SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) of the
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) July 3, 1997
CENTRAL TRACTOR FARM & COUNTRY, INC.
(Exact name of registrant as specified in charter)
Delaware 0-24902 42-1425562
(State or other (Commission file (IRS employer
jurisdiction of number) identification no.)
incorporation)
3915 Delaware Avenue, Des Moines, Iowa 50316-0330
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (515) 266-3101
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Item 2. Acquisition or Disposition of Assets.
On July 3, 1997, Central Tractor Farm & Country, Inc. ("CT" or the
"Company") acquired all the outstanding capital stock of Country General, Inc.
("CG") from ConAgra, Inc. ("ConAgra") in exchange for $135,000,000, subject to
post-closing adjustment (the "Acquisition"). As a result of the Acquisition, CG
became a wholly-owned subsidiary of CT. At the time of the Acquisition, CG
operated a chain of 114 stores, located primarily in the Midwest, offering
merchandise oriented to farm and country living, including animal care products,
farm and ranch supplies, clothing and lawn and garden products. Substantially
all of the CG stores are located in markets not currently served by CT stores.
The Company presently intends to continue to operate substantially all of the CG
stores under their current format.
The Company funded the acquisition price in part from a $49,750,000
equity contribution it received from its sole shareholder, CT Holding, Inc.
("Holding"), and in part from funds drawn under an amendment and restatement of
the Company's Credit Agreement with Fleet National Bank, as administrative agent
for the banks, financial institutions and other institutional lenders party
thereto (the "New Credit Facility"). Among other things, the amendment and
restatement of the New Credit Facility increased the aggregate principal amount
of the facility from $38,000,000 to $150,000,000, consisting of a $50,000,000
term loan facility and a $100,000,000 revolving credit facility.
Item 5. Other Events.
In connection with the consummation of the Acquisition, the Company's
Board of Directors was expanded by the election of Peter Lamm and Richard
Dresdale, who are affiliated with Fenway Partners, Inc., which became an
investor in Holding in connection with the Acquisition.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of the Business Acquired.
As of the date of filing of this Current Report on 8-K, it is
impracticable for the Company to provide the financial statements required by
this Item 7 (a). In accordance with Item 7 (a) (4) of Form 8-K, such financial
statements shall be filed by amendment to this Form 8-K no later than 60 days
after July 18, 1997.
(b) Pro Forma Financial Information
As of the date of this filing of this Current Report on 8-K, it is
impracticable for the Company to provide the pro forma financial information
required by this Item 7 (b). In accordance with Item 7 (b) of Form 8-K, such
financial statements shall be filed by amendment to this Form 8-K no later than
60 days after July 18, 1997.
(c) Exhibits.
The following documents are filed as exhibits to this report:
Exhibit No. Description
2.1 Stock Purchase Agreement, dated as of June 26, 1997, by and
between the Company and ConAgra, Inc.
99.1 Amended and Restated Credit Agreement, dated as of July 3, 1997
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CENTRAL TRACTOR FARM & COUNTRY, INC.
By: /s/Dean Longnecker
Executive Vice President
Date: July 18, 1997
STOCK PURCHASE AGREEMENT
AGREEMENT, dated as of June 26, 1997 by and among CONAGRA, INC., a
Delaware corporation ("Seller") and CENTRAL TRACTOR FARM & COUNTRY, INC., a
Delaware corporation ("Buyer").
RECITALS:
This Agreement is made with reference to the following facts and
circumstances:
(a) Country General, Inc., a Delaware corporation (the "Company"),
operates certain retail stores.
(b) Seller owns all of the issued and outstanding capital stock of
the Company.
(c) Seller desires to sell, and Buyer desires to purchase, all of
the issued and outstanding shares of capital stock of the
Company for the consideration and upon the terms and
conditions hereinafter set forth.
AGREEMENT:
In consideration of the foregoing recitals and in further
consideration of the mutual covenants and agreements hereinafter contained, the
parties hereto agree, subject to the terms and conditions hereinafter set forth,
as follows.
1. Sale and Purchase of Stock. Subject to the terms and conditions
contained herein, at Closing (as defined in Section 3), Seller will sell,
transfer, assign, convey and deliver to Buyer, and Buyer will purchase, accept
and acquire all of the issued and outstanding shares of capital stock of the
Company ("Purchased Stock") free and clear of all liens, claims, options charges
and encumbrances.
2. Purchase Price. The purchase price payable by Buyer for the
Purchased Stock (the "Purchase Price") shall be an amount equal to One Hundred
Thirty-
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Five Million Dollars ($135,000,000) plus (or minus) the amount by which Invested
Capital (as defined in Section 4.1 below) is greater than (or less than) Ninety
Million Dollars ($90,000,000). One Hundred Thirty-Five Million Dollars
($135,000,000) of the Purchase Price (the "Estimated Amount") shall be paid by
wire transfer of immediately available funds on the Closing Date. The amount by
which the Purchase Price exceeds the Estimated Amount, if any, shall be paid by
Buyer on the Settlement Date (as defined in Section 4.2) or the amount by which
the Estimated Amount exceeds the Purchase Price, if any, shall be paid by Seller
on the Settlement Date. All payments shall be made by wire transfer of
immediately available funds.
3. Closing. Subject to the terms and conditions contained in this
Agreement, the closing of the transactions contemplated hereby (the "Closing")
will occur at the offices of Seller, on July 3, 1997 or at such other place or
time or on such other date as the parties hereto may mutually agree (the
"Closing Date"). Closing shall be effective as of the close of business on the
Closing Date (the "Effective Time").
3.1 Buyer's Obligation at Closing. At the Closing, Buyer shall:
3.1.1 Consideration. Pay to Seller the Estimated Amount by
wire transfer pursuant to instructions delivered by
Seller prior to Closing.
3.1.2 Legal Opinion. Cause to be delivered to Seller the
legal opinion of Sullivan & Worcester, LLP, counsel
for Buyer, in the form attached hereto as Exhibit
3.1.2.
3.1.3 Certificate. Execute and deliver the certificate
contemplated in Section 10.3.
3.1.4 Resolutions. Deliver resolutions of Buyer's board of
directors approving this Agreement and the
transactions contemplated hereby.
3.1.5 Letter of Credit. Deliver a standby letter of credit
in form and substance reasonably satisfactory to
Seller issued by Fleet National Bank conforming to
the terms outlined on Exhibit 3.1.5 hereto.
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3.1.6 Equipment Sublease. Execute and deliver the Equipment
Sublease in the form attached hereto as Exhibit 3.1.6
(the "Equipment Sublease".
3.2 Seller's Obligations at Closing. At the Closing, Seller shall:
3.2.1 Stock Certificates. Deliver to Buyer a certificate or
certificates representing all of the Purchased Stock
duly endorsed to the Buyer.
3.2.2 Legal Opinion. Cause to be delivered to Buyer the
legal opinion of McGrath, North, Mullin & Kratz,
P.C., counsel for Seller, in the form attached hereto
as Exhibit 3.2.2.
3.2.3 Certificate. Execute and deliver the certificate
contemplated in Section 9.3.
3.2.4 Resolutions. Deliver resolutions of Seller's board of
directors authorizing the transactions contemplated
under this Agreement.
3.2.5 Equipment Sublease. Execute and deliver the Equipment
Sublease.
3.2.6 Directors and Officers. Deliver resignations from the
directors and officers of the Company listed in
Exhibit 3.2.6.
4. Post Closing Matters.
4.1 Special Purpose Balance Sheet.
4.1.1 Preparation and Audit. As soon as practicable
following the Closing Date, Seller shall prepare, and
shall cause to be audited by Deloitte & Touche
("Deloitte") in accordance with Section 4.1.3 a
special purpose balance sheet of the Company as at
the Closing Date (the "Special Purpose Balance
Sheet").
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Seller shall prepare such Special Purpose Balance
Sheet in accordance with the "Applicable Accounting
Principles" (as defined in Section 4.1.2 below).
Buyer shall provide to Seller, and shall cause the
Company to provide to Seller and Deloitte, such
assistance and access to books and records as is
necessary to timely prepare, deliver and audit such
Special Purpose Balance Sheet including, but not
limited to, access to the Company's employees.
4.1.2 Applicable Accounting Principles. For purposes of
this Agreement, the phrase "Applicable Accounting
Principles" shall mean generally accepted accounting
principles applied in a manner consistent with the
accounting principles used in the preparation of, and
reflected in, the Audited Financial Statements (as
defined in Section 6.9), subject, however, to the
following:
(a) No accruals, reserves or provisions will be
included with respect to the Retained
Liabilities (as defined in Section 14.17
below).
(b) Inventory quantities will be based on the
physical inventory to be conducted pursuant
to the procedures set forth on Exhibit 4.1.2
hereto. Buyer shall pay for the cost of
inventory services expenses for this
physical inventory incurred from and after
June 21, 1997 other than Seller's cost of
participating in and observing such physical
inventory.
(c) Pursuant to and subject to Section 8.3
below, for purposes of the Final Special
Purpose Balance Sheet (as defined below),
all intercompany accounts shall be netted,
and the net amount shall be treated as part
of contributed capital.
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4.1.3 Deloitte Engagement and Audit. Deloitte shall be
engaged by Seller to audit the Special Purpose
Balance Sheet in accordance with generally accepted
auditing standards consistent with Deloitte's audit
of the Audited Financial Statements and to issue its
report in one of the forms attached hereto as Exhibit
4.1.3(A) (the "Report"). Seller shall retain, and pay
all fees and expenses of, Deloitte in connection with
the audit of the Special Purpose Balance Sheet.
4.1.4 Access. Each party shall make available all documents
or records reasonably requested by the other (or its
accountants) to permit the preparation, audit and
review of the Special Purpose Balance Sheet;
provided, however, that Buyer's access to Deloitte's
workpapers shall be pursuant and subject to the
letter attached as Exhibit 4.1.4 hereto.
4.1.5 Objections. Upon completion of its audit, Deloitte
shall deliver to Seller and Buyer a draft of the
Report together with the accompanying audited Special
Purpose Balance Sheet (herein collectively, the
"Preliminary Report"). Within twenty (20) business
days following receipt thereof, Buyer and Seller
shall submit to each other in writing any objections
that either may have as to whether the Preliminary
Report (i) was prepared in accordance with the
Applicable Accounting Principles or (ii) presents
fairly in all material respects the Invested Capital
of the Company as of June 21, 1997 in conformity with
the Applicable Accounting Principles. Such notice
shall specify in reasonable detail the nature and
basis of such objection. Buyer and Seller shall use
reasonable efforts to resolve such objections within
forty (40) business days following receipt of such
Preliminary Report; failing which, such objections
shall be submitted to a mutually acceptable
arbitrator for final and binding resolution. Each
party shall pay one-half (1/2) of the costs of the
dispute resolution, provided, that each party shall
pay the fees and expenses of its own counsel and
accountants.
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Upon the parties' failure to object to the
Preliminary Report on a timely basis, their agreed
resolution of objections, or the resolution of such
objections in accordance with this paragraph, Buyer
and Seller shall execute and deliver, or cause to be
executed and delivered, as the case may be, in
connection with the audit of the Special Purpose
Balance Sheet the representation letters
substantially in the form attached hereto as Exhibit
4.1.5(B) and Seller shall cause Deloitte to revise
the Special Purpose Balance Sheet as applicable, to
reflect such agreement or resolution in respect of
objections and to deliver the same, as revised,
accompanied by a signed Report (herein, the "Final
Special Purpose Balance Sheet").
4.1.6 Invested Capital. For purposes of this Agreement,
"Invested Capital" shall mean the Company's total
assets, less total liabilities, as of the Closing
Date, as reflected in the Final Special Purpose
Balance Sheet.
4.2 Settlement of Purchase Price. On the fifth business day
following delivery of the Final Special Purpose Balance Sheet
pursuant to Section 4.1 (the "Settlement Date"), Buyer shall
pay to Seller an amount equal to the excess of the Purchase
Price over the Estimated Amount, or Seller shall pay to Buyer
an amount equal to the excess of the Estimated Amount over the
Purchase Price, as the case may be, in either case with
interest at an annual rate of five and three-quarters percent
(5-3/4%) from the Closing Date to the date of payment. The
payment required to be made pursuant to this Section 4 shall
be made by wire transfer of immediately available funds.
4.3 Insurance Matters.
4.3.1 Coverage. Buyer acknowledges that, as of the
Effective Time, the Company's coverage by the
insurance policies and insurable risk programs
currently made available to the Company through
Seller shall be discontinued.
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4.3.2 Insurance Claims. Subject to the terms of this
Section 4.3.2, from and after Closing, Seller shall
pay and be responsible for, and shall indemnify Buyer
and the Company from and against, all claims
resulting from occurrences prior to Closing (whether
or not disclosed to or otherwise known by Buyer) that
are subject to coverage under Seller's existing
insurance programs, policies or agreements (all of
which are listed on the Disclosure Schedule),
including all claims falling within deductible or
self- insured retention. Without limiting the
foregoing, from and after Closing, the Company shall
be entitled to submit claims to Seller with respect
to which insurance coverage existed under insurance
policies maintained by Seller applicable to the
Company prior to Closing, which claims Seller shall
forward to its insurance carriers and administer on
behalf of the Company, and Buyer shall insure that
the Company does not submit claims directly to any
such insurance carrier. The indemnity provided for in
this Section 4.3.2 shall not be exclusive of the
general indemnity provided for in Section 12, shall
not be subject to the limitations in Section 12.5 and
shall be effective provided that the claim giving
rise to such indemnity was submitted by the Company
to Seller so as to allow the Seller sufficient time
to in turn submit such claims to its insurance
carriers and administrators within the applicable
time frame required under the applicable insurance
programs, policies or agreements to which such claim
relates.
4.3.3 Defense of Claims. Seller shall have the right to
control, at its own cost and expense, the defense of
any claim submitted to Seller pursuant to Section
4.3.2 above. Buyer and the Company (including the
Company's employees) shall fully cooperate with
Seller and its insurance carriers in connection with
such claims and the defense thereof, shall make all
records and personnel available at no cost to Seller
and its insurance carriers which are reasonably
necessary for handling such claims and defense and
shall not take any action detrimental to
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such defense. Settlement of any claim (including the
release of any parties to the claim) shall be subject
to the terms and conditions of the insurance
programs, policies or agreements applicable to such
claim and Seller shall have the same right to settle
any such claim as reflected in such programs,
policies or agreements.
4.4 Trade Name. Seller specifically and exclusively retains, and
Buyer acknowledges that it will not acquire, and that the
Company does not own, any right, title or interest to the
trade name "ConAgra" (or derivations thereof) or to any logos
or trademarks related thereto. Buyer agrees that promptly
after Closing it will cause the Company to discontinue the use
of any advertising or other form of media that uses or
references any such names or logos. Buyer further agrees that
as soon as practicable, but in no event longer than six (6)
months after the Closing Date, it shall remove all signage
which refers to Seller, and take all such other action as may
be reasonably necessary to dissociate Seller with the
operations of the Company after Closing.
4.5 Record Retention. Except as set forth below, Buyer will cause
all books and records of the Company in respect of matters
prior to the Closing historically kept by the Company (the
"Records") to be retained for seven (7) years after Closing.
During such term, Buyer shall allow Seller and its
representatives access, subject in all respects to the terms
of Section 4.5.1 hereof, to inspect or copy such Records as
are reasonably related to Seller's business and affairs during
normal business hours on reasonable notice. In the event Buyer
intends to destroy any Records at the end of such seven (7)
year term, Buyer shall use reasonable efforts to first notify
Seller at which time Seller shall have the right to remove the
Records at its own cost as are reasonably related to Seller's
business and affairs. The parties acknowledge that, in the
past, the Company has routinely disposed of certain Records on
a periodic basis and has not retained such Records for seven
(7) years. Notwithstanding the foregoing, the Company may
continue such routine periodic record destruction so long as
prior to such destruction the Company notifies Seller of the
nature of such destruction and permits Seller to remove
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and retain, subject in all respects to the terms of Section
4.5.1 hereof such Records at Seller's expense.
4.5.1 Confidentiality. All Records furnished by Buyer or
the Company (collectively, the "Provider") to Seller
pursuant to Section 4.5 of this Agreement, regardless
of the manner in which they are furnished, together
with analyses, compilations, studies or other
documents or records prepared by or on behalf of
Seller which contain or reflect or are generated from
such Records, regardless of whether explicitly
identified as confidential, shall be considered
"Confidential Information". Unless otherwise agreed
to in writing by the Provider, Seller agrees (a)
except as required by law, to keep all Confidential
Information confidential and not to disclose or
reveal any Confidential Information to any person
other than those employed by Seller or on its behalf
or on behalf of any Affiliate of Seller who are
actively and directly participating in review of the
Confidential Information or who otherwise need to
know the Confidential Information (the persons to
whom such disclosure is permissible being
collectively called "Representatives"), (b) to inform
its Representatives of the confidential nature of the
Confidential Information and to direct such
Representatives to be bound by these confidentiality
covenants, and (c) to use the Confidential
Information solely for the bona fide business
purposes of the Seller but not in any way to compete
with Buyer or the Company. Seller shall be
responsible for any breach of these confidentiality
covenants by its Representatives. In the event that
Seller or any of its Representatives are requested
pursuant to, or required by, applicable law or
regulation or by legal process to disclose any
Confidential Information, Seller will provide the
Provider with prompt notice of such requests to
enable Provider to seek an appropriate protective
order or other remedy. In the event that such
protective order or other remedy is not obtained,
Seller shall furnish only that portion of the
Confidential Information
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which, in the opinion of its counsel, Seller is
legally compelled to disclose, and Seller will use
reasonable efforts to obtain assurance that, if
possible, confidential treatment will be accorded the
Confidential Information. Seller agrees that the
Buyer or the Company shall be entitled to equitable
relief to enforce these confidentiality covenants.
4.6 Open Store Leases.
4.6.1 Exhibit 4.6.1 lists all leases of the Company's
facilities with respect to which a consent is
required to be obtained for any of (i) the assignment
to the Company of Seller's obligations as lessee, or
(ii) the consummation of the stock purchase
transaction contemplated by this Agreement. In case
of any such consents which have not been obtained as
of the Closing Date, the parties shall cooperate in
any commercially reasonable interim arrangement to
provide the essential benefits of any such leases to
Buyer without causing a declaration of default or
breach thereunder.
4.6.2 Seller shall use reasonable commercial efforts to
obtain at or prior to Closing the consents described
in Section 4.6.1 with respect to the leases listed on
Exhibit 4.6.1, provided, however, in no event shall
Seller be required to pay (and shall not commit the
Company to pay) any monies to any lessor or any third
party in order to obtain such consents.
4.6.3 Exhibit 4.6.3(A) lists all leases of the Company's
facilities in respect of which Seller has any
obligations either as a lessee or as a Guarantor of
the Company's obligations as lessee (the "Ongoing
Obligation Leases"). To the extent Seller has not
been released as of Closing from its direct or
indirect obligations under any Ongoing Obligation
Leases, Buyer agrees to use its reasonable commercial
efforts to obtain such releases. Notwithstanding the
foregoing, in no event shall Buyer be
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required to obtain any release that is conditioned
upon (i) an increase in rent or other lease terms
less favorable to the tenant than those in force as
of the date of this Agreement, or (ii) provision by
Buyer or any affiliate of Buyer of any guaranty of or
other security for the lessee's obligations. To the
extent Seller has not been released from liability
under any Ongoing Obligation Leases, Buyer shall
insure that neither the Buyer, the Company nor any
successor shall assign, sublease, exercise or obtain
any right to renew or extend such leases unless or
until either (i) Seller is released from liability
thereunder by the lessor, or (ii) Buyer delivers to
Seller a standby letter of credit in form and
substance reasonably satisfactory to Seller and in
accordance with Exhibit 4.6.3(B) securing the payment
of the base rent under such lease.
4.6.4 If Buyer is unable to obtain a release of Seller from
its obligations in respect of any Ongoing Obligation
Lease in accordance with Section 4.6.3, Buyer agrees
to indemnify and hold Seller harmless from and
against all liabilities or claims resulting from
Buyer's or the Company's failure after the Effective
Time to perform the lessee's obligations under any
such Ongoing Obligation Lease. If Seller is released
from liability under any Ongoing Obligation Lease, it
shall immediately assign such Lease to the Company or
Buyer.
4.7 Closed Store Leases. Attached hereto as Exhibit 4.7 is a list
of closed store locations leased by the Company ("Closed
Stores"). The parties agree that such leases shall be assigned
to Seller (unless such assignment is prohibited) and,
irrespective of whether assignment is permitted, Seller shall
be responsible for, and shall indemnify Buyer and Company from
and against, all obligations in respect of such leases without
regard to the provisions of Section 12.5. Seller may dispose
or otherwise deal with such leases (whether by way of
assignment, sublease or otherwise) and any and all income,
revenue or expense with respect thereto shall be for Seller's
account. Buyer shall reasonably cooperate with Seller with
respect to any such Closed Stores
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and the leases thereof, including executing any assignments,
subleases or other documents reasonably requested by Seller,
and including entering into any commercially reasonable
interim arrangements to provide the benefits of any such lease
to Seller or its assignee or sublessee without causing a
declaration of default or breach thereunder, provided,
however, any reasonable third party expenses incurred by Buyer
(including reasonable attorneys fees and expenses) in
cooperating with Seller with respect to any Closed Stores
shall be reimbursed by Seller.
4.8 Letters of Credit. Buyer acknowledges that, prior to Closing,
Seller may cause letters of credit to be issued supporting the
payment by the Company of the purchase price and related costs
of goods and inventory ("Seller LC's") and that Seller may
have a reimbursement obligation to issuing banks with respect
to such letters of credit. Notwithstanding anything in this
Agreement to the contrary, Buyer shall pay to Seller, or cause
to be paid to Seller, the amount drawn down after Closing on
any Seller LC. Such payment shall be made by wire transfer of
immediately available funds within one (1) business day
following each such draw down. On the close of the last
business day prior to the Closing Date, Seller shall orally
advise Buyer of the estimated amount of Seller LC's then
outstanding which have not yet been drawn upon (the "Estimated
LC Draw Liability"). At Closing, Buyer shall either pay Seller
in immediately available funds an amount equal to the
Estimated LC Draw Liability to be applied by Seller against
the amounts due by Buyer under this Section 4.8, or deliver to
Seller a standby letter of credit in an amount equal to the
Estimated LC Draw Liability (the "Draw LC") to secure timely
payment of Buyer's obligations as they become due hereunder.
The Draw LC shall be in such form and substance and from such
banks as are reasonably acceptable to Seller.
5. Employee Matters.
5.1 General. As of the Effective Time, Buyer will cause the
Company to provide each individual employed by the Company on
the Closing Date (including employees absent from work due to
short-term disability, sick leave or other permitted absences
but excluding individuals on long-term
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disability leave) ("Company Employees") with employment at
wages comparable to wages currently paid by the Company and
other benefits comparable to those provided to similarly
situated employees of Buyer, provided, however, Seller shall
retain responsibility to provide healthcare coverage for one
employee of the Company identified in Exhibit 5.1(A). Buyer
shall also provide to the Company Employees severance benefits
consistent with Buyer's current severance policy, a true and
correct copy of which is attached hereto as Exhibit 5.1(B)
(the "Buyer Severance Policy") resulting from the consummation
of the transactions contemplated herein or caused by any
action taken by Buyer or the Company from and after the
Effective Time and shall maintain Buyer's Severance Policy for
at least six (6) months after the Closing. Buyer shall treat
service with Seller or the Company as service with Buyer for
purposes of such Buyer Severance Policy. Without limiting the
foregoing, and notwithstanding anything in the Buyer Severance
Policy to the contrary, the Buyer agrees that the Company
Employees that are hourly personnel will be eligible for
severance under the Buyer Severance Policy. Notwithstanding
anything herein to the contrary, Buyer shall cause the Company
to (i) honor and be responsible for all vacation benefits that
the Company Employees are entitled to as of the Closing to the
extent accrued on the Final Special Purpose Balance Sheet and
(ii) pay to the Company Employees all bonuses and incentive
payments and benefits earned by the Company Employees through
the Closing Date to the extent accrued on the Final Special
Purpose Balance Sheet; provided, however, that any incentives,
bonuses, severance or termination pay or other benefits or
payments that are due or become due on or after the Closing to
two (2) senior executives of the Company identified on Exhibit
5.1(C) on account of agreements between such individual and
the Seller, shall not be accrued on the Final Special Purpose
Balance Sheet, and shall be the responsibility of Seller, and
Buyer shall be eligible for indemnification therefor pursuant
to Section 12.1 without regard to the provisions of Section
12.5. Buyer shall cause the Company to be responsible for any
and all liabilities, obligations and claims of any kind
arising out of employment (or termination of employment,
whether actual or constructive) of the Company Employees from
and after the Effective Time, including, but not limited to,
any severance (in accordance with Buyer's severance policy
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attached as Exhibit 5.1(B)), termination pay, or similar
obligations with respect to employees terminated from and
after the Effective Time or resulting from the consummation of
the transactions contemplated herein or resulting from the
change in any benefits provided to the Company Employees.
