period ending on such date of determination; provided, however, for
purposes of calculating the Fixed Charge Coverage Ratio for any period ending
during Fiscal Year 2000 or Fiscal Year 2001, Capital Expenditures shall
specifically exclude Capital Expenditures made during Fiscal Year 2000 in the
operations of the Consolidated Companies in Juarez, Mexico and Coimbatore, India
in an aggregate amount not to exceed $3,700,000.
"Foreign Subsidiary" shall mean any Subsidiary of the Company that is
organized under the laws of a jurisdiction other than one of the fifty states of
the United States or the District of Columbia of the United States.
"Fully Diluted Basis" includes, without duplication, (i) all shares of
Stock of the Company outstanding at the time of determination, (ii) the Stock
issuable upon exercise of all outstanding warrants, options and other rights to
acquire Stock of the Company directly or indirectly and (iii) the Stock of the
Company issuable upon conversion of all securities convertible directly or
indirectly into Stock of the Company.
"GAAP" shall mean generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant
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<PAGE> 12
segment of the accounting profession, which are applicable to the circumstances
as of the date of determination.
"Governmental Authority" means any national, state or local government
(whether domestic or foreign), any political subdivision thereof or any other
governmental, quasi-governmental, judicial, public or statutory instrumentality,
authority, body, agency, bureau or entity (including, without limitation, the
FDIC, the Comptroller of the Currency or the Federal Reserve Board, any central
bank or any comparable authority or the Securities and Exchange Commission) or
any court or any arbitrator with authority to bind a party at law.
"Guarantor" shall mean each Subsidiary Guarantor and their respective
successors and permitted assigns.
"Guaranty" shall mean any contractual obligation, contingent or
otherwise, of a Person with respect to any Indebtedness or other obligation or
liability of another Person, including without limitation, any such
Indebtedness, obligation or liability directly or indirectly guaranteed,
endorsed, co-made or discounted or sold with recourse by that Person, or in
respect of which that Person is otherwise directly or indirectly liable,
including contractual obligations (contingent or otherwise) arising through any
agreement to purchase, repurchase, or otherwise acquire such Indebtedness,
obligation or liability or any security therefor, or any agreement to provide
funds for the payment or discharge thereof (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise), or to maintain
solvency, assets, level of income, or other financial condition, or to make any
payment other than for value received. The amount of any Guaranty shall be
deemed to be an amount equal to the stated or determinable amount of the primary
obligation in respect of which guaranty is made or, if not so stated or
determinable, the maximum reasonably anticipated liability in respect thereof
(assuming such Person is required to perform thereunder) as determined by such
Person in good faith.
"Guaranty Agreement" shall mean the this Agreement.
"Hazardous Substance" shall mean any pollutant, contaminant, chemical
or industrial toxic or hazardous constituent, substance or waste (a) that is
defined as a "hazardous waste", "hazardous material", "hazardous substance",
"pollutant" or "contaminant" under (i) the Clean Air Act (42 U.S.C. ss. 7401 et
seq.), (ii) the clean Water Act (33 U.S.C. ss. 1251 et seq.), (iii) the Resource
Conservation and Recovery Act (42 U.S.C. ss. 6901 et seq.), (iv) the Toxic
Substances Control Act (15 U.S.C. ss. 2601 et seq.), or (v) the Comprehensive
Environmental Response Compensation and Liability Act of 1980, as amended by the
Superfund Amendments and Reauthorization Act of 1986, (42 U.S.C. ss. 9601 et
seq.), (b) that is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic or otherwise hazardous and is regulated by
any Governmental Authority (c) that contains petroleum (including, without
limitation, crude oil or any fraction thereof), petroleum hydrocarbons or other
volatile organic compounds, polychlorinated biphenyls (PCBs) or asbestos or urea
formaldehyde foam insulation, or (d) that contains or remits radioactive
particles, waves or material, including, without limitation, radon gas.
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<PAGE> 13
"Indebtedness" of any Person shall mean, without duplication (a) all
obligations of such Person for borrowed money; (b) all obligations of such
Person evidenced by bonds, debentures, notes, drafts, bankers' acceptances or
other similar instruments, (c) all obligations of such Person to pay the
deferred purchase price of property or services (other than trade accounts
payable that are not past due by more than ninety (90) days and other
obligations accrued in the ordinary course of business and earn-outs or similar
arrangements), (d) all obligations of such Person under leases required to be
capitalized under GAAP, (e) all obligations or liabilities of others secured by
any Lien upon property of such Person whether or not such obligation or
liability is assumed, (f) all obligations of such Person under Interest Rate
Contracts or Currency Contracts, (g) all obligations of such Person in respect
of letters of credit (including all contingent reimbursement obligations,
whether or not any draws under such letters of credit have been presented for
payment) and all drafts, bankers acceptances or similar instruments issued in
connection therewith, (h) all Guaranties of Indebtedness of the type described
in clauses (a) through (g) of this definition of Indebtedness, (i) the aggregate
development, construction and acquisition cost of property leased to such Person
pursuant to a Synthetic Lease and all obligations of such Person with respect to
asset securitization programs, and (j) without duplication, all obligations and
liabilities of such Person that are required by GAAP to be shown as liabilities
on a balance sheet of such Person (other than reserves required under GAAP).
"Intangible Assets" shall mean those assets of any Person which are (i)
deferred assets, other than prepaid insurance and prepaid taxes; (ii) patents
and applications therefor, copyrights, trademarks, service marks, trade names,
trademark and trade name registrations and applications, goodwill, franchises,
permits, experimental expenses and other similar assets which would be
classified as "intangible assets" under GAAP; and (iii) treasury stock and any
write-up of the value of any assets after the date of such Person's most recent
year end financial statements provided to the Purchaser prior to the Closing
Date, unless in accordance with GAAP.
"Interest Coverage Ratio" shall mean, as of any date of determination,
the ratio of (a) Adjusted EBITDA to (b) Interest Expense, in each case measured
for the four Fiscal Quarter period ending on such date of determination, or if
such date of determination is not the last day of any Fiscal Quarter, then
ending immediately prior to such date of determination.
"Interest Expense" shall mean, for any period, all interest expense of
the Consolidated Companies (including without limitation, interest expense
attributable to capitalized leases in accordance with GAAP, all capitalized
interest, all commissions, discounts and other fees and charges with respect to
bankers acceptance financing, and all interest expense (whether shown as
interest expense or as loss and expenses on sale of receivables) under a
receivables purchase facility) determined on a consolidated basis in accordance
with GAAP, provided that, for any period ending prior to the first four full
Fiscal Quarters after the Closing Date, Interest Expense shall mean interest
expense for the period commencing on the Closing Date and ending on the last day
of such period, multiplied by a fraction, the numerator of which is 365 and the
denominator of which is the number of days in such period.
"Interest Rate Contracts" shall mean any forward contracts, futures
contracts, interest rate exchange agreements, interest rate cap agreements,
interest rate collar agreements, and other
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<PAGE> 14
similar agreements and arrangements designed to protect against fluctuations in
interest rates, which agreements and arrangements shall be valued on a mark to
market basis.
"Investment" shall mean, any direct or indirect advance, loan or other
extension of credit (other than the creation of receivables in the ordinary
course of business) or capital contribution (by means of transfers of property
to others or payments for property or services for the account or use of others,
or otherwise), or any direct or indirect purchase or other acquisition of, or of
a beneficial interest in, capital stock, partnership interests, bonds, notes,
debentures or other securities.
"Lien" shall mean, any mortgage, pledge, security interest, lien,
charge, hypothecation, assignment, deposit arrangement, title retention,
preferential right, trust or other arrangement having the practical effect of
the foregoing and shall include the interest of a vendor or lessor under any
conditional sale agreement, capitalized lease or other title retention
agreement, and the filing of a financing statement under the Uniform Commercial
Code (excluding precautionary filings or financing statements under the Uniform
Commercial Code which cover property that is made available to or used by a
Consolidated Company pursuant to the terms of a lease that is not a Capital
Lease or a Synthetic Lease).
"Loan Documents" shall mean, collectively, each of the Transaction
Documents other than the Warrant Documents, in each case either as originally
executed or as the same may from time to time be supplemented, modified,
amended, restated, extended or supplanted.
"Margin Regulations" shall mean Regulation T, Regulation U and
Regulation X of the Board of Governors of the Federal Reserve System, as the
same may be in effect from time to time.
"Materially Adverse Effect" shall mean any materially adverse change
in, or material adverse effect upon, (i) the business, results of operations,
condition (financial or otherwise), assets, liabilities or prospects of the
Consolidated Companies, taken as a whole, (ii) the ability of any Credit Party
to perform its obligations under the Loan Documents, (iii) the rights and
remedies of the Purchasers under any Transaction Document or (iv) the legality,
validity or enforceability of any Transaction Document.
"Material Contract" shall mean any contract or other arrangement (other
than Transaction Documents), whether written or oral, to which the Company or
any of its Subsidiaries is a party as to which the breach, nonperformance,
cancellation or failure to renew by any party thereto could have a Material
Adverse Effect, as the same are listed on Schedule 5.16 as of the Closing Date.
"Maturity Date" shall mean March 5, 2008.
"Merger" shall have the meaning set forth in the recitals to this
Agreement.
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<PAGE> 15
"Merger Documents" shall mean any and all agreements and other
documents relating to the Merger, including without limitation, the articles of
merger, including the Plan of Merger, which are filed in connection with the
Merger with the Secretary of State of South Carolina.
"Multiemployer Plan" shall have the meaning set forth in Section
4001(a)(3) of ERISA.
"Net Cash Proceeds" shall mean, (a) with respect to any sale or
disposition by any Consolidated Company of any of its assets, the gross amount
of cash proceeds received by such Consolidated Company including any cash
proceeds received from time to time as payments for the deferred purchase price
of such assets or as principal payments on any promissory notes or other
instruments made or issued to a Consolidated Company in payment of such assets)
less (i) the amount of all commissions and other reasonable and customary
transaction costs, transfer taxes, broker's fees, legal fees and other fees and
expenses properly attributable to such transaction and paid by the Consolidated
Company in cash in connection therewith to any Person that is not an Affiliate
of any of the Consolidated Companies (other than such costs and fees payable to
an Affiliate of CVC and on conditions at least as favorable to such Consolidated
Company as would be obtained by such Consolidated Company at the time in a
comparable arms-length transaction with a Person other than an Affiliate), (ii)
the amount of any reserves taken in accordance with GAAP against liabilities
incurred in connection with such asset sale, and (iii) the principal amount of
any Indebtedness plus premium, penalty and interest (other than the
Obligations), if any, which is secured by such asset and which is required to be
repaid in connection with the disposition thereof, and (b) with respect to the
issuance by Parent of any Stock or debt securities, the gross proceeds received
by Parent from such issuance less the amount of all underwriting discounts and
commissions and other reasonable costs, fees and expenses paid by Parent in
connection therewith to any Person that is not an Affiliate.
"Net Casualty/Insurance Proceeds" when used with respect to any
Condemnation Awards or insurance proceeds allocable to the Collateral, means the
gross proceeds from any Casualty or Condemnation remaining after payment of all
expenses (including attorney's fees incurred in collection of such gross
proceeds).
"Net Income (Loss)" shall mean, for any period, the net income (or
loss) of the Consolidated Companies for such period (taken as a single
accounting period) determined on a consolidated basis in conformity with GAAP.
"Net Worth" shall mean, as of any date, total stockholders' equity of
the Consolidated Companies, determined on a consolidated basis in accordance
with GAAP.
"Note" shall mean, collectively, each subordinated promissory note
issued by the Company pursuant to Section 2.1 or any other provision hereof, in
substantially the form of Exhibit A hereto, maturing on the Maturity Date, or
such earlier date as provided herein, at which time all principal, interest and
other amounts owing hereunder shall be due and payable in full, and bearing
interest as set forth in this Agreement, and each Note delivered in
substitution, amendment, modification, extension or exchange for any such Note
pursuant to the provisions of this Agreement.
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<PAGE> 16
"Obligations" shall mean all amounts owing to any Purchaser by the
Company or its Domestic Subsidiaries pursuant to the terms of this Agreement and
all other Loan Documents including, without limitation, all amounts outstanding
under any Note (including all principal and interest payments due thereunder),
all fees, expenses, indemnification and reimbursement payments, indebtedness,
liabilities and obligations, direct or indirect, absolute or contingent,
liquidated or unliquidated, now existing or hereafter arising, together with all
renewals, extension, modifications or refinancings thereof.
"Permitted Liens" shall mean those Liens expressly permitted by Section
8.1.2.
"Person" shall mean any individual, partnership, firm, corporation, S
corporation, association, joint venture, limited liability company, trust or
other entity, or any government or political subdivision or agency, department
or instrumentality thereof.
"Plan" shall mean any "employee benefit plan" (as defined in Section
3(3) of ERISA), including, but not limited to, any defined benefit pension plan,
profit sharing plan, money purchase pension plan, savings or thrift plan, stock
bonus plan, employee stock ownership plan, Multiemployer Plan, or any plan,
fund, program, arrangement or practice providing for medical (including
post-retirement medical), hospitalization, accident, sickness, disability, or
life insurance benefits, but shall exclude any Foreign Plan.
"Preferred Stock" shall mean the Preferred Stock of the Company, no par
value.
"Principal Office" for each Purchaser shall mean the office set forth
as such on the signature pages hereto.
"Pro Rata Share" for each Purchaser shall mean the percentage
designated on such Purchaser's Pro Rata Share of the Note as set forth under the
name of such Purchaser on the respective signature page for such Purchaser to
this Agreement.
"Purchasers" and "Purchaser" has the meaning set forth in the
introductory paragraph hereof and shall include each Purchaser's successors and
assigns.
"Registration Rights Agreement" means that certain Registration Rights
Agreement, dated as of the date hereof, between, amongst others, the Company and
the Purchasers in their capacity as holder of the Warrants, in substantially the
form of Exhibit D, together with all amendments and modifications thereto.
"Required Purchasers" shall mean Purchasers who individually or
collectively hold more than fifty-one percent (51%) of the outstanding principal
amount of the Note or Notes.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System, as the same may be in effect from time to time.
"Requirement of Law" for any Person shall mean the articles or
certificate of incorporation and bylaws or other organizational or governing
documents of such Person, and
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<PAGE> 17
any law, treaty, rule or regulation, or determination of a Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.
"Restricted Payment" shall have the meaning set forth in Section 8.1.6.
"Senior Credit Agreement" shall mean that certain Revolving Credit and
Term Loan Agreement, dated as of the date hereof, by and between the Senior
Lenders, SunTrust Bank, as Agent, as Security Agent, as Issuing Bank, and as
Swingline Lender, GMAC Commercial Credit LLC, as Syndication Agent, and Heller
Financial, Inc., as Documentation Agent, and the Company, providing as of the
Closing Date for an aggregate credit facility to the Company of $70,000,000, as
the same may be hereafter amended, modified, restated, supplemented, refinanced
or replaced.
"Senior Debt" shall have the meaning set forth in the Subordination
Agreement.
"Senior Debt Documents" shall mean the Senior Credit Agreement and all
other Credit Documents (as defined in the Senior Credit Agreement).
"Senior Lenders" shall have the meaning given to such term in the
recitals hereof.
"Stock" shall mean (i) with respect to any Person that is a
corporation, any and all shares, interests or equivalents in capital stock
(whether voting or nonvoting, and whether common or preferred) of such
corporation, and (ii) with respect to any Person that is not a corporation, any
and all partnership, membership, limited liability company or other equity
interests of such Person; and in each case, any and all warrants, rights, or
options to purchase any of the foregoing.
"Stock Holding Agreement" shall mean that certain Stock Holding
Agreement, dated as of March 6, 2000 by and between CIC and the Purchasers.
"Stockholders Agreement" means that certain Stockholders Agreement,
dated as of the date hereof, between, amongst others, the Company and the
Purchasers in their capacity as holder of the Warrants, in substantially the
form of Exhibit H, together with all amendments and modifications thereto.
"Subordination Agreement" shall mean that certain Subordination
Agreement, dated as of the date hereof, by and among the Agent and the Senior
Lenders and the Purchasers, and acknowledged by each Credit Party, either as
originally executed or as hereafter amended, modified or supplemented with the
consent of the Purchaser.
"Subordinated Debt" shall mean (i) the Indebtedness evidenced by the
Notes, and (ii) additional Indebtedness incurred by the Company after the
Closing Date which is expressly subordinated to the Obligations in form and
substance satisfactory to the Purchasers in their sole discretion.
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<PAGE> 18
"Subsidiary" shall mean, with respect to any Person, any other Person a
majority of the total combined voting power of all classes of voting Stock of
which shall, at the time as of which any determination is being made, be owned
by such first Person, either directly or indirectly through one or more other
Subsidiaries.
"Subsidiary Guarantor" shall mean Simplicity Pattern Co., Inc.,
Simplicity Capital Corp., Simplicity Holdings and all other Domestic
Subsidiaries now or hereafter existing, and their respective successors and
permitted assigns.
"Synthetic Lease" shall mean lease that is not treated as a capital
lease under GAAP, but that is treated as a financing under the Tax Code.
"Synthetic Lease Obligations" shall mean the obligations of any
Consolidated Company pursuant to a Synthetic Lease.
"Tax Code" shall mean the Internal Revenue Code of 1986, as amended,
and any successor statute, together with the regulations thereunder, as in
effect from time to time.
"Taxes" shall mean any present or future taxes, levies, imposts,
duties, fees, assessments, deductions, withholdings or other charges of whatever
nature, including without limitation, income, receipts, excise, property, sales,
transfer, license, payroll, withholding, social security and franchise taxes now
or hereafter imposed or levied by the United States of America, or any state,
local or foreign government or by any department, agency or other political
subdivision or taxing authority thereof or therein and all interest, penalties,
additions to tax and similar liabilities with respect thereto.
"Total Funded Debt" shall mean, as of any date of determination,
without duplication, the sum of all Indebtedness of the Consolidated Companies
described in clauses (a) through (e) and in clause (i) of the definition of
"Indebtedness", including without limitation, the Loans (as such term is defined
in the Senior Credit Agreement) and the Letter of Credit Obligations (as such
term is defined in the Senior Credit Agreement).
"Total Funded Debt to Adjusted EBITDA Ratio" shall mean, as of any date
of determination, the ratio of (a) Total Funded Debt, as of such date of
determination, to (b) Adjusted EBITDA measured for the four Fiscal Quarter
period ending on such date of determination, or if such date of determination is
not the last day of any Fiscal Quarter, then ending immediately prior to such
date of determination.
"Transaction Documents" shall mean, collectively, this Agreement, each
Note, each Warrant, the Warrant Agreement, the Registration Rights Agreement,
the Stockholders Agreement, the Assumption Agreement, the Subordination
Agreement, the Stock Holding Agreement, the Fee Letter and any other agreements
of any type or nature in any way relating to or in furtherance of this Agreement
and the Merger Documents, in each case either as originally executed or as the
same may from time to time be supplemented, modified, amended, restated,
extended or supplanted.
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"Uniform Commercial Code" or "UCC" means the Uniform Commercial Code as
in effect from time to time in the State of Georgia.
"United States" shall mean the United States of America, any of the
fifty states thereof, and the District of Columbia thereof.
"Val Mex" shall mean Val-Mex, S.A. de C.V. a corporation organized
under the laws of Mexico, and a wholly owned subsidiary of the Company.
"Warrant Agreement" shall mean that certain Warrant Agreement, dated as
of the date hereof, between the Company and the Purchasers in their capacity as
holder of the Warrants, in substantially the form of Exhibit B hereto, together
with all amendments and modifications thereto.
"Warrant Documents" shall mean, collectively, the Warrant Agreement,
the Warrants, the Registration Rights Agreement and the Stockholders Agreement.
"Warrants" shall mean, collectively, the common stock and preferred
stock purchase warrants issued and delivered by the Company on the Closing Date,
in substantially the form of Exhibit C hereto, and each common stock or
preferred stock purchase warrant issued and delivered in substitution or
exchange for any Warrant.
"Year 2000 Issues" shall mean the actual and anticipated costs, claims,
losses, and liabilities associated with the inability of certain computer
applications to handle effectively data that includes dates on and after January
1, 2000, as such inability in respect of the Consolidated Companies and their
respective material customers, suppliers and vendors materially affects the
business, operations, and financial condition of the Consolidated Companies.
Section 1.2 Accounting Terms and Determination. Unless otherwise defined or
specified herein, all accounting terms shall be construed herein, all accounting
determinations hereunder shall be made, all financial statements required to be
delivered hereunder shall be prepared, and all financial records shall be
maintained in accordance with, GAAP, provided, however, if there is a change in
GAAP, the financial statements required to be delivered by the Company under
Section 7.1.7(1) or 7.1.7(2), as applicable, shall be delivered within ninety
(90) days of the effective date of such change in GAAP, and otherwise in
accordance with the requirements of Section 7.1.7(1) or Section 7.1.7(2), as
applicable.
Section 1.3 Other Definitional Terms. The words "hereof', "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement, and Article, Section, Schedule, Exhibit and like references are to
this Agreement unless otherwise specified.
Section 1.4 Exhibits and Schedules. All Exhibits and Schedules attached hereto
are by reference made a part hereof.
Section 1.5 Plural Terms. Capitalized terms used in the singular shall import
the plural and vice versa.
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ARTICLE 2.
ISSUANCE AND PURCHASE OF NOTES AND WARRANTS
Section 2.1 Authorization of Issuance of Notes and Warrants. The Company has
duly authorized the issuance and sale, on the terms and subject to the
conditions set forth herein, of Notes in the aggregate principal amount of up to
$20,000,000, to be dated as of the date of Issuance. The Company has duly
authorized the issuance and sale, on the terms and subject to the conditions set
forth herein and in the Warrant Agreement, of the Warrants for the purchase of
the number of Shares of the Company which correspond to an aggregate twelve
percent (12%) of the Common Stock and the Preferred Stock of Conso
International, calculated on a Fully Diluted Basis, after giving effect to the
Merger.
Section 2.2 Purchase and Sale of Notes and Warrants. The Company hereby agrees
to sell to the Purchasers and, subject to the terms and conditions set forth
herein and in reliance upon the representations and warranties of the Company
contained herein, Purchasers severally agree to purchase from the Company, its
Pro Rata Share of the Notes with the Warrants for an aggregate purchase price of
$20,000,000 (the "Purchase Commitment"). The purchase price paid by the
Purchasers for each Note shall be equal to the principal amount thereof and no
additional consideration (other than payable upon issuance of the Notes and the
Purchase Commitment).
Section 2.3 Allocation of Purchase Price. Under both generally accepted
accounting standards consistently applied and the regulations of the Internal
Revenue Service, the issuance to the Purchasers of the Notes and the Warrants
for an aggregate purchase price equal to the aggregate principal amount of such
Notes being so purchased results in the creation of "original issue discount" on
such Notes (which original issue discount may also be deemed to constitute the
value of any Warrant issued in connection with the issuance of such Notes), and
such regulations require the determination of the value of any Warrant so
delivered. Pursuant to generally accepted accounting principles consistently
applied and applicable Treasury Regulations, the Company and the Purchasers
agree that the aggregate amount of such original issue discount and the
aggregate value of the Warrants for the number of Shares of the Company which
correspond to an aggregate twelve percent (12%) of the Common Stock and the
Preferred Stock of Conso International, calculated on a Fully Diluted Basis,
after giving effect to the Merger is $__________, which original issue discount
and value of such Warrants shall be allocated to the Notes. The Company and the
Purchasers agree to recognize and adhere to the determinations and allocations
of original issue discount and valuation of each Warrant set forth herein for
all federal and state income tax purposes. In the event of any proposed transfer
of any Note by any Purchaser, such Purchaser shall, prior to such transfer, mark
such Note with a legend pertaining to the original issue discount in the form
required by Treasury Regulation Section 1.1275-3(b)(1).
Section 2.4 Interest on the Notes.
(a) Interest on each Note shall accrue at a rate per annum
equal to twelve percent (12.00%), subject to Section 3.5 below.
Interest shall be payable (i) on the last Business Day of each calendar
quarter, commencing on March 31, 2000 and continuing
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thereafter until such Note has been paid in full, (ii) upon any
prepayment of any Note to the date of prepayment on the amount prepaid
and (iii) at maturity of the Notes, whether by acceleration or
otherwise.
(b) After maturity, whether by acceleration or otherwise,
interest shall accrue on the Notes at the Default Rate.
Section 2.5 Amortization and Maturity of Notes; Prepayments; Funding Losses.
(a) The principal amount of the Notes shall be payable on the
Maturity Date, unless sooner accelerated in accordance with the terms
hereof.
(b) The Company may prepay the Notes in whole or in part from
time to time, provided that (i) the Company provides at least fifteen
(15) days' prior written notice to the Purchaser of such prepayment,
(ii) any partial prepayment hereunder shall be in a principal amount of
not less than $500,000 or, if greater than $500,000, then in integral
multiples of $500,000, and (iii) such prepayment is accompanied by all
accrued and unpaid interest on the amount prepaid through the date of
prepayment and all other amounts then owing by the Company hereunder in
connection with the Notes.
(c) Prepayment of the Notes shall not preclude any Purchaser
from continuing to own the Warrants or from exercising any of its
rights pursuant to the Warrants, the Warrant Agreement or the
Registration Rights Agreement at a later date; provided, however, that
if the Notes are prepaid in full on or before May 28, 2001, one of each
class of Warrants issued to each Purchaser on the Closing Date (and any
substitution or replacement thereof) shall be deemed to expire pursuant
to the terms thereof.
(d) The Notes shall be prepaid upon a Change of Control, or
upon the closing of a public offering of the Company's Common Stock
pursuant to a registration statement filed under the Securities Act.
Section 2.6 Prepayment Fee.
(a) Upon any prepayment of the Notes on or prior to the second
anniversary of the Closing Date, the Company shall pay to the Purchaser
prior to or concurrently with such prepayment a prepayment fee in an
amount equal to three percent (3%) of the amount of such prepayment.
(b) Upon any prepayment of the Notes after the second
anniversary of the Closing Date and on or prior to the third
anniversary of the Closing Date, the Company shall pay to the Purchaser
prior to or concurrently with such prepayment a prepayment fee in an
amount equal to two percent (2%) of the amount of such prepayment.
(c) Upon any prepayment of the Notes after the third
anniversary of the Closing Date and on or prior to the fourth
anniversary of the Closing Date, the Company shall pay to the Purchaser
prior to or concurrently with such prepayment a prepayment fee in an
amount equal to one percent (1%) of the amount of such prepayment.
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ARTICLE 3.
OTHER PROVISIONS RELATING TO THE NOTES
Section 3.1 Making of Payments. The Company shall make each payment hereunder
and under the Notes not later than 1:00 p.m. (Atlanta, Georgia time) on the day
when due in Dollars in same day funds to each Purchaser at its Principal Office.
All payments received after that hour shall be deemed to have been received by
such Purchaser on the next following Business Day.
Section 3.2 Increased Costs. In the event that any change in any applicable law,
treaty or governmental regulation, or in the interpretation or application
thereof, or compliance by any Purchaser with any guideline, request or directive
(whether or not having the force of law) from any central bank or other U.S. or
foreign financial, monetary or other governmental authority in either case
arising after the date hereof, shall: (a) subject such Purchaser to any tax
(subject to the applicable provisions of Section 3.7) of any kind whatsoever
with respect to this Agreement, the Notes or the Warrants or change the basis of
taxation of payments to such Purchaser of principal, interest, fees or any other
amount payable hereunder (except for changes in the rate of tax on the overall
net income of such Purchaser); (b) impose, modify, or hold applicable any
reserve, special deposit, assessment or similar requirement against assets held
by, or deposits in or for the account of, advances or loans by, or other credit
extended by or committed to be extended by any office of such Purchaser,
including, without limitation, pursuant to Regulation D of the Board of
Governors of the Federal Reserve System; or (c) impose on such Purchaser any
other condition with respect to this Agreement, the Notes or the Warrants
hereunder; and the result of any of the foregoing is to increase the cost to
such Purchaser of making or maintaining the Notes or the Warrants or to reduce
the amount of any payment (whether of principal, interest or otherwise) in
respect of the Notes or the Warrants, then, in any case, the Company shall
promptly pay from time to time, upon demand of such Purchaser, such additional
amounts as will compensate such Purchaser for such additional cost or such
reduction, as the case may be. Such Purchaser shall certify the amount of such
additional cost or reduced amount to the Company, and such certification shall
be conclusive absent manifest error. Each Purchaser agrees that, if requested by
the Company, it will use reasonable efforts (subject to overall policy
considerations of such Purchaser) to designate an alternate lending office with
respect to any of its Notes affected by the matters or circumstances described
herein, to reduce the liability of the Company or avoid the results provided
hereunder, so long as such designation is not disadvantageous to such Purchaser
as determined by such Purchaser, which determination if made in good faith,
shall be conclusive and binding on all parties hereto. Nothing in this Section
3.2 shall affect or postpone any of the obligations of the Company or any right
of any Purchaser provided hereunder.
Section 3.3 Capital Adequacy. If, after the date of this Agreement, any
Purchaser shall have determined that the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Purchaser with any request or
directive
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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 Purchaser's capital (whether on this credit
facility or otherwise) as a consequence of its obligations hereunder to a level
below that which such Purchaser could have achieved but for such adoption,
change or compliance (taking into consideration such Purchaser's policies with
respect to capital adequacy) by an amount deemed by such Purchaser, acting
reasonably, to be material, then from time to time, promptly upon demand by such
Purchaser, the Company shall pay such Purchaser such additional amount or
amounts as will compensate such Purchaser for such reduction. A certificate of
such Purchaser claiming compensation under this Section and setting forth the
additional amount or amounts to be paid to it hereunder shall be prima facie
evidence of the matters contained therein. In determining any such amount, such
Purchaser may use any reasonable averaging and attribution methods. Each
Purchaser agrees that, if requested by the Company, it will use reasonable
efforts (subject to overall policy considerations of such Purchaser) to
designate an alternate lending office with respect to any of its Notes affected
by the matters or circumstances described herein, to reduce the liability of the
Company or avoid the results provided hereunder, so long as such designation is
not disadvantageous to such Purchaser as determined by such Purchaser, which
determination if made in good faith, shall be conclusive and binding on all
parties hereto. Nothing in this Section 3.3 shall affect or postpone any of the
obligations of the Company or any right of any Purchaser provided hereunder.