Seller shall be responsible for (i) any Company Employees who,
on the Closing Date, are receiving long-term disability
benefits, and (ii) any individuals formerly employed by the
Company who, on the Closing Date, have retired and are
receiving retiree health benefits.
5.1.1 Stay Bonuses. Each Company Employee who remains
employed with the Company or Buyer during the six (6)
month period immediately following the Closing Date
(or who are terminated without cause during such six
(6) month period) shall be entitled to a bonus (the
"Stay Bonus"), payable by the Company within one (1)
month of the end of such six (6) month period, equal
to three (3) months of such Company Employee's then
existing base salary. The Buyer shall cause the
Company to pay such amounts and Seller shall pay
Buyer an amount equal to one-half (1/2) of the amount
of such Stay Bonuses paid by the Company. Any Stay
Bonus paid to any Company Employees shall be in
addition to, and not in lieu of, any severance
payment required to be paid to such employees by
Buyer in accordance with Section 5.1.
5.2 Pension Plan. As of the Closing Date, Company Employees shall
cease to actively participate in the ConAgra Pension Plan for
Salaried Employees (the "Pension Plan") and will receive no
further benefit accruals under the Pension Plan. Seller shall
retain all assets and liabilities relating to the Pension
Plan, and the participation by the Company Employees
thereunder. Service, compensation and other items related to
the computation of Pension Plan benefits with respect to
Company Employees for periods after the Closing Date shall not
be considered for purposes of the Pension Plan.
5.3 401(k) Plans. As of the Closing Date, Company Employees shall
cease to actively participate in the ConAgra Retirement Income
Savings Plan (the
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"401(k) Plan") and no further contributions shall be made to
the 401(k) Plan for the benefit of Company Employees. As of
the Closing Date, the interests of the Company Employees in
the 401(k) Plan shall be one hundred percent (100%) vested and
shall be fully nonforfeitable, except that the interests of
the Company Employees shall not vest in any "special
contributions" made by the Company or on the Company's behalf
to the 401(k) Plan. Seller shall retain all assets and
liabilities relating to the 401(k) Plan, and the participation
by the Company Employees thereunder. The Retained Liabilities
include all obligations relating to the vesting or non-vesting
of the special contribution.
5.4 Welfare Plans. The parties acknowledge that the Company
Employees participate in Seller's welfare benefit plans and
programs. As of the Closing Date, Company Employees shall
cease to participate in such welfare plans and programs.
5.5 Seller Acknowledgment of Responsibility with Respect to
Employee Plans. Seller agrees to accept all past, present and
future liabilities and responsibilities as plan sponsor,
within the meaning ofss. 3(16)(B) of ERISA, of any Employee
Plan (as defined in Section 6.21), including without limit the
Pension Plan, the 401(k) Plan, and all welfare benefit plans
and programs referred to in Section 5.4. Seller agrees that
Buyer shall have no liability for any period with respect to
any such Employee Plans, and any cost, expense or liability
that may be incurred by Buyer or the Company in connection
with any such Employee Plan shall be subject to
indemnification pursuant to Section 12.1.
5.6 WARN. Buyer shall be responsible for, and shall indemnify and
hold Seller harmless against and in respect of any liability,
loss, claim damage or deficiency that arises pursuant to the
Worker Adjustment and Retraining Notification Act (29 U.S.C.
Sections 2101-2109) or any similar state or local laws or
ordinances on account of, or in connection with, any action
taken by Buyer or the Company from and after the Effective
Time.
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5.7 Buyer Plans. Subject to the rules for qualification of plans
under ss. 401(a) of the Code, Buyer agrees to grant, and shall
cause its ERISA Affiliates (as defined in Section 6.21) to
grant, credit to Company Employees for service accrued by such
Company Employees as employees of the Company, Seller, or
their ERISA Affiliates, for purposes of calculating
eligibility and vesting service under any benefit plan
(including the Buyer Severance Policy) provided to Company
Employees of which Buyer or any of its ERISA Affiliates is the
sponsor, after Closing. Buyer shall waive all preexisting
condition requirements, eligibility requirements, waiting
period requirement and any similar provision for all Company
Employees that are covered by the Seller's health care plan as
of the Closing other than known preexisting conditions which
were excluded by the Seller's health care plan, and shall
provide such health care coverage effective as of the Closing
without the application of any eligibility period for
coverage. Buyer shall credit all payments made by Company
Employees toward deductible, co-payment, and out-of-pocket
limits under the Seller's health care plan for the plan year
which includes the Closing as if such payments had been made
for similar purposes under Buyer's health care plan during the
plan year which includes the Closing, with respect to
employees employed by Buyer as of the Closing.
5.8 Cooperation. The parties shall cooperate with each other to
provide any information, filings or notices as appropriate
with respect to this Section 5. Buyer shall assist in
providing any information, filings or notices (including the
notice required by Section 204(h) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) as needed
to cease the benefit accruals.
5.9 COBRA. Seller will be responsible for all COBRA obligations,
costs and expenses relating to employees of the Company who
terminate employment with the Company prior to the Effective
Time, and Buyer and the Company will be responsible for all
COBRA obligations, costs and expenses relating to employees of
the Company who terminate employment with the Company from and
after the Effective Time.
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6. Representations and Warranties of Seller. Seller hereby represents
and warrants to and with Buyer as set forth below. Such representations and
warranties are made subject to certain exceptions and qualifications set forth
in the Seller Disclosure Schedule dated as of the date hereof and delivered as a
separate document and incorporated in this Agreement by reference (the
"Disclosure Schedule") The representation(s) and warranty(ies) to which each
such exception or qualification relates is(are) specifically identified (by
cross-reference or otherwise) in the Disclosure Schedule unless the
applicability of such exception is apparent on its face.
6.1 Organization, Good Standing and Corporate Power. Each of
Seller and the Company is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Delaware and the Company has the corporate power to
own, operate and lease its properties and to carry on its
business as now being conducted. The Company is qualified to
conduct its business and is in good standing in all
jurisdictions in which such qualification or authorization is
required, except for those jurisdictions in which failure to
be so qualified or authorized would not have a material
adverse effect on the business or operations of the Company.
6.2 Articles and By-Laws. Seller has previously furnished to Buyer
complete and correct copies of (a) the Certificate of
Incorporation of the Company as amended to the date furnished,
certified by the Secretary of State of Delaware, (b) the
By-Laws of the Company as in effect on the date furnished,
certified by the Secretary of the Company, and (c) the minute
books of the Company. Such Certificate of Incorporation and
By-Laws have not been further amended and are in full force
and effect, and the Company is not in violation of any
provisions thereof.
6.3 Corporate Authorization; Binding Effect. Seller has full power
and authority to execute this Agreement and to perform its
obligations hereunder. This Agreement and the consummation of
the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the
part of Seller and constitutes the legal, valid and binding
obligation of Seller enforceable in accordance with its terms.
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6.4 Effect of Agreement. The execution, delivery and performance
of this Agreement and the consummation of the transactions
contemplated hereby will not, with or without the giving of
notice or the lapse of time or both, (a) violate any provision
of law, statute, rule or regulation to which Seller or the
Company is subject, (b) violate any judgment, order, writ or
decree of any court applicable to Seller or the Company; or
(c) except as set forth in the Disclosure Schedule, result in
the breach of, or conflict with, any term, covenant or
condition of, result in or permit the modification or
termination of, constitute a default under, or result in the
creation or imposition of any lien, security interest or
encumbrance upon any of the Company's assets pursuant to,
Seller's or the Company's certificate of incorporation,
by-laws, or any Material Contract (as defined in Section 6.18
below), or any Permits listed in the Disclosure Schedule to
which Seller or the Company is a party.
6.5 No Government Authorization Required. Except for compliance
with the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), and except for any filings or
consents required in connection with any permits, licenses or
approvals held or utilized by or for the benefit of the
Company which are listed in the Disclosure Schedule, no
consent, authorization or approval of, or exemption by, or
filings with, any governmental, public or self-regulatory body
or authority is required in connection with the execution,
delivery and performance of this Agreement by Seller.
6.6 No Options, Warrants, Rights. The Company has no outstanding
or authorized options, warrants, rights or any other
agreements of any character obligating it to issue any shares
of its capital stock or any securities convertible into or
evidencing the right to purchase any shares of its capital
stock. Neither Seller nor the Company is a party to any
agreements, arrangements or understandings with respect to the
voting, transfer or assignment of, or obligating the Company
to repurchase, redeem or otherwise acquire, the Purchased
Stock.
6.7 Title to Company Shares. Seller is the lawful and equitable
owner of all of the shares of Purchased Stock, free and clear
of all liens, claims, options,
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charges and encumbrances. The shares of Purchased Stock
constitute all of the authorized, issued and outstanding
shares of capital stock of the Company. All of the shares of
the Purchased Stock have been duly authorized and validly
issued, and are fully paid and non-assessable.
6.8 No Subsidiaries. The Company does not control or own any
equity interest in any corporation, partnership, limited
liability company or other entity (whether as direct
subsidiaries or through intervening subsidiaries).
6.9 Financial Statements. Seller has heretofore delivered to Buyer
copies of the audited balance sheets of the Company as of May
29, 1994, May 28, 1995 and May 26, 1996, and the related
statements of income, stockholders equity and cash flows for
the years then ended and shall, prior to Closing, deliver to
Buyer copies of the audited balance sheet of the Company as of
May 25, 1997 and the related statement of income, stockholders
equity and cash flow for the year then ended (collectively,
the "Audited Financial Statements"). The Audited Financial
Statements have been or will be prepared in accordance with
generally accepted accounting principles applied on a
consistent basis throughout the periods covered thereby and
present fairly in all material respects the financial position
of the Company as of their respective dates, and the results
of its operations and its cash flows as at the dates and for
the years then ended. Seller also has heretofore delivered to
Buyer unaudited, year-to-date balance sheet and statement of
income of the Company for the twelve (12) months ended May 25,
1997 (the "Interim Financials"). Except as set forth in
Section 6.9 of the Disclosure Schedule, the Interim Financials
were prepared in accordance with generally accepted accounting
principles applied on a basis consistent with the Audited
Financial Statements, and present fairly in all material
respects the financial position of the Company for that period
subject, however, to normal year-end adjustments (which will
not be material) and subject to the omission of footnotes and
statements of cash flow and stockholder's equity. To Seller's
knowledge, the Company does not have any liability required by
generally accepted accounting principles to be accrued on the
balance sheet or reflected in the notes thereto, except for
(i) liabilities set forth in the Audited Financial Statements
or in the Interim Financials or the notes thereto, (ii)
liabilities
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which have arisen after May 25, 1997 in the ordinary course of
business (none of which relates to any breach of contract,
breach of warranty, tort, infringement, or violation of law or
arose out of any charge, complaint, action, suit, proceeding,
hearing, investigation, claim, or demand), and (iii)
liabilities disclosed in the Disclosure Schedule. Seller also
agrees to provide Buyer with a copy of the Company's audited
financial statements for the fiscal year ended May 25, 1997 as
soon as such audited financial statements are available.
6.10 Conduct of Business Since May 26, 1996. Since May 26, 1996 and
except as set forth in the Disclosure Schedule:
6.10.1 The Company has conducted its operations in all
material respects in the ordinary course of business
consistent with past practices.
6.10.2 Other than personal property or inventory purchased,
sold, leased or consumed in the ordinary course of
business, the Company has not purchased, sold,
leased, mortgaged, pledged or otherwise acquired or
disposed of any material properties or assets other
than the Company's closing of certain store locations
listed in the Disclosure Schedule.
6.10.3 The Company has not declared or paid any dividend on,
or made any other distribution or payment (whether
cash or in kind) in respect of or in redemption of,
any shares of stock or other securities other than
through settlement of intercompany accounts in the
ordinary course consistent with past practices which,
for purposes of this Section 6.10.3, shall not be
deemed a declaration or payment of dividend or other
distribution or payment in respect of shares of
stock.
6.10.4 Other than the incentives listed in the Disclosure
Schedule, the Company has not entered into or amended
any written employment agreement and, except in the
ordinary course of
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business or as required by any written employment
agreement, there has been no increase or other change
made in the rate or nature of the compensation,
including wages, salaries and bonuses, which has been
paid, or will be paid or payable, by the Company to
any of its directors, officers or employees.
6.10.5 There has been no material change by the Company in
any method of accounting or accounting practice,
whether Tax (as such term is defined in Section
6.11.3) or otherwise.
6.10.6 There has been no material adverse change in the
financial condition, results of operations or
business (financial or otherwise) of the Company.
6.10.7 There has been no damage, destruction or other
casualty loss to or forfeiture of any material
property or assets of (or used by the Company in the
business of) the Company, whether or not covered by
insurance.
6.10.8 The Company has not engaged in any transactions with
its affiliates except in the ordinary course of
business.
6.10.9 The Company has not incurred or assumed any debt,
obligation (including capitalized lease obligations)
or liability for borrowed money, or made any
commitment to do any of the foregoing, or issued any
debt securities or assumed, guaranteed, endorsed or
otherwise as an accommodation become responsible for
liabilities of any other person.
6.10.10 The Company has not agreed to take any actions
inconsistent with or in contravention of the
foregoing representations in this Section 6.10.
The provisions of this Section 6.10 shall not apply to
environmental matters which are solely addressed in Section
6.22 below.
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6.11 Non-Income Taxes and Non-Income Tax Returns.
6.11.1 General Tax Representations.
(i) The Company has duly filed all federal,
state, local and foreign Non-Income Tax (as
defined below) returns required to be filed
by it for all Pre-Closing Periods, and the
Company has duly paid or made provision in
accordance with generally accepted
accounting principles for the payment of all
Non- Income Taxes which are due and payable
pursuant to such returns or pursuant to any
assessment with respect to Non-Income Taxes
in such jurisdictions for such periods,
whether or not in connection with such
returns;
(ii) The provisions for Non-Income Taxes
reflected on the Final Special Purpose
Balance Sheet of the Company will be
established in accordance with Applicable
Accounting Principles;
(iii) There are no pending examinations or claims
asserted for Non-Income Taxes of the Company
or outstanding agreements or waivers
extending the statutory period of limitation
applicable to any Non-Income Tax return of
the Company for any period or any pending
Non-Income Tax litigation or proceedings of
the Company;
(iv) The Company has not filed either a consent
to the application of Section 341(f) of the
Code (as defined below) or an election to be
treated as a small business corporation
under Subchapter S of the Code;
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(v) The Company has complied in all material
respects for all prior periods with the
payroll Tax and withholding provisions of
all applicable federal, state, local and
other laws;
(vi) There are no liens on any of the assets of
any of the Company that arose in connection
with any failure (or alleged failure) to pay
any Non-Income Tax except for liens for
Non-Income Taxes that are not delinquent or
are being contested in good faith and for
which provision in accordance with
Applicable Accounting Principles has been
made;
(vii) The Company has made no payments, is not
obligated to make any payments, and is not a
party to any agreement that under certain
circumstances could obligate it to make any
payments, that will not be deductible under
Code Section 28OG; and
(viii) The Seller is a United States Person as
defined in Section 7701(a)(30) of the Code.
6.11.2 Taxes Since May 26, 1996. Since May 26, 1996, the
Company has not incurred any material Non-Income Tax
liability other than Non-Income Taxes incurred in the
ordinary and regular course of its business.
6.11.3 Definitions. For purposes of this Agreement, (i) the
term "Tax" or "Taxes" shall mean all taxes, charges,
fees, levies, withholdings or other assessments of
any kind whatsoever, including, without limitation,
income, gross receipts, excise, property, sales, use,
license, payroll, franchise, withholding, social
security (or similar), unemployment, value added,
duties, business occupation, transfer and recording
taxes, fees and charges, imposed by the United
States, or any state, local or
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foreign authority, government or subdivision or
agency thereof whether computed on a consolidated,
unitary, combined, separate or any other basis; and
such term shall include any and all interest,
penalties and additions to tax, as well as any
primary or secondary liability for taxes; (ii) the
term "tax return" shall mean any report, return or
other document or information required by law to be
supplied to a taxing authority in connection with
Taxes; (iii) the term "Pre-Closing Period" shall mean
any Tax period that ends on or before the Closing
Date, and, with respect to any Tax period beginning
on or before and ending after the Closing Date, shall
mean the portion of such Tax period ending on the
Closing Date; (iv) the term "Income Taxes" shall mean
all federal, state, local, foreign and other
governmental Taxes imposed on or with respect to
gross or net income (whether denominated as income
taxes, franchise taxes or otherwise, but not
including any such Tax which is the equivalent of a
sales, use, gains, documentary, registration, value
added, transaction, transfer, or similar Taxes)); (v)
the term "Non-Income Taxes" shall mean all Taxes
other than Income Taxes; and (vi) the term "Code"
means the Internal Revenue Code of 1986, as amended.
6.12 Properties. The Disclosure Schedule sets forth the following
information as of the dates noted:
6.12.1 A list of all real estate owned (the "Owned Real
Property") or leased (the "Leased Real Property") by
the Company (or leased by Seller or any of its
affiliates and used by the Company) as of the date
hereof (collectively, the "Real Property"), which
list represents all Real Property used by the Company
in the conduct of its business.
6.12.2 A list of all equipment leases related to equipment
or vehicles leased or used by the Company which
require annual rental payments in excess of Twenty
Five Thousand Dollars ($25,000).
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The Company has good and insurable fee simple title
to all Owned Real Property and good title to all
personal property owned by the Company, and the
Company has valid leasehold interests in all Leased
Real Property and leased personal property reflected
as being leased by the Company in the Disclosure
Schedule, except such as shall have been disposed of
in the ordinary course of business since the dates
set forth above. The properties and assets owned by
the Company are subject to no liens, mortgages,
pledges, encumbrances or charges of any kind except
(i) liens for real property taxes not delinquent or
being contested in good faith and for which adequate
provision has been made, which contested taxes are
listed in the Disclosure Schedule, (ii) statutory
mechanics and material man's liens on the real estate
for work or goods supplied thereto in the ordinary
course of business, (iii) liens, covenants,
restrictions, easements and encumbrances disclosed in
the title insurance policies previously provided by
Seller to Buyer, and (iv) such other exceptions as
are disclosed in the Disclosure Schedule. The
buildings and improvements owned by the Company do
not encroach on any property not owned or controlled
by the Company so as to materially interfere with the
Company's ability to conduct its business on such
property in a manner consistent with the business
conducted by the Company thereon prior to the Closing
Date. Neither Seller nor the Company has received any
written notice from any public authority having
jurisdiction over such matters that there is
currently existing any material violation of any
building code, zoning ordinance or similar laws or
regulations pertaining to Owned Real Property or
Leased Real Property or improvements owned or used by
the Company. The Seller has furnished to Buyer copies
of all leases with respect to the Leased Real
Property. Except as disclosed in the Disclosure
Schedule, no lease with respect to the Leased Real
Property has a provision for an increase in rent or
the imposition of other terms more
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burdensome to the tenant that has been or will be
triggered by consummation of the transactions
contemplated herein.
6.13 Licenses, Permits and Orders. The Company has all material
registrations, approvals, licenses and other permits
(collectively, the "Permits") which are necessary for the
operation of its business as now being conducted, and all such
Permits are listed in the Disclosure Schedule. The Company is
not in breach or operating in violation of any such Permits,
where such breach or violation would have an adverse effect on
the Company.
6.14 Directors, Officers and Bank Accounts. The Disclosure Schedule
contains a complete and accurate list of all officers and
directors of the Company. The Disclosure Schedule also sets
forth the name of each bank in which the Company has an
account or safety deposit box, together with the account
numbers and the persons authorized to draw thereon.
6.15 Litigation. The Disclosure Schedule sets forth each instance
in which the Company (i) is subject to any unsatisfied
judgment, order, decree, stipulation, injunction, or charge or
(ii) is a party or, to the knowledge of the Seller, is
threatened to be made a party to any charge, complaint,
action, suit, proceeding or investigation of or in any court
or quasi-judicial or administrative agency of any federal,
state, local or foreign jurisdiction or before any arbitrator.
The provisions of this Section 6.15 shall not apply to
environmental matters which are solely addressed in Section
6.22 below.
6.16 Intellectual Property.
6.16.1 For purposes of this Agreement, the term
"Intellectual Property" shall mean:
(a) The name "Country General", and all
fictional business names, trading names,
registered and unregistered trademarks,
service marks, and applications
(collectively, the "Trademarks").
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<PAGE>
(b) All distinctive exterior and interior design
and appearance (including color scheme and
building material and layout), menus, style
of service, uniform, distinctive decorative
accessories and other trade dress associated
with the business of the Company
(collectively, the "Trade Dress");
(c) All patents, patent applications, and
inventions and discoveries that may be
patentable (collectively, "Patents");
(d) All copyrights in both published works and
unpublished works (collectively,
"Copyrights"); and
(e) All know-how trade secrets, confidential
information, customer lists, software,
technical information, data, process
technology, plans, drawings, and blue prints
(collectively, "Trade Secrets");
in each case, owned, used, or licensed by the Company
as licensee or licensor.
6.16.2 To Seller's knowledge, the Company has adequate and
sufficient rights in all Intellectual Property
necessary for the operation of the business of the
Company as presently conducted in the United States,
and each item of Intellectual Property owned or used
by the Company immediately prior to the Closing
hereunder will be owned or available for use by the
Company on identical terms and conditions immediately
subsequent to the Closing hereunder.
6.16.3 The Disclosure Schedule hereto contains a complete
and accurate list and summary description, including
any royalties paid or received by the Company, of all
contractual obligations
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relating to the Company's right to ownership and use
of the Intellectual Property to which the Company is
a party or by which the Company is bound, except for
perpetual, paid-up licenses for commonly available
software programs with a value of less than $10,000
under which the Company is the licensee. There are no
outstanding and, to the knowledge of the Seller no
threatened dispute or disagreement with respect to
any such agreement.
6.16.4 The Disclosure Schedule contains a complete and
accurate list of all federal registrations of
trademarks and trade names owned by the Company (the
"Registrations"). Except as set forth in such
Disclosure Schedule:
(a) The Company is the owner of all right,
title, and interest in and to each of the
Registrations, free and clear of all liens
and encumbrances;
(b) All Registrations are currently in
compliance with all formal legal
requirements (including the timely
post-registration filing of affidavits of
use and incontestability and renewal
applications);
(c) No Registration has been or is now involved
in any opposition, invalidation, or
cancellation and, to the knowledge of the
Seller, no such action is threatened with
respect to any of the Registrations;
(d) Except as set forth in the Disclosure
Schedule, none of the Trademarks noted in
the Disclosure Schedule as "Material
Trademarks" (the "Material Trademark") as
currently used by the Company at the
locations currently used by the Company
infringes or is alleged to infringe any
trade name, trademark, or service mark of
any third party which
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would have a material adverse effect on the
business and operation of the Company as
currently conducted.
6.16.5 The Company has no Patents.
6.16.6 The Company has no Copyright registrations.
6.17 Compliance with Laws. The Company is now and has been for the
last five (5) years in material compliance with all applicable
federal, foreign, state and local laws, ordinances, rules and
regulations. The Disclosure Schedule sets forth for the past
twelve (12) months, in respect to the Company, all material
investigations, inspections or citations under any health,
safety or other applicable laws and regulations and under any
other federal, state or local laws or regulations, together
with the results thereof and a brief description of all
corrective or other action taken with respect thereto. The
Company has no knowledge of any pending or threatened
governmental investigations, inspections or citations relating
to its business or operations. The provisions of this Section
6.17 shall not apply to environmental matters which are solely
addressed in Section 6.22 below.
6.18 List of Contracts and Other Data. The Disclosure Schedule sets
forth a listing of all contracts (including licenses, leases,
indentures, guaranty and indemnification agreements, loan
agreements, sales agency, broker and dealer agreements,
noncompete, employment and consulting agreements) to which the
Company is a party, except (i) open purchase orders entered
into in the ordinary course of business, (ii) cooperative
advertising contracts entered into in the ordinary course of
business, (iii) any contract (other than a noncompetition
agreement) which involves an aggregate expenditure after the
date of this Agreement of less than Fifty Thousand Dollars
($50,000), and (iv) any contract that may be terminated by the
Company on no more than ninety (90) days notice without
penalty (collectively, the "Material Contracts"). The
Disclosure Schedule also sets forth a listing of the Company's
largest ten (10) suppliers during its fiscal year ended May
25, 1997.
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(i) All Material Contracts are in full force and effect
and are valid and binding on and enforceable against
the Company and, to the Seller's knowledge, the other
parties thereto;
(ii) Neither the Company nor, to Seller's knowledge, any
other party to any Material Contract is in breach of
any provision of, in violation of, or in default
under the terms of any Material Contract;
(iii) No event has occurred which, after the giving of
notice or passage of time or otherwise, would
constitute a breach or default or permit termination,
modification or acceleration, under of any Material
Contract by the Company or, to Seller's knowledge, by
any other party;
(iv) Seller has made available to Buyer accurate and
complete copies of each Material Contract;
(v) Except as set forth in the Disclosure Schedule, the
consummation of the transactions contemplated hereby
will not contravene or constitute a default under or
require consent or result in termination or
impairment of any Material Contract.