Section 3.4 Default Rate of Interest. If the Company shall fail to pay on the
due date therefor, whether by acceleration or otherwise, any principal owing
under the Notes or any other Obligations, then interest shall accrue on such
unpaid principal or other Obligation from the due date until and including the
date on which such principal is paid in full at a rate per annum that is two
percent (2%) in excess of the rate of interest otherwise payable hereunder (the
"Default Rate"). Interest calculated at the Default Rate shall be due and
payable upon demand by any Purchaser.
Section 3.5 Calculation of Interest. Interest payable on the Notes shall be
calculated on the basis of a year of 360 days and shall be payable for the
actual number of days elapsed. If the date for any payment of principal is
extended (whether by operation of this Agreement, any provision of law or
otherwise), interest shall be payable for such extended time at the rates
provided herein. Whenever any payment hereunder shall be stated to be due on a
day other than a Business Day, such payment shall be due on the next succeeding
Business Day.
Section 3.6 Usury. In no event shall the amount of interest due or payable on
any Obligation, when aggregated with all amounts payable by the Company under
any of the Transaction Documents that are deemed or construed to be interest,
exceed the maximum rate of interest allowed by Applicable Law and, in the event
any such payment is paid by the Company or received by any Purchaser, then such
excess sum shall be credited as a payment of principal, unless the Company, as
applicable, shall notify such Purchaser in writing that it elects to have such
excess sum returned to it forthwith. It is the express intent of the parties
hereto that the Company not pay, and the Purchasers not receive, directly or
indirectly, in any manner whatsoever, interest in excess of that which may be
lawfully paid by the Company under Applicable Law.
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Section 3.7 Payments, etc.
(i) Any and all payments by the Company hereunder or
under the Notes shall be made free and clear of and without deduction
for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Purchaser, taxes imposed on or measured
by its net income, net profits, and franchise taxes (all such excluded
net income taxes, taxes on net profits and franchise taxes,
collectively referred to as the "Excluded Taxes"; all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and
liabilities being collectively referred to in this Section 3.7 as
"Taxes"). If the Company shall be required by law to deduct any Taxes
from or in respect of any sum payable hereunder or under any Note to
any Purchaser, (x) the sum so payable shall be increased by such amount
(the "Gross-up Amount") as may be necessary so that after making all
required deductions (including deductions with respect to Taxes owed by
such Purchaser on the Gross-up Amount payable under this Section 3.7
such Purchaser receives an amount equal to the sum it would have
received had no such deductions been made, (y) the Company shall make
such deductions, and (z) the Company shall pay the full amount deducted
to the relevant taxation authority or other authority in accordance
with applicable law.
(ii) The Company will indemnify each Purchaser for
the full amount of Taxes (together with any Taxes or Excluded Taxes
owed by such Purchaser applicable to the Gross-up Amount payable under
clause (x) of Section 3.7(i) or on the indemnification payments made by
the Company under this Section 3.7(ii), but without duplication
thereof), and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not
such Taxes or such Excluded Taxes were correctly or legally asserted,
so as to compensate such Purchaser for any loss, cost, expense or
liability incurred as a consequence of any such Taxes. Payment pursuant
to such indemnification shall be made within ten (10) days from the
date such Purchaser makes written demand therefor. Within thirty (30)
days after the date of the Company's payment of Taxes, the Company will
furnish to the relevant Purchaser, at its appropriate lending office,
the original or a certified copy of a receipt evidencing payment
thereof. In the event a Purchaser receives a refund of, or credit with
respect to, any Taxes or Excluded Taxes paid by the Company pursuant to
this Section 3.7, such Purchaser shall pay the amount of such refund or
credit to the Company within thirty (30) days of receipt of such refund
or application of such credit.
(iii) Each Purchaser that is not a "United States
Person" (as defined in the Internal Revenue Code of 1986, as amended)
hereby agrees that:
(A) it shall, prior to the time it becomes a
Purchaser hereunder, deliver to the Company:
(1) for each lending office located
in the United States, three (3) accurate and complete
signed originals of Internal Revenue Service Form
W-8ECI or any successor thereto ("Form W-8ECI"),
and/or
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(2) for each lending office located
outside the United States, three (3) accurate and
complete signed originals of Internal Revenue Service
Form W-8BEN or any successor thereto ("Form W-8BEN");
in each case indicating and establishing that such Purchaser,
on the date of delivery thereof, is entitled to receive
payments of principal, interest and fees for the account of
such lending office under this Agreement and the Notes are
free from withholding of any United States Federal income tax;
provided, that if the Form W-8ECI or Form W-8BEN, as the case
may be, supplied by a Purchaser fails to establish a complete
exemption from United States withholding tax as of the date
such Purchaser becomes a Purchaser, such Purchaser shall,
within 15 days after a written request from the Company,
deliver to the Company the forms or other documents necessary
to establish a complete exemption from United States
withholding tax as of such date;
(B) if at any time such Purchaser changes
its lending office or selects an additional lending office, it
shall, at the same time or reasonably promptly thereafter (but
only to the extent the forms previously delivered by it
hereunder are no longer effective or do not meet the
requirements of Section 3.7(iii)(A) deliver to the Company in
replacement for the forms previously delivered by it
hereunder:
(1) for such changed or additional
applicable lending office located in the United
States of America, three (3) accurate and complete
signed originals of Form W-8ECI; or
(2) otherwise, three (3) accurate
and complete signed originals of Form W-8BEN;
in each case indicating and establishing that such Purchaser
is on the date of delivery thereof entitled to receive
payments of principal, interest and fees for the account of
such changed or additional lending office under this Agreement
and the Notes are free from withholding of any United States
Federal income tax.
(iv) In addition to the documents to be furnished
pursuant to Section 3.7, each Purchaser shall, promptly upon the
reasonable written request of the Company, deliver to the Company and
such other accurate and complete forms or similar documentation as such
Purchaser is legally able to provide and as may be required from time
to time by any applicable law, treaty, rule or regulation of any
jurisdiction in order to establish such Purchaser's tax status for
withholding purposes or as may otherwise be appropriate to eliminate or
minimize any Taxes on payments under this Agreement and the Notes.
(v) Each Purchaser shall use reasonable efforts to
avoid or minimize any amounts which might otherwise be payable by the
Company pursuant to this Section
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3.7, except to the extent that a Purchaser determines that such efforts
would be disadvantageous to such Purchaser, as reasonably determined by
such Purchaser and which determination, if made in good faith, shall be
binding and conclusive on all parties hereto.
(vi) Without prejudice to the survival of any other
agreement of the Company hereunder, the agreements and obligations of
the Company and the Purchasers contained in this Section 3.7 shall
survive the termination of this Agreement and the payment in full of
the principal of, premium, if any, interest, and fees hereunder and
under the Notes.
ARTICLE 4.
GUARANTY
Section 4.1 The Guaranty.
Each Guarantor hereby jointly and severally guarantees to the
Purchasers, as primary obligor and not as surety, the prompt payment of the
Obligations in full when due (whether at stated maturity, as a mandatory
prepayment, by acceleration, as a mandatory cash collateralization or otherwise)
strictly in accordance with the terms thereof. The Guarantors hereby further
agree that if any of the Obligations are not paid in full when due (whether at
stated maturity, as a mandatory prepayment, by acceleration, or otherwise), the
Guarantors will promptly pay the same, without any demand or notice whatsoever,
and that in the case of any extension of time of payment or renewal of any of
the Obligations, the same will be promptly paid in full when due (whether at
extended maturity, as a mandatory prepayment, by acceleration, as a mandatory
cash collateralization or otherwise) in accordance with the terms of such
extension or renewal.
Notwithstanding any provision to the contrary contained herein or in
any other of the Loan Documents, the obligations of each Guarantor under this
Agreement and the other Loan Documents shall be limited to an aggregate amount
equal to the largest amount that would not render such obligations subject to
avoidance under Section 548 of the Bankruptcy Code or any comparable provisions
of any applicable state law.
Section 4.2 Obligations Unconditional.
The obligations of each Guarantor under Section 4.1 are joint and
several, absolute and unconditional, irrespective of the value, genuineness,
validity, regularity or enforceability of any of the Loan Documents, or any
other agreement or instrument referred to therein, or any substitution, release,
impairment or exchange of any other guarantee of or security for any of the
Obligations, and, to the fullest extent permitted by applicable law,
irrespective of any other circumstance whatsoever which might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
it being the intent of this Section 4.2 that the obligations of each Guarantor
hereunder shall be absolute and unconditional under any and all circumstances.
Each Guarantor agrees that it shall have no right of subrogation, indemnity,
reimbursement or contribution against the Company or any other Guarantor for
amounts paid under this Article 4 until such time as the Purchasers have been
indefeasibly paid in full in respect of all Obligations. Without limiting the
generality of the
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foregoing, it is agreed that, to the fullest extent permitted by law, the
occurrence of any one or more of the following shall not alter or impair the
liability of any Guarantor hereunder which shall remain absolute and
unconditional as described above:
(a) at any time or from time to time, without notice any
Guarantor, the time for any performance of or compliance with any of
the Obligations shall be extended, or such performance or compliance
shall be waived;
(b) any of the acts mentioned in any of the provisions of any
of the Loan Documents, or any other agreement or instrument referred to
in the Loan Documents shall be done or omitted;
(c) the maturity of any of the Obligations shall be
accelerated, or any of the Obligations shall be modified, supplemented
or amended in any respect, or any right under any of the Loan
Documents, or any other agreement or instrument referred to in the Loan
Documents shall be waived or any other guarantee of any of the
Obligations or any security therefor shall be released, impaired or
exchanged in whole or in part or otherwise dealt with; or
(d) any of the Obligations shall be determined to be void or
voidable (including, without limitation, for the benefit of any
creditor of any Guarantor) or shall be subordinated to the claims of
any Person (including, without limitation, any creditor of any
Guarantor).
With respect to its obligations hereunder, each Guarantor hereby expressly
waives diligence, presentment, demand of payment, protest and all notices
whatsoever, and any requirement that each Purchaser exhaust any right, power or
remedy or proceed against any Person under any of the Loan Documents, or any
other agreement or instrument referred to in the Loan Documents, or against any
other Person under any other guarantee of, or security for, any of the
Obligations.
Section 4.3 Reinstatement.
The obligations of the Guarantors under this Section 4 shall be
automatically reinstated if and to the extent that for any reason any payment by
or on behalf of any Person in respect of the Obligations is rescinded or must be
otherwise restored by any holder of any of the Obligations, whether as a result
of any proceedings in bankruptcy or reorganization or otherwise, and each
Guarantor agrees that it will indemnify each Purchaser on demand for all
reasonable costs and expenses (including, without limitation, reasonable
out-of-pocket fees and expenses of counsel) incurred by such Purchaser in
connection with such rescission or restoration, including any such reasonable
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.
Section 4.4 Certain Additional Waivers.
Without limiting the generality of the provisions of this Section 4,
each Guarantor hereby specifically waives the benefits of [O.C.G.A. ss. 10-7-24
(or New York equivalent)] to the extent applicable. Each Guarantor further
agrees that it shall have no right of recourse to security for the
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Obligations, except through the exercise of rights of subrogation and
contribution pursuant to Section 4.2.
Section 4.5 Remedies.
Each Guarantor agrees that, to the fullest extent permitted by law, as
between such Guarantor, on the one hand, and each Purchaser, on the other hand,
the Obligations may be declared to be forthwith due and payable as provided in
Section 9.2 (and shall be deemed to have become automatically due and payable in
the circumstances provided in said Section 9.2) for purposes of Section 4.1
notwithstanding any stay, injunction or other prohibition preventing such
declaration (or preventing the Obligations from becoming automatically due and
payable) as against any other Person and that, in the event of such declaration
(or the Obligations being deemed to have become automatically due and payable),
the Obligations (whether or not due and payable by any other Person) shall
forthwith become due and payable by such Guarantor for purposes of Section 4.1.
Section 4.6 Guarantee of Payment; Continuing Guarantee.
The guarantee in this Section 4 is a guaranty of payment and not of
collection, is a continuing guarantee, and shall apply to all Obligations
whenever arising.
ARTICLE 5.
CONDITIONS PRECEDENT TO PURCHASE OF THE NOTES AND THE WARRANTS
Section 5.1 Closing Date Conditions. The obligations of the Credit Parties under
this Agreement are subject to the satisfaction of each of the following
conditions on the Closing Date:
(A) No Injunction, etc. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or proposed
before any court, governmental agency or legislative body to enjoin, restrain,
or prohibit, or to obtain substantial damages in respect of, or which is related
to or arises out of, this Agreement or the Merger Agreement or the consummation
of the transactions contemplated hereby or thereby, or which, in each
Purchaser's reasonable discretion, would make it inadvisable to consummate the
transactions contemplated by this Agreement.