6.19 Related Party Transactions. The Disclosure Schedule sets forth
a description of all significant services provided by Seller
to the Company, as well as transactions between the Company on
one hand, and Seller or its other subsidiaries or affiliates
on the other, except for those services or transactions
occurring in the ordinary course of business on an arms'
length basis.
6.20 Labor Relations. The Company is not a party to or bound by any
collective bargaining agreement. There are no material
controversies pending or, to the knowledge of Seller,
threatened between the Company and any of its employees.
Except as set forth in the Disclosure Schedule, there are no
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claims pending or, to Seller's knowledge, threatened against
the Company in respect to any unfair labor practices or age,
sex, religion or national origin discrimination complaints
before any federal, state or local board, department,
commission or agency. There are no existing or, to the
knowledge of Seller, threatened labor strikes or material
disputes or grievances affecting the Company. There are no
pending or, to the knowledge of Seller, threatened
representation questions respecting the employees of the
Company and there are no pending or, to the knowledge of
Seller, threatened arbitration proceedings arising out of or
under any union contract. Except as set forth in the
Disclosure Schedule, the Company has complied in all material
respects with all federal, state and local laws relating to
employment, wages, hours, working conditions, collective
bargaining and the payment of social security, unemployment
and similar taxes, and the Company is not liable for any
arrears of wages or any taxes or penalties for failure to
comply with any of the foregoing; and there are no
proceedings, investigations or citations pending before any
court, governmental agency or instrumentality or arbitrator
relating to any failure to comply therewith.
6.21 Employee Plans. For purposes of this Section 6.21, the term
"Employee Plan" includes all pension, retirement, disability,
medical, dental or other health insurance plans, life
insurance or other death benefit plans, profit sharing,
deferred compensation, stock option, bonus or other incentive
plans, vacation benefit plans, severance plans or other
employee benefit plans or arrangements, including, without
limitation, any "pension plan" ("Pension Plan") as defined in
Section 3(2) of ERISA, and any "welfare plan", as defined in
Section 3(1) of ERISA, whether or not any of the foregoing is
funded, (a) to which the Company, any ERISA Affiliate or any
Subsidiary is a party or by which it is bound; or (b) with
respect to which the Company has made any payments or
contributions; or (c) to which the Company may otherwise have
any liability. "Employee Plan" shall not include any
government sponsored employee benefit arrangements. "ERISA
Affiliate" means any such person (as defined in Section 3(9)
of ERISA) which, together with the Company and any subsidiary
would be deemed to be a single employer within the meaning of
Section 414(b), (c), (m) or (o) of the Code.
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6.21.1 Except as set forth in the Disclosure Schedule, there
are no Employee Plans relating to any present Company
Employees.
6.21.2 The Company, each Employee Plan, and the
administrator and fiduciaries of each Employee Plan
have complied in all material respects with all
applicable legal requirements governing each Employee
Plan. No material lawsuits or complaints to, or by,
any person or government entity, are pending or, to
Seller's knowledge, threatened with respect to any
Employee Plan.
6.21.3 Neither the Company, any Employee Plan, nor any
administrator or fiduciary of any Employee Plan has
taken any action, or failed to take any action, that
could subject it or him or her or any other person to
any material liability for any excise tax or for
breach of fiduciary duty with respect to or in
connection with any Employee Plan.
6.21.4 Neither the Company, any Employee Plan, any
administrator or fiduciary of any Employee Plan nor
any other person has any material liability to any
plan participant, beneficiary or other person under
any provision of ERISA or any other applicable law by
reason of any payment of benefits or other amounts or
failure to pay benefits or any other amounts, or by
reason of any credit or failure to give credit for
any benefits or rights (such as, but not limited to,
vesting rights) with respect to benefits under or in
connection with any Employee Plan. The Company is
not, to any material extent, in arrears with respect
to any contributions under any Employee Plan. No
reportable event, as defined under Title IV of ERISA,
will occur as a result of the transactions
contemplated by this Agreement.
6.21.5 Each funded Employee Plan that is a Pension Plan is
qualified under Section 401(a) of the Code, and the
trust or trusts maintained in connection with such
Employee Plan is or are exempt from tax under Section
501 (a) of the Code. A
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favorable IRS determination letter as to the
qualification under the Code has been received for
each such trust.
6.21.6 The Company is not now, nor has it been during the
past five (5) year period, a participating employer
in a multiemployer plan (as defined in Section 3(37)
of ERISA).
6.21.7 None of the Pension Plans has incurred an
"accumulated funding deficiency" as defined in
Section 412 of the Code.
6.21.8 No liability under Subtitle C or D of Title IV of
ERISA has been or is expected to be incurred by the
Company with respect to any ongoing, frozen or
terminated "single employer plan", within the meaning
of Section 4001(a)(15) of ERISA.
6.21.9 All accrued obligations of the Company for payments
by it to by trust or other funds or to any
governmental or administrative agency, with respect
to pension benefits, unemployment compensation
benefits, social security benefits or any other
benefits for employees of the Company have been paid
or adequate accruals therefor have been made in the
Audited Financial Statements, and none of the
foregoing has been rendered not due by reason of any
extension, whether at the request of the Company or
otherwise.
6.21.10 Except as set forth in the Disclosure Schedule, all
obligations of the Company for salaries, vacation and
holiday pay, bonuses and other forms of compensation
which were payable to its officers, directors or
other employees have been paid or adequate accruals
therefor have been made in the Audited Financial
Statements.
6.21.11 The Company is in compliance with the requirements of
Sections 162(k) (to the extent applicable prior to
its amendment
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by the Technical and Miscellaneous Revenue Act of
1988) and 4980B of the Code and Section 601 of ERISA.
6.22 Environmental.
6.22.1 The Disclosure Schedule lists all charges,
complaints, actions, suits, proceedings, hearings,
investigations, claims, demands, or notices which, to
the knowledge of Seller, have been filed, commenced
or threatened against the Company under any
Environmental Laws.
6.22.2 There has been no disposal, release, burial, or
placement of Hazardous Materials by any of the
Company and its affiliates which could reasonably be
expected to result or has resulted in contamination
of or beneath any Leased Real Property or any
properties or facilities formerly leased, operated or
occupied by any of the Company and its affiliates at
any time since its organization which requires or
will require clean-up or remediation under
Environmental Laws; provided, however, no
representation or warranty is made, or shall be
deemed made, with respect to any underground storage
tanks ("UST's") located on any such properties or any
release from any such UST's. No pollutant,
contaminant, or chemical, industrial, hazardous, or
toxic material or waste ever has been buried, stored,
spilled, leaked, discharged, emitted, or released by
the Company on any Leased Real Property or any real
property that the Company formerly leased which
requires or will require clean-up or remediation
under Environmental Laws; provided, however, no
representation or warranty is made, or shall be
deemed made, with respect to any UST's located on any
such properties or any release from any such UST's.
6.22.3 There is no basis for any present or future charge,
complaint, action, suit, proceeding, investigation,
claim, or demand against the Company giving rise to
any liability under any
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Environmental Laws related to any Owned Real Property
or any properties or facilities formerly owned by any
of the Company and its affiliates or to any past or
present operations conducted thereon (whether or not
conducted by any of the Company and its affiliates).
There has been no disposal, release, burial, or
placement of Hazardous Materials (whether or not by
any of the Company and its affiliates) which could
reasonably be expected to result or has resulted in
contamination of or beneath any Owned Real Property
or any properties or facilities formerly owned by any
of the Company and its affiliates at any time since
its organization which requires or will require
clean-up or remediation under Environmental Laws;
provided, however, no representation or warranty is
made, or shall be deemed made, with respect to any
UST's located on any such properties or any release
from any such UST's. No pollutant, contaminant, or
chemical, industrial, hazardous, or toxic material or
waste ever has been buried, stored, spilled, leaked,
discharged, emitted, or released on any Owned Real
Property or any real property that the Company
formerly owned that requires or will require clean-up
or remediation under Environmental Laws; provided,
however, no representation or warranty is made, or
shall be deemed made, with respect to any UST's
located on any such properties or any release from
any such UST's. All properties and equipment
currently or formerly owned by the Company have been
free of asbestos, PCB's, methylene chloride,
trichloroethylene, 1,2 trans-dichloroethylene,
dioxins, dibenzofurans, and Extremely Hazardous
Substances in quantities or conditions which requires
or will require clean-up or remediation under
Environmental Laws; provided, however, no
representation or warranty is made, or shall be
deemed made, with respect to any UST's located on any
such properties or any release from any such UST's.
All product labeling of the Company has been in
conformity with applicable laws (including rules and
regulations thereunder).
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6.22.4 For purposes of this Section 6.22:
(a) "Environmental Laws" shall mean any
presently existing federal, state, local or
foreign law, statute, ordinance, rule,
regulation, consent, judgment, order or
permit pertaining to the environment,
natural resources or Hazardous Materials.
(b) "Extremely Hazardous Substances" has the
meaning set forth in Section 302 of the
Emergency Planning and Community
Right-to-Know Act of 1986, as amended.
(c) "Hazardous Materials" shall mean any
substance or material (a) the presence of
which requires investigation, removal or
remediation under any Environmental Law or
(b) that is defined as a "hazardous waste",
"hazardous material" or "hazardous
substance" under any Environmental Law
including but not limited to the Resource
Conservation and Recovery Act of 1976, 42
U.S.C. ss.6091 et. seq., as amended, and the
rules and regulations promulgated thereunder
and the Comprehensive Environmental
Response, Compensation and Liability Act of
1980, 42 U.S.C. 9601 et. seq., as amended,
and the rules and regulations promulgated
thereunder ("CERCLA" or "Superfund").
6.22.5 Underground Storage Tanks. Notwithstanding the
foregoing provisions of this Section 6.22, no part of
Section 6.22.1 through 6.22.4 shall apply to, nor
shall be deemed to apply to, any underground storage
tanks which currently exist or previously existed on
any real property that the Company or any of its
affiliates owns, leases or operates, or has ever
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owned, leased or operated, in connection with the
Company's business and operations. The parties'
entire rights, obligations, undertakings and
agreements relating to all such underground storage
tanks are set forth in Section 8.4.1 below.
6.22.6 Environmental Disclaimer. Except as set forth in
Section 8.7 below, the parties hereto specifically
acknowledge and agree that Seller shall have no
liability whatsoever for any environmental matters on
or from any Leased Real Property, or any properties
or facilities formerly leased, operated or occupied
at any time by any of the Company and its affiliates
(not to include, however, any Owned Real Property or
properties or facilities formerly owned by any of the
Company and its affiliates at any time since its
organization), which resulted from the acts or
omissions of any party other than the Company and its
affiliates. In addition, the parties hereto
specifically acknowledge and agree that Seller shall
have no liability with respect to any underground
storage tanks which exist or previously existed on
any real property that the Company or any of its
affiliates owns, leases or operates, or has ever
owned, leased or operated, in connection with the
Company's business and operations, nor any liability
for any releases from any such underground storage
tank, except and only to the extent set forth in
Section 8.4.1 below.
6.23 Brokers and Finders. Seller has not employed any investment
banker, broker or finder or incurred any liability for any
brokerage fees, commissions or finders fees in connection with
the transactions contemplated by this Agreement.
6.24 Inventory. The Company's inventory is owned free and clear of
any liens or security interests, was purchased in the ordinary
course of business in a manner consistent with its normal
inventory practices, and is reflected on the Audited Financial
Statements and the Interim Financials at cost as computed
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in accordance with generally accepted accounting principles,
consistently applied.
6.25 Assets of the Business. The assets owned or leased by the
Company as of the Closing Date will constitute all of the
assets held for use or used for the conduct of the Company's
business, and the sale of the Purchased Stock by Seller to
Buyer will effectively convey the business to Buyer, including
all tangible and intangible assets and goodwill relating to
the business, as will be reflected in the Final Special
Purpose Balance Sheet.
6.26 Insurance. The Disclosure Schedule sets forth the scope of
coverage with respect to each insurance policy (including
policies providing property, casualty liability, and workers'
compensation coverage and bond and surety arrangements) to
which the Company is currently a party, a named insured, or
otherwise the beneficiary of coverage. Seller has also
provided Buyer (or its representatives) with a copy of the
Company's worker's compensation history. With respect to each
such insurance policy: (A) the policy is legal, valid,
binding, and enforceable and in full force and effect; and (B)
neither the Company nor any other party to the policy is in
breach or default (including with respect to the payment of
premiums or the giving of notices), and no event has occurred
which, with notice or the lapse of time, would constitute such
a breach or default or permit termination, modification, or
acceleration, under the policy.
6.27 Disclosure. To Seller's knowledge, the representations and
warranties contained in this Section 6 and the Disclosure
Schedule do not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to
make the statements and information contained in this Section
6 not misleading in any material respect in light of the
circumstance in which made.
7. Representations and Warranties of Buyer. Buyer represents, warrants
and covenants to and with Seller as follows:
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7.1 Organization, Power. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Delaware and has the corporate power to own, operate
and lease its properties and to carry on its business as now
being conducted.
7.2 Corporate Authorization; Binding Effect. Buyer has full power
and authority to execute this Agreement and to perform its
obligations hereunder. This Agreement and the consummation of
the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the
part of Buyer and constitutes the legal, valid and binding
obligation of Buyer enforceable in accordance with its terms.
7.3 No Government Authorization Required. Except for compliance
with the HSR Act, no consent, authorization or approval of, or
exemption by, or filing with, any governmental, public or
self-regulatory body or authority is required in connection
with the execution, delivery and performance of this Agreement
by Buyer.
7.4 Brokers and Finders. Except in respect of SBC Warburg Inc.
(whose fees shall be paid by Buyer), Buyer has not employed
any investment banker, broker or finder or incurred any
liability for any brokerage fees, commissions or finders fees
in connection with the transactions contemplated by this
Agreement.
7.5 Effect of Agreement. The execution, delivery and performance
of this Agreement and the consummation of the transactions
contemplated hereby will not, with or without the giving of
notice or the lapse of time or both, (a) violate any provision
of law, statute, rule or regulation to which Buyer is subject,
(b) violate any judgment, order, writ or decree of any court
applicable to Buyer; or (c) result in the breach of, or
conflict with, any term, covenant or condition of, result in
the modification or termination of, or constitute a default
under, any corporate charter, by-law, material contract or
other material agreement to which Buyer is a party.
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7.6 Financing. Buyer has adequate financing and/or financing
commitments attached as Exhibit 7.6 as may be necessary to pay
the Purchase Price and to otherwise fulfill its financial
obligations set forth in this Agreement. The transactions
contemplated herein are not contingent upon Buyer's ability to
obtain financing from any third party other than receipt of
funding under such financing commitments.
7.7 Terms of Sale. Buyer acknowledges that EXCEPT AS OTHERWISE
SPECIFICALLY SET FORTH IN THIS AGREEMENT, THE COMPANY IS BEING
SOLD TO BUYER ON AN "AS IS, WHERE IS" BASIS WITHOUT ANY
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, OTHER THAN
THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS
AGREEMENT.
8. Covenants.
8.1 Covenants of Seller.
8.1.1 Conduct of Business. During the period from June 21,
1997 to the date hereof the Company has conducted and
operated its business in the usual and ordinary
course and, during the period from the date hereof to
the Closing Date, Seller shall cause the Company to
conduct and operate its business in the usual and
ordinary course and shall not, without the prior
written consent of Buyer:
(a) Except in the ordinary course of business or
as required by the terms of any written
employment agreement, increase the
compensation of any employee's pay or agree
to pay a pension, retirement allowance or
other employee benefit to any employees not
required by any existing plan, agreement or
arrangement to any such person;
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(b) Execute any material agreement the terms of
which would be violated or adversely
affected by the consummation of the
transactions contemplated by this Agreement;
(c) Agree to become subject to any liability or
obligation, except liabilities and
obligations incurred in the ordinary course
of business consistent with past practices;
(d) Enter into, accelerate, modify or terminate
any Material Contract (or any series of
related contracts, leases, subleases,
licenses and sublicenses involving more than
$50,000 in the aggregate), other than in the
ordinary course of business consistent with
past practices or modify or terminate any
policy of insurance listed in the Disclosure
Schedule;
(e) Close any store, sell, abandon or otherwise
dispose of, or pledge, mortgage or otherwise
encumber any of the assets, tangible or
intangible, of the Company, other than the
sale or disposal of assets in the ordinary
course of business;
(f) Amend any charter documents or by-laws or
take any action with respect to any such
amendment;
(g) Enter into any material employment contract
or any collective bargaining agreement or
other agreement with any labor union or
similar association representing any
employees or modify in any material respects
the terms of any existing contract or
agreement;
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(h) Except as otherwise contemplated herein,
declare or make any dividend payment or
distribution to any shareholder, or
purchase, redeem or otherwise acquire, any
shares of Purchased Stock other than through
settlement of intercompany accounts in the
ordinary course, consistent with past
practices which, for purposes of this
Section 8.1.1(h), shall not be deemed a
declaration or payment of dividend or other
distribution or payment; or
(i) Merge or consolidate with any other
corporation or acquire or agree to acquire
any stock or substantially all of the assets
of any other person, firm, association,
corporation or other business organization;
(j) Make any capital expenditure (or series of
related capital expenditures) involving more
than $400,000 in the aggregate;
(k) Make any capital investment in any loan to,
or any acquisition of the securities or
assets of any other person (or series of
related capital investments, loans and
acquisitions) either involving more than
$50,000 or outside the ordinary course of
business;
(l) Delay or postpone the payment of accounts
payable and other liabilities or accelerate
receivables or liquidate inventories except
in the normal course of business;
(m) Cancel, compromise, waive, or release any
right or claim (or series of related rights
and claims) involving more than $50,000;
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(n) Grant any license or sublicense of any
rights under or with respect to any
intellectual property;
(o) Issue, sell, or otherwise dispose of any of
its capital stock, or grant any options,
warrants, or other rights to purchase or
obtain (including upon conversion or
exercise) any of its capital stock;
(p) Make any loan to, or enter into any other
transaction with, any of its directors,
officers, and employees outside the ordinary
course of business (other than as otherwise
provided for or referenced elsewhere in this
Agreement);
(q) Adopt any (A) bonus, (B) profit-sharing, (C)
incentive compensation, (D) pension, (E)
retirement, (F) medical, hospitalization,
life or other insurance, (G) severance or,
(H) other plan, contract, or commitment for
any of its directors, officers, and
employees, or modify or terminate any
existing such plan, contract, or commitment;
(r) Make or pledge to make any charitable or
other capital contribution outside the
ordinary course of business;
(s) Enter into any commitment to do any of the
foregoing.
8.1.2 Preservation of Business. From the date hereof
through the Closing Date, the Company shall use all
reasonable efforts to preserve intact the business
organization of the Company, to keep available the
services of the present officers and key employees
thereof, and to preserve the good will of those
having business relationships with the Company.
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8.1.3 Information and Access. From the date hereof through
the Closing Date, Seller and the Company shall give
Buyer and its counsel, accountants and other
representatives access during normal business hours
to all properties, books, contracts, documents and
records, with respect to the affairs of the Company
as Buyer may reasonably request at such times and in
such manner as will not disrupt or interfere with the
conduct of the Company's business. All such
information shall be held confidential by Buyer
pursuant to the terms of that certain confidentiality
agreement dated May 2, 1997 between Seller and Buyer
and dated November 17, 1996 between Seller and
certain affiliates of Buyer (collectively, the
"Confidentiality Agreement"). During such time,
Seller will endeavor to give prompt notice to Buyer
of any event which would make a representation or
warranty untrue in any material respects or make it
unable to comply with a covenant herein. As soon as
practicable after Closing, Seller shall deliver to
Buyer copies of the financial, accounting and other
information and data maintained by and available to
Seller with respect to the Company which is listed on
Exhibit 8.1.3, and from and after the Closing Seller
shall give Buyer and its representatives access to
such information and data during normal business
hours. Following the Closing, the Seller will hold,
and will cause its affiliates to hold, and will cause
their respective employees, representatives,
consultants and advisors to hold, in strict
confidence, unless compelled to disclose by judicial
or administrative process, or, in the written opinion
of its counsel, a copy of which will be promptly
furnished to the Buyer, by other requirements of law,
all documents and information concerning the Company
or any of its subsidiaries (except to the extent that
such information is in the public domain through no
fault of the Buyer or its Affiliates). If the Seller
shall be required to make disclosure of any such
information by operation of the law, the Seller shall
give the Buyer prior written notice of the making of
such disclosure and shall use all
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reasonable efforts to afford the Buyer an opportunity
to contest the making of such disclosure.
8.1.4 Transition Services. From and after the Closing Date,
the Seller will provide certain services for the
Company on a transition basis pursuant to the terms
of the Transition Services Agreement attached hereto
as Exhibit 8.1.4 (the "Transition Services
Agreement").
8.1.5 Exclusivity. The Seller will not (and the Seller will
not cause or permit any of the Company and its
Subsidiaries to) (a) solicit, initiate, or encourage
the submission of any proposal or offer from any
Person relating to any (i) liquidation, dissolution
or recapitalization, (ii) merger or consolidation,
(iii) acquisition or purchase of securities or
assets, or (iv) similar transaction or business
combination involving any of the Company and its
Subsidiaries, or (b) participate in any discussions
or negotiations regarding, furnish any information
with respect to, assist or participate in, or
facilitate in any other manner any effort or attempt
by any Person to do or seek any of the foregoing;
including, without limitation, providing any
confidential or proprietary business or financial
information concerning the Company to any third
party, irrespective of whether such information is,
subject to a confidentiality agreement executed by
such third party. The Seller will notify the Buyer
immediately if any Person makes any proposal, offer,
inquiry, or contact with respect to any of the
foregoing.
8.2 Topping Fees, Etc. The Seller shall pay, and shall hold the
Buyer harmless and indemnify it with respect to any liability
for, any topping fees, break-up fees or similar or related
fees arising in connection with previous offers or agreements,
if any, to acquire any capital stock or other interest in or
assets of the Company or its Subsidiaries.
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8.3 Intercompany Debt. Immediately prior to the Effective Time,
the Seller will endeavor, and will endeavor to cause each of
its Affiliates to (a) adjust the capital of the Company and
its Subsidiaries to reflect the net amount of all then
outstanding indebtedness and liabilities owed by the Company
or any Subsidiary to the Seller or any Affiliate thereof less
any outstanding indebtedness and liabilities owed by the
Seller or any affiliate thereof to the Company as equity.
Notwithstanding the foregoing, the parties acknowledge and
agree that certain amounts may inadvertently remain owing by
the Company to Seller and reflected as accounts payable on the
Final Special Purpose Balance Sheet and that certain amounts
may inadvertently remain owing by the Seller to the Company
and reflected as accounts receivable on the Final Special
Purpose Balance Sheet. Buyer shall cause the Company to repay
to Seller in the ordinary course of business all such accounts
payable owing to Seller as reflected on the Final Special
Purpose Balance Sheet and Seller shall repay to Buyer in the
ordinary course of business all such accounts receivable owing
from Seller as reflected on the Final Special Purpose Balance
Sheet.
8.4 Covenants of Buyer.
8.4.1 Underground Storage Tanks. The Disclosure Schedule
lists Seller's Real Property locations where
underground storage tanks are known to exist, which
of the locations have been upgraded by Seller under
its ongoing UST compliance program as described in
the Disclosure Schedule (the "Compliance Program"),
and which locations remain to be upgraded pursuant to
the Compliance Program. Seller shall be responsible
for those environmental matters relating to the
Company's UST's which are expressly set forth on
Exhibit 8.4.1(A) attached hereto and except as set
forth below Buyer shall be responsible for and shall
and hereby agrees to indemnify and hold Seller
harmless from and against any obligation, expense,
liability (including penalties, fines and attorney's
fees), or demand for same relating to all other
environmental matters arising in connection with all
other UST's located on any property owned
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or leased by the Company. Exhibit 8.4.1(B) sets forth
a listing of twenty nine (29) Company stores located
on Owned Real Property and ten (10) Company stores
located on Leased Real Property. Within the sixty
(60) day period following Closing, Buyer shall have
the right to contact in writing the applicable state
environmental agency responsible for UST's in each
state where a Company store set forth on Exhibit
8.4.1(B) is located for the sole purpose of obtaining
a copy of whatever existing documents such state
agency may have in its files relating to UST's at the
Company store listed on Exhibit 8.4.1(B). Such
contact shall be a letter in form and substance
mutually acceptable to the parties and such follow-up
contact consistent with such letter. Buyer shall use
its reasonable commercial efforts to obtain the
requested information from the state agencies
contacted by it as quickly and expeditiously as
possible following Closing. Copies of responses
received from such agencies shall be immediately
forwarded to Seller, and in all events Buyer shall
update Seller at least every two (2) weeks as to the
status of responses it has received or has failed to
receive from such state agencies until such time as
Seller has no more liability with respect to any USTs
at the Company stores listed on Exhibit 8.4.1(B). If
the information received by Buyer from such state
agency indicates no environmental issue resulting
from or relating to such UST in violation of
Environmental Laws, Seller's obligation with respect
to such UST shall immediately terminate. As to UST's
at a Company store on Owned Real Property, or as to
UST's currently used by the Company at a store
located on Leased Real Property, if the information
received by Buyer from such state agency indicates an
environmental issue resulting from or relating to
such UST in violation of Environmental Laws, Buyer
shall advise Seller in writing and Seller shall, as
soon as reasonably practical, investigate such issue
and remedy such environmental issue consistently with
Environmental Laws, to the extent not previously done
so. Any remedial action taken by Seller
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pursuant to this Section shall be consistent with the
prior remedial actions taken by the Company, but in
all events consistent with and in compliance with
Environmental Laws. For purposes of this Section
8.4.1, the term "UST" or "underground storage tank"
shall have the same meaning given to that term or a
substantially similar term in any applicable law or
regulation.
8.5 Additional Agreements. Each of the parties hereto agrees to
use its best efforts to take, or cause to be taken, all action
and to do, or cause to be done, all reasonable things
necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions
contemplated by this Agreement, including using its best
efforts to satisfy the conditions precedent to the obligations
of the other parties hereto, to obtain all necessary waivers,
consents and approvals required in connection with the
transactions contemplated hereby, to effect all necessary
registrations and filings (including, but not limited to,
filings under the HSR Act).
8.6 Company Accounts Receivable. One hundred twenty (120) days
after Closing, Seller shall pay to the Company an amount equal
to one-half (1/2) of the total "Uncollected Receivables" (as
defined below) and the Basket Amount described in Section
12.5.2 shall be reduced as set forth in Section 12.5.2. The
phrase "Uncollected Receivables" shall mean the Company's
receivables as reflected on the Final Special Purpose Balance
Sheet that remain uncollected as of one hundred fifteen (115)
days after Closing, less the allowance for doubtful accounts
reflected on the Final Special Purpose Balance Sheet. If any
of the Uncollected Receivables are later collected by Buyer
and/or the Company, the Company shall immediately remit to
Seller one-half (1/2) of the amount of such collected
Uncollected Receivable and the remaining one-half (1/2) of
such collected Uncollected Receivable shall be added to the
Basket Amount under Section 12.5.2 below.
8.7 Columbus, Nebraska Leased Real Property. The parties
acknowledge that Seller has indicated that, approximately
eight (8) years ago, a petroleum spill on property adjacent to
the Columbus Leased Real Property (which adjacent
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property is currently owned by Charles Schonfeld, 15
Greenview, Hillsbourough, California), was reported to the
State of Nebraska (the "Spill"). The party responsible for the
Spill was identified by the State of Nebraska as Walters Oil
Co. of Cuba, Kansas. In connection with such Spill, a
monitoring well has been placed on the Columbus Leased Real
Property. In the event Buyer or the Company is required to
remedy any contamination at the Columbus Leased Real Property
resulting from the Spill, Seller shall arrange for, and pay
the cost of, remediating such contamination under
Environmental Laws. Seller's liability under this Section 8.7
shall terminate on the earlier of (i) July 1, 2000 (unless,
prior to that time, Buyer receives, and provides to Seller a
copy of, notice from a third party claiming that Buyer or the
Company is required to remedy such contamination), or (ii)
action or communication from state officials that the matter
is closed or requires no further action. Seller agrees to
remedy such contamination as expeditiously as practical under
the then existing circumstances. Buyer shall cooperate, and
shall cause Company to cooperate with Seller in all reasonable
respects with regard to Seller's obligations under this
Section 8.7, to include assisting Seller in asserting and
participating as a party in any claims, demands, or actions
against any responsible party, to include the current and/or
past owner or operator of the property adjacent to the
Columbus Leased Real Property including, Mr. Kresge, K-Mart,
Charles Schonfeld and/or Walters Oil Co., for the purpose of
collecting the cost and expense incurred in connection with
remedying environmental problems addressed in this Section
8.7. Reasonable third party expenses (including reasonable
attorney's fees) incurred by Buyer in so cooperating with
Seller shall be paid by Seller. To the extent any federal or
state fund is available to reimburse Seller for the work
contemplated herein, Seller shall be entitled to all
recoveries from such funds, and the Buyer's and Company's
duties to cooperate extend to any application or claim Seller
makes against such funds.
9. Conditions Precedent to Obligations of Buyer. The obligation of
Buyer to consummate the transactions contemplated herein is subject to the
satisfaction, at or prior to the Closing Date, of all of the following
conditions:
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9.1 Accuracy of Representations and Warranties. The
representations and warranties of Seller contained in this
Agreement shall have been true in all material respects when
made and, in addition, shall be true in all material respects
on and as of the Closing Date with the same force and effect
as though made on and as of the Closing Date.
9.2 Performance of Agreements. Seller shall have performed all
material obligations and complied, in all material respects,
with all covenants and conditions contained in this Agreement
to be performed and complied with by it at or prior to the
Closing Date.
9.3 Certificate. At the Closing, Seller shall have delivered to
Buyer an officer's certificate, dated as of the Closing Date
stating that Seller has fulfilled the obligations set forth in
Sections 9.1 and 9.2.
9.4 HSR Act. All applicable waiting periods specified in the HSR
Act shall have expired.
9.5 Consents. The Seller shall have procured landlord consents
relating to the change of control of the Company or any
subsequent merger transaction involving the Company after
Closing with respect to the store leases at Douglas, Cheyenne,
Ogallala, Casper, Montrose and Loveland as well as consents
from the lessors under the Equipment Sublease.
9.6 No Litigation, Etc. No action, suit, or proceeding shall be
pending before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction
wherein any unfavorable judgment, order, decree, stipulation,
injunction, or charge would (A) prevent consummation of the
purchase and sale of the Purchased Stock contemplated by this
Agreement, (B) cause the purchase and sale of the Purchased
Stock contemplated by this Agreement to be rescinded following
consummation, or (C) materially and adversely affect the right
of Buyer to own, operate, or control the Purchased Stock or
the Company (and no such judgment, order, decree, stipulation,
injunction, or charge shall be in effect).
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9.7 Ancillary Agreements. The Seller shall have entered into the
non competition agreement in form attached hereto as Exhibit
9.7, the Transition Services Agreement and the Equipment
Sublease.
9.8 Financial Statements. Seller shall have delivered to Buyer
copies of the audited balance sheet of the Company as of May
25, 1997 and the related statements of income, stockholders
equity and cash flow for the year then ended.
10. Conditions Precedent to Obligations of Seller. The obligation of
Seller to consummate the transactions contemplated herein is subject to the
satisfaction, at or prior to the Closing Date, of all of the following
conditions:
10.1 Accuracy of Representations and Warranties. The
representations and warranties of Buyer contained in this
Agreement shall have been true in all material respects when
made and, in addition, shall be true in all material respects
on and as of the Closing Date with the same force and effect
as though made on and as of the Closing Date.
10.2 Performance of Agreements. Buyer shall have performed all
material obligations and complied, in all material respects,
with all covenants and conditions contained in this Agreement
to be performed and complied with by it at or prior to the
Closing Date.
10.3 Certificate. At the Closing, Buyer shall have delivered to
Seller an officer's certificate, dated as of the Closing Date,
stating that Buyer has fulfilled the obligations set forth in
Sections 10.1 and 10.2.
10.4 HSR Act. All applicable waiting periods specified in the HSR
Act shall have expired.
10.5 No Litigation, Etc. No action, suit, or proceeding shall be
pending before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction
wherein any unfavorable judgment, order, decree, stipulation,
injunction, or charge would (A) prevent consummation
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of the purchase and sale of the Purchased Stock contemplated
by this Agreement, or (B) cause the purchase and sale of the
Purchased Stock contemplated by this Agreement to be rescinded
following consummation.
10.6 Buyer Letters of Credit. Buyer shall have delivered the letter
of credit required under Section 3.1.5 above.
10.7 Equipment Sublease. Buyer shall have entered into the
Equipment Sublease.
11. Termination.
11.1 Events of Termination. The transactions contemplated by this
Agreement may be terminated on or before the Closing Date as
follows:
11.1.1 Mutual Agreement. By mutual written agreement of
Seller and Buyer.
11.1.2 Court Order. By Buyer or Seller if any court of
competent jurisdiction shall have issued an order,
decree or ruling restraining, enjoining or otherwise
prohibiting the consummation of the transactions
contemplated by this Agreement and such order shall
have become final and nonappealable.
11.1.3 Conditions to Close. By Buyer or Seller if any
condition precedent to its obligation to close has
not occurred as of the Closing Date, unless the party
seeking to terminate has failed to observe any
covenant, agreement or condition precedent to be
observed or performed by such party on or before the
Closing Date.
11.1.4 Failure to Close. After July 3, 1997 by either Buyer
or Seller if the Closing has not occurred for any
reason other than a breach of this Agreement by the
terminating party.
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11.2 Procedure or Effect of Termination. In the event of
termination of this Agreement and the abandonment of the
transactions contemplated hereby pursuant to this Section 11,
the terminating party shall forthwith give written notice
thereof to the other party and this Agreement shall terminate
and the transactions contemplated hereby shall be abandoned,
without further action by any of the parties hereto. If this
Agreement is terminated as provided herein, then no party
hereto nor any of its directors, officers or affiliates shall
have any liability or further obligation to the other party or
any of its directors, officers or affiliates pursuant to this
Agreement except as stated in this Section 11.2 and in the
Confidentiality Agreement, each of which shall survive such
termination, and except that nothing herein shall relieve any
party from liability for any breach of this Agreement.
12. General Indemnity.
12.1 Indemnification of Buyer by Seller. Seller shall indemnify and
hold Buyer and, after Closing, the Company and their
respective officers, directors, employees, and Affiliates
harmless against and in respect of the following matters to
the extent of any excess of applicable accruals set forth on
the Final Special Purpose Balance Sheet to which any such
liability, loss, claim, damage or deficiency relates:
12.1.1 Any liability, loss, claim, damage or deficiency
proximately resulting from (a) any misrepresentation,
breach of warranty on the part of Seller under this
Agreement, or from any misrepresentation in or
omission from any certificate or other instrument
furnished or to be furnished to Buyer hereunder or
(b) nonfulfillment of any covenant or agreement on
the part of Seller under this Agreement (including,
without limitation, Seller's agreements to assume and
hold Buyer and the Company harmless from the Retained
Liabilities).
12.1.2 All other actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses incident
to the foregoing,
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including, without limitation, attorneys' fees and
other out-of-pocket expenses.
12.2 Indemnification of Seller by Buyer. Buyer shall, and after
Closing shall cause the Company to, indemnify and hold Seller
and its officers, directors, employees and Affiliates harmless
against and in respect of:
12.2.1 Any liability, loss, claim, damage or deficiency
proximately resulting from (a) any misrepresentation
or breach of warranty on the part of Buyer under this
Agreement, or from any misrepresentation in or
omission from any certificate or other instrument
furnished or to be furnished to Seller hereunder, or
(b) nonfulfillment of any covenant or agreement on
the part of Buyer under this Agreement; and
12.2.2 All other actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses incident
to the foregoing, including, without limitation,
attorneys' fees and other out-of-pocket expenses.
12.3 Notice of Claims. The party seeking indemnification
("Indemnified Party") agrees to give the other party (the
"Indemnitor") notice of any and all claims asserted against
the Indemnified Party for which indemnification is or may be
sought under this Section 12. Such notice shall be given
within a reasonable time after receipt of written notice of
such claim by the Indemnified Party. Failure to give such
notice shall not abrogate or diminish the Indemnitor's
obligation under this Section 12 if the Indemnitor has or
receives knowledge of the existence of any such claim by any
other means or unless (and then solely to the extent) such
failure prejudices the Indemnitor's ability to defend such
claim.
12.4 Defense of Claim. In any litigation, administrative
proceeding, negotiation or arbitration pertaining to any claim
for which indemnification is sought under this Section 12, the
Indemnitor shall have the right to select legal counsel
reasonably satisfactory to the Indemnified Party to represent
the
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Indemnitor and the Indemnified Party and to otherwise control
such litigation, proceedings, negotiations and arbitration,
provided, that the Indemnified Party may participate in any
such litigation, administrative proceeding, negotiation or
arbitration at its sole cost and expense. The Indemnitor will
not consent to the entry of any judgment with respect to the
matter, or any settlement which does not include a provision
whereby the plaintiff or claimant in the matter releases the
Indemnified Party from all liability with respect thereto,
without the written consent of the Indemnified Party, not to
be withheld unreasonably; provided, however, that the written
consent of the Indemnified Party shall not be required to the
extent that, as to the matters not covered by a release, the
Indemnified Party is still entitled to indemnification under
this Section 12. If the Indemnitor shall, within a reasonable
time after notice, fail to defend, the Indemnified Party shall
have the right, but not the obligation, to undertake the
defense of and to compromise or settle the claim or other
matter on behalf, for the account, and at the risk of the
Indemnitor. The Indemnified Party shall cooperate in all
reasonable respects with the Indemnitor and its counsel in
defending any claims and shall not take any action which is
reasonably likely to be detrimental to such defense.
12.5 Qualifications.
12.5.1 Cap. Except as provided below, the maximum aggregate
liability of Seller under Section 12.1.1(a) shall be
Fifteen Million Dollars ($15,000,000). The limitation
herein shall not apply to claims relating to breaches
of Sections 6.3 and 6.7 above. Notwithstanding the
foregoing, the maximum aggregate liability of Seller
under Section 12.1.1(a) for all environmental matters
of any nature whatsoever (except to the extent any
environmental matter is included as part of the
Retained Liabilities) shall be Five Million Dollars
($5,000,000).
12.5.2 Basket. Except as provided below, Buyer shall not be
entitled to indemnification under Section 12.1.1(a)
unless, and only to the extent that, the amount of
all losses, costs, expenses and
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damages suffered or incurred by Buyer for which Buyer
is indemnified under such Section exceeds the "Basket
Amount" (as defined below) in the aggregate for all
claims for which indemnity is sought under such
Section; Buyer shall not be entitled to
indemnification under Section 12.1.1(a) for breaches
of Section 6.22 unless, and only to the extent that,
as to any store location, the aggregate amount of
such losses, costs, expenses and damages resulting
from breaches of Section 6.22 for such location
during any twelve (12) month period commencing on the
Closing Date exceeds Ten Thousand Dollars ($10,000),
and the aggregate amount of such losses, costs,
expenses and damages in excess of Ten Thousand
Dollars ($10,000) shall be subject to the Basket
Amount. The limitation herein shall not apply to
breaches of Sections 6.3 and 6.7 above. The phrase
"Basket Amount" shall mean (i) One Million Dollars
($1,000,000), less (ii) the amount, if any, paid by
Seller to the Company pursuant to Section 8.6, and/or
plus the amount of any collected Uncollected
Receivable paid to Seller.
12.5.3 Sole Remedy. Each party agrees, except in respect to
Sections 4.2, 4.3, 4.7, 5.5, 5.9 and 13, that its
sole remedy (other than applicable equitable remedies
with respect to obligations under this Agreement)
after Closing, in respect to breach of warranty,
representation or covenant by the other party
hereunder shall be limited to indemnification
pursuant to this Section 12 and that, in particular,
other than to the extent contemplated by such
indemnification rights neither Buyer nor the Company
shall exercise any rights or remedies against Seller
under or pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act, as amended
by the Superfund Amendments and Reauthorization Act,
or any subsequent amendment of either law, or any
state or local equivalent of such laws.
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12.5.4 Net Recovery. The amount to which an Indemnified
Party may become entitled hereunder shall be net of
any recovery (whether by way of payment, discount,
credit, set off, tax benefit, counterclaim or
otherwise) received from a third party (including any
insurer or taxation authority) in respect of such
claim. The amount of any such recovery, less all
reasonable costs, charges and expenses incurred by
the Indemnified Party in obtaining such recovery from
the third party, shall be repaid by the Indemnified
Party to the Indemnitor promptly upon the receipt
thereof from the third party.
12.5.5 Mitigation. Buyer will use commercially reasonable
efforts to mitigate the losses, costs, expenses and
damages to which it may become entitled to
indemnification hereunder.
12.5.6 Limitation of Damages. Except in the case of the
indemnifying party's intentional fraud, the
indemnified party shall not be entitled to recover
hereunder punitive or exemplary damages (except to
the extent the indemnified matter requires the
indemnified party to pay such damages to a third
party). In addition, Seller shall not be responsible
for lost profits or business interruption caused by
Seller's performance of its environmental remediation
covenants in compliance with the terms of this
Agreement or caused by the facts or circumstances
giving rise to such remediation obligation.
13. Special Tax Indemnity.
13.1 Transfer Taxes. All liability for any transfer, documentary,
sales, use, stamp, registration, value added and other such
non-Income Taxes and fees (including, without limitation, any
penalties and interest) incurred in connection with this
Agreement (including, without limitation, any real property
transfer Tax and any similar Tax) ("Transfer Taxes") shall be
paid by Buyer. Buyer shall file all necessary Tax Returns and
other
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documentation with respect to all such Transfer Taxes and fees
(with the expenses of such filings to be borne equally by the
parties).
13.2 Tax Sharing Agreements. Any Tax sharing or other allocation
agreement with respect to Taxes to which the Company is a
party is hereby terminated as of the Closing Date and shall
have no further effect for any taxable period (whether the
current year, a future year or a past year). This Section 13
and Section 6.11 above shall control all of the parties'
respective obligations for Taxes affecting the Company and
supersedes any and all prior agreements, contracts or
understandings regarding the Company's Taxes.
13.3 Section 338(h)(10) Election. Seller agrees that it will, and
will, with Buyer's cooperation, cause the Company to, make an
election or join in making an election under Section
338(h)(10) of the Code, to treat the sale of the Purchased
Stock as a sale of all the assets of the Company for federal
Income Tax purposes and an election under the statutes of such
states as permit an equivalent election to treat the sale of
the Purchased Stock as a sale of all its assets as provided by
such states' applicable laws for state Income Tax purposes.
The Seller agrees that it will, and that it will, with Buyer's
cooperation, cause the Company to, comply with all of the
requirements and conditions of Section 338(h)(10) of the Code
and the treasury regulations thereunder and all other
applicable Code Sections and treasury regulations relating
thereto, including without limitation the execution and timely
filing of Form 8023A entitled "Corporate Qualified Stock
Purchase Election" or any successor form of similar import,
and any forms required to effectuate similar elections for
state income tax purposes. The parties agree that the Purchase
Price shall be allocated to the assets of the Company in
accordance with Exhibit 13.3 hereto. Each party covenants to
report a gain, loss or cost basis, as the case may be, in a
manner consistent with Exhibit 13.3 for federal and state
Income Tax purposes. The parties shall exchange mutually
acceptable IRS Forms 8594 reflecting such allocations which
shall be filed with the IRS and any applicable state or local
tax authorities. Buyer will promptly notify Seller in the
event the IRS challenges, or threatens to challenge, such
allocations. Buyer shall cause the Company after the Closing
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Date to cooperate with Seller in the timely and proper filing
of all applicable federal and state elections required to be
filed under this Section.
13.4 Tax Returns.
13.4.1 Income Tax Returns. Buyer shall cause the Company to
consent to join, for all Pre-Closing Periods for
which the Company is eligible to do so, in any
consolidated or combined federal, state, local or
foreign Income Tax Returns. Seller shall cause to be
prepared and timely filed any and all consolidated or
combined federal, state or local Income Tax Returns
as well as any separate federal, state, local or
foreign Income Tax Returns for the Company for all
Tax periods of the Company ending on or before the
Closing Date, which Tax Returns shall be prepared in
all material respects in a manner consistent with the
prior practice of the Company and the Seller. Buyer
shall cause to be prepared and timely filed any and
all Income Tax Returns for Tax periods of the Company
ending after the Closing Date. The parties agree to
cooperate with each other and each other's affiliates
in the preparation of the portions of such returns
pertaining to the Company. The parties shall be
entitled to utilize the services of the personnel who
would have been responsible for preparing such
returns as they relate to the Company, to the extent
reasonably necessary in preparing said returns on a
timely basis. The parties shall also provide each
other with full access to applicable records to
enable the preparation of said returns. Seller shall
pay on a timely basis all Income Taxes in respect to
the Pre-Closing Period shown as due on such returns.
Buyer shall pay on a timely basis all Income Taxes in
respect to tax periods ending after the Closing Date,
as shown on such returns. The parties shall make
available to each other copies of the portions of
such returns relating to the Company for taxable
years ending before or including the Closing Date.
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13.4.2 Non-Income Tax Returns. Seller shall cause to be
prepared and timely filed all Non-Income Tax Returns
of the Company due on or before the Closing Date.
Buyer shall cause the Company to prepare and timely
file all Non-Income Tax Returns of the Company due
after the Closing Date. Buyer shall cause the Company
to pay all Non-Income Taxes to which such Non-Income
Tax Returns relate and which are due after the
Closing Date. The parties agree to cooperate with
each other and their affiliates in the preparation of
such Non-Income Tax Returns. The parties shall be
entitled to utilize the services of the personnel who
would have been responsible for preparing such
returns to the extent reasonably necessary in
preparing said returns on a timely basis. The parties
shall also provide each other with full access to
applicable records to enable the preparation of such
returns. The parties shall make available to each
other copies of Non-Income Tax Returns of the
Companies covering Tax periods ending before or
including the Closing Date.
13.4.3 Allocations. Seller shall include the income and
deductions of the Company (including any deferred
income triggered into income by Treas.
Reg.ss.1.1502-13 and Treas. Reg.ss.1.1502-14 and any
excess loss accounts taken into income under Treas.
Reg.ss.1.1502-19, or equivalent provisions of state
or local law) on Seller's consolidated or combined
federal, state or local Income Tax Returns for all
periods through the Closing Date and shall pay any
Taxes attributable thereto. If the allocation of an
item of income, deduction or credit cannot be
specifically allocated based on such closing of the
books, such item shall be allocated, pro rata, on a
daily basis. Seller shall be liable for Income Taxes
attributable to the Pre-Closing Period. In case of
(i) Income Taxes attributable to Tax periods ending
after the Closing Date and (ii) all non-Income Taxes,
Buyer and the Company shall be jointly and severally
liable for such Taxes.
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13.5 Allocation of Income Tax Benefits.
13.5.1 If any adjustments shall be made to any federal,
state, local, or foreign Income Tax returns relating
to the Company or Seller for the Pre-Closing Period
which result in any Income Tax detriment to Seller or
any affiliate of Seller with respect to such period
and any Income Tax benefit to the Company, Buyer or
any affiliate of Buyer for any Tax period ending
after the Closing Date (to the extent such Income Tax
benefit is realized after the Closing Date), Seller
shall be entitled to the benefit of such Income Tax
benefit to the extent of the related Income Tax
detriment and Buyer shall or shall cause the Company
to pay to Seller such amount at such time or times as
and to the extent that the Company, Buyer or any
affiliate of Buyer actually realizes such benefit
through a refiling of Income Tax or reduction in the
amount of Income Tax which the Company would
otherwise have had to pay if such adjustment had not
been made.
13.5.2 If any adjustment shall be made to any federal,
state, local, or foreign Income Tax returns relating
to the Company for any Tax period ending after the
Pre-Closing Period which result in any Income Tax
detriment to Buyer, the Company or any affiliate of
Buyer with respect to such period and any Income Tax
benefit to Seller or any affiliate of Seller for any
Pre- Closing Period, Buyer shall be entitled to the
benefit of such Income Tax Benefits to the extent of
the related Income Tax detriment. Seller shall pay to
Buyer such amount at such time or times as and to the
extent that Seller or any affiliate of Seller
actually realizes such benefit through a refund of
Income Tax or reduction in the amount of Income Taxes
which Seller or any such affiliate would otherwise
have had to pay if such adjustment had not been made.
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13.6 Tax Indemnity. From and after the Closing Date, Seller shall
be liable for, and agrees to indemnify, defend and hold
harmless each of the Buyer and the Company from and against
all Income Taxes imposed on the Company in respect to the
Pre-Closing Period. In addition, the Seller agrees to
indemnify each of the Buyer and the Company from and against
the entirety of any losses or expenses the Buyer or the
Company may suffer resulting from any liability of the Company
for Taxes of any person other than the Company (i) under
Treas. Reg. 1.1502-6 (or any similar provision of state, local
or foreign law for any Pre-Closing Period and provided such
other person is not the Buyer or any affiliate of Buyer), (ii)
as a transferee or successor with respect to any transaction
made in a Pre-Closing Period in which the Buyer or any
affiliate of the Buyer was not a party, (iii) or by contract
between the Company and another person arising before Closing
for any Pre-Closing Period and provided such other person is
not the Buyer or an affiliate of the Buyer.