(B) Documentation. Each Purchaser shall have received, on or prior to
the Closing Date, the following, each in the form and substance satisfactory to
such Purchaser and its counsel:
(1) duly executed counterparts of this Agreement;
(2) a Note or Notes executed in favor of each Purchaser in the
aggregate principal amount of such Purchaser's Pro Rata Share of the
$20,000,000 of Notes sold pursuant to the terms of this Agreement;
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(3) the duly executed Warrant Agreement;
(4) duly executed Warrants executed in favor of each Purchaser
for the purchase of such Purchaser's Pro Rata Share of the number of
Shares of the Company which correspond to an aggregate twelve percent
(12%) of the Common Stock and the Preferred Stock of Conso
International, calculated on a Fully Diluted Basis, after giving effect
to the Merger;
(5) the duly executed Registration Rights Agreement;
(6) the duly executed Stockholders' Agreement;
(7) UCC, tax, judgment and fixture Lien search results on (a)
the names of each Credit Party and (b) all trade names or former names
used by each Credit Party from all appropriate jurisdictions and filing
offices requested by Purchasers, together with copies of executed
originals of such termination statements, releases and cancellations of
mortgages required by the Purchasers in connection with the removal of
any Liens (other than Permitted Liens) against the assets of the
Purchasers;
(8) a certificate signed by a senior officer of each Credit
Party stating that the representations and warranties set forth in
Section 5.1 hereof are true and correct in all material respects on and
as of such date with the same effect as though made on and as of such
date, stating that each Credit Party is on such date in compliance with
all the terms and provisions of the Transaction Documents on its part
to be observed or performed, and stating that on such date, no Default
or Event of Default, has occurred or is continuing;
(9) copies of the articles of incorporation of each Credit
Party and CIC, and all amendments thereto, certified by the relevant
Secretary of State of such Credit Party's or CIC's incorporation as of
a recent date; and (b) good standing certificates for each Credit
Party, issued by the relevant Secretary of State and any other States
in which each Credit Party's qualification is required, in each case as
of a recent date;
(10) a certificate of the Secretary or an Assistant Secretary
of each Credit Party and CIC, certifying (a) that attached thereto is a
true and complete copy of the Bylaws of such Credit Party or CIC, as
the case may be, as in effect on the date of such certification, (b)
that attached thereto is a true and complete copy of resolutions
adopted by the Board of Directors of such Credit Party or CIC, as the
case may be, authorizing the execution, delivery and performance of
this Agreement and the other Transaction Documents to which such Credit
Party is a party; (c) as to the incumbency and genuineness of the
signatures of the officers of such Credit Party executing this
Agreement or any of the other Transaction Documents;
(11) a favorable legal opinion of counsel to each Credit
Party, addressed to the Purchasers, covering such matters relating to
the transactions contemplated hereby as the Purchasers may request;
(12) certified copies of the executed Senior Debt Documents
and evidence that all conditions precedent thereto have been satisfied
or waived;
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(13) copies of all material consents, approvals,
authorizations, registrations and filings and orders required or
advisable to be made or obtained under any Requirement of Law or by any
material Contractual Obligation of each Credit Party, in connection
with the execution, delivery, performance, validity and enforceability
of the Transaction Documents or any of the transactions contemplated
thereby, and such consents, approvals, authorizations, registrations,
filings and orders shall be in full force and effect and all applicable
waiting periods shall have expired
(14) copies of the internally prepared quarterly consolidated
financial statements of Conso International for the Fiscal Quarter
ending January 1, 2000 and copies of the audited consolidated financial
statements for Conso International for the Fiscal Year ending July 3,
1999;
(15) a solvency certificate of each Credit Party executed by
the Chief Financial Officer of such Credit Party;
(16) written instructions from the Company to the Purchasers
as to the disbursements of the proceeds of each Note;
(17) the duly executed Subordination Agreement;
(18) certified copies of the Merger Agreement, together with
evidence that all conditions precedent to the Merger Agreement have
been satisfied or waived and that all transactions contemplated by the
Merger Agreement have been consummated.
(19) evidence satisfactory to the Purchasers that CVC has made
an aggregate minimum equity investment in the Company of $19,999,600
and Findlay has made an aggregate minimum equity investment in the
Company of $4,800,400, in each case under terms reasonably satisfactory
to Purchasers.
(20) evidence satisfactory to Purchasers that the Consolidated
Companies have Adjusted EBITDA for the most recent twelve-month period
ending December 31, 1999 of at least $19,000,000.
(21) such other documents, instruments and agreements as
Purchasers shall request.
(C) Corporate Actions. All corporate and other action required
hereunder shall be satisfactory.
(D) No Material Adverse Effect. No Material Adverse Effect has occurred
since July 3, 1999.
(F) No Default, Etc. No Default or Event of Default shall exist.
(G) Representations Accurate. All representations and warranties made
by the Credit Parties contained herein or in any other Transaction Document
shall be true and correct in all material respects with the same effect as
though such representations and warranties had been
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made on and as of the Closing Date except where such representations or
warranties specifically refer to an earlier date.
ARTICLE 6.
REPRESENTATIONS AND WARRANTIES
Section 6.1 Representations and Warranties Generally. The Company (as to itself
and all other Consolidated Companies) represents and warrants that the following
statements are, and after giving effect to the Merger will be, true and correct.
6.1.1 Organizational Existence; Compliance with Law. Each of the
Consolidated Companies (i) is duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its organization,
(ii) has the corporate or other organizational power and authority and
the legal right to own and operate its property and to conduct its
business, (iii) is duly qualified as a foreign corporation or other
organization and in good standing under the laws of each jurisdiction
where its ownership of property or the conduct of its business requires
such qualification, except where a failure to be so qualified could not
reasonably be expected to have a Materially Adverse Effect, and (iv) is
in compliance with all Requirements of Law except where the failure to
be in compliance could not reasonably be expected to have a Materially
Adverse Effect and has not received any notice of any violation of any
Requirement of Laws that would reasonably be expected to have a
Materially Adverse Effect.
6.1.2 Organizational Power; Authorization. Each Credit Party has the
corporate or other organizational power and authority to make, deliver
and perform the Transaction Documents to which it is a party and has
taken all necessary corporate or other organizational action to
authorize the execution, delivery and performance of the Transaction
Documents to which it is a party. No consent, approval, authorization
of, or registration or filing with, any Person under any material
Contractual Obligation, with any Person under the articles of
incorporation or bylaws of any Credit Party, or with any Governmental
Authority is required in connection with the execution, delivery or
performance by any Credit Party, or the validity or enforceability
against any Credit Party of the Transaction Documents to which it is a
party or any of the transactions contemplated thereby, other than such
consents, approvals, authorizations, registrations or filings which
have been made or obtained and are in full force and effect.
6.1.3 Enforceable Obligations. This Agreement has been duly executed
and delivered, and each other Loan Document will be duly executed and
delivered, by the Credit Parties, and this Agreement constitutes, and
each other Loan Document when executed and delivered will constitute,
legal, valid and binding obligations of the Credit Parties, enforceable
against them in accordance with their respective terms, except as may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting the enforcement of creditors'
rights generally and by general principles of equity.
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6.1.4 No Legal Bar. The execution, delivery and performance by the
Credit Parties of the Transaction Documents to which it is a party will
not violate any Requirement of Law or cause a breach or default under
any of their respective Contractual Obligations, articles of
incorporation or bylaws, except as could not reasonably be expected to
have a Materially Adverse Effect.
6.1.5 No Material Litigation. Except as set forth on Schedule 6.1.5, no
litigation, investigations or proceedings of or before any Governmental
Authority are pending or, to the knowledge of any Credit Party,
threatened by or against any of the Consolidated Companies, or against
any of their respective properties or revenues, existing or future (a)
with respect to any Transaction Document or any of the transactions
contemplated hereby or thereby, or (b) which could reasonably be
expected to have a Materially Adverse Effect.
6.1.6 Investment Company Act, Etc. No Credit Party is an "investment
company" or a company "controlled" by an "investment company" (as each
of the quoted terms is defined or used in the Investment Company Act of
1940, as amended). No Credit Party is subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal Power Act, or
any foreign, federal or local statute or regulation limiting its
ability to incur indebtedness for money borrowed, guarantee such
indebtedness, or pledge its assets to secure such indebtedness, as
contemplated hereby or by any other Loan Document.
6.1.7 Margin Regulations. No part of the proceeds of any of the Notes
will be used for any purpose which violates, or which would be
inconsistent or not in compliance with, the provisions of the
applicable Margin Regulations.
6.1.8 Compliance With Environmental Laws. Except as set forth on
Schedule 6.1.8 or as would not reasonably be expected to result in
penalties, fines, claims or other liabilities (including, without
limitation, remediation costs and expenses) to the Consolidated
Companies in amounts in excess of $50,000 either individually or in the
aggregate:
(1) The Consolidated Companies have received no notices of
claims or potential liability under, and are in compliance with, all
applicable Environmental Laws.
(2) None of the Consolidated Companies has received during the
period from January 1, 1990 through the date of this Agreement, any
notice of violation, or notice of any action, either judicial or
administrative, from any Governmental Authority (whether United States
or foreign) relating to the actual or alleged violation of any
Environmental Law, including, without limitation, any notice of any
actual or alleged spill, leak, or other release of any Hazardous
Substance, waste or hazardous waste by any Consolidated Company or its
employees or agents, or as to the existence of any contamination on any
properties owned by any Consolidated Company.
(3) The Consolidated Companies have obtained, and are in
compliance with, all necessary governmental permits, licenses and
approvals which are material to the operations conducted on their
respective properties, including without limitation, all
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required permits, licenses and approvals for (i) the emission of air
pollutants or contaminates, (ii) the treatment or pretreatment and
discharge of waste water or storm water, (iii) the treatment, storage,
disposal or generation of hazardous wastes, (iv) the withdrawal and
usage of ground water or surface water, and (v) the disposal of solid
wastes.
6.1.9 Insurance. The Consolidated Companies currently maintain
insurance with respect to their respective properties and businesses,
with financially sound and reputable insurers, having coverages against
losses or damages of the kinds customarily insured against by reputable
companies in the same or similar businesses, such insurance being in
amounts no less than those amounts which are customary for such
companies under similar circumstances. The Consolidated Companies have
paid all of insurance premiums now due and owing with respect to such
insurance policies and coverages, and such policies and coverages are
in full force and effect.
6.1.10 No Default. None of the Consolidated Companies is in default
under any Contractual Obligation which has had or is reasonably
expected to have a Materially Adverse Effect.
6.1.11 No Burdensome Restrictions. None of the Consolidated Companies
is a party to or bound by any Contractual Obligation or Requirement of
Law which has had or could reasonably be expected to have a Materially
Adverse Effect.
6.1.12 Taxes. Each of the Consolidated Companies has filed or caused to
be filed all declarations, reports and tax returns which are required
to have been filed, and has paid all taxes, custom duties, levies,
charges and similar contributions ("taxes" in this Section 6.1.12)
shown to be due and payable on said returns or on any assessments made
against it or its properties, and all other taxes, fees or other
charges imposed on it or any of its properties by any Governmental
Authority (other than those (i) the amount or validity of which is
currently being contested in good faith by appropriate proceedings and
with respect to which reserves in conformity with GAAP have been
provided in its books and (ii) for which an extension has been filed);
and no tax liens have been filed and, to the knowledge of any
Consolidated Company, no claims are being asserted with respect to any
such taxes, fees or other charges.
6.1.13 Subsidiaries; Dormant Subsidiaries. Except as set forth on
Schedule 6.1.13 (as amended from time to time), the Company has no
Subsidiaries, and no Consolidated Company is a joint venture partner or
general partner in any partnership. Each Subsidiary listed in Part A of
Schedule 6.1.13 is an Active Subsidiary and each Subsidiary listed in
Part B of Schedule 6.1.13 is a Dormant Subsidiary.
6.1.14 Financial Statements. The Company has furnished to the
Purchasers:
(1) (i) the audited consolidated and consolidating balance
sheet of Conso International and its Subsidiaries as at July 3, 1999
and the related consolidated and consolidating statements of income,
shareholders' equity and cash flows for the Fiscal Year then ended,
including in each case the related schedules and notes, and (ii) the
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unaudited consolidated and consolidating balance sheet of Conso
International and its Subsidiaries as at the end of the October 2, 1999
Fiscal Quarter, and the related unaudited consolidated and
consolidating statements of income, shareholders' equity, and cash
flows for the period then ended, setting forth in each case in
comparative form the figures for the previous Fiscal Year and Fiscal
Quarter, as the case may be. The foregoing financial statements fairly
present in all material respects the financial condition of Conso
International and its Subsidiaries as at the dates thereof and results
of operations for such periods in conformity with GAAP. Conso
International and its Subsidiaries taken as a whole do not have any
material contingent obligations, contingent liabilities, or material
liabilities for known taxes, long-term leases or unusual forward or
long-term commitments not reflected in the foregoing financial
statements or the notes thereto. Since July 3, 1999 there have been no
changes with respect to Conso International and its Subsidiaries which
have had or could reasonably be expected to have, as to any Credit
Party, BT Credit Party, or in the aggregate, a Materially Adverse
Effect.
(2) the unaudited pro forma balance sheet of the Consolidated
Companies on a consolidated basis setting forth as of the Closing Date
(after giving effect to the Merger) the pro forma financial position of
the Company and its Subsidiaries on a consolidated basis, copies of
which have been delivered to the Purchasers, fairly present, on a pro
forma basis, in conformity with GAAP applied on a basis consistent with
the financial statements referred to in clause (a) above, the financial
position of the Consolidated Companies on a consolidated basis, as of
such date and time, as if the Merger occurred as of October 2, 1999.
Neither the Company nor any Subsidiary of the Company has any material
contingent obligations, contingent liabilities or other obligations
which are not reflected in the balance sheet referenced above (the "Pro
Forma Financial Statements").
(3) the projections attached to the solvency certificates
delivered by the Company pursuant to Section 5.1(B)(15), prepared for
the Consolidated Companies on a consolidated basis with respect to the
1999 fiscal year (on a month by month basis) and with respect to the
2000 and 2001 fiscal years (on an annual basis), copies of which have
been furnished to the Purchasers, have been prepared based upon the
reasonable assumptions set forth therein which are believed by the
Company to be reasonable and fair in light of the current condition and
past performance of Conso International and to reflect a reasonable
estimate of the projected balance sheets, results of operations, cash
flows and other information presented therein.
6.1.15 Employee Benefits. Except as disclosed on Schedule 6.1.15:
(1) Identification of Plans. (1) None of the Consolidated
Companies maintains or contributes to or has an obligation to
contribute to, a Plan that is an "employee pension benefit plan" as
defined in Section 3(2) of ERISA or any plan, program or arrangement
that provides for deferred compensation, (2) none of the Consolidated
Companies nor any of their respective ERISA Affiliates in the last five
years has maintained or contributed to or has had an obligation to
contribute to, a Plan that is subject to Title IV of ERISA, and (3)
none of the Consolidated Companies maintains or contributes to any
Foreign Plan;
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(2) Compliance. Except as could not reasonably be expected to
result in a Materially Adverse Effect, each Plan maintained by a
Consolidated Company is by its terms and in operation, in substantial
compliance with all applicable laws, and no Consolidated Company has
been assessed, and to the knowledge of the Company, is subject to, any
tax or penalty with respect to any Plan of such Consolidated Company or
any ERISA Affiliate thereof, including without limitation, any tax or
penalty under Title I or Title IV of ERISA or under Chapter 43 of the
Tax Code, or any tax or penalty resulting from a loss of deduction
under Sections 162, 404, or 419 of the Tax Code;
(3) Liabilities. The Consolidated Companies have not been
assessed and to the knowledge of the Company are not subject to, any
material monetary liabilities (including withdrawal liabilities) with
respect to any Plans or Foreign Plans of such Consolidated Companies or
any of their ERISA Affiliates, including without limitation, any
liabilities arising from Titles I or IV of ERISA, other than
obligations to fund benefits under an ongoing Plan and to pay current
contributions, expenses and premiums with respect to such Plans or
Foreign Plans;
(4) Funding. The Consolidated Companies and, with respect to
any Plan which is subject to Title IV of ERISA, each of their
respective ERISA Affiliates, have made full and timely payment of all
amounts (A) required to be contributed under the terms of each Plan and
applicable law, and (B) required to be paid as expenses (including PBGC
or other premiums) of each Plan, and no Plan subject to Title IV of
ERISA has an "amount of unfunded benefit liabilities" (as defined in
Section 4001 (a)(18) of ERISA), determined as if such Plan terminated
on any date on which this representation and warranty is deemed made.