13.7 Refunds. Any refunds of Income Taxes received by the Company
attributable to the Pre-Closing Period shall be for the
benefit of Seller. Buyer shall or shall cause the Company to
pay to Seller or its order any such refunds within ten (10)
days of receipt thereof, except to the extent accrued as an
asset in the Company's books and records as of the Closing
Date. Any refunds of non-Income Taxes received by the Company
attributable to the Pre-Closing Period shall be for the
benefit of Buyer.
13.8 Cooperation. After the Closing Date, Seller and Buyer shall
make available to the other, free of charge, cost or expense
and as reasonably requested, all information, records or
documents reasonably relevant to Tax liabilities or potential
Tax liabilities of either the Company or its predecessors for
all periods prior to or including the Closing Date (or any
matter, transaction or event occurring on or before the
Closing Date that may affect such a Tax liability) and each
such person shall preserve all such available information,
records and documents until the expiration of any applicable
statute of limitations or extensions thereof. Each such person
shall provide, free of charge, cost or expense, the other(s)
and the pertinent Tax Authority with all available information
and documentation reasonably necessary to comply with
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all Tax audit information requests or inquiries made of any
such periods relevant to such Tax liabilities or potential Tax
liabilities (or any matter, transaction or event occurring on
or before the Closing date that reasonably may affect such a
Tax liability). Any information obtained pursuant to this
Section 13.8 shall be held in strict confidence and shall be
used solely in connection with the reason for which it was
requested.
13.9 Tax Audits. Buyer shall promptly notify Seller in writing upon
receipt by Buyer, any affiliate of Buyer, or the Company, and
Seller shall promptly notify Buyer in writing upon receipt by
Seller or any affiliate of Seller, of notice of any pending or
threatened federal, state, local or foreign Tax audits,
examinations or assessments of the Company for any Pre-Closing
Period, so long as Pre-Closing Period Taxable years remain
open. Seller shall have the sole right to represent the
Company and its predecessors in any Income Tax audit or
administrative or court proceeding relating to the Pre-
Closing Period, and to employ counsel of its choice at its
expense.
13.10 Buyer's Taxes. Buyer shall pay, or cause to be paid, and shall
indemnify and defend Seller and its affiliates against and
hold them harmless from any liability for Taxes for Tax
periods of the Company beginning, and portions of Tax periods
occurring after the Closing Date, including, without
limitation, any such liability with respect to operations of
the Company and dispositions of assets by the Company after
the Closing Date.
13.11 Survival. The representations, warranties and obligations of
the parties under Section 6.11 and Section 13, shall survive
the Closing until the expiration of the applicable or
underlying Tax statute of limitations (including any
extensions).
14. Miscellaneous. The following miscellaneous provisions shall apply
to this Agreement:
14.1 Notices. All notices or other communications required or
permitted to be given, pursuant to the terms of this
Agreement, shall be in writing and shall be deemed to be duly
given when received if delivered in person or by telex,
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telegram or cable and confirmed by mail, or mailed by
registered or certified mail (return receipt requested) or
overnight courier, express mail, postage prepaid, as follows:
If to Seller: ConAgra, Inc.
One ConAgra Drive
Omaha, Nebraska 68102-5001
Attn: Vice President/Controller
and a copy to: ConAgra Agri-Products Companies
4687 18th Street
Greeley, Colorado 80634
Attn: Controller
If to Buyer: Central Tractor Farm & Country, Inc.
3915 Delaware Avenue
Des Moines, Iowa 50313
Attn: President
with a copy to: Steven G. Segal
J.W. Childs Associates, L.P.
One Federal Street, 21st Floor
Boston, MA 02110
and a copy to: Richard Dresdale
Fenway Partners, Inc.
152 West 57th Street
New York, NY 10870
and a copy to: Mr. Christopher Cabot, Esq.
Sullivan & Worcester, LLP
One Post Office Square
Boston, MA 02109
or at such other address as the party to whom notice is to be
given furnishes writing to the other party in the manner set
forth above.
14.2 Amendments and Waivers. This Agreement may not be modified or
amended, except by instrument or instruments in writing,
signed by the party against whom enforcement of any such
modification or amendment is sought. Either Seller or Buyer
may, by an instrument in writing, waive compliance
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by the other party with any term or provision of this
Agreement on the part of such other party to be performed or
complied with. No action taken pursuant to this Agreement,
including any investigation by or on behalf of any party,
shall be deemed to constitute a waiver by the party taking
such action of compliance with any representation, warranty or
agreement contained herein. The waiver by any party hereto of
a breach of any term or provision of this Agreement shall not
be construed as a waiver of any subsequent breach.
14.3 Expenses. Except as otherwise provided herein, whether or not
this Agreement shall be consummated, Seller and Buyer shall
each pay its own expenses incident to the preparation,
execution and consummation of this Agreement.
14.4 Survival of Representations, Warranties and Indemnifications.
Except as set forth in Section 13 above, all representations
and warranties (and indemnities related thereto) made in or
pursuant to this Agreement, as well as indemnities related to
breaches of Section 8.1.1, shall expire 18 months after
Closing unless a claim in respect thereof is made before such
period expires. Seller's indemnity obligation with respect to
breaches of Section 6.22 shall expire two (2) years after
Closing unless a claim in respect thereof is made before such
period expires.
14.5 Entire Agreement. This Agreement, which includes the Exhibits
hereto, the Disclosure Schedule and the Interim Period
Agreement entered into on the date hereof by and between
Seller and Buyer, and the other documents and certificates
delivered pursuant to the terms hereof, set forth the entire
agreement and understanding of the parties hereto with respect
to the subject matter contained herein, and supersede all
prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or
written, by any officer, employee or representative of any
party hereto. In addition, the Confidentiality Agreement,
dated November 19, 1996, between Seller and J.W. Childs
Associates, L.P., the Confidentiality Agreement, dated
November 19, 1996, between Seller and
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<PAGE>
Fenway Partners, Inc. and the Confidentiality Agreement, dated
May 2, 1997, between Seller and Buyer all shall survive.
14.6 Reliance. No claim shall be made against Seller in respect of
any warranty, representation, indemnity, covenant, undertaking
or otherwise arising out of or in connection with the
transactions contemplated herein except where the same is
expressly contained in this Agreement, and Buyer confirms that
it has not relied on any warranty, representation, indemnity,
covenant or undertaking of any person which is not expressly
contained in this Agreement and the Disclosure Schedule.
14.7 Applicable Law. This Agreement and the legal relations among
the parties hereto shall be governed by and construed in
accordance with the laws of the State of Delaware applicable
to contracts made and performed in Delaware.
14.8 Binding Effect; Benefits. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their
respective heirs, successors and assigns; nothing in this
Agreement, express or implied, is intended to confer on any
person other than the parties hereto or their respective
heirs, successors and assigns, any rights, remedies,
obligations or liabilities under or by reason of this
Agreement.
14.9 Assignability. Neither this Agreement nor any of the parties'
rights hereunder shall be assignable by any party hereto
without the prior written consent of the other party hereto.
14.10 Effect of Headings. The headings of the various sections and
subsections herein are inserted merely as a matter of
convenience and for reference and shall not be construed as in
any manner defining, limiting, or describing the scope or
intent of the particular sections to which they refer, or as
affecting the meaning or construction of the language in the
body of such sections.
14.11 Exhibits; Disclosure Schedule. All exhibits and disclosures
referred to in this Agreement are attached hereto and are
incorporated herein by reference as if fully set forth herein.
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<PAGE>
14.12 Severability. Any term or provision of this Agreement, which
is invalid or unenforceable in any jurisdiction, shall be
ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms
or other provisions of this Agreement in any other
jurisdiction.
14.13 Construction. For purposes of this Agreement, the phrases
"Seller's knowledge" or "to the knowledge of Seller" mean the
actual knowledge of Seller's senior corporate executive
officers or such knowledge as Seller's senior corporate
executive officers would have after due inquiry of the Company
Employees listed on Exhibit 14.13. The language in all parts
of this Agreement shall in all cases be construed as a whole
according to its fair meaning, strictly neither for nor
against any party hereto, and without implying a presumption
that the terms thereof shall be more strictly construed
against one party by reason of the rule of construction that a
document is to be construed more strictly against the person
who himself drafted same. It is hereby agreed that
representatives of both parties have participated in the
preparation hereof
14.14 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be regarded as an original
and all of which shall constitute one and the same instrument.
14.15 Publicity. The parties hereto agree that they will consult
with each other concerning any proposed press release or
public announcement pertaining to the transactions
contemplated and shall use their best efforts to agree upon
the text of any such press release or the making of such
public announcement. Except as mutually agreed, neither Buyer
nor Seller shall disclose (except as required by applicable
law) the terms and conditions contained in this Agreement.
14.16 Further Assurances. If at any time after the Closing any
further actions are necessary or desirable to carry out the
purposes of this Agreement, each of the parties will take such
further action (including the execution and delivery of such
further instruments and documents) as the other party
reasonably may
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<PAGE>
request, all at the sole cost and expense of the requesting
party (unless the action requested is necessary for
fulfillment of the obligations to whom such request is made).
14.17 Assumption of Retained Liabilities. Seller hereby assumes and
agrees to perform and discharge the following obligations and
liabilities of the Company (collectively, the "Retained
Liabilities"): Liability for debt for money borrowed by the
Company prior to Closing; liability for Retained Litigation
Matters (as defined below); liability for insurance claims
under Section 4.3.2; liability or obligation arising out of
all Company store locations, whether leased or owned by the
Company, which have been closed prior to the date hereof;
liabilities under Section 5.1; liability for the 401(k) Plan
under Section 5.3; liability for Employee Plans under Section
5.5; liability for COBRA obligations under Section 5.9;
liability for interest and/or penalties which may be payable
in connection with the matter listed on item 1 on Section 6.11
(Pending Tax Audits, etc.) of the Disclosure Schedule;
liability for UST's as set forth in Exhibit 8.4.1(A); and
liability for Pre-Closing Income Taxes under Section 13.
14.17.1 Retained Litigation Matters. Notwithstanding anything
in this Agreement to the contrary, Seller shall
retain liability for, and shall be entitled to any
recoveries in connection with, and shall indemnify
and hold Buyer and the Company harmless from, any
loss, damage and expense relating to the litigation
matters listed as items 2, 4, 5, 6, 7, 8, 10, 11, 12,
13, 16, 18, and 20 on Section 6.15 (Litigation) of
the Disclosure Schedule (collectively, the "Retained
Litigation Matters"). Buyer shall retain liability
for, and shall indemnify and hold Seller harmless
from, any loss, damage and expense relating to all
other litigation matters set forth on Section 6.15
(Litigation) of the Disclosure Schedule. If the
litigation described in item 22 on Section 6.15 of
the Disclosure Schedule is an insured matter or
relates to a store location (whether owned or leased)
closed by the Company prior to the date hereof, then
such item 22 shall be included as a Retained
Litigation Matter.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
CONAGRA, INC., a Delaware CENTRAL TRACTOR FARM &
corporation COUNTRY, INC., a Delaware corporation
By: /s/Kenneth W. DiFonzo By: /s/James McKitrick
Its: _____________________________ Its: President & CEO
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<PAGE>
The following exhibits to the Stock Purchase Agreement are omitted from this
filing:
Exhibit No. Description
- ----------- -----------
3.1.2 Legal Opinion of Sullivan & Worcester, LLP
3.1.5 Letter of Credit Terms
3.1.7 Equipment Sublease Agreement
3.2.2 Legal Opinion of McGrath, North, Mullin & Kratz, P.C.
3.2.6 Directors and Officers to Resign
4.1.2 Inventory Procedures
4.1.3(A) Forms of Deloitte's Report
4.1.4 Deloitte's Workpapers Letter
4.1.5 Representation Letters
4.6.1 Leases Requiring Consent
4.6.3(A) Ongoing Obligation Leases
4.6.3(B) Letters of Credit Re: Ongoing Obligation Leases
4.7 Closed Store Locations
5.1(A) Company Employee Receiving Seller Health Benefits
5.1(B) Buyer's Severance Policy
5.1(C) Executives Receiving Incentive Bonus
7.6 Buyer Financing Committments
8.1.3 Financial, Accounting and Other Information
8.1.4 Transition Services Agreement
8.4.1(A) UST Environmental Matters
8.4.1(B) List of Company Stores Contact State Regarding UST's
9.7 Noncompetition Agreement
13.3 Allocation of Purchase Price
14.13 Seller's Knowledge Qualifier
EXECUTION COPY
$150,000,000
CREDIT AGREEMENT
Dated as of July 3, 1997
Among
CENTRAL TRACTOR FARM & COUNTRY, INC.,
as Borrower,
CT HOLDING, INC.,
as Holding,
and
THE INITIAL LENDERS, INITIAL ISSUING BANK AND
SWING LINE BANK NAMED HEREIN
as Initial Lenders, Initial Issuing Bank and Swing Line Bank
and
FLEET NATIONAL BANK
as Administrative Agent
and
NATIONSBANK, N.A.
as Syndication Agent
and
DLJ CAPITAL FUNDING, INC.
as Documentation Agent
<PAGE>
<TABLE>
<CAPTION>
T A B L E O F C O N T E N T S
Section Page
<S> <C> <C>
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.01. Certain Defined Terms........................................................................... 2
1.02. Computation of Time Periods..................................................................... 28
1.03. Accounting Terms................................................................................ 29
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
AND THE LETTERS OF CREDIT
2.01. The Advances.................................................................................... 29
2.02. Making the Advances............................................................................. 31
2.03. Issuance of and Drawings and Reimbursement Under Letters of
Credit........................................................................................ 33
2.04. Repayment of Advances........................................................................... 35
2.05. Termination or Reduction of the Commitments..................................................... 37
2.06. Prepayments..................................................................................... 37
2.07. Interest........................................................................................ 39
2.08. Fees............................................................................................ 40
2.09. Conversion of Advances.......................................................................... 41
2.10. Increased Costs, Etc............................................................................ 41
2.11. Payments and Computations....................................................................... 43
2.12. Taxes........................................................................................... 45
2.13. Sharing of Payments, Etc........................................................................ 47
2.14. Use of Proceeds................................................................................. 48
2.15. Defaulting Lenders.............................................................................. 48
2.16. Removal of Lender............................................................................... 50
ARTICLE III
CONDITIONS OF LENDING
3.01. Conditions Precedent to Effective Date.......................................................... 51
3.02. Conditions Precedent to Each Borrowing and Issuance............................................. 56
3.03. Determinations Under Section 3.01............................................................... 57
<PAGE>
ii
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.01. Representations and Warranties.................................................................. 58
ARTICLE V
COVENANTS OF THE BORROWER
5.01. Affirmative Covenants........................................................................... 65
5.02. Negative Covenants.............................................................................. 69
5.03. Reporting Requirements.......................................................................... 76
5.04. Financial Covenants............................................................................. 81
ARTICLE VI
EVENTS OF DEFAULT
6.01. Events of Default............................................................................... 83
6.02. Actions in Respect of the Letters of Credit upon Default........................................ 87
ARTICLE VII
THE ADMINISTRATIVE AGENT
7.01. Authorization and Action........................................................................ 87
7.02. Administrative Agent's Reliance, Etc............................................................ 88
7.03. Fleet and Affiliates............................................................................ 88
7.04. Lender Party Credit Decision.................................................................... 88
7.05. Indemnification................................................................................. 89
7.06. Successor Administrative Agents................................................................. 90
ARTICLE VIII
GUARANTY
8.01. Guaranty........................................................................................ 91
8.02. Guaranty Absolute. ............................................................................. 92
8.03. Waivers and Acknowledgments..................................................................... 93
8.04. Subrogation..................................................................................... 93
8.05. Continuing Guarantee; Assignments............................................................... 94
<PAGE>
iii
ARTICLE IX
MISCELLANEOUS
9.01. Amendments, Etc................................................................................. 94
9.02. Notices, Etc. .................................................................................. 95
9.03. No Waiver; Remedies............................................................................. 96
9.04. Costs and Expenses.............................................................................. 96
9.05. Right of Set-off................................................................................ 98
9.06. Binding Effect.................................................................................. 98
9.07. Assignments and Participations.................................................................. 98
9.08. Execution in Counterparts.......................................................................101
9.09. No Liability of the Issuing Bank................................................................101
9.10. Confidentiality.................................................................................102
9.11. Jurisdiction, Etc...............................................................................102
9.12. Governing Law...................................................................................103
9.13. Waiver of Jury Trial............................................................................103
</TABLE>
<PAGE>
iv
SCHEDULES
Schedule I - Commitments and Applicable Lending Offices
Schedule II - Disclosed Litigation
Schedule III - Subsidiaries
Schedule IV - Authorizations, Etc.
Schedule V - Plans
Schedule VI - Existing Debt
Schedule VII - Owned Real Property
Schedule VIII - Leased Real Property
Schedule IX - Material Contracts
Schedule X - Investments
Schedule XI - Intellectual Property
Schedule XII - Pro Forma EBITDA
Schedule XIII - Liens
Schedule XIV - Surviving Debt
Schedule XV - Environmental Disclosure
EXHIBITS
Exhibit A-1 - Form of Term Note
Exhibit A-2 - Form of Revolving Credit Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Assignment and Acceptance
<PAGE>
v
Exhibit D - Form of Security Agreement
Exhibit E - Form of Pledge Agreement
Exhibit F - Form of Subsidiary Guaranty
Exhibit G - Form of Solvency Certificate
Exhibit H - Form of Opinion of Sullivan & Worcester
Exhibit I - Form of Opinion of Dickinson, MacKamon,
Tyler & Hagen, P.C.
Exhibit J - Form of Borrowing Base Certificate
[Note: These schedules and exhibits have been
omitted from this filing.]
<PAGE>
AMENDED AND RESTATED CREDIT AGREEMENT
AMENDED AND RESTATED CREDIT AGREEMENT dated as of July 3, 1997
among Central Tractor Farm & Country, Inc., a Delaware corporation (the
"Borrower"), CT Holding, Inc., a Delaware corporation ("Holding"), the banks,
financial institutions and other institutional lenders listed on the signature
pages hereof as the Initial Lenders (the "Initial Lenders"), the Initial Issuing
Bank (as hereinafter defined), the Swing Line Bank (as hereinafter defined),
Fleet National Bank ("Fleet"), as administrative agent (together with any
successor appointed pursuant to Article VII, the "Administrative Agent") for the
Lender Parties (as hereinafter defined), NationsBank, N.A., as syndication agent
(the "Syndication Agent") for the Lender Parties, and DLJ Capital Funding, Inc.,
as documentation agent (the "Documentation Agent") for the Lender Parties.
PRELIMINARY STATEMENTS:
(1) The Borrower and Holding entered into a Credit Agreement
as of December 23, 1996, as amended by Letter Amendment dated as of April 30,
1997 (as so amended, the "Existing Credit Agreement"), with the financial
institutions and other institutional lenders party thereto (the "Existing
Lenders") and Fleet, as administrative agent for the Existing Lenders.
(2) Pursuant to the Existing Credit Agreement, the Borrower
requested that the Existing Lenders make advances to it, and issue letters of
credit for its account, in an aggregate principal amount of up to $38,000,000,
on the terms and conditions set forth therein.
(3) The Borrower has entered into a Stock Purchase Agreement
dated as of June 26, 1997 (as the same may be amended, modified or otherwise
supplemented from time to time in accordance with the provisions of this
Agreement, the "Stock Purchase Agreement") with ConAgra, Inc. pursuant to which
it will acquire (the "Acquisition") all of the outstanding capital stock of
Country General, Inc., a Delaware corporation (the "Company"), for $135,000,000
plus (or minus) the amount by which Invested Capital (as defined in the Stock
Purchase Agreement) is greater than (or less than) $90,000,000.
(4) The Borrower has requested that the Initial Lenders
hereunder enter into this Agreement to amend and restate the Existing Credit
Agreement and to lend the Borrower and issue Letters of Credit (as defined
herein) for the benefit of the Borrower from time to time in an aggregate
principal amount of up to $150,000,000. The Initial Lenders hereunder have
indicated their willingness to amend and restate the Existing Credit Agreement
and to agree to lend such amounts on the terms and conditions of this Agreement.
<PAGE>
2
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements contained herein, the parties hereto hereby
agree that, subject to the satisfaction of the conditions set forth in Section
3.01, the Existing Credit Agreement is amended and restated in its entirety to
read as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings (such meanings
to be equally applicable to both the singular and plural forms of the terms
defined):
"Acquisition" has the meaning specified in the Preliminary
Statements.
"Administrative Agent" has the meaning specified in the
recital of parties to this Agreement.
"Administrative Agent's Account" means the account of the
Administrative Agent maintained by the Administrative Agent with Fleet
at its office at One Federal Street, Boston, Massachusetts 02211, ABA
No. 011 000 138, Account No. 151035- 03-156, Attention: Maria Vieira.
"Advance" means a Term Advance, a Revolving Credit Advance, a
Swing Line Advance or a Letter of Credit Advance.
"Affiliate" means, as to any Person, any other Person that,
directly or indirectly, controls, is controlled by or is under common
control with such Person or is a director or officer of such Person.
For purposes of this definition, the term "control" (including the
terms "controlling," "controlled by" and "under common control with")
of a Person means the possession, direct or indirect, of the power to
vote 10% or more of the Voting Stock of such Person or to direct or
cause the direction of the management and policies of such Person,
whether through the ownership of Voting Stock, by contract or
otherwise.
"Applicable Lending Office" means, with respect to each Lender
Party, such Lender Party's Domestic Lending Office in the case of a
Prime Rate Advance and such Lender Party's Eurodollar Lending Office in
the case of a Eurodollar Rate Advance.
<PAGE>
3
"Applicable Margin" means (x) during the period from the date
hereof through July 31, 1997, 1% per annum for Prime Rate Advances and
2-3/8% per annum for Eurodollar Rate Advances and (y) thereafter, a
percentage per annum determined by reference to the Debt to EBITDA
Ratio as set forth below:
Prime Rate Advances Eurodollar Rate
Advances
------------------- ---------------
Level I 0.125% 1.500%
-------
less than 3.0:1
Level II 0.375% 1.750%
--------
3.0:1 or greater,
but less than 3.5:1
Level III 0.675% 2.000%
---------
3.5:1 or greater,
but less than 3.75:1
Level IV 0.875% 2.250%
--------
3.75:1 or greater,
but less than 4.0:1
Level V 1.000% 2.375%
-------
4.0:1 or greater
The Applicable Margin for each Prime Rate Advance shall be determined
by reference to the Debt to EBITDA Ratio in effect from time to time
and the Applicable Margin for each Eurodollar Rate Advance shall be
determined by reference to the ratio in effect on the first day of each
Interest Period for such Advance; provided, however, that no change in
the Applicable Margin shall be effective until three Business Days
after the date on which the Administrative Agent receives financial
<PAGE>
4
statements pursuant to Section 5.03(b), (c) or (d) and a certificate of
the chief financial officer of the Borrower demonstrating such Debt to
EBITDA Ratio.
"Applicable Percentage" means (x) during the period from the
date hereof through July 31, 1997, 0.50% per annum and (y) thereafter,
a percentage per annum determined by reference to the Debt to EBITDA
Ratio as set forth below:
Debt to EBITDA Ratio Applicable Percentage
-------------------- ---------------------
Level I
less than 3.0:1 0.250%
Level II
3.0:1 or greater,
but less than 3.5:1 0.375%
Level III
3.5:1 or greater 0.500%
The Applicable Percentage shall be determined by reference to the Debt
to EBITDA Ratio in effect from time to time; provided, however, that no
change in the Applicable Percentage shall be effective until three
Business Days after the date on which the Administrative Agent receives
financial statements pursuant to Section 5.03(b), (c) or (d) and a
certificate of the chief financial officer of the Borrower
demonstrating such Debt to EBITDA Ratio.
"Appropriate Lender" means, at any time, with respect to (a)
any of the Term or Revolving Credit Facilities, a Lender that has a
Commitment with respect to such Facility at such time, (b) the Letter
of Credit Facility, (i) the Issuing Bank and (ii) if the other
Revolving Credit Lenders have made Letter of Credit Advances pursuant
to Section 2.03(c) that are outstanding at such time, each such other
Revolving Credit Lender and (c) the Swing Line Facility, (i) the Swing
Line Bank and (ii) if the other Revolving Credit Lenders have made
Swing Line Advances pursuant to Section 2.02(b) that are outstanding at
such time, each such other Revolving Credit Lender.
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender Party and an Eligible Assignee, and accepted
by the Administrative Agent, in accordance with Section 9.07 and in
substantially the form of Exhibit C hereto.
<PAGE>
5
"Available Amount" of any Letter of Credit means, at any time,
the maximum amount available to be drawn under such Letter of Credit at
such time (assuming compliance at such time with all conditions to
drawing).
"Borrower" has the meaning specified in the recital of parties
to this Agreement.
"Borrower's Account" means the account of the Borrower
maintained by the Borrower with Fleet at its office at One Federal
Street, Boston, Massachusetts 02110, ABA No. 011 000 138, Account No.