The Consolidated Companies are subject to no liabilities with respect
to post-retirement medical benefits;
(5) Prohibited Transactions. No Consolidated Company has
engaged in, or has any knowledge of, any non-exempt prohibited
transaction (within the meaning of Section 406 of ERISA or Section 4975
of the Tax Code) with respect to any Plan.
(6) Qualification of Plans. A favorable determination as to
the qualification under Section 401(a) of the Tax Code has been made by
the Internal Revenue Service with respect to each Plan intended to be
qualified under Section 401(a) of the Tax Code and, to the best
knowledge of each of the Consolidated Companies, nothing has occurred
since the date of such determination that would adversely affect such
qualification.
(7) Withdrawal. Except as could not reasonably be expected to
result in a Materially Adverse Effect, none of the Consolidated
Companies nor any of their respective ERISA Affiliates has:
(A) ceased operations at a facility so as to
become subject to the provisions of Section 4062(e)
of ERISA,
(B) withdrawn as a substantial employer so
as to become subject to the provisions of Section
4063 of ERISA,
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(C) ceased making contributions to any
"employee pension benefit plan" subject to the
provisions of Section 4064(a) of ERISA to which any
of the Consolidated Companies or any of their
respective ERISA Affiliates made contributions,
(D) incurred or caused to occur a "complete
withdrawal" (within the meaning of Section 4203 of
ERISA) or a "partial withdrawal" (within the meaning
of Section 4205 of ERISA) from a Multiemployer Plan
so as to incur withdrawal liability under Section
4201 of ERISA (without regard to subsequent reduction
or waiver of such liability under Sections 4207 or
4208 of ERISA), or
(E) been a party to any transaction or
agreement under which the provisions of Section 4204
of ERISA were applicable and which could reasonably
be expected to result in liability for any of the
Consolidated Companies.
(F) Proceedings. Except as could not
reasonably be expected to result in a Materially
Adverse Effect, there are no actions, suits or claims
pending (other than routine claims for benefits) or,
to the knowledge of any of the Consolidated
Companies, which could reasonably be expected to be
asserted, against any Plan maintained for employees
or the assets of any such Plan. No civil or criminal
action brought pursuant to the provisions of Title I,
Subtitle B, Part 5 of ERISA, is pending or, to the
best knowledge of any of the Consolidated Companies,
threatened against any fiduciary or any Plan.
6.1.16 Patents, Trademarks, Licenses, Etc (x) The Consolidated
Companies have obtained and hold in full force and effect or have the
right to use all material patents, trademarks, service marks, trade
names, copyrights, licenses and other such rights, free from burdensome
restrictions, which are necessary for the operation of their respective
businesses as presently conducted, and (y) no product, process, method,
service or other item presently sold by or employed by any Consolidated
Company in connection with such business infringes any patents,
trademark, service mark, trade name, copyright, license or other right
owned by any other Person except to the extent any such infringement
could not reasonably be expected to have a Materially Adverse Effect,
and (z) there is not presently pending, or to the knowledge of any
Consolidated Company, threatened, any claim or litigation against or
affecting any Consolidated Company contesting such Person's right to
sell or use any such product, process, method, substance or other item.
6.1.17 Ownership of Property. On the Closing Date, the real estate (the
"Real Estate") listed on Schedule 6.1.17 constitutes all of the real
property owned, leased, subleased, or used by the Consolidated
Companies. Each Consolidated Company has good and marketable fee simple
title to all of its owned real property or a valid leasehold interest
in all of its leased real property and good title to, or a valid
leasehold interest in, all of its other property, including the
properties and assets reflected in the balance sheet of Conso
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International at July 3, 1999 and the Pro Forma Financial Statements
hereinabove described, other than properties disposed of in the
ordinary course of business since such date, subject to no Lien or
title defect of any kind, except Permitted Liens. The Consolidated
Companies enjoy peaceful and undisturbed possession under all of their
respective real estate leases under which they are tenants or lessees,
as the case may be. Schedule 6.1.17 also describes any purchase
options, rights of first refusal or other similar contractual rights
pertaining to any Real Estate. As of the Closing Date, no portion of
any Credit Party's owned Real Estate has suffered any material damage
by fire or other casualty loss which has not heretofore been repaired
and restored in all material respects to its original condition or
otherwise remedied.
6.1.18 Indebtedness. Except as set forth on Schedule 8.1.1, as of the
Closing Date none of the Consolidated Companies is an obligor in
respect of any Indebtedness for borrowed money in a principal amount of
$250,000 or more, or any commitment to create or incur any Indebtedness
for borrowed money in a principal amount of $250,000 or more.
6.1.19 Financial Condition. On the Closing Date and after giving effect
to the Merger and the other transactions contemplated by this
Agreement, the other Loan Documents, the Senior Debt Documents and the
other Transaction Documents, (i) the assets of each Credit Party, at
fair valuation and based on their present fair saleable value, will
exceed such Credit Party's debts, including contingent liabilities, as
such liabilities may be limited under the express terms of any Guaranty
Agreement, (ii) the remaining capital of each Credit Party will not be
unreasonably small to conduct such Credit Party's business, and (iii)
no Credit Party will have incurred debts, or have intended to incur
debts, beyond its ability to pay such debts as they mature. For
purposes of this Section 6.1.19, "debt" means any liability on a claim,
and "claim" means (a) the right to payment, whether or not such right
is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or
unsecured, or (b) the right to an equitable remedy for breach of
performance if such breach gives rise to a right to payment, whether or
not such right to an equitable remedy is reduced to judgment, fixed,
contingent, matured, unmatured, disputed, undisputed, secured or
unsecured.
6.1.20 Labor Matters. Since January 1, 1997, the Consolidated Companies
have experienced no strikes, labor disputes, slow downs or work
stoppages due to labor disagreements and, to the best knowledge of any
Credit Party, there are no such strikes, disputes, slow downs or work
stoppages threatened against any Consolidated Company. The hours worked
and payment made to employees of the Consolidated Companies have not
been in violation in any material respect of the Fair Labor Standards
Act or any other applicable law dealing with such matters. All material
payments due from the Consolidated Companies, or for which any claim
may be made against the Consolidated Companies, on account of wages and
employee health and welfare insurance and other benefits have been paid
or accrued as liabilities on the books of the Consolidated Companies.
6.1.21 Payment or Dividend Restrictions. Except as described on
Schedule 6.1.21, none of the Consolidated Companies is party to or
subject to any agreement or understanding
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restricting or limiting the payment of any dividends or other
distributions by such Consolidated Company.
6.1.22 Year 2000 Issues. The Company and the other Consolidated
Companies (i) have done a comprehensive review of their computer
programs to identify the systems that would be affected by Year 2000
Issues as such Year 2000 Issues pertain to the computer programs and
systems of the Consolidated Companies, (ii) have reviewed their Year
2000 exposure to their material third party customers, suppliers, or
vendors and have evaluated the costs of modifications to program logic
control systems, (iii) developed a program for remediating in all
material respects all currently known Year 2000 Issues and successfully
implemented such program, and (iv) based on their review, consultants'
reports, and all other information currently available to them, the
Year 2000 Issues could not reasonably be expected to have a Materially
Adverse Effect.
6.1.23 Disclosure. No representation or warranty contained in the Loan
Documents or in any other document furnished from time to time to the
Purchasers by the Company, Conso International, their advisors, counsel
or representatives pursuant to the terms of this Agreement, contains or
will contain any untrue statement of a material fact or omits or will
omit to state any material fact necessary to make the statements herein
or therein not misleading as of the date made or deemed to be made.
Except as may be set forth herein, there is no fact known to any Credit
Party which has had, or is reasonably expected to have, a Materially
Adverse Effect.
ARTICLE 7.
AFFIRMATIVE COVENANTS
Section 7.1 Affirmative Covenants. Until all Obligations then due and payable
have been paid in full, unless the Required Purchasers shall otherwise consent
in the manner set forth in Section 10.4, the Company agrees to, and to cause
each of its Subsidiaries to:
7.1.1 Organizational Existence, Etc. Except as permitted by Section
8.3, preserve and maintain its corporate or other organizational
existence, its rights, franchises, and licenses, and its patents and
copyrights (for the scheduled duration thereof), trademarks, trade
names, and service marks, necessary or desirable in the normal conduct
of its business, and its qualification to do business as a foreign
corporation or other organization in all jurisdictions where it
conducts business or other activities making such qualification
necessary except where a failure to be so qualified could not
reasonably be expected to have a Materially Adverse Effect.
7.1.2 Compliance with Laws, Etc. Comply with all Requirements of Law
(including, without limitation, the Environmental Laws and ERISA) and
Contractual Obligations applicable to or binding on any of them, except
where a failure to comply could not reasonably be expected to have a
Materially Adverse Effect.
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7.1.3 Payment of Taxes and Claims, Etc. Pay (i) all taxes, assessments
and governmental charges imposed upon it or upon its property, and (ii)
all claims (including, without limitation, claims for labor, materials,
supplies or services) which might, if unpaid, become a Lien upon its
property, unless, in each case, the validity or amount thereof is being
contested in good faith by appropriate proceedings and adequate
reserves are maintained with respect thereto in accordance with GAAP
and subject to maintenance of reasonable reserves and extensions
permitted by the relevant taxing authorities.
7.1.4 Keeping of Books. Keep proper books of record and account,
containing complete and accurate entries of all their respective
financial and business transactions which are required to be maintained
in order to prepare the consolidated financial statements of the
Company and its Subsidiaries in conformity with GAAP in all material
respects.
7.1.5 Visitation, Inspection and Audits, Etc. Permit any representative
of any Purchaser which owns at least $2,500,000 of Subordinated Notes
to visit and inspect any of its property, to examine its books and
records and to make copies and take extracts therefrom, and to discuss
its affairs, finances and accounts with its officers, all at such
reasonable times and as often as any such Purchaser may reasonably
request after reasonable prior notice to the Company; provided,
however, if a Default or an Event of Default has occurred and is
continuing, no prior notice shall be required. All reasonable expenses
incurred by such Purchaser in connection with any such visit,
inspection, audit, examination and discussions shall be borne by the
Company; provided, however, that prior to the occurrence and
continuation of a Default or Event of Default the Company shall not be
required to pay the reasonable expenses of each visit of such Purchaser
under this Section 7.1.5 in excess of one visit per Fiscal Quarter.
7.1.6 Insurance; Maintenance of Properties; Net Casualty/Insurance
Proceeds.
(1) Maintain or cause to be maintained with financially sound
and reputable insurers, insurance with respect to its properties and
business, and the properties and business of its Subsidiaries, against
loss or damage of the kind customarily insured against by reputable
companies in the same or similar businesses, such insurance to be of
such types and in such amounts as is customary for such companies under
similar circumstances; provided, however, that in any event the Company
shall use its best efforts to maintain, or cause to be maintained,
insurance in amounts and with coverages not materially less favorable
to any Consolidated Company as in effect on the date of this Agreement.
(2) Cause all properties used or useful in the conduct of its
business to be maintained and kept in good condition, repair and
working order (normal wear and tear and any damage being repaired or
restored excepted) and supplied with all necessary equipment and will
cause to be made all necessary repairs, renewals, replacements,
settlements and improvements thereof, all as in the judgment of the
Company as may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at
all times and except where a failure to do so would not have a
Materially Adverse Effect;
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(3) To the extent permitted by the terms of the Senior Credit
Agreement, Net Casualty/Insurance Proceeds must be applied to the
payment of the Obligations.