937 3835380, Attention: Maria Vieira.
"Borrowing" means a Term Borrowing, a Revolving Credit
Borrowing or a Swing Line Borrowing.
"Borrowing Base Deficiency" means, at any time, the failure of
(a) the Loan Value of the Eligible Collateral at such time to equal or
exceed (b) the sum of (i) the aggregate principal amount of the
Revolving Credit Advances, the Letter of Credit Advances and the Swing
Line Advances outstanding at such time plus (ii) the aggregate
Available Amount under all Letters of Credit outstanding at such time.
"Borrowing Rate Certificate" means a certificate in
substantially the form of Exhibit J hereto, duly certified by the chief
financial officer of the Borrower.
"Business Day" means a day of the year on which banks are not
required or authorized by law to close in Boston, Massachusetts and, if
the applicable Business Day relates to any Eurodollar Rate Advances, on
which dealings are carried on in the London interbank market.
"Capital Expenditures" means, for any Person for any period,
the sum of (a) all expenditures made, directly or indirectly, by such
Person or any of its Subsidiaries during such period for equipment,
fixed assets, real property or improvements, or for replacements or
substitutions therefor or additions thereto, that have been or should
be, in accordance with GAAP, reflected as additions to property, plant
or equipment on a Consolidated balance sheet of such Person or have a
useful life of more than one year plus (b) (without duplication) the
aggregate principal amount of all Debt (including Obligations under
Capitalized Leases) assumed or incurred in connection with any such
expenditures.
"Capitalized Leases" means all leases that have been or should
be, in accordance with GAAP, recorded as capitalized leases.
<PAGE>
6
"Cash Collateral Account" has the meaning specified in the
Security Agreement.
"Cash Equivalents" means any of the following, to the extent
owned by the Borrower or any of its Subsidiaries free and clear of all
Liens other than Liens created under the Collateral Documents and
having a maturity of not greater than 360 days from the date of
acquisition thereof: (a) readily marketable direct obligations of the
Government of the United States or any agency or instrumentality
thereof or obligations unconditionally guaranteed by the full faith and
credit of the Government of the United States, (b) insured certificates
of deposit of or time deposits with any commercial bank that is a
Lender Party or a member of the Federal Reserve System, issues (or the
parent of which issues) commercial paper rated as described in clause
(c), is organized under the laws of the United States or any State
thereof and has combined capital and surplus of at least $1 billion or
(c) commercial paper in an aggregate amount of no more than $2.5
million per issuer outstanding at any time, issued by any corporation
organized under the laws of any State of the United States and rated at
least "Prime-1" (or the then equivalent grade) by Moody's Investors
Service, Inc. or "A-1" (or the then equivalent grade) by Standard &
Poor's Ratings Group.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time.
"CERCLIS" means the Comprehensive Environmental Response,
Compensation and Liability Information System maintained by the U.S.
Environmental Protection Agency.
"Childs Management Agreement" means the Management Agreement
dated as of March 27, 1997 between the Borrower, Holding and J.W.
Childs Associates, L.P., as the same may be amended, modified or
otherwise supplemented from time to time in accordance with the
provisions of this Agreement.
"Collateral" means all "Collateral" referred to in the
Collateral Documents and all other property that is or is intended to
be subject to any Lien in favor of the Administrative Agent for the
benefit of the Secured Parties.
"Collateral Documents" means the Security Agreement, the
Pledge Agreement, the Mortgages and any other agreement that creates or
purports to create a Lien in favor of the Administrative Agent for the
benefit of the Lender Parties.
"Commitment" means a Term Commitment, a Revolving Credit
Commitment or a Letter of Credit Commitment.
<PAGE>
7
"Company" has the meaning specified in the Preliminary
Statements.
"Confidential Information" means information that the Borrower
furnishes to the Administrative Agent or any Lender Party that is
proprietary in nature, including financial information, projections,
business plans and other information in a writing marked, labeled or
otherwise identified as confidential, but does not include any such
information that is or becomes generally available to the public other
than as a result of a breach by the Administrative Agent or any Lender
Party of its obligations hereunder or that is or becomes available to
the Administrative Agent or such Lender Party from a source other than
the Borrower.
"Consolidated" refers to the consolidation of accounts in
accordance with GAAP.
"Conversion", "Convert" and "Converted" each refer to a
conversion of Advances of one Type into Advances of the other Type
pursuant to Section 2.09 or 2.10.
"Current Assets" of any Person means all assets of such Person
that would, in accordance with GAAP, be classified as current assets of
a company conducting a business the same as or similar to that of such
Person, after deducting adequate reserves in each case in which a
reserve is proper in accordance with GAAP.
"Current Liabilities" of any Person means (a) all Debt of such
Person that by its terms is payable on demand or matures within one
year after the date of determination (excluding any Debt renewable or
extendible, at the option of such Person, to a date more than one year
from such date or arising under a revolving credit or similar agreement
that obligates the lender or lenders to extend credit during a period
of more than one year from such date), (b) without duplication, all
amounts of Funded Debt of such Person required to be paid or prepaid
within one year after such date and (c) all other items (including
taxes accrued as estimated) that in accordance with GAAP would be
classified as current liabilities of such Person.
"Debt" of any Person means, without duplication, (a) all
indebtedness of such Person for borrowed money, (b) all Obligations of
such Person for the deferred purchase price of property or services
(other than trade payables not overdue by more than 90 days incurred in
the ordinary course of such Person's business), (c) all Obligations of
such Person evidenced by notes, bonds, debentures or other similar
instruments, (d) all Obligations of such Person created or arising
under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of
default are limited to repossession or sale of such property),
<PAGE>
8
(e) all Obligations of such Person as lessee under Capitalized Leases,
(f) all Obligations, contingent or otherwise, of such Person under
acceptance, letter of credit or similar facilities, (g) all Obligations
of such Person to purchase, redeem, retire, defease or otherwise make
any payment in respect of any capital stock of or other ownership or
profit interest in such Person or any other Person or any warrants,
rights or options to acquire such capital stock, valued, in the case of
Redeemable Preferred Stock, at the greater of its voluntary or
involuntary liquidation preference plus accrued and unpaid dividends,
(h) all Obligations of such Person in respect of Hedge Agreements, (i)
all Debt of others referred to in clauses (a) through (h) above or
clause (j) below guaranteed directly or indirectly in any manner by
such Person, or in effect guaranteed directly or indirectly by such
Person through an agreement (i) to pay or purchase such Debt or to
advance or supply funds for the payment or purchase of such Debt, (ii)
to purchase, sell or lease (as lessee or lessor) property, or to
purchase or sell services, primarily for the purpose of enabling the
debtor to make payment of such Debt or to assure the holder of such
Debt against loss, (iii) to supply funds to or in any other manner
invest in the debtor (including any agreement to pay for property or
services irrespective of whether such property is received or such
services are rendered) or (iv) otherwise to assure a creditor against
loss, and (j) all Debt referred to in clauses (a) through (i) above of
another Person secured by (or for which the holder of such Debt has an
existing right, contingent or otherwise, to be secured by) any Lien on
property (including, without limitation, accounts and contract rights)
owned by such Person, even though such Person has not assumed or become
liable for the payment of such Debt.
"Debt to EBITDA Ratio" means, for any fiscal quarter of
Holding, a ratio of (A) Debt of Holding and its Subsidiaries (other
than any Debt of Holding that bears interest on a payment-in-kind
basis) as at the end of such fiscal quarter less the sum of cash and
Cash Equivalents held by Holding and its Subsidiaries as at the end of
such fiscal quarter to (B) Consolidated EBITDA for the most recently
completed four fiscal quarters of Holding and its Subsidiaries;
provided, however, that for each fiscal quarter of Holding ending
closest to July 31, 1997, October 31, 1997, January 31, 1998 and April
30, 1998, Consolidated EBITDA shall be calculated for such four fiscal
quarter period by adding Consolidated EBITDA for such period of Holding
and its Subsidiaries and the Pro Forma EBITDA for such fiscal quarter.
"Default" means any Event of Default or any event that would
constitute an Event of Default but for the requirement that notice be
given or time elapse or both.
"Defaulted Advance" means, with respect to any Lender Party at
any time, the portion of any Advance required to be made by such Lender
Party to the Borrower pursuant to Section 2.01 or 2.02 at or prior to
such time which has not been made by such Lender Party or by the
Administrative Agent for the account of such Lender
<PAGE>
9
Party pursuant to Section 2.02(e) as of such time. In the event that a
portion of a Defaulted Advance shall be deemed made pursuant to Section
2.15(a), the remaining portion of such Defaulted Advance shall be
considered a Defaulted Advance originally required to be made pursuant
to Section 2.01 on the same date as the Defaulted Advance so deemed
made in part.
"Defaulted Amount" means, with respect to any Lender Party at
any time, any amount required to be paid by such Lender Party to the
Administrative Agent or any other Lender Party hereunder or under any
other Loan Document at or prior to such time which has not been so paid
as of such time, including, without limitation, any amount required to
be paid by such Lender Party to (a) the Swing Line Bank pursuant to
Section 2.02(b) to purchase a portion of a Swing Line Advance made by
the Swing Line Bank, (b) the Issuing Bank pursuant to Section 2.03(c)
to purchase a portion of a Letter of Credit Advance made by the Issuing
Bank, (c) the Administrative Agent pursuant to Section 2.02(e) to
reimburse the Administrative Agent for the amount of any Advance made
by the Administrative Agent for the account of such Lender Party, (d)
any other Lender Party pursuant to Section 2.13 to purchase any
participation in Advances owing to such other Lender Party and (e) the
Administrative Agent or the Issuing Bank pursuant to Section 7.05 to
reimburse the Administrative Agent or the Issuing Bank for such Lender
Party's ratable share of any amount required to be paid by the Lender
Parties to the Administrative Agent or the Issuing Bank as provided
therein. In the event that a portion of a Defaulted Amount shall be
deemed paid pursuant to Section 2.15(b), the remaining portion of such
Defaulted Amount shall be considered a Defaulted Amount originally
required to be paid hereunder or under any other Loan Document on the
same date as the Defaulted Amount so deemed paid in part.
"Defaulting Lender" means, at any time, any Lender Party that,
at such time, (a) owes a Defaulted Advance or a Defaulted Amount or (b)
shall take any action or be the subject of any action or proceeding of
a type described in Section 6.01(f).
"Disclosed Litigation" has the meaning specified in Section
3.01(j).
"Documentation Agent" has the meaning specified in the recital
of parties to this Agreement.
"Domestic Lending Office" means, with respect to any Lender
Party, the office of such Lender Party specified as its "Domestic
Lending Office" opposite its name on Schedule I hereto or in the
Assignment and Acceptance pursuant to which it became a Lender Party,
as the case may be, or such other office of such Lender Party as such
Lender Party may from time to time specify to the Borrower and the
Administrative Agent.
<PAGE>
10
"EBITDA" means, for any period, the sum, determined on a
Consolidated basis, of (a) net income (or net loss), (b) interest
expense, (c) income tax expense, (d) depreciation expense and (e)
amortization expense, in each case of Holding and its Subsidiaries,
determined in accordance with GAAP for such period.
"Effective Date" has the meaning specified in Section 3.01.
"Eligible Assignee" means (a) with respect to any Facility
(other than the Letter of Credit Facility), (i) a Lender; (ii) an
Affiliate of a Lender; (iii) a commercial bank organized under the laws
of the United States, or any State thereof, and having total assets in
excess of $500,000,000; (iv) a savings and loan association or savings
bank organized under the laws of the United States, or any State
thereof, and having total assets in excess of $500,000,000; (v) a
commercial bank organized under the laws of any other country that is a
member of the OECD or has concluded special lending arrangements with
the International Monetary Fund associated with its General
Arrangements to Borrow or of the Cayman Islands, or a political
subdivision of any such country, and having total assets in excess of
$500,000,000, so long as such bank is acting through a branch or agency
located in the United States; (vi) the central bank of any country that
is a member of the OECD; (vii) a finance company, insurance company or
other financial institution or fund (whether a corporation,
partnership, trust or other entity) that 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
$500,000,000; and (viii) any other Person approved by the
Administrative Agent and the Borrower, such approval not to be
unreasonably withheld or delayed, and (b) with respect to the Letter of
Credit Facility, a Person that is an Eligible Assignee under subclause
(iii) or (v) of clause (a) of this definition and is approved by the
Administrative Agent and the Borrower, such approval not to be
unreasonably withheld or delayed; provided, however, that neither any
Loan Party nor any Affiliate of a Loan Party shall qualify as an
Eligible Assignee under this definition.
"Eligible Collateral" means, collectively, Eligible Inventory
and Eligible Receivables.
"Eligible Inventory" means all Inventory of the Borrower and
the Subsidiary Guarantors other than the following classes of
Inventory:
(a) Inventory consisting of "perishable agricultural
commodities" within the meaning of the Perishable Agricultural
Commodities Act of 1930, as amended, and the regulations
thereunder, or on which a Lien has arisen or may arise in
favor of agricultural producers under comparable state or
local laws;
<PAGE>
11
(b) Inventory that is obsolete, unusable or otherwise
unavailable for sale;
(c) Inventory with respect to which the
representations and warranties set forth in Section 8 of the
Security Agreement applicable to Inventory are not true and
correct;
(d) Inventory consisting of promotional, marketing,
packaging or shipping materials and supplies;
(e) Inventory that fails to meet all standards
imposed by any governmental agency, or department or division
thereof, having regulatory authority over such Inventory or
its use or sale;
(f) Inventory that is subject to any licensing,
patent, royalty, trademark, trade name or copyright agreement
with any third party from whom the Borrower has received
notice of a dispute in respect of any such agreement;
(g) Inventory located outside the United States;
(h) Inventory that is not in the possession of or
under the sole control of the Borrower;
(i) Inventory consisting of work in progress; and
(j) Inventory in respect of which the Security
Agreement, after giving effect to the related filings of
financing statements that have then been made, if any, does
not or has ceased to create a valid and perfected first
priority lien or security interest in favor of the Lender
Parties securing the Secured Obligations.
"Eligible Receivables" means all Receivables of the Borrower
and the Subsidiary Guarantors other than the following classes of
Receivables:
(a) Receivables that do not arise out of sales of
goods or rendering of services in the ordinary course of the
Borrower's business;
(b) Receivables on terms other than those normal or
customary in the Borrower's business;
<PAGE>
12
(c) Receivables owing from any Person that is an
Affiliate of the Borrower;
(d) Receivables more than 90 days past original
invoice date or more than 60 days past the date due;
(e) Receivables owing from any Person that (i) has
disputed liability for any Receivable owing from such Person
or (ii) has otherwise asserted any claim, demand or liability,
whether by action, suit, counterclaim or otherwise;
(f) Receivables owing from any Person that shall take
or be the subject of any action or proceeding of a type
described in Section 6.01(f);
(g) Receivables (i) owing from any Person that is
also a supplier to or creditor of the Borrower or (ii)
representing any manufacturer's or supplier's credits,
discounts, incentive plans or similar arrangements entitling
the Borrower to discounts on future purchase therefrom;
(h) Receivables arising out of sales to account
debtors outside the United States;
(i) Receivables arising out of sales on a
bill-and-hold, guaranteed sale, sale-or-return, sale on
approval or consignment basis or subject to any right of
return, set-off or charge-back;
(j) Receivables owing from an account debtor that is
an agency, department or instrumentality of the United States
or any State thereof; and
(k) Receivables in respect of which the Security
Agreement, after giving effect to the related filings of
financing statements that have then been made, if any, does
not or has ceased to create a valid and perfected first
priority lien or security interest in favor of the Lender
Parties securing the Secured Obligations.
"Environmental Action" means any action, suit, demand, demand
letter, claim, notice of non-compliance or violation, notice of
liability or potential liability, investigation, proceeding, consent
order or consent agreement relating in any way to any Environmental
Law, any Environmental Permit or Hazardous Material, including, without
limitation, (a) by any governmental or regulatory authority for
enforcement, cleanup, removal, response, remedial or other actions or
damages and (b) by any governmental or regulatory authority or third
party for damages, contribution, indemnification, cost recovery,
compensation or injunctive relief.
<PAGE>
13
"Environmental Law" means any federal, state, local or foreign
statute, law, ordinance, rule, regulation, code, order, writ, judgment,
injunction, decree or judicial or agency interpretation, policy or
guidance that has the force and effect of law relating to pollution or
protection of the environment, public or employee health and safety or
natural resources, including, without limitation, those relating to the
use, handling, transportation, treatment, storage, disposal, release or
discharge of Hazardous Materials.
"Environmental Permit" means any permit, approval,
identification number, license or other authorization required under
any Environmental Law.
"Equity" has the meaning specified in Section 3.01(f).
"Equity Investors" means J.W. Childs and its Affiliates and
co-investors, Fenway Partners Capital Fund, L.P., Fleet Equity Partners
and its Affiliates, certain members of management of the Borrower and
certain members of the Board of Directors of Holding.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
"ERISA Affiliate" means any Person that for purposes of Title
IV of ERISA is a member of the controlled group of any Loan Party, or
under common control with any Loan Party, within the meaning of Section
414 of the Internal Revenue Code.
"ERISA Event" means (a) (i) the occurrence of a reportable
event, within the meaning of Section 4043 of ERISA, with respect to any
Plan unless the 30-day notice requirement with respect to such event
has been waived by the PBGC, or (ii) the requirements of subsection (1)
of Section 4043(b) of ERISA (without regard to subsection (2) of such
Section) are met with respect to a contributing sponsor, as defined in
Section 4001(a)(13) of ERISA, of a Plan, and an event described in
paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA is
reasonably expected to occur with respect to such Plan within the
following 30 days; (b) the application for a minimum funding waiver
with respect to a Plan; (c) the provision by the administrator of any
Plan of a notice of intent to terminate such Plan, pursuant to Section
4041(a)(2) of ERISA (including any such notice with respect to a plan
amendment referred to in Section 4041(e) of ERISA); (d) the cessation
of operations at a facility of any Loan Party or any ERISA Affiliate in
the circumstances described in Section 4062(e) of ERISA; (e) the
withdrawal by any Loan Party or any ERISA Affiliate from a Multiple
Employer Plan during a plan year for which it was a substantial
employer, as defined in Section 4001(a)(2) of ERISA; (f) the conditions
<PAGE>
14
for imposition of a lien under Section 302(f) of ERISA shall have been
met with respect to any Plan; (g) the adoption of an amendment to a
Plan requiring the provision of security to such Plan pursuant to
Section 307 of ERISA; or (h) the institution by the PBGC of proceedings
to terminate a Plan pursuant to Section 4042 of ERISA, or the
occurrence of any event or condition described in Section 4042 of ERISA
that constitutes grounds for the termination of, or the appointment of
a trustee to administer, such Plan.
"Eurocurrency Liabilities" has the meaning specified in
Regulation D of the Board of Governors of the Federal Reserve System,
as in effect from time to time.
"Eurodollar Lending Office" means, with respect to any Lender
Party, the office of such Lender Party specified as its "Eurodollar
Lending Office" opposite its name on Schedule I hereto or in the
Assignment and Acceptance pursuant to which it became a Lender Party
(or, if no such office is specified, its Domestic Lending Office), or
such other office of such Lender Party as such Lender Party may from
time to time specify to the Borrower and the Administrative Agent.
"Eurodollar Rate" means, for any Interest Period for all
Eurodollar Rate Advances comprising part of the same Borrowing, an
interest rate per annum (rounded upward, if necessary, to the nearest
1/32 of one percent) as determined on the basis of the offered rates
for deposits in U.S. dollars, for a period of time comparable to such
Interest Period which appears on the Telerate Page 3750 as of 11:00
A.M. (London time) two Business Days before the first day of such
Interest Period, provided, however, that if the rate described above
does not appear on the Telerate System on any applicable interest
determination date, the Eurodollar Rate shall be the rate (rounded
upward as described above, if necessary) for deposits in dollars for a
period substantially equal to the interest period on the Reuters Page
"LIBO" (or such other page as may replace the LIBO page on that service
for the purpose of displaying such rates), as of 11:00 A.M. (London
time) two Business Days before the first day of such Interest Period.
If both the Telerate and Reuters system are unavailable, then
the rate for that date will be determined on the basis of the offered
rates for deposits in U.S. dollars for a period of time comparable to
such Interest Period which are offered by four major banks in the
London interbank market at approximately 11:00 A.M. (London time) two
Business Days before the first day of such Interest Period as selected
by the Administrative Agent. The principal London office of each of the
four major London banks will be requested to provide a quotation of its
U.S. dollar deposit offered rate. If at least two such quotations are
provided, the rate for that date will be the arithmetic mean of the
quotations. If fewer than two quotations are provided as requested, the
rate for that date will be determined on the basis of the rates quoted
for loans in U.S. dollars to leading European banks for a period of
time comparable to such Interest Period offered by major banks in New
York City at approximately 11:00 A.M. (New York City time) two Business
Days before the first day of such Interest
<PAGE>
15
Period. In the event that the Administrative Agent is unable to obtain
any such quotation as provided above, it will be deemed that the
Eurodollar Rate for such Interest Rate cannot be determined.
In the event that the Board of Governors of the Federal
Reserve System shall impose a Eurodollar Rate Reserve Percentage with
respect to Eurocurrency Liabilities, the Eurodollar Rate for an
Interest Period shall be equal to the amount determined above for such
Interest Period divided by a percentage equal to 100% minus the
Eurodollar Rate Reserve Percentage for such Interest Period.
"Eurodollar Rate Advance" means an Advance that bears interest
as provided in Section 2.07(a)(ii).
"Eurodollar Rate Reserve Percentage" for any Interest Period
for all Eurodollar Rate Advances comprising part of the same Borrowing
means the reserve percentage applicable two Business Days before the
first day of such Interest Period under regulations issued from time to
time by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement (including,
without limitation, any emergency, supplemental or other marginal
reserve requirement) for a member bank of the Federal Reserve System in
New York City with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities (or with respect to any other
category of liabilities that includes deposits by reference to which
the interest rate on Eurodollar Rate Advances is determined) having a
term equal to such Interest Period.
"Events of Default" has the meaning specified in Section 6.01.
"Excess Cash Flow" means, for any period, the amount by which
(a) the sum of (i) Consolidated net income (or loss) of Holding and its
Subsidiaries for such period the initial Borrowing plus (ii) the
aggregate amount of all non-cash charges deducted in arriving at such
Consolidated net income (or loss) plus (iii) if there was a net
increase in Consolidated Current Liabilities of Holding and its
Subsidiaries during such period, the amount of such net increase
(without taking into account any such increase that arises solely as a
result of Funded Debt becoming a Current Liability during such period)
plus (iv) if there was a net decrease in Consolidated Current Assets
(excluding cash and Cash Equivalents) of Holding and its Subsidiaries
during such period, the amount of such net decrease less (v) the
aggregate amount of all non-cash credits included in arriving at such
Consolidated net income (or loss) less (vi) if there was a net decrease
in Consolidated Current Liabilities of Holding and its Subsidiaries
during such period, the amount of such net decrease less (vii) if there
was a net increase in Consolidated Current Assets (excluding cash and
Cash Equivalents) of Holding and its Subsidiaries during such period,
the amount of such net increase less (viii) the aggregate amount of
cash paid by Holding and its Subsidiaries in respect of Capital
Expenditures during such period less (ix) without duplication, the
aggregate amount of all cash payments made by Holding and its
<PAGE>
16
Subsidiaries in respect of the permanent reduction of Debt (of the type
referred to in clauses (a), (c), (d), (e) and (f) of the definition
thereof) during such period exceeds (b) $2,000,000.
"Existing Credit Agreement" has the meaning specified in the
Preliminary Statements.
"Existing Debt" means Debt of the Borrower and its
Subsidiaries outstanding immediately before the date hereof.
"Existing Lenders" has the meaning specified in the
Preliminary Statements.
"Extension of Credit" means a Borrowing or an issuance of a
Letter of Credit hereunder.
"Extraordinary Receipt" means any cash received by or paid to
or for the account of any Person not in the ordinary course of
business, including, without limitation, tax refunds, pension plan
reversions, proceeds of insurance (other than proceeds of business
interruption insurance to the extent such proceeds constitute
compensation for lost earnings), condemnation awards (and payments in
lieu thereof) and indemnity payments in respect of loss or damage to
equipment, fixed assets or real property; provided, however, that an
Extraordinary Receipt shall not include cash receipts received from
proceeds of insurance, condemnation awards (or payments in lieu
thereof) or indemnity payments to the extent that such proceeds, awards
or payments in respect of loss or damage to equipment, fixed assets or
real property are applied (or in respect of which expenditures were
previously incurred) to replace or repair the equipment, fixed assets
or real property in respect of which such proceeds were received in
accordance with the terms of the Loan Documents, so long as such
application is made within 12 months after the occurrence of such
damage or loss.
"Facility" means the Term Facility, the Revolving Credit
Facility, the Swing Line Facility or the Letter of Credit Facility.