7.1.7 Reporting Covenants. Furnish to each Purchaser:
(1) Annual Financial Statements. As soon as available and in
any event within 120 days after the end of each Fiscal Year, balance
sheets of the Consolidated Companies as at the end of such year,
presented on a consolidated and consolidating basis, and the related
statements of income, retained earnings and cash flows of the
Consolidated Companies for such Fiscal Year, presented on a
consolidated basis, setting forth in each case in comparative form the
figures for the previous Fiscal Year, all in reasonable detail and
accompanied by a report thereon of Deloitte & Touche L.L.P. or other
independent public accountants of comparable recognized national
standing, which such report shall be unqualified as to going concern
and scope of audit and shall state that such financial statements
present fairly in all material respects the financial condition as at
the end of such Fiscal Year, and the results of operations and
statements of cash flows of the Consolidated Companies for such Fiscal
Year in accordance with GAAP and that the examination by such
accountants in connection with such financial statements has been made
in accordance with generally accepted auditing standards;
(2) Monthly Financial Statements. As soon as available and in
any event within 45 days after the end of each Fiscal Month that is not
the end of a Fiscal Year, balance sheets of the Consolidated Companies
as at the end of such Fiscal Month presented on a consolidated and
consolidating basis and the related statements of income, retained
earnings and cash flows of the Consolidated Companies for such Fiscal
Month and for the portion of the Fiscal Year ended at the end of such
Fiscal Month, presented on a consolidated and consolidating basis
setting forth in each case in comparative form the figures for the
corresponding month and the corresponding portion of the Company's
previous Fiscal Year, all in reasonable detail, and certified by the
chief financial officer or principal accounting officer of the Company
that such financial statements fairly present in all material respects
the financial condition of the Consolidated Companies as at the end of
such Fiscal Month on a consolidated basis, and the results of
operations and statements of cash flows of the Consolidated Companies
for such Fiscal Month and such portion of the Fiscal Year, in
accordance with GAAP (subject to normal year-end audit adjustments and
the absence of certain footnotes);
(3) No Default/Compliance Certificate. Together with the
financial statements required pursuant to subsection (a) and with the
financial statements required pursuant to subsection (b) above for the
third Fiscal Month of each Fiscal Quarter, a certificate of the chief
financial officer or treasurer of the Company substantially in the form
of Exhibit G, to the effect that, based upon a review of the activities
of the Consolidated Companies and such financial statements during the
period covered thereby, to his knowledge, (i) there exists no Event of
Default and no Default under this Agreement, or if there exists an
Event of Default or a Default hereunder, specifying the nature thereof
and the proposed response thereto, and (ii) demonstrating in reasonable
detail compliance as at the end of such Fiscal Year or such Fiscal
Month with Sections 7.1.15, 7.1.16, 7.1.17 and 8.1.12;
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(4) Auditor's No Default Certificate. Together with the
financial statements required pursuant to subsection (1) above, a
certificate of the accountants who prepared the report referred to
therein, (i) to the effect that during the course of their audit, they
have found no Default or Event of Default under this Agreement, or if
there exists a Default or Event of Default hereunder, specifying the
nature thereof and (ii) demonstrating in reasonable detail compliance
as at the end of such Fiscal Year with Sections 7.1.15, 7.1.16, 7.1.17
and 8.1.12;
(5) Notice of Default under Loan Documents. Promptly after any
Credit Party has notice or knowledge of the occurrence of an Event of
Default or a Default hereunder a certificate of the chief financial
officer or principal accounting officer of the Company specifying the
nature thereof and the proposed response thereto;
(6) Notice of Default under Other Indebtedness. Promptly upon
its receipt thereof, furnish to the Purchasers a copy of any notice
received by it or any other Consolidated Company from the holder(s) of
any Indebtedness referred to in Section 8.1.1 (or from any trustee,
agent, attorney, or other party acting on behalf of such holder(s)),
where such notice states or claims the existence or occurrence of any
default or event of default with respect to such Indebtedness under the
terms of any indenture, loan or credit agreement, debenture, note, or
other document evidencing or governing such Indebtedness;
(7) Litigation. Promptly after (i) the occurrence thereof,
notice of the institution of or any material adverse development in any
action, suit or proceeding or any governmental investigation or any
arbitration, before any court or arbitrator or any governmental or
administrative body, agency or official, against any Consolidated
Company, or any property of any thereof, or (ii) actual knowledge
thereof, notice of the threat of any such action, suit, proceeding,
investigation or arbitration;
(8) Environmental Notices. Promptly after receipt thereof,
notice of any actual or alleged violation, or notice of any action,
claim or request for information, either judicial or administrative,
from any Governmental Authority relating to any actual or alleged
claim, notice of potential responsibility under or violation of any
Environmental Law, or any actual or alleged spill, leak, disposal or
other release of any waste, petroleum product, or hazardous waste or
Hazardous Substance by any Consolidated Company which could result in
penalties, fines, claims or other liabilities to any Consolidated
Company in amounts in excess of $500,000;
7.1.8 ERISA. Promptly after the occurrence thereof with respect to any
Plan of any Consolidated Company or any ERISA Affiliate thereof, or any
trust established thereunder, notice of (A) a "reportable event"
described in Section 4043 of ERISA and the regulations issued from time
to time thereunder (other than a "reportable event" not subject to the
provisions for 30-day notice to the PBGC under such regulations), or
(B) any other event which could subject any Consolidated Company to any
tax, penalty or liability under Title I or Title IV of ERISA or Chapter
43 of the Tax Code, or any tax or penalty resulting from a loss of
deduction under Sections 162, 404 or 419 of the Tax Code, or any tax,
penalty or liability (other than amounts that become payable in the
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normal operation of any Plan) under any Requirement of Law applicable
to any Foreign Plan, where any such taxes, penalties or liabilities
exceed or could exceed $500,000 in the aggregate;
(1) Promptly after such notice must be provided to the PBGC,
or to a Plan participant, beneficiary or alternative payee, any notice
required under Section 101(d), 302(f)(4), 303, 304, 307, 4041(a)(2) of
ERISA or under Section 401(a)(29) or 412 of the Tax Code with respect
to any Plan of any Consolidated Company or any ERISA Affiliate thereof,
(2) Promptly after receipt, any notice received by any
Consolidated Company or any ERISA Affiliate thereof concerning the
intent of the PBGC or any other Governmental Authority to terminate a
Plan of such Company or ERISA Affiliate thereof which is subject to
Title IV of ERISA, to impose any liability on such Company or ERISA
Affiliate under Title IV of ERISA or Chapter 43 of the Tax Code;
(3) Upon the request of the Purchasers, promptly upon the
filing thereof with the Internal Revenue Service ("IRS") or the
Department of Labor ("DOL"), a copy of IRS Form 5500 or annual report
for each Plan of any Consolidated Company or ERISA Affiliate thereof
which is subject to Title IV of ERISA;
(4) Upon the request of the Purchasers, (A) true and complete
copies of any and all documents, government reports and IRS
determination or opinion letters or rulings for any Plan of any
Consolidated Company from the IRS, PBGC or DOL, (B) any reports filed
with the IRS, PBGC or DOL with respect to a Plan of the Consolidated
Companies or any ERISA Affiliate thereof, or (C) a current statement of
withdrawal liability for each Multiemployer Plan of any Consolidated
Company or any ERISA Affiliate thereof,
(5) Promptly upon any Consolidated Company becoming aware
thereof, notice that (i) any material contributions to any Foreign Plan
have not been made by the required due date for such contribution and
such default cannot immediately be remedied, (ii) any Foreign Plan is
not funded to the extent required by the law of the jurisdiction whose
law governs such Foreign Plan based on the actuarial assumptions
reasonably used at any time, or (iii) a material change is anticipated
to any Foreign Plan that could reasonably be expected to have a
Materially Adverse Effect.
7.1.9 Liens. Promptly upon any Consolidated Company becoming aware
thereof, notice of the filing of any federal statutory Lien, tax or
other state or local government Lien or any other Lien affecting their
respective properties, other than Permitted Liens;
7.1.10 Public Filings, Etc. Promptly upon the filing thereof or
otherwise becoming available, copies of all financial statements,
annual, quarterly, monthly and special reports, proxy statements and
notices sent or made available generally by the Company to its public
security holders, of all regular and periodic reports and all
registration statements and prospectuses, if any, filed by it with any
securities exchange, and of all press releases and other statements
made available generally to the public containing
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material developments in the business or financial condition of the
Company and the other Consolidated Companies;
7.1.11 Accountants' Reports. Promptly upon receipt thereof, copies of
all financial statements of, and all reports submitted by, independent
public accountants to the Company in connection with each annual,
interim, or special audit of the Company's financial statements,
including without limitation, the comment letter submitted by such
accountants to management in connection with their annual audit;
7.1.12 Senior Debt and Equity Notices. As soon as practicable, copies
of all material written notices given or received by any Credit Party
with respect to any Senior Debt or Stock of such Person, and, promptly
after any Credit Party obtains knowledge of any matured or unmatured
event of default with respect to any Senior Debt, notice of such event
of default;
7.1.13 Other Information. With reasonable promptness, such other
information about the Consolidated Companies as the Purchasers may
reasonably request from time to time.
7.1.14 Year 2000 Issues. Take all actions reasonably necessary to
assure that the Year 2000 Issues could not reasonably be expected to
have a Materially Adverse Effect. The Company and the other
Consolidated Companies will use their best efforts to assure that its
material third-party customers, suppliers and vendors develop and
implement programs to remediate in all material respects all Year 2000
Issues that could not reasonably be expected to have a Materially
Adverse Effect. Upon reasonable request by the Purchasers or Lender,
the Company will provide the Purchasers and Lenders a written
description of its Year 2000 program, including updates and progress
reports. The Company will advise the Purchasers and the Lenders
promptly of any reasonably anticipated Materially Adverse Effect as a
result of Year 2000 Issues.
7.1.15 Maximum Total Funded Debt to Adjusted EBITDA Ratio. As of the
last day of each Fiscal Quarter, commencing with the Fiscal Quarter
ending on the third Fiscal Quarter of Fiscal Year 2000, the Total
Funded Debt to Adjusted EBITDA Ratio for the following periods shall be
not greater than the following ratios:
Fiscal Quarter Ratio
-------------- -----
Third and Fourth
Fiscal Quarter in
Fiscal Year 2000 4.90:1.00
First and Second
Fiscal Quarter in
Fiscal Year 2001 4.85:1.00
Third Fiscal Quarter
in Fiscal Year 2001 4.75:1.00
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Fourth Fiscal Quarter
in Fiscal Year 2001 4.50:1.00
First Fiscal Quarter in
Fiscal Year 2002 4.35:1.00
Second Fiscal Quarter in
Fiscal Year 2002 4.25:1.00
Third Fiscal Quarter in
Fiscal Year 2002 4.00:1.00
Fourth Fiscal Quarter in
Fiscal Year 2002 3.85:1.00
First Fiscal Quarter in
Fiscal Year 2003 3.75:1.00
Second Fiscal Quarter in
Fiscal Year 2003 3.65:1.00
Third Fiscal Quarter in
Fiscal Year 2003 and
thereafter 3.50:1.00
7.1.16 Minimum Fixed Charge Coverage Ratio. As of the last day of each
Fiscal Quarter, commencing with the third Fiscal Quarter of Fiscal Year
2000, the Fixed Charge Coverage Ratio shall be not less than 1.05:1.00.
7.1.17 Interest Coverage Ratio. As of the last day of each Fiscal
Quarter, commencing with the third Fiscal Quarter of Fiscal Year 2000,
the Interest Coverage Ratio for the following periods shall be not less
than the following ratios:
Fiscal Quarter Ratio
-------------- -----
Third Fiscal Quarter in
Fiscal Year 2000 through
the Third Fiscal Quarter
in Fiscal Year 2001 1.90:1.00
Fourth Fiscal Quarter in
Fiscal Year 2001 2.00:1.00
First and Second
Fiscal Quarter in
Fiscal Year 2002 2.10:1.00
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Third Fiscal Quarter in
Fiscal Year 2002 and thereafter 2.30:1.00
7.1.18 Additional Credit Parties. In the event that, subsequent to the
Closing Date, any Person becomes a Domestic Subsidiary of the Company,
whether pursuant to an acquisition or otherwise, (x) the Company shall
promptly notify the Purchasers of the creation or acquisition of such
Domestic Subsidiary and (y) the Company shall cause such Person (i) to
become a party to this Agreement as a new Subsidiary Guarantor, and
(ii) to provide all relevant documentation with respect thereto and to
take such other actions as such Domestic Subsidiary would have provided
and taken pursuant to Section 5.1 if such Subsidiary had been a Credit
Party on the Closing Date.
7.1.19 Issuance of Relacement Warrants. If the Notes are not prepaid in
full on or before June 5, 2001, upon the request of any Registered
Holder of any Warrant Certificate the Company shall issue replacement
Warrant Certificates, which replacement Warrant Certificates shall be
in the form of Exhibit I hereto, upon the surrender thereof by the
Registered Holders at the principal office of the Company, for new
certificates of like tenor representing in the aggregate the purchase
rights thereunder, and each new certificate will represent such portion
of such rights as is designated by the Registered Holder at the time of
such surrender.
ARTICLE 8.
NEGATIVE COVENANTS
Section 8.1 Negative Covenants. For so long as any Note or any of the other
Obligations remains unpaid or unperformed (other than indemnification and other
similar obligations that survive beyond the termination of this Agreement),
unless the Required Purchasers (or, if required pursuant to Section 10.4, all
Purchasers) shall otherwise consent in the manner set forth in Section 10.4, the
Company will not, and will not permit any of its Subsidiaries to:
8.1.1 Indebtedness. Create, incur, assume or suffer to exist any
Indebtedness, other than:
(1) Indebtedness under this Agreement and any other Loan
Document;
(2) Senior Debt;
(3) Indebtedness evidenced by the BT Intercompany Note;
(4) Indebtedness existing on the Closing Date and described on
Schedule 8.1.1;
(5) purchase money Indebtedness and Capital Lease Obligations
to the extent secured by a Lien permitted by Section 8.1.2(8);
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(6) (A) unsecured current liabilities and other ordinary
course operating liabilities incurred in the ordinary course of
business as conducted on the Closing Date (other than liabilities for
borrowed money or liabilities evidenced by promissory notes, bonds or
similar instruments) and (B) Indebtedness to trade creditors incurred
in the ordinary course of business and either (i) not more than 90 days
past due, or (ii) being disputed in good faith by appropriate
proceedings with reserves for such disputed liability maintained in
conformity with GAAP;
(7) Indebtedness consisting of contingent obligations under
indemnities, guarantees, and reimbursement agreements in favor of
Persons issuing surety bonds, guarantees and similar undertakings
issued to support performance obligations of any of the Consolidated
Companies incurred in the ordinary course of business;
(8) the Interest Rate Contract required under Section 8.13 of
the Senior Credit Agreement;
(9) Indebtedness consisting of intercompany loans and advances
made by the Company to any Subsidiary Guarantor, or made by BT to
Val-Mex or India Trimmings; provided that (i) each Subsidiary Grantor,
BT and Val-Mex shall execute a demand note on the Closing Date (the
"Intercompany Notes") to evidence any such intercompany Indebtedness,
(ii) the Company and BT shall record all intercompany transactions on
its books and records in a manner reasonably satisfactory to
Purchasers, (iii) the obligations of each borrower under any such
Intercompany Notes shall be subordinated to its obligations under its
respective guarantee, if any, (iv) at the time any such intercompany
loan or advance is made by the Company to any Subsidiary Guarantor, or
by BT to Val-Mex or India Trimmings, as the case may be, and after
giving effect thereto, the representation and warranty set forth in
Section 6.1.19 is true and correct, and (v) no Default or Event of
Default shall have occurred and be continuing or would occur and be
continuing after giving effect to any such proposed intercompany loan;
provided, further, that the Intercompany Notes by Val-Mex and India
Trimmings in favor of BT shall be in a principal amount not to exceed
$4,000,000, of which up to $2,000,000 may be used for Capital
Expenditures permitted pursuant to Section 8.1.12 and up to $2,000,000
may be used for purposes other than Capital Expenditures;
(10) Indebtedness secured by Permitted Liens;
(11) Indebtedness for borrowed money not otherwise permitted
pursuant to this Section 8.1.1 in an aggregate amount at any one time
outstanding not to exceed $500,000; and
(12) Indebtedness arising out of judgments and awards, not to
exceed $500,000 in the aggregate at any one time outstanding, which do
not otherwise constitute an Event of Default under the terms of this
Agreement, including, without limitation, Section 9.1(i) hereof.
8.1.2 Liens. Create, incur, assume or suffer to exist any Lien on any
of its property now owned or hereafter acquired other than:
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(1) Liens in favor of the Agent for the benefit of the Senior
Lenders;
(2) Liens existing on the Closing Date and disclosed on
Schedule 8.1.2;
(3) Liens in favor of the Company to secure the BT
Intercompany Note;
(4) Liens for taxes not yet due and payable, and Liens for
taxes or Liens imposed by ERISA which are being contested in good faith
by appropriate proceedings and with respect to which adequate reserves
are being maintained in accordance with GAAP;
(5) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by law
created in the ordinary course of business for amounts not yet due or
which are being contested in good faith by appropriate proceedings and
with respect to which adequate reserves are being maintained in
accordance with GAAP;
(6) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the
performance of tenders, statutory obligations, surety and appeal bonds,
bids, trade contracts, leases, government contracts, performance and
return-of-money bonds and other similar obligations (exclusive of
obligations for the payment of borrowed money);
(7) zoning, building and other land use laws imposed by any
Governmental Authority having jurisdiction over such parcel which are
not violated by the current use and occupancy of such parcel or the
operation of the business thereon, and easements, covenants,
conditions, restrictions and other similar matters of record affecting
title to such parcel, which would not materially impair the use or
occupancy of such parcel in the operation of the business;
(8) Liens incurred in connection with purchase money
Indebtedness with respect to assets acquired by any Credit Party in the
ordinary course of business (provided that such Liens attach only to
the assets subject to such purchase money debt and such Indebtedness
does not exceed 100% of the purchase price of the subject assets);
(9) Liens incurred in connection with capital leases permitted
under Section 8.1.7; and
(10) any extension, renewal or replacement (or successive
extensions, renewals or replacements), in whole or in part, of any Lien
referred to in the foregoing clauses; provided that such extension,
renewal or replacement Lien shall be limited to all or a part of the
property which secured the Lien so extended, renewed or replaced (plus
improvements on such property).
8.1.3 Mergers, Consolidations, Acquisitions, Sales, Etc.
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(1) Enter into any transaction of merger, consolidation,
pooling of interest or other combination with any other Person other
than (i) the Merger, (ii) a consolidation or merger between the Company
and a Subsidiary, provided the Company is the surviving entity, or
(iii) any Subsidiary may merge with and into any Credit Party, provided
such Credit Party is the surviving entity, and any Subsidiary of any BT
Credit Party may merge with and into such BT Credit Party provided such
BT Credit Party is the surviving entity;
(2) Sell, lease, or otherwise dispose of its accounts,
property or other assets (including capital stock of Subsidiaries),
other than (i) sales, leases or other dispositions of assets by the
Company to another Credit Party, (ii) sales, leases or other
dispositions of assets by a Subsidiary to a Credit Party, (iii) sales,
leases or other disposition of assets by a Foreign Subsidiary to a BT
Credit Party, (iv) sales of inventory in the ordinary course of
business, (v) grants of licenses of intellectual property in the
ordinary course of business as conducted on the Closing Date, (vi)
sales of obsolete, worn out, excessively damaged or unusable equipment,
fixtures or inventory, and (vii) the sale of property in Niles,
Michigan referred to in paragraph B3(b)of Schedule 7.17;
(3) Purchase, lease or otherwise acquire all or any
substantial portion of the property or assets (including capital stock)
of another Person (each an "Acquisition") provided, however, that the
foregoing restriction on Acquisitions shall not apply to any
Acquisitions (A) that are otherwise permitted under Section 8.1.3(1),
and (B) by any Consolidated Company so long as: (i) after giving effect
to such Acquisition, no Default or Event of Default will have occurred
and be continuing, (ii) the Consolidated Companies would have been in
compliance with Sections 7.1.15, 7.1.16, 7.1.17 and 8.10 as of the last
day of the then most recently ended Fiscal Quarter after giving effect
to such Acquisition on a pro forma basis as if such Acquisition had
occurred on the first day of any period tested in the covenants set
forth in such Sections, (iii) the Board of Directors of the Person
being acquired has approved the Acquisition, (iv) after giving effect
to such Acquisition, the representation and warranty set forth in
Section 6.1.20 is true and correct with respect to the Consolidated
Company making such Acquisition, (v) the assets or property being
acquired belong to the same, or a substantially related, line of
business as the Consolidated Companies taken as a whole or logical
extensions thereof, and (vi) the Company has notified the Purchasers of
such Acquisition and delivered to the Purchasers a certificate
certifying that each of the conditions set forth above has been
satisfied, demonstrating compliance with the covenants set forth in
Sections 7.1.15, 7.1.16, 7.1.17 and 8.10 after giving effect to such
Acquisition on a pro forma basis; and
(4) Sale or other dispositions of assets not otherwise
permitted by this Section 8.1.3 in an aggregate amount per Fiscal Year
not to exceed $350,000.
8.1.4 Investments, Loans, Etc. Make, permit or hold, any Investments in
any Person, or otherwise create, acquire or hold any Subsidiaries,
other than:
(1) Investments from time to time in any Credit Party;
(2) Investments existing on the date hereof and described on
Schedule 8.1.4;
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(3) Investments consisting of intercompany Indebtedness
permitted by Section 8.1.3;
(4) direct obligations of the United States of America or any
agency thereof, or obligations guaranteed by the United States of
America or any agency thereof, in each case supported by the full faith
and credit of the United States of America and maturing within one year
from the date of creation thereof;
(5) commercial paper maturing within one year from the date of
creation thereof rated in the highest grade by a nationally recognized
credit rating agency;
(6) time deposits maturing within one year from the date of
creation thereof, including certificates of deposit issued by, any
office located in England of any bank or trust company which is
organized under the laws of the United States of America or any state
thereof and has capital, surplus and undivided profits aggregating at
least $500,000,000, including without limitation, any such deposits in
Eurodollars issued by a foreign branch of any such bank or trust
company;
(7) Investments made by Plans;
(8) time deposits maturing within one year from the date of
creation thereof, including certificates of deposits, or the
equivalent, issued by any office located in the United Kingdom of any
bank which is organized under the laws of the United Kingdom and has
capital, surplus and undivided profits aggregating at least
$500,000,000;
(9) loans and advances in an aggregate principal amount
outstanding at any one time not to exceed $300,000 to management and
other employees of the Company, the proceeds of which are used in their
entirety to purchase Stock in Company and make other investments
pursuant to retirement savings programs;
(10) Investments made in connection with Acquisitions
otherwise permitted under Section 8.1.3(7);
(11) investments consisting of promissory notes or other
non-cash consideration received as proceeds of asset sales and
dispositions by any Credit Party or BT Credit Party or permitted under
Section 8.1.3; and
(12) investments not otherwise permitted under this Section
8.1.4 made after the Closing Date; provided that the aggregate amount
of all such Investments does not exceed $500,000.
8.1.5 Lease Obligations. Create or suffer to exist any obligations for
the payment under operating leases or agreements to lease (including
all Synthetic Lease Obligations but excluding any obligations under
leases required to be classified as capital leases under GAAP) having a
term of one year or more which would cause the direct or contingent
liabilities of the Consolidated Companies under such leases or
agreements to lease, on a consolidated basis, to exceed $5,000,000 in
the aggregate in any Fiscal Year.
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8.1.6 Restricted Payments. (a) Declare or pay any dividend or
distribution on any class of its stock, or (b) make any payment to
purchase, redeem, retire or acquire any capital stock or Subordinated
Debt or any option, warrant, or other right to acquire such capital
stock or such Indebtedness (each payment under clause (a) or (b), a
"Restricted Payment"), other than (i) dividends payable solely in
shares of any class of its stock, and (ii) Restricted Payments made by
any Subsidiary to any Credit Party or BT.
8.1.7 Sale and Leaseback Transactions. Sell or transfer any property,
real or personal, whether now owned or hereafter acquired, and
thereafter rent or lease such property for substantially the same
purpose or purposes as the property being sold or transferred other
than in connection with assets acquired in contemplation of the
creation of a capital lease which are, within six months from the date
of purchase of such assets, sold to another Person and leased back to a
Consolidated Company pursuant to a Capital Lease arrangement permitted
hereunder ("Permitted Sale Leaseback"), provided that the aggregate
amount of such Permitted Sale Leasebacks does not exceed $1,000,000 in
the aggregate.
8.1.8 Transactions with Affiliates. Other than transactions described
on Schedule 8.1.8:
(1) Enter into any transaction or series of related
transactions, whether or not in the ordinary course of business, with
any Affiliate of any Consolidated Company, other than on terms and
conditions at least as favorable to such Consolidated Company as would
be obtained by such Consolidated Company at the time in a comparable
arm's-length transaction with a Person other than an Affiliate.
(2) Make any payment or any loan owing to any officer,
shareholder, subsidiary or Affiliate, or convey or transfer to any
other Person any real property, buildings, or Fixtures used in the
manufacturing or production operations of any Consolidated Company, or
convey or transfer to any other Consolidated Company any other assets
(excluding conveyances or transfers in the ordinary course of business)
if at the time of such payment, conveyance or transfer any Default or
Event of Default exists or would exist as a result of such payment,
conveyance or transfer.
8.1.9 ERISA. Take or fail to take any action with respect to any Plan
of any Consolidated Company or, with respect to its ERISA Affiliates,
any Plans which are subject to Title IV of ERISA or to continuation
health care requirements for group health plans under the Tax Code
which could reasonably be expected to result in a Materially Adverse
Effect, including without limitation (i) establishing any such Plan,
(ii) amending any such Plan (except where required to comply with
applicable law), (iii) terminating or withdrawing from any such Plan,
or (iv) incurring an amount of unfunded benefit liabilities, as defined
in Section 4001(a)(18) of ERISA, or any withdrawal liability under
Title IV of ERISA with respect to any such Plan, without first
obtaining the written approval of the Required Lenders.
8.1.10 Additional Negative Pledges. Create or otherwise cause or suffer
to exist or become effective, directly or indirectly, any prohibition
or restriction on the creation or existence of any Lien upon any asset
of any Consolidated Company, other than pursuant
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to (i) this Agreement, (ii) the Subordinated Note Documents, (iii) the
terms of any agreement, instrument or other document pursuant to which
any Indebtedness permitted by Section 8.1.1(e) is incurred by any
Consolidated Company, so long as such prohibition or restriction
applies only to the property or asset being financed by such
Indebtedness, and (iv) any requirement of applicable law or any
regulatory authority having jurisdiction over any of the Consolidated
Companies.
8.1.11 Limitation on Payment Restrictions Affecting Consolidated
Companies. Create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction on the ability of
any Consolidated Company to (i) pay dividends or make any other
distributions on such Consolidated Company's stock, or (ii) pay any
Indebtedness owed to any Credit Party or any other Consolidated
Company, or (iii) transfer any of its property or assets to any Credit
Party or any other Consolidated Company, except any consensual
encumbrance or restriction existing under the Loan Documents or the
Subordinated Note Documents.
8.1.12 Capital Expenditures. Make Capital Expenditures during any
Fiscal Year in excess of (i) $5,700,000 during Fiscal Year 2000, (ii)
$2,000,000 during Fiscal Year 2001, and (iii) for each Fiscal Year
thereafter, the sum of (y) $2,000,000 plus (z) an amount equal to fifty
percent (50%) of Excess Cash Flow for the immediately preceding Fiscal
Year measured at the end of such immediately preceding Fiscal Year;
provided, however, commencing with Fiscal Year 2001, if the actual
aggregate amount of Capital Expenditures made by the Company and its
Subsidiaries during any Fiscal Year (the "Current CapEx"), is less than
the respective limit specified above for such Fiscal Year (the
"Specified CapEx"), then the applicable limit for the immediately
succeeding Fiscal Year shall be increased by an amount equal to the
difference between the Current CapEx and the Specified CapEx (the
"Carryover Amount"). For purposes of this Section 8.1.12, Capital
Expenditures made by the Company in any Fiscal Year shall be deemed to
be made first with Specified CapEx for such Fiscal Year, then, from the
Carryover Amount, if any. In addition, for purposes of this Section
8.1.12, Capital Expenditures shall not include: (A) Capital
Expenditures made with Net Casualty/Insurance Proceeds and (B) up to a
maximum amount of $3,000,000 in the aggregate during the term of this
Agreement, of Capital Expenditures incurred in connection with
Acquisitions that are permitted under Section 8.1.3, and which are not
solely for the purchase of assets but are made in connection with
Acquisitions of an additional line of business or business entity.
8.1.13 Change in Business. Enter into, or permit any of their
respective Subsidiaries to enter into, any business other than the
business presently conducted by the Consolidated Companies taken as a
whole or any business reasonably related or complementary thereto.
8.1.14 Modification of Corporate Name, Charter, Etc. Make any change in
any of their (i) corporate names, articles of incorporation, or similar
documents or capital structure that would materially adversely affect
the Company's ability to perform under any Transaction Document, or
(ii) accounting practices, business objectives, purposes of operations,
Fiscal Month, Fiscal Quarter or Fiscal Year.
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ARTICLE 9.
EVENTS OF DEFAULT
Section 9.1 Events of Default. Each of the following shall constitute an Event
of Default, whatever the reason for such event and whether or not it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule, or regulation of any
governmental or nongovernmental body:
(a) failure of the Company to pay (i) any principal on any of
the Notes when due or (ii) any other amount payable hereunder or under
any other Loan Document when due and such failure to pay continues for
five (5) days after such due date; or
(b) failure on the part of the Company to perform or observe
any covenant contained in Article 8 or Sections 7.1.1, 7.1.5, 7.1.7,
7.1.15, 7.1.16, and 7.1.17 hereof; or
(c) failure on the part of the Company to perform or observe
(after giving effect to any applicable grace period) any other term,
covenant or agreement contained in this Agreement not specifically
referred to in this Article 9, and any such failure remains unremedied
for 30 days after the earlier of (i) the discovery thereof by the
Company or (ii) written notice thereof to the Company by any Purchaser;
or
(d) any warranty, representation or other written statement
made by or on behalf of the Company contained herein or in any
instrument furnished in compliance with or in reference to this
Agreement is false or misleading in any material respect on the date as
of which made or deemed to be made; or
(e) any Credit Party shall fail to pay its debts generally as
they come due, or shall file any petition or action for relief under
any bankruptcy, reorganization, insolvency or moratorium law, or any
other law or laws for the relief of, or relating to, debtors; or
(f) an involuntary petition shall be filed under any
bankruptcy statute against Credit Party, or a custodian, receiver,
trustee, assignee for the benefit of creditors (or other similar
official) shall be appointed to take possession, custody, or control of
the Credit Party, unless such petition or appointment is set aside or
withdrawn or ceases to be in effect within sixty (60) days from the
date of said filing or appointment or an order for relief shall be
entered in any such involuntary action; or
(g) the Company or any of its Subsidiaries (i) shall fail to
make any payment when due (whether by scheduled maturity, required
prepayment, acceleration or otherwise) with respect to (x) the Senior
Credit Agreement or (y) any other Indebtedness in excess of $1,000,000
in the aggregate, or (ii) shall fail to perform or observe any other
agreement, term or condition contained in any agreement under which any
Indebtedness described in clause (i) is created (or if any other event
shall occur and be continuing
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<PAGE> 53
thereunder) and, in the case of clause (ii) above, the holders thereof
shall have caused such Indebtedness to become due prior to any stated
maturity; or
(h) a Change of Control shall occur; or
(i) any final order or judgment for the payment of money in
excess of $1,000,000 shall be rendered against the Company or any of
its Subsidiaries as to which the Company or such Subsidiary is not
indemnified, and such order or judgment shall continued unsatisfied and
unstayed for more than sixty (60) days. A final judgement or order for
the payment of damages for which the Company is indemnified shall not
constitute an Event of Default hereunder, so long as (i) the Purchasers
have received written confirmation of such indemnification, (ii) the
terms of such indemnification have been approved by the Required
Purchasers in their reasonable credit judgement, and (iii) the Person
indemnifying the Company or other Consolidated Company is acceptable to
the Required Purchasers in their reasonable credit judgement; or
(j) the Company shall disavow, revoke or terminate prior to
its scheduled or stated maturity date any Transaction Document to which
it is a party or shall otherwise challenge or contest in any action,
suit or proceeding in any court or before any arbitrator or
governmental body the validity or enforceability of this Agreement, the
Notes or any other Transaction Document; or
(k) an attachment or similar action shall be made on or taken
against any of the assets of the Consolidated Companies with an
aggregate value of $500,000 or more and such attachment or similar
action is not controverted within 10 days, or is not removed within 60
days.