"Federal Funds Rate" means, 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 members 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 that is a
Business Day, the average of the quotations for such day for such
transactions received by the Administrative Agent from three Federal
funds brokers of recognized standing selected by it.
"Fenway Management Agreement" means the Consulting Agreement
dated as of July 3, 1997 between the Borrower, Holding and Fenway
Partners, Inc. as the
<PAGE>
17
same may be amended, modified or otherwise supplemented from time to
time in accordance with the provisions of this Agreement.
"Fiscal Year" means a fiscal year of Holding and its
Consolidated Subsidiaries ending in October or November of any calendar
year.
"Funded Debt" of any Person means Debt in respect of the
Advances, in the case of the Borrower, and all other Debt of such
Person that by its terms matures more than one year after the date of
determination or matures within one year from such date but is
renewable or extendible, at the option of such Person, to a date more
than one year after such date or arises under a revolving credit or
similar agreement that obligates the lender or lenders to extend credit
during a period of more than one year after such date, excluding,
however, all amounts of Funded Debt of such Person required to be paid
or prepaid within one year after the date of determination.
"GAAP" has the meaning specified in Section 1.03.
"Guaranty" has the meaning specified in Section 8.01.
"Hazardous Materials" means (a) petroleum or petroleum
products, radioactive materials, asbestos-containing materials,
polychlorinated biphenyls and radon gas and (b) any other chemicals,
materials or substances designated or classified as hazardous or toxic,
regulated under, any Environmental Law.
"Hedge Agreements" means interest rate swap, cap or collar
agreements, interest rate future or option contracts, currency swap
agreements, currency future or option contracts and other similar
agreements.
"Holding" has the meaning specified in the recital of parties
hereto.
"Indemnified Party" has the meaning specified in Section
8.04(b).
"Initial Issuing Bank" means Fleet.
"Initial Lenders" has the meaning specified in the recital of
parties to this Agreement.
"Insufficiency" means, with respect to any Plan, the amount,
if any, of its unfunded benefit liabilities, as defined in Section
4001(a)(18) of ERISA.
"Interest Period" means, for each Eurodollar Rate Advance
comprising part of the same Borrowing, the period commencing on the
date of such Eurodollar Rate Advance or the date of the Conversion of
any Prime Rate Advance into such Eurodollar Rate Advance, and ending on
the last day of the period selected by the Borrower pursuant to the
provisions below and, thereafter, each subsequent period
<PAGE>
18
commencing on the last day of the immediately preceding Interest Period
and ending on the last day of the period selected by the Borrower
pursuant to the provisions below. The duration of each such Interest
Period shall be one, two, three or six months (or, to the extent
permitted under Section 2.02(c), one week), as the Borrower may, upon
notice received by the Administrative Agent not later than 11:00 A.M.
(Boston, Massachusetts) on the third Business Day prior to the first
day of such Interest Period, select; provided, however, that:
(a) the Borrower may not select any Interest Period
with respect to any Eurodollar Rate Advance under a Facility
that ends after any principal repayment installment date for
such Facility unless, after giving effect to such selection,
the aggregate principal amount of Prime Rate Advances and of
Eurodollar Rate Advances having Interest Periods that end on
or prior to such principal repayment installment date for such
Facility shall be at least equal to the aggregate principal
amount of Advances under such Facility due and payable on or
prior to such date;
(b) Interest Periods commencing on the same date for
Eurodollar Rate Advances comprising part of the same Borrowing
shall be of the same duration;
(c) whenever the last day of any Interest Period
would otherwise occur on a day other than a Business Day, the
last day of such Interest Period shall be extended to occur on
the next succeeding Business Day, provided, however, that, if
such extension would cause the last day of such Interest
Period to occur in the next following calendar month, the last
day of such Interest Period shall occur on the next preceding
Business Day; and
(d) whenever the first day of any Interest Period
occurs on a day of an initial calendar month for which there
is no numerically corresponding day in the calendar month that
succeeds such initial calendar month by the number of months
equal to the number of months in such Interest Period, such
Interest Period shall end on the last Business Day of such
succeeding calendar month.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
"Inventory" means all Inventory referred to in Section 1(b) of
the Security Agreement.
"Investment" in any Person means any loan or advance to such
Person, any purchase or other acquisition of any capital stock or other
ownership or profit interest, warrants, rights, options, obligations or
other securities of such Person, any capital contribution to such
Person or any other investment in such Person, including,
<PAGE>
19
without limitation, any arrangement pursuant to which the investor
incurs Debt of the types referred to in clause (i) or (j) of the
definition of "Debt" in respect of such Person.
"Issuing Bank" means the Initial Issuing Bank and each
Eligible Assignee to which the Letter of Credit Commitment hereunder
has been assigned pursuant to Section 9.07.
"J.W. Childs" means J.W. Childs Equity Partners, L.P.
"L/C Cash Collateral Account" has the meaning specified in the
Security Agreement.
"L/C Related Documents" has the meaning specified in Section
2.04(e)(ii).
"Lender Party" means any Lender, the Issuing Bank or the Swing
Line Bank.
"Lenders" means the Initial Lenders and each Person that shall
become a Lender hereunder pursuant to Section 9.07.
"Letter of Credit" has the meaning specified in Section
2.01(e).
"Letter of Credit Advance" means an advance made by the
Issuing Bank or any Revolving Credit Lender pursuant to Section
2.03(c).
"Letter of Credit Agreement" has the meaning specified in
Section 2.03(a).
"Letter of Credit Commitment" means, with respect to the
Issuing Bank at any time, the amount set forth opposite the Issuing
Bank's name on Schedule I hereto under the caption "Letter of Credit
Commitment" or, if the Issuing Bank has entered into one or more
Assignments and Acceptances, set forth for the Issuing Bank in the
Register maintained by the Administrative Agent pursuant to Section
9.07(d) as the Issuing Bank's "Letter of Credit Commitment", as such
amount may be reduced at or prior to such time pursuant to Section
2.05.
"Letter of Credit Facility" means, at any time, an amount
equal to the amount of the Issuing Bank's Letter of Credit Commitment
at such time, as such amount may be reduced at or prior to such time
pursuant to Section 2.05.
"Lien" means any lien, security interest or other charge or
encumbrance of any kind, or any other type of preferential arrangement,
including, without limitation, the lien or retained security title of a
conditional vendor and any easement, right of way or other encumbrance
on title to real property.
<PAGE>
20
"Loan Documents" means (a) for purposes of this Agreement and
the Notes and any amendment or modification hereof or thereof and for
all other purposes other than for purposes of the Collateral Documents,
(i) this Agreement, (ii) the Notes, (iii) the Collateral Documents,
(iv) each Letter of Credit Agreement and (v) the Subsidiary Guaranty
and (b) for purposes of the Collateral Documents, (i) this Agreement,
(ii) the Notes, (iii) the Collateral Documents, (iv) each Letter of
Credit Agreement and (v) the Subsidiary Guaranty, in each case as
amended or otherwise modified from time to time.
"Loan Parties" means the Borrower, Holding and each Subsidiary
Guarantor.
"Loan Value" means, with respect to (i) any Eligible
Inventory, 65% of the value of such Eligible Inventory and (ii) any
Eligible Receivable, 80% of the unpaid face amount of such Eligible
Receivable.
"Margin Stock" has the meaning specified in Regulation U.
"Material Adverse Change" means any material adverse change in
the business, condition (financial or otherwise), operations,
performance, properties or prospects of any Loan Party and its
Subsidiaries, taken as a whole.
"Material Adverse Effect" means a material adverse effect on
(a) the business, condition (financial or otherwise), operations,
performance, properties or prospects of any Loan Party and its
Subsidiaries, taken as a whole, (b) the rights and remedies of the
Administrative Agent or any Lender Party under any Loan Document or
Related Document or (c) the ability of any Loan Party to perform its
Obligations under any Loan Document or Related Document to which it is
or is to be a party.
"Material Contract" means, with respect to any Person, each
contract to which such Person is a party involving aggregate
consideration payable to or by such Person of $2,000,000 or more in any
year or otherwise material to the business, condition (financial or
otherwise), operations, performance, properties or prospects of such
Person.
"Mortgage" has the meaning specified in Section 5.01(n).
"Multiemployer Plan" means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which any Loan Party or any ERISA
Affiliate is making or accruing an obligation to make contributions, or
has within any of the preceding five plan years made or accrued an
obligation to make contributions.
"Multiple Employer Plan" means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, that (a) is maintained for
employees of any Loan Party or any ERISA Affiliate and at least one
Person other than the Loan Parties and the ERISA Affiliates or (b) was
so maintained and in respect of which any Loan Party or
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21
any ERISA Affiliate could have liability under Section 4064 or 4069 of
ERISA in the event such plan has been or were to be terminated.
"Net Cash Proceeds" means, with respect to any sale, lease,
transfer or other disposition of any asset or the sale or issuance of
any Debt or capital stock or other ownership or profit interest, any
securities convertible into or exchangeable for capital stock or other
ownership or profit interest or any warrants, rights, options or other
securities to acquire capital stock or other ownership or profit
interest by any Person, or any Extraordinary Receipt received by or
paid to or for the account of any Person, the aggregate amount of cash
received from time to time (whether as initial consideration or through
payment or disposition of deferred consideration) by or on behalf of
such Person in connection with such transaction after deducting
therefrom only (without duplication) (a) reasonable and customary
brokerage commissions, underwriting fees and discounts, legal fees,
finder's fees and other similar fees and commissions, in each case to
the extent, but only to the extent, that the amounts so deducted are,
at the time of receipt of such cash, actually paid to a Person that is
not an Affiliate of such Person or any Loan Party or any Affiliate of
any Loan Party, (b) any Debt permitted by Section 5.02(b)(iv)(B), (C)
or (F) and secured by assets being sold in such transaction that is
required to be paid from such proceeds, and (c) income taxes that, as
estimated by the Borrower in good faith, will be required to be paid by
the Borrower and its Subsidiaries in cash as a result of, and within 15
months after, such sale or disposition, in each case specified in
clauses (a), (b) and (c) to the extent, but only to the extent, that
the amounts so deducted are properly attributable to such transaction
or to the asset that is the subject thereof; provided, however, that
Net Cash Proceeds from the sale, lease, transfer or other disposition
of any asset shall not include any amount of cash proceeds received in
connection with such transaction to the extent such cash proceeds are
applied to replace the asset in respect of which such cash proceeds
were received, so long as such application is made within 12 months
after the occurrence of such sale, lease, transfer or other
disposition.
"Nonratable Assignment" means an assignment by a Lender Party
pursuant to Section 9.07(a) of a portion of its rights and obligations
under this Agreement, other than an assignment of a uniform, and not a
varying, percentage of all of the rights and obligations of such Lender
Party under and in respect of all of the Facilities (other than the
Letter of Credit Facility and the Swing Line Facility).
"Note" means a Term Note or a Revolving Credit Note.
"Notice of Borrowing" has the meaning specified in Section
2.02(a).
"Notice of Issuance" has the meaning specified in Section
2.03(a).
"Notice of Renewal" has the meaning specified in Section
2.01(d).
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22
"Notice of Swing Line Borrowing" has the meaning specified in
Section 2.02(b).
"Notice of Termination" has the meaning specified in Section
2.01(d).
"NPL" means the National Priorities List under CERCLA.
"Obligation" means, with respect to any Person, any payment,
performance or other obligation of such Person of any kind, including,
without limitation, any liability of such Person on any claim, whether
or not the right of any creditor to payment in respect of such claim is
reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, disputed, undisputed, legal, equitable, secured or unsecured,
and whether or not such claim is discharged, stayed or otherwise
affected by any proceeding referred to in Section 6.01(f). Without
limiting the generality of the foregoing, the Obligations of the Loan
Parties under the Loan Documents include (a) the obligation to pay
principal, interest, Letter of Credit commissions, charges, expenses,
fees, attorneys' fees and disbursements, indemnities and other amounts
payable by any Loan Party under any Loan Document and (b) the
obligation of any Loan Party to reimburse any amount in respect of any
of the foregoing that any Lender Party, in its sole discretion, may
elect to pay or advance on behalf of such Loan Party.
"OECD" means the Organization for Economic Cooperation and
Development.
"Open Year" has the meaning specified in Section 4.01(bb).
"Other Taxes" has the meaning specified in Section 2.12(b).
"PBGC" means the Pension Benefit Guaranty Corporation (or any
successor).
"Permanent Debt" means the $105,000,000 original principal
amount of 10-5/8% - Senior Notes due 2007 issued by the Borrower.
"Permanent Debt Documents" means the agreements and
instruments which govern the terms of the Permanent Debt, as the same
may be amended, modified or otherwise supplemented from time to time in
accordance with the provisions of this Agreement.
"Permitted Liens" means such of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding
shall have been commenced: (a) Liens for taxes, assessments and
governmental charges or levies to the extent not required to be paid
under Section 5.01(b) hereof; (b) Liens imposed by law, such as
materialmen's, mechanics', carriers', workmen's and repairmen's Liens
and other similar Liens arising in the ordinary course of business, in
each case (i) in existence less than 90 days from the date of creation
thereof or (ii) being contested in good
<PAGE>
23
faith by the Borrower or any Subsidiary in appropriate proceedings (so
long as the Borrower or such Subsidiary shall, in accordance with GAAP,
have set aside on its books adequate reserves with respect thereto);
(c) deposits or pledges made in the ordinary course of business (i) in
connection with, or to secure payment of, workers' compensation,
unemployment insurance, old age pensions or other social security, (ii)
in connection with casualty insurance maintained in accordance with the
provisions of any Loan Document, (iii) to secure the performance of
bids, tenders or leases, (iv) to secure statutory obligations or surety
or appeal bonds or (v) to secure indemnity, performance or other
similar bonds in the ordinary course of business; and (d) easements,
rights of way and other encumbrances on title to real property that do
not render title to the property encumbered thereby unmarketable or
materially adversely affect the use of such property for its present
purposes.
"Person" means an individual, partnership, corporation
(including a business trust), limited liability company, joint stock
company, trust, unincorporated association, joint venture or other
entity, or a government or any political subdivision or agency thereof.
"Plan" means a Single Employer Plan or a Multiple Employer
Plan.
"Pledge Agreement" has the meaning specified in Section
3.01(n)(ix).
"Preferred Stock" means, with respect to any corporation,
capital stock issued by such corporation that is entitled to a
preference or priority over any other capital stock issued by such
corporation upon any distribution of such corporation's assets, whether
by dividend or upon liquidation.
"Prime Rate" means a fluctuating interest rate per annum in
effect from time to time, which rate per annum shall at all times be
equal to the higher of:
(a) the rate of interest announced publicly by Fleet
in Boston, Massachusetts from time to time, as Fleet's prime
rate; and
(b) 1/2 of one percent per annum above the Federal
Funds Rate.
"Prime Rate Advance" means an Advance that bears interest as
provided in Section 2.07(a)(i).
"Pro Forma EBITDA" means for each fiscal quarter ending
closest to July 31, 1997, October 31, 1997, January 31, 1998 and April
30, 1998 the amount set forth on Schedule XII opposite such fiscal
quarter.
"Pro Rata Share" of any amount means, with respect to any
Revolving Credit Lender at any time, the product of such amount times a
fraction the numerator of
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24
which is the amount of such Lender's Revolving Credit Commitment at
such time and the denominator of which is the Revolving Credit Facility
at such time.
"Receivables" means all Receivables referred to in Section
1(c) of the Security Agreement.
"Redeemable" means, with respect to any capital stock or other
ownership or profit interest, Debt or other right or Obligation, any
such right or Obligation that (a) the issuer has undertaken to redeem
on or prior to the Termination Date at a fixed or determinable date or
dates, whether by operation of a sinking fund or otherwise, or upon the
occurrence of a condition not solely within the control of the issuer
or (b) is redeemable at the option of the holder; provided, however,
that the term "Redeemable" shall not include any such right or
Obligation that is redeemable solely by being exchanged for common
stock of the issuer.
"Register" has the meaning specified in Section 9.07(d).
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
"Related Documents" means the Stock Purchase Agreement, the
Stockholders Agreement, the Childs Management Agreement, the Fenway
Management Agreement and the Permanent Debt Documents.
"Required Lenders" means at any time Lenders owed or holding
at least a majority in interest of the sum of (a) the aggregate
principal amount of the Advances outstanding at such time, (b) the
aggregate Available Amount of all Letters of Credit outstanding at such
time, (c) the aggregate unused Commitments under the Term Facility at
such time and (d) the aggregate Unused Revolving Credit Commitments at
such time; provided, however, that if any Lender shall be a Defaulting
Lender at such time, there shall be excluded from the determination of
Required Lenders at such time (A) the aggregate principal amount of the
Advances owing to such Lender (in its capacity as a Lender) and
outstanding at such time, (B) such Lender's Pro Rata Share of the
aggregate Available Amount of all Letters of Credit issued by such
Lender and outstanding at such time, (C) the unused Term Commitments of
such Lender at such time and (D) the Unused Revolving Credit Commitment
of such Lender at such time. For purposes of this definition, the
aggregate principal amount of Swing Line Advances owing to the Swing
Line Bank and of Letter of Credit Advances owing to the Issuing Bank
and the Available Amount of each Letter of Credit shall be considered
to be owed to the Lenders ratably in accordance with their respective
Revolving Credit Commitments.
"Responsible Officer" means any executive officer of any Loan
Party or any of its Subsidiaries.
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25
"Revolving Credit Advance" has the meaning specified in
Section 2.01(b).
"Revolving Credit Borrowing" means a borrowing consisting of
simultaneous Revolving Credit Advances of the same Type made by the
Revolving Credit Lenders.
"Revolving Credit Commitment" means, with respect to any
Revolving Credit Lender at any time, the amount set forth opposite such
Lender's name on Schedule I hereto under the caption "Revolving Credit
Commitment" or, if such Lender has entered into one or more Assignments
and Acceptances, set forth for such Lender in the Register maintained
by the Administrative Agent pursuant to Section 9.07(d) as such
Lender's "Revolving Credit Commitment", as such amount may be reduced
at or prior to such time pursuant to Section 2.05.
"Revolving Credit Facility" means, at any time, the aggregate
amount of the Lenders' Revolving Credit Commitments at such time.
"Revolving Credit Lender" means any Lender that has a
Revolving Credit Commitment.
"Revolving Credit Note" means a promissory note of the
Borrower payable to the order of any Revolving Credit Lender, in
substantially the form of Exhibit A-2 hereto, evidencing the aggregate
indebtedness of the Borrower to such Lender resulting from the
Revolving Credit Advances made by such Lender.
"Secured Obligations" has the meaning specified in the
Security Agreement.
"Secured Parties" means the Administrative Agent and the
Lender Parties.
"Security Agreement" has the meaning specified in Section
3.01(n)(viii).
"Single Employer Plan" means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, that (a) is maintained for
employees of any Loan Party or any ERISA Affiliate and no Person other
than the Loan Parties and the ERISA Affiliates or (b) was so maintained
and in respect of which any Loan Party or any ERISA Affiliate could
have liability under Section 4069 of ERISA in the event such plan has
been or were to be terminated.
"Solvent" and "Solvency" mean, with respect to any Person on a
particular date, that on such date (a) the fair value of the property
of such Person is greater than the total amount of liabilities,
including, without limitation, contingent liabilities, of such Person,
(b) the present fair salable value of the assets of such Person is not
less than the amount that will be required to pay the probable
liability of such Person on its debts as they become absolute and
matured, (c) such Person does not intend to, and does not believe that
it will, incur debts or liabilities beyond such Person's ability to pay
such debts and liabilities as they mature and (d) such Person is not
engaged in
<PAGE>
26
business or a transaction, and is not about to engage in business or a
transaction, for which such Person's property would constitute an
unreasonably small capital. The amount of contingent liabilities at any
time shall be computed as the amount that, in the light of all the
facts and circumstances existing at such time, represents the amount
that can reasonably be expected to become an actual or matured
liability.
"Standby Letter of Credit" means any Letter of Credit issued
under the Letter of Credit Facility, other than a Trade Letter of
Credit.
"Stock Purchase Agreement" has the meaning specified in the
Preliminary
Statements.
"Stockholders Agreement" means the Amended and Restated
Stockholders Agreement dated as of July 3, 1997 among Holding, the
Persons listed as the "JWC Holders" on the signature pages thereof, the
Persons listed as the "Other Holders" on the signature pages thereof
and the Persons listed as the "Management Holders" on the signature
pages thereof, as the same may be amended, modified or otherwise
supplemented from time to time in accordance with the provisions of
this Agreement.
"Subordinated Debt" means any Debt of the Borrower that is
subordinated to the Obligations of the Borrower under the Loan
Documents on, and that otherwise contains, terms and conditions
reasonably satisfactory to the Required Lenders.
"Subsidiary" of any Person means any corporation, partnership,
joint venture, limited liability company, trust or estate of which (or
in which) more than 50% of (a) the issued and outstanding capital stock
having ordinary voting power to elect a majority of the Board of
Directors of such corporation (irrespective of whether at the time
capital stock of any other class or classes of such corporation shall
or might have voting power upon the occurrence of any contingency), (b)
the interest in the capital or profits of such partnership, joint
venture or limited liability company or (c) the beneficial interest in
such trust or estate is at the time directly or indirectly owned or
controlled by such Person, by such Person and one or more of its other
Subsidiaries or by one or more of such Person's other Subsidiaries.
"Subsidiary Guarantor" means the Company and each other
Subsidiary of the Borrower.
"Subsidiary Guaranty" has the meaning set forth in Section
3.01(n)(x).
"Surviving Debt" has the meaning set forth in Section 3.01(g).
"Swing Line Advance" means an advance made by (a) the Swing
Line Bank pursuant to Section 2.01(c) or (b) any Revolving Credit
Lender pursuant to Section 2.02(b).
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27
"Swing Line Bank" means Fleet.
"Swing Line Borrowing" means a borrowing consisting of a Swing
Line Advance made by the Swing Line Bank.
"Swing Line Facility" has the meaning specified in Section
2.01(c).
"Syndication Agent" has the meaning specified in the recital
of parties to this Agreement.
"Tax Certificate" has the meaning specified in Section
5.03(o).
"Taxes" has the meaning specified in Section 2.12(a).
"Term Advance" has the meaning specified in Section 2.01(b).
"Term Borrowing" means a borrowing consisting of simultaneous
Term Advances of the same Type made by the Term Lenders.
"Term Commitment" means, with respect to any Term Lender at
any time, the amount set forth opposite such Lender's name on Schedule
I hereto under the caption "Term Commitment" or, if such Lender has
entered into one or more Assignments and Acceptances, set forth for
such Lender in the Register maintained by the Administrative Agent
pursuant to Section 9.07(d) as such Lender's "Term Commitment", as such
amount may be reduced at or prior to such time pursuant to Section
2.05.
"Term Facility" means, at any time, the aggregate amount of
the Term Lenders' Term Commitments at such time.
"Term Lender" means any Lender that has a Term Commitment.
"Term Note" means a promissory note of the Borrower payable to
the order of any Term Lender, in substantially the form of Exhibit A-1
hereto, evidencing the indebtedness of the Borrower to such Lender
resulting from the Term Advance made by such Lender.
"Termination Date" means the earlier of July 3, 2003 and the
date of termination in whole of the Term Commitments, the Letter of
Credit Commitments and the Revolving Credit Commitments pursuant to
Section 2.05 or 6.01.
"Total Debt to EBITDA" means, for any fiscal quarter of
Holding, a ratio of (A) Debt of Holding and its Subsidiaries (other
than any Debt of Holding that bears interest on a payment-in-kind
basis) as at the end of such fiscal quarter less the sum of cash and
Cash Equivalents held by Holding and its Subsidiaries as at the end of
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28
such fiscal quarter to (B) Consolidated EBITDA for the most recently
completed four fiscal quarters of Holding and its Subsidiaries;
provided, however, that for each fiscal quarter of Holding ending
closest to July 31, 1997, October 31, 1997, January 31, 1998 and April
30, 1998, Consolidated EBITDA shall be calculated for such four fiscal
quarter period by adding (i) Consolidated EBITDA for such period of
Holding and its Subsidiaries, (ii) the Pro Forma EBITDA for such fiscal
quarter and (iii) $3,250,000.
"Trade Letter of Credit" means any Letter of Credit that is
issued under the Letter of Credit Facility for the benefit of a
supplier of Inventory to the Borrower or any of its Subsidiaries to
effect payment for such Inventory.
"Transaction" means the Acquisition, the amendment and
restatement of the Existing Credit Agreement and the issuance of the
Equity.
"Type" refers to the distinction between Advances bearing
interest at the Prime Rate and Advances bearing interest at the
Eurodollar Rate.