Section 9.2 Remedies on Default. (a) Upon the occurrence and continuation of an
Event of Default (other than an Event of Default described in Section 9.1 (e)
and (f)), the Required Purchasers may, in their sole discretion, but shall not
be obligated to, declare all amounts payable by the Company under the Notes to
be forthwith due and payable, including, without limitation, costs of collection
(including reasonable attorneys' fees if collected by or through an attorney at
law or in bankruptcy, receivership or other judicial proceedings) and the same
shall thereupon become immediately due and payable without demand, presentment,
protest or further notice of any kind, all of which are hereby expressly waived,
and may exercise all of its rights and remedies under the Loan Documents or
under applicable law.
(b) Upon the occurrence of any Event of Default set forth in
clause (e) or (f) above, without any notice to the Company or any other
act by the Required Purchasers, all amounts payable by the Company
under the Notes, including, without limitation, all costs of collection
(including reasonable attorneys' fees if collected by or through an
attorney at law or in bankruptcy, receivership or other judicial
proceedings) shall be immediately due and payable, without presentment,
demand, protest or notice of any kind, all of which are hereby
expressly waived by the Company.
(c) No remedy herein conferred or reserved is intended to be
exclusive of any other available remedy or remedies, but each and every
such remedy shall be cumulative
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<PAGE> 54
and shall be in addition to every other remedy given under this
Agreement or now or hereafter existing at law or in equity or by
statute. No delay or omission to exercise any right or power accruing
upon any default, omission or failure of performance hereunder shall
impair any such right or power or shall be construed to be a waiver
thereof, but any such right or power may be exercised from time to time
and as often as may be deemed expedient. In order to exercise any
remedy reserved to the Purchaser in this Agreement, it shall not be
necessary to give any notice, other than such notice as may be herein
expressly required.
ARTICLE 10.
MISCELLANEOUS
Section 10.1 Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including bank wire, telex, telecopy,
electronic mail message or similar teletransmission or writing), shall be in the
English language, and shall be given to such party at its address or applicable
teletransmission number set forth below, or such other address or applicable
teletransmission number as such party may hereafter specify by notice to the
Purchasers and the Company. Each such notice, request or other communication
shall be effective (i) if given by telex, when such telex is transmitted to the
telex number specified in this Section and the appropriate answer back is
received, (ii) if given by mail, five Business Days after such communication is
deposited in the mails with first class postage prepaid, addressed as aforesaid,
(iii) if given by telecopy, when such telecopy is transmitted to the telecopy
number specified in this Section and the appropriate confirmation is received,
(iv) if given by a reputable overnight courier service, the Business Day after
such communication is delivered to such courier device for overnight delivery,
or (v) if given by any other means (including, without limitation, by air
courier), when delivered or received at the address specified in this Section;
provided that notices to the Purchasers shall not be effective until received.
Notices herein shall be mailed or telecopied as follows:
If to the Company, the Parent or any other Consolidated Company:
CIC Acquisition Sub, Inc.
513 North Duncan Bypass
Union, South Carolina 29379
Attn: J. Cary Findlay
Telecopy No.: (864) 427-8820
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with a copy, which shall not constitute notice to the Company, the
Parent or any other Consolidated Company, to:
Kirkland & Ellis
153 East 53rd Street
New York, New York 10022
Attention: Kirk A. Radke, Esq.
Telecopy: (212) 446-4900
If to SunTrust:
SunTrust Banks, Inc.
303 Peachtree Street, Suite 2400
Atlanta, GA 30308
Attn: Mr. Robert L. Dudiak
Telecopy Number: (404) 724-3754
Telephone Number: (404) 588-8735
with a copy to:
King & Spalding
191 Peachtree Street
Atlanta, GA 30303
Attn: Hector E. Llorens, Jr., Esq.
Telecopy Number: (404) 572-4600
Telephone Number: (404) 572-5100
If to Lincoln:
The Lincoln National Life Insurance Company
Principal & Interest Payments (via Fed Wire) for
$3,000,000 Note
Bankers Trust Company
New York, NY
ABA #: 021 00 1033
A/C #: 99-911-145
Private Placement Processing
For Further Credit: The Lincoln National Life Insurance
Company
Custody Account Number 98127
Principal & Interest Payments (via Fed Wire) for
$6,500,000 Note
Bankers Trust Company
New York, NY
ABA #: 021 00 1033
A/C #: 99-911-145
Private Placement Processing
For Further Credit: The Lincoln National Life Insurance
Company
Custody Account Number 98449
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Address for all Communication and Notice of Payment
Lincoln Investment Management, Inc.
200 East Berry Street, Renaissance Square
Fort Wayne, IN 46802
ATTN: Investments/Private Placements
FAX: (219) 455-5499 - Private Placements
Address for Notice of Payment
Bankers Trust Company
ATTN: Private Placement Unit
P.O. Box 998, Bowling Green Station
New York, NY 10004
FAX: (615) 835-2493 - ATTN: Kim Louis - Private Placements
Lincoln National Income Fund, Inc.
Principal & Interest Payments (via Fed Wire)
Bankers Trust Company
New York, NY
ABA #: 021 00 1033
A/C #: 99-911-145
Private Placement Processing
For Further Credit: Lincoln National Income Fund, Inc.
Address for all Communication and Notice of Payment
Lincoln Investment Management, Inc.
200 East Berry Street, Renaissance Square
Fort Wayne, IN 46802
ATTN: Investments/Private Placements
FAX: (219) 455-5499 - Private Placements
Address for Notice of Payment
Bankers Trust Company
ATTN: Private Placement Unit
P.O. Box 998, Bowling Green Station
New York, NY 10004
FAX: (615) 835-2493 - ATTN: Kim Louis - Private Placements
Section 10.2 No Waiver. No delay or failure on the part of any Purchaser or any
holder of the Notes and the exercise of any right, power or privilege granted
under this Agreement or any other Transaction Document or available at law or in
equity, shall impair any such right, power or privilege or be construed as a
waiver of any Event of Default or any acquiescence therein. No single or partial
exercise of any such right, power or privilege shall preclude the further
exercise
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<PAGE> 57
of such right, power or privilege. No waiver shall be valid against any
Purchaser unless made in writing and signed by such Purchaser, and then only to
the extent expressly specified therein.
Section 10.3 Expenses.
(1) The Company agrees to pay on demand all reasonable
out-of-pocket costs, expenses, taxes and fees (i) incurred by the
Purchasers in connection with the preparation, execution and delivery
of this Agreement and all other Transaction Documents, including the
reasonable fees and disbursements of counsel for each Purchaser; (ii)
incurred by each Purchaser in connection with the preparation,
execution and delivery of any waiver, amendment or consent by each
Purchaser relating to the Transaction Documents, including the
reasonable costs and fees of counsel for each Purchaser; and (iii)
incurred by each Purchaser, including the reasonable costs and fees of
its counsel, in connection with the enforcement of the Transaction
Documents.
(2) The Company agrees to indemnify, pay and hold each
Purchaser and any holder of any of the Notes and the Warrants and the
officers, directors, employees and agents of such Purchaser and such
holders (the "Indemnified Persons") harmless from and against any and
all liabilities, losses, damages, costs and expenses of any kind
(including, without limitation, the reasonable fees and disbursements
of counsel for any Indemnified Person in connection with any
investigative, administrative or judicial proceeding, whether or not
such Indemnified Person shall be designated a party thereto) which may
be incurred by any Indemnified Person, relating to or arising out of
the enforcement of this Agreement, the Notes, the Warrants or any other
Transaction Document or any actual or proposed use of proceeds of the
Notes; provided, that no Indemnified Person shall have the right to be
indemnified hereunder for its own gross negligence or willful
misconduct.
Section 10.4 Amendments, Etc. Any provision of this Agreement, the Notes, or any
other Loan Document to which the Company is a party may be amended or waived, if
such amendment or waiver is in writing and is signed by the Company and the
Required Purchasers; provided that, without the approval in writing of each
Purchaser with respect to its Note, no amendment, modification, supplement,
termination, waiver, or consent may be effective:
(a) to amend or modify the principal of such Note, or the
amount of principal payments or prepayments required hereunder, or the
rate of interest payable on any Note;
(b) to postpone any date fixed for any payment of principal
of, prepayment of principal of, or any installment of interest on, any
Note or to extend the term of any Note;
(c) to amend or modify the definitions of "Required
Purchasers," or the provisions of this Section 10.4;
Any amendment, modification, supplement, termination, waiver or consent effected
in accordance with this Section 10.4 shall apply equally to, and shall be
binding upon, all Purchasers.
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Section 10.5 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided, that the Company may not assign or otherwise
transfer any of its rights or obligations under this Agreement, the Notes or any
other Transaction Document to any Person without the prior written consent of
the Purchasers. Each Purchaser hereby agrees to promptly provide written notice
to the Company of any assignment, along with providing such other information
about the assignee as the Company may reasonably request. After such
notification, an assignee that becomes a Purchaser hereunder shall have, to the
extent of such assignment, the same rights, obligations and benefits as the
assigning Purchaser had hereunder and under the other Loan Documents.
Notwithstanding the foregoing, any Purchaser may sell or otherwise grant
participations in all or any part of the Notes. The holder of any such
participation, shall not have any rights and benefits of a Purchaser hereunder,
and the Purchaser that sells or grants such participation shall have the same
rights, obligations and benefits with respect to the Loan Documents.
Section 10.6 GOVERNING LAW. THIS AGREEMENT, THE NOTES AND THE WARRANTS SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
(WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICTS OF LAWS).
Section 10.7 Survival of Representations and Warranties. All representations and
warranties contained herein or made by or furnished on behalf of the Company in
connection herewith shall survive the execution and delivery of this Agreement
and shall continue until the termination hereof.
Section 10.8 Severability. If any part of any provision contained in this
Agreement shall be invalid or unenforceable under applicable law, said part
shall be ineffective to the extent of such invalidity only, without in any way
affecting the remaining parts of said provision or the remaining provisions.
Section 10.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which,
taken together, shall constitute one and the same instrument.
Section 10.10 Set-Off. Upon the occurrence and during the continuation of an
Event of Default, each Consolidated Company authorizes each Purchaser, without
notice or demand, to apply any indebtedness due or to become due to such
Consolidated Company from such Purchaser in satisfaction of any of the
indebtedness, liabilities or obligations of such Consolidated Company under this
Agreement or under any other Loan Document, including, without limitation, the
right to set-off against any deposits or other cash collateral of the Company
held by such Purchaser or an Affiliate thereof.
Section 10.11 Termination of Agreement. This Agreement shall terminate upon the
payment in full of the Notes and all Obligations relating thereto; provided
that, Sections 3.2, 3.3 and 10.3 shall survive the termination of this
Agreement.
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<PAGE> 59
Section 10.12 JURISDICTION AND VENUE. EACH PARTY TO THIS AGREEMENT HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE OR FEDERAL COURT
SITTING IN NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR RELATED DOCUMENT, AND EACH HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR FEDERAL COURT. THE CREDIT
PARTIES AGREE THAT SUCH JURISDICTION SHALL BE EXCLUSIVE WITH RESPECT TO ANY SUCH
ACTION OR PROCEEDING BROUGHT BY IT AGAINST ANY PURCHASER. EACH PARTY TO THIS
AGREEMENT HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO
SO, THE DEFENSE OF ANY INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING. EACH CREDIT PARTY AGREES THAT FINAL JUDGMENT IN ANY SUCH CIVIL SUIT
OR ACTION SHALL BE CONCLUSIVE AND BINDING UPON IT AND SHALL BE ENFORCEABLE
AGAINST IT BY SUIT UPON SUCH JUDGMENT IN ANY COURT OF COMPETENT JURISDICTION.
Section 10.13 WAIVER OF JURY TRIAL. EACH OF THE COMPANY, SUBSIDIARY GUARANTOR
AND each PURCHASER KNOWINGLY, VOLUNTARILY, INTENTIONALLY, AND IRREVOCABLY WAIVE
THE RIGHT EITHER OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY
LITIGATION, WHETHER IN CONTRACT OR TORT, AT LAW OR EQUITY, BASED HEREON, OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT AND ANY OTHER
DOCUMENT OR INSTRUMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN)
OR ACTIONS OF ANY PARTY HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT FOR
PURCHASER ENTERING INTO THIS AGREEMENT. FURTHER, EACH CREDIT PARTY HEREBY
CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF PURCHASER, NOR THE PURCHASER'S
COUNSEL, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT PURCHASER WOULD NOT, IN
THE EVENT OF SUCH LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL
PROVISION, NO REPRESENTATIVE OR AGENT OF THE PURCHASER, NOR PURCHASER'S COUNSEL
HAS THE AUTHORITY TO WAIVE, CONDITION, OR MODIFY THIS PROVISION.
Section 10.14 Entire Agreement. This Agreement, the Notes, the Warrants and the
other Transaction Documents to which any Credit Party is a party, together with
any exhibits and schedules attached hereto and thereto, constitute the entire
understanding of the parties with respect to the subject matter hereof and
thereof, and any other prior or contemporaneous agreements, whether written or
oral, with respect hereto or thereto are expressly superseded hereby. The
execution of this Agreement, the Notes, the Warrants and the other Transaction
Documents to which any Credit Party is a party by such Credit Party was not
based upon any facts or materials provided by any Purchaser, nor was such Credit
Party induced to execute this Agreement, the Note, the Warrants or the other
Transaction Documents to which any Credit Party is a party by any
representation, statement or analysis made by any Purchaser.
[SIGNATURES ON FOLLOWING PAGES]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their authorized officers all as of the day and year first above
written.
COMPANY:
CIC ACQUISITION SUB, INC.
By: /s/ M. Saleem Muqaddam
------------------------------
Name: M. Saleem Muqaddam
Title: President and Secretary
SUBSIDIARY GUARANTORS:
SIMPLICITY PATTERN CO., INC.
By: /s/ Frank J. Rizzo
------------------------------
Name: Frank J. Rizzo
Title: Vice President
SIMPLICITY CAPITAL CORPORATION
By: /s/ Frank J. Rizzo
-----------------------------
Name: Frank J. Rizzo
Title: Vice President
SIMPLICITY HOLDINGS
By: /s/ Frank J. Rizzo
-----------------------------
Name: Frank J. Rizzo
Title: Vice President
[SIGNATURE PAGE TO SUBORDINATED
NOTE AND WARRANT PURCHASE AGREEMENT
<PAGE> 61
PURCHASERS:
Pro Rata Share: 50% SUNTRUST BANKS, INC.
By: /s/ Robert L. Dudiak
---------------------------
Robert L. Dudiak
Group Vice President
Pro Rata Share: 47.5% THE LINCOLN NATIONAL LIFE
INSURANCE COMPANY
By: Lincoln Investment Management, Inc.,
Its Attorney-In-Fact
By: /s/ R. Scott Krafft
-----------------------------
Name: R. Scott Krafft
Title: Vice President
Pro Rata Share: 2.5% LINCOLN NATIONAL INCOME FUND, INC.
By: /s/ David C. Fischer
-------------------------------
Name: David C. Fischer
Title: Vice President
[SIGNATURE PAGE TO SUBORDINATED
NOTE AND WARRANT PURCHASE AGREEMENT