"Unused Revolving Credit Commitment" means, with respect to
any Revolving Credit Lender at any time, (a) such Lender's Revolving
Credit Commitment at such time minus (b) the sum of (i) the aggregate
principal amount of all Revolving Credit Advances, Swing Line Advances
and Letter of Credit Advances made by such Lender (in its capacity as a
Lender) and outstanding at such time, plus (ii) such Lender's Pro Rata
Share of (A) the aggregate Available Amount of all Letters of Credit
outstanding at such time, (B) the aggregate principal amount of all
Letter of Credit Advances made by the Issuing Bank pursuant to Section
2.03(c) and outstanding at such time and (C) the aggregate principal
amount of all Swing Line Advances made by the Swing Line Bank pursuant
to Section 2.01(c) and outstanding at such time.
"Voting Stock" means capital stock issued by a corporation, or
equivalent interests in any other Person, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the
election of directors (or persons performing similar functions) of such
Person, even if the right so to vote has been suspended by the
happening of such a contingency.
"Welfare Plan" means a welfare plan, as defined in Section
3(1) of ERISA, that is maintained for employees of any Loan Party or in
respect of which any Loan Party could have liability.
"Withdrawal Liability" has the meaning specified in Part I of
Subtitle E of Title IV of ERISA.
SECTION 1.02. Computation of Time Periods. In this Agreement
in the computation of periods of time from a specified date to a later specified
date, the word
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29
"from" means "from and including" and the words "to" and "until" each mean "to
but excluding".
SECTION 1.03. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles consistent with those applied in the preparation
of the financial statements referred to in Section 4.01(f) ("GAAP").
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
AND THE LETTERS OF CREDIT
SECTION 2.01. The Advances. (a) The Term Advances. Each Term
Lender severally agrees, on the terms and conditions hereinafter set forth, to
make a single advance (a "Term Advance") to the Borrower on the date hereof in
an amount not to exceed such Lender's Term Commitment at such time. The Term
Borrowing shall consist of Term Advances made simultaneously by the Term Lenders
ratably according to their Term Commitments. Amounts borrowed under this Section
2.01(a) and repaid or prepaid may not be reborrowed.
(b) The Revolving Credit Advances. Each Revolving Credit
Lender severally agrees, on the terms and conditions hereinafter set forth, to
make advances (each a "Revolving Credit Advance") to the Borrower from time to
time on any Business Day during the period from the date hereof until the
Termination Date in an amount for each such Advance not to exceed such Lender's
Unused Revolving Credit Commitment at such time. Each Revolving Credit Borrowing
shall be in an aggregate amount of $1,000,000 or an integral multiple of
$250,000 in excess thereof (other than a Borrowing the proceeds of which shall
be used solely to repay or prepay in full outstanding Swing Line Advances or
outstanding Letter of Credit Advances) and shall consist of Revolving Credit
Advances made simultaneously by the Revolving Credit Lenders ratably according
to their Revolving Credit Commitments. Within the limits of each Revolving
Credit Lender's Unused Revolving Credit Commitment in effect from time to time,
the Borrower may borrow under this Section 2.01(b), prepay pursuant to Section
2.06(a) and reborrow under this Section 2.01(b).
(c) The Swing Line Advances. The Borrower may request the
Swing Line Bank to make, and the Swing Line Bank shall make, on the terms and
conditions hereinafter set forth, Swing Line Advances to the Borrower from time
to time on any Business Day during the period from the date hereof until the
Termination Date (i) in an aggregate amount not to exceed at any time
outstanding $5,000,000 (the "Swing Line Facility") and (ii) in an amount for
each such Swing Line Borrowing not to exceed the aggregate of the Unused
Revolving Credit Commitments of the Revolving Credit Lenders at such time. No
Swing Line Advance shall be used for the purpose of funding the payment of
principal of any other Swing Line Advance. Each Swing Line Borrowing shall be in
an amount of $250,000 or an
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30
integral multiple of $100,000 in excess thereof and shall be made as a Prime
Rate Advance. Within the limits of the Swing Line Facility and within the limits
referred to in clause (ii) above, the Borrower may borrow under this Section
2.01(c), repay pursuant to Section 2.04(d) or prepay pursuant to Section 2.06(a)
and reborrow under this Section 2.01(c).
(d) Letters of Credit. The Issuing Bank agrees, on the terms
and conditions hereinafter set forth, to issue letters of credit (the "Letters
of Credit") for the account of the Borrower from time to time on any Business
Day during the period from the date hereof until 45 days before the Termination
Date (i) in an aggregate Available Amount for all Letters of Credit not to
exceed at any time the Issuing Bank's Letter of Credit Commitment at such time
and (ii) in an Available Amount for each such Letter of Credit not to exceed the
Unused Revolving Credit Commitments of the Revolving Credit Lenders at such
time. No Letter of Credit shall have an expiration date (including all rights of
the Borrower or the beneficiary to require renewal) later than the earlier of 45
days before the Termination Date and (A) in the case of a Standby Letter of
Credit one year after the date of issuance thereof, but may by its terms be
renewable annually upon notice (a "Notice of Renewal") given to the Issuing Bank
and the Administrative Agent on or prior to any date for notice of renewal set
forth in such Letter of Credit but in any event at least three Business Days
prior to the date of the proposed renewal of such Standby Letter of Credit and
upon fulfillment of the applicable conditions set forth in Article III unless
the Issuing Bank has notified the Borrower (with a copy to the Administrative
Agent) on or prior to the date for notice of termination set forth in such
Letter of Credit but in any event at least 30 Business Days prior to the date of
automatic renewal of its election not to renew such Standby Letter of Credit (a
"Notice of Termination") and (B) in the case of a Trade Letter of Credit, 45
days after the date of issuance thereof; provided that the terms of each Standby
Letter of Credit that is automatically renewable annually shall (x) require the
Issuing Bank to give the beneficiary named in such Standby Letter of Credit
notice of any Notice of Termination, (y) permit such beneficiary, upon receipt
of such notice, to draw under such Standby Letter of Credit prior to the date
such Standby Letter of Credit otherwise would have been automatically renewed
and (z) not permit the expiration date (after giving effect to any renewal) of
such Standby Letter of Credit in any event to be extended to a date later than
45 days before the Termination Date. If either a Notice of Renewal is not given
by the Borrower or a Notice of Termination is given by the Issuing Bank pursuant
to the immediately preceding sentence, such Standby Letter of Credit shall
expire on the date on which it otherwise would have been automatically renewed;
provided, however, that even in the absence of receipt of a Notice of Renewal
the Issuing Bank may in its discretion, unless instructed to the contrary by the
Administrative Agent or the Borrower, deem that a Notice of Renewal had been
timely delivered and in such case, a Notice of Renewal shall be deemed to have
been so delivered for all purposes under this Agreement. Any "Letters of Credit"
(as defined in the Existing Credit Agreement) that are issued and outstanding on
the date hereof shall be deemed to be Letters of Credit hereunder. Within the
limits of the Letter of Credit Facility, and subject to the limits referred to
above, the Borrower may request the issuance of Letters of Credit under this
Section 2.01(d), repay any Letter of Credit Advances
<PAGE>
31
resulting from drawings thereunder pursuant to Section 2.03(c) and request the
issuance of additional Letters of Credit under this Section 2.01(d).
SECTION 2.02. Making the Advances. (a) Except as otherwise
provided in Section 2.02(b) or 2.03, each Borrowing shall be made on notice,
given not later than 12:00 Noon (Boston, Massachusetts time) on the third
Business Day prior to the date of the proposed Borrowing in the case of a
Borrowing consisting of Eurodollar Rate Advances, or the first Business Day
prior to the date of the proposed Borrowing in the case of a Borrowing
consisting of Prime Rate Advances, by the Borrower to the Administrative Agent,
which shall give to each Appropriate Lender prompt notice thereof by telecopier.
Each such notice of a Borrowing (a "Notice of Borrowing") shall be by telephone,
confirmed immediately in writing or telecopier, in substantially the form of
Exhibit B hereto, specifying therein the requested (i) date of such Borrowing,
(ii) Facility under which such Borrowing is to be made, (iii) Type of Advances
comprising such Borrowing, (iv) aggregate amount of such Borrowing and (v) in
the case of a Borrowing consisting of Eurodollar Rate Advances, initial Interest
Period for each such Advance. Each Appropriate Lender shall, before 11:00 A.M.
(Boston, Massachusetts time) on the date of such Borrowing, make available for
the account of its Applicable Lending Office to the Administrative Agent at the
Administrative Agent's Account, in same day funds, such Lender's ratable portion
of such Borrowing in accordance with the respective Commitments under the
applicable Facility of such Lender and the other Appropriate Lenders. After the
Administrative Agent's receipt of such funds and upon fulfillment of the
applicable conditions set forth in Article III, the Administrative Agent will
make such funds available to the Borrower by crediting the Borrower's Account.
(b) Each Swing Line Borrowing shall be made on notice, given
not later than 12:00 Noon (Boston, Massachusetts time) on the date of the
proposed Swing Line Borrowing, by the Borrower to the Swing Line Bank and the
Administrative Agent. Each such notice of a Swing Line Borrowing (a "Notice of
Swing Line Borrowing") shall be by telephone, confirmed immediately in writing,
or telecopier, specifying therein the requested (i) date of such Borrowing, (ii)
amount of such Borrowing and (iii) maturity of such Borrowing (which maturity
shall be no later than the seventh day after the requested date of such
Borrowing). The Swing Line Bank will make the amount of the requested Swing Line
Advance available to the Administrative Agent at the Administrative Agent's
Account, in same day funds. After the Administrative Agent's receipt of such
funds and upon fulfillment of the applicable conditions set forth in Article
III, the Administrative Agent will make such funds available to the Borrower by
crediting the Borrower's Account. Upon written demand by the Swing Line Bank,
with a copy of such demand to the Administrative Agent, each other Revolving
Credit Lender shall purchase from the Swing Line Bank, and the Swing Line Bank
shall sell and assign to each such other Revolving Credit Lender, such other
Lender's Pro Rata Share of such outstanding Swing Line Advance as of the date of
such demand, by making available for the account of its Applicable Lending
Office to the Administrative Agent for the account of the Swing Line Bank, by
deposit to the Administrative Agent's Account, in same day funds, an amount
equal to the portion of the outstanding principal amount of such Swing Line
Advance to be purchased by such Lender. The Borrower hereby agrees to each such
sale and assignment. Each Revolving Credit Lender agrees to purchase
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its Pro Rata Share of an outstanding Swing Line Advance on (i) the Business Day
on which demand therefor is made by the Swing Line Bank, provided that notice of
such demand is given not later than 11:00 A.M. (Boston, Massachusetts time) on
such Business Day or (ii) the first Business Day next succeeding such demand if
notice of such demand is given after such time. Upon any such assignment by the
Swing Line Bank to any other Revolving Credit Lender of a portion of a Swing
Line Advance, the Swing Line Bank represents and warrants to such other Lender
that the Swing Line Bank is the legal and beneficial owner of such interest
being assigned by it, but makes no other representation or warranty and assumes
no responsibility with respect to such Swing Line Advance, the Loan Documents or
any Loan Party. If and to the extent that any Revolving Credit Lender shall not
have so made the amount of such Swing Line Advance available to the
Administrative Agent, such Revolving Credit Lender agrees to pay to the
Administrative Agent forthwith on demand such amount together with interest
thereon, for each day from the date of demand by the Swing Line Bank until the
date such amount is paid to the Administrative Agent, at the Federal Funds Rate.
If such Lender shall pay to the Administrative Agent such amount for the account
of the Swing Line Bank on any Business Day, such amount so paid in respect of
principal shall constitute a Swing Line Advance made by such Lender on such
Business Day for purposes of this Agreement, and the outstanding principal
amount of the Swing Line Advance made by the Swing Line Bank shall be reduced by
such amount on such Business Day.
(c) Anything in subsection (a) above to the contrary
notwithstanding, (i) the Borrower may select Eurodollar Rate Advances having an
initial Interest Period of one week for the initial Borrowing hereunder, and for
the period from the Closing Date to the date that is the earlier of 30 days
after the Closing Date and the date on which the Administrative Agent notifies
the Borrower and the Lender Parties that the Facilities are fully syndicated,
and, thereafter, the Borrower may select Eurodollar Rate Advances for any
Borrowing if the aggregate amount of such Borrowing is at least $1,000,000 or if
the obligation of the Appropriate Lenders to make Eurodollar Rate Advances shall
not then be suspended pursuant to Section 2.09 or Section 2.10 and (ii) the Term
Advances may not be outstanding as part of more than 5 separate Borrowings and
the Revolving Credit Advances may not be outstanding as part of more than 7
separate Borrowings.
(d) Each Notice of Borrowing and Notice of Swing Line
Borrowing shall be irrevocable and binding on the Borrower. In the case of any
Borrowing that the related Notice of Borrowing specifies is to be comprised of
Eurodollar Rate Advances, if the Borrower fails to fulfill on or before the date
specified in such Notice of Borrowing for such Borrowing the applicable
conditions set forth in Article III and the Advance to be made by such Lender as
part of such Borrowing, as a result of such failure, is not made on such date,
the Borrower will pay to the Administrative Agent for each Appropriate Lender an
amount equal to the present value (calculated in accordance with this Section
2.02(d)) of interest for the Interest Period specified in such Notice of
Borrowing on the amount of such Advance, at a rate per annum equal to the excess
of (a) the Eurodollar Rate that would have been in effect for such Interest
Period over (b) the Eurodollar Rate applicable on the date of determination to a
deemed Interest Period ending on the last day of such Interest Period.
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33
The present value of such additional interest shall be calculated by discounting
the amount of such interest for each day in the Interest Period specified in
such Notice of Borrowing from such day to the date of such repayment or
termination at an interest rate per annum equal to the interest rate determined
pursuant to the preceding sentence, and by adding all such amounts for all such
days during such period. The determination by the Administrative Agent of such
amount of interest shall, in the absence of manifest error, be conclusive.
(e) Unless the Administrative Agent shall have received notice
from an Appropriate Lender prior to the date of any Borrowing under a Facility
under which such Lender has a Commitment that such Lender will not make
available to the Administrative Agent such Lender's ratable portion of such
Borrowing, the Administrative Agent may assume that such Lender has made such
portion available to the Administrative Agent on the date of such Borrowing in
accordance with subsection (a) or (b) of this Section 2.02 and the
Administrative Agent may, in reliance upon such assumption, make available to
the Borrower on such date a corresponding amount. If and to the extent that such
Lender shall not have so made such ratable portion available to the
Administrative Agent, such Lender and the Borrower severally agree to repay or
pay to the Administrative Agent forthwith on demand such corresponding amount
and to pay interest thereon, for each day from the date such amount is made
available to the Borrower until the date such amount is repaid or paid to the
Administrative Agent, at (i) in the case of the Borrower, the interest rate
applicable at such time under Section 2.07 to Advances comprising such Borrowing
and (ii) in the case of such Lender, the Federal Funds Rate. If such Lender
shall pay to the Administrative Agent such corresponding amount, such amount so
paid shall constitute such Lender's Advance as part of such Borrowing for all
purposes.
(f) The failure of any Lender to make the Advance to be made
by it as part of any Borrowing shall not relieve any other Lender of its
obligation, if any, hereunder to make its Advance on the date of such Borrowing,
but no Lender shall be responsible for the failure of any other Lender to make
the Advance to be made by such other Lender on the date of any Borrowing.
SECTION 2.03. Issuance of and Drawings and Reimbursement Under
Letters of Credit. (a) Request for Issuance. Each Letter of Credit shall be
issued upon notice, given not later than 12:00 Noon (Boston, Massachusetts time)
on the third Business Day prior to the date of the proposed issuance of such
Letter of Credit, by the Borrower to the Issuing Bank, which shall give to the
Administrative Agent and each Revolving Credit Lender prompt notice thereof by
telecopier. Each such notice of issuance of a Letter of Credit (a "Notice of
Issuance") shall be by telephone, confirmed immediately in writing or
telecopier, specifying therein the requested (A) date of such issuance (which
shall be a Business Day), (B) Available Amount of such Letter of Credit, (C)
expiration date of such Letter of Credit, (D) name and address of the
beneficiary of such Letter of Credit and (E) form of such Letter of Credit, and
shall be accompanied by such application and agreement for letter of credit as
the Issuing Bank may specify to the Borrower for use in connection with such
requested Letter of Credit (a "Letter of Credit Agreement"). If (x) the
requested form of such Letter of Credit is acceptable to the Issuing Bank in its
sole discretion
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34
and (y) it has not received notice of objection to such issuance from Lenders
holding at least a majority of the Revolving Credit Commitments, the Issuing
Bank will, upon fulfillment of the applicable conditions set forth in Article
III, make such Letter of Credit available to the Borrower at its office referred
to in Section 9.02 or as otherwise agreed with the Borrower in connection with
such issuance. In the event and to the extent that the provisions of any Letter
of Credit Agreement shall conflict with this Agreement, the provisions of this
Agreement shall govern.
(b) Letter of Credit Reports. The Issuing Bank shall furnish
(A) to the Administrative Agent on the first Business Day of each week a written
report summarizing issuance and expiration dates of Letters of Credit issued
during the previous week and drawings during such week under all Letters of
Credit, (B) to each Revolving Credit Lender on the first Business Day of each
month a written report summarizing issuance and expiration dates of Letters of
Credit issued during the preceding month and drawings during such month under
all Letters of Credit and (C) to the Administrative Agent and each Lender on the
first Business Day of each calendar quarter a written report setting forth the
average daily aggregate Available Amount during the preceding calendar quarter
of all Letters of Credit.
(c) Drawing and Reimbursement. The payment by the Issuing Bank
of a draft drawn under any Letter of Credit shall constitute for all purposes of
this Agreement the making by the Issuing Bank of a Letter of Credit Advance,
which shall be a Prime Rate Advance, in the amount of such draft. Upon written
demand by the Issuing Bank, with a copy of such demand to the Administrative
Agent, each Revolving Credit Lender shall purchase from the Issuing Bank, and
the Issuing Bank shall sell and assign to each such Revolving Credit Lender,
such Lender's Pro Rata Share of such outstanding Letter of Credit Advance as of
the date of such purchase, by making available for the account of its Applicable
Lending Office to the Administrative Agent for the account of the Issuing Bank,
by deposit to the Administrative Agent's Account, in same day funds, an amount
equal to the portion of the outstanding principal amount of such Letter of
Credit Advance to be purchased by such Lender. Promptly after receipt thereof,
the Administrative Agent shall transfer such funds to the Issuing Bank. The
Borrower hereby agrees to each such sale and assignment. Each Revolving Credit
Lender agrees to purchase its Pro Rata Share of an outstanding Letter of Credit
Advance on (i) the Business Day on which demand therefor is made by the Issuing
Bank, provided notice of such demand is given not later than 11:00 A.M. (Boston,
Massachusetts time) on such Business Day or (ii) the first Business Day next
succeeding such demand if notice of such demand is given after such time. Upon
any such assignment by the Issuing Bank to any other Revolving Credit Lender of
a portion of a Letter of Credit Advance, the Issuing Bank represents and
warrants to such other Lender that the Issuing Bank is the legal and beneficial
owner of such interest being assigned by it, free and clear of any liens, but
makes no other representation or warranty and assumes no responsibility with
respect to such Letter of Credit Advance, the Loan Documents or any Loan Party.
If and to the extent that any Revolving Credit Lender shall not have so made the
amount of such Letter of Credit Advance available to the Administrative Agent,
such Revolving Credit Lender agrees to pay to the Administrative Agent forthwith
on demand such amount together
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35
with interest thereon, for each day from the date of demand by the Issuing Bank
until the date such amount is paid to the Administrative Agent, at the Federal
Funds Rate for its account or the account of the Issuing Bank, as applicable. If
such Lender shall pay to the Administrative Agent such amount for the account of
the Issuing Bank on any Business Day, such amount so paid in respect of
principal shall constitute a Letter of Credit Advance made by such Lender on
such Business Day for purposes of this Agreement, and the outstanding principal
amount of the Letter of Credit Advance made by the Issuing Bank shall be reduced
by such amount on such Business Day.
(d) Failure to Make Letter of Credit Advances. The failure of
any Lender to make the Letter of Credit Advance to be made by it on the date
specified in Section 2.03(c) shall not relieve any other Lender of its
obligation hereunder to make its Letter of Credit Advance on such date, but no
Lender shall be responsible for the failure of any other Lender to make the
Letter of Credit Advance to be made by such other Lender on such date.
SECTION 2.04. Repayment of Advances. (a) Term Advances. The
Borrower shall repay to the Administrative Agent for the ratable account of the
Term Lenders the aggregate outstanding principal amount of the Term Advances on
the following dates in the amounts indicated (which amounts shall be reduced as
a result of the application of prepayments in accordance with the order of
priority set forth in Section 2.06):
Date Amount
December 31, 1997 $1,500,000
June 30, 1998 $1,500,000
December 31, 1998 $1,500,000
June 30, 1999 $1,500,000
December 31, 1999 $3,000,000
June 30, 2000 $3,000,000
December 31, 2000 $4,000,000
June 30, 2001 $4,000,000
December 31, 2001 $6,000,000
June 30, 2002 $6,000,000
December 31, 2002 $9,000,000
June 30, 2003 $9,000,000
provided, however, that the final principal installment shall be repaid on the
Termination Date and in any event shall be in an amount equal to the aggregate
principal amount of the Term Advances outstanding on such date.
(b) Revolving Credit Advances. The Borrower shall repay to the
Administrative Agent for the ratable account of the Revolving Credit Lenders on
the Termination Date the aggregate outstanding principal amount of the Revolving
Credit Advances then outstanding.
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36
(c) Swing Line Advances. The Borrower shall repay to the
Administrative Agent for the account of the Swing Line Bank and each other
Revolving Credit Lender that has made a Swing Line Advance the outstanding
principal amount of each Swing Line Advance made by each of them on the earlier
of the maturity date specified in the applicable Notice of Swing Line Borrowing
(which maturity shall be no later than the seventh day after the requested date
of such Borrowing) and the Termination Date.
(d) Letter of Credit Advances. (i) The Borrower shall repay to
the Administrative Agent for the account of the Issuing Bank and each other
Revolving Credit Lender that has made a Letter of Credit Advance on the earlier
of demand and the Termination Date.
(ii) The Obligations of the Borrower under this Agreement, any
Letter of Credit Agreement and any other agreement or instrument relating to any
Letter of Credit shall be unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement, such Letter of Credit
Agreement and such other agreement or instrument under all circumstances,
including, without limitation, the following circumstances:
(A) any lack of validity or enforceability of any Loan
Document, any Letter of Credit Agreement, any Letter of Credit or any
other agreement or instrument relating thereto (all of the foregoing
being, collectively, the "L/C Related Documents");
(B) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations of the Borrower in
respect of any L/C Related Document or any other amendment or waiver of
or any consent to departure from all or any of the L/C Related
Documents;
(C) the existence of any claim, set-off, defense or other
right that the Borrower may have at any time against any beneficiary or
any transferee of a Letter of Credit (or any Persons for whom any such
beneficiary or any such transferee may be acting), the Issuing Bank or
any other Person, whether in connection with the transactions
contemplated by the L/C Related Documents or any unrelated transaction;
(D) any statement or any other document presented under a
Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(E) payment by the Issuing Bank under a Letter of Credit
against presentation of a draft or certificate that does not strictly
comply with the terms of such Letter of Credit;
(F) any exchange, release or non-perfection of any Collateral
or other collateral, or any release or amendment or waiver of or
consent to departure from the
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37
Guaranty or any other guarantee, for all or any of the Obligations of
the Borrower in respect of the L/C Related Documents; or
(G) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing, including, without limitation, any
other circumstance that might otherwise constitute a defense available
to, or a discharge of, the Borrower or a guarantor (other than the
gross negligence or willful misconduct of the Issuing Bank).
SECTION 2.05. Termination or Reduction of the Commitments. (a)
Optional. The Borrower may, upon at least five Business Days' notice to the
Administrative Agent, terminate in whole or reduce in part the unused portions
of the Term Commitments and the Letter of Credit Facility and the Unused
Revolving Credit Commitments; provided, however, that each partial reduction of
a Facility (i) shall be in an aggregate amount of $1,000,000 or an integral
multiple of $250,000 in excess thereof and (ii) shall be made ratably among the
Appropriate Lenders in accordance with their Commitments with respect to such
Facility.
(b) Mandatory. (i) On the date of the Term Borrowing, after
giving effect to such Term Borrowing, and from time to time thereafter upon each
repayment or prepayment of the Term Advances, the aggregate Term Commitments of
the Term Lenders shall be automatically and permanently reduced, on a pro rata
basis, by an amount equal to the amount by which the aggregate Term Commitments
immediately prior to such reduction exceed the aggregate unpaid principal amount
of the Term Advances then outstanding.
(ii) The Letter of Credit Facility shall be permanently
reduced from time to time on the date of each reduction in the Revolving Credit
Facility by the amount, if any, by which the amount of the Letter of Credit
Facility exceeds the Revolving Credit Facility after giving effect to such
reduction of the Revolving Credit Facility.
SECTION 2.06. Prepayments. (a) Optional. The Borrower may,
upon at least one Business Day's notice in the case of Prime Rate Advances and
three Business Days' notice in the case of Eurodollar Rate Advances, in each
case to the Administrative Agent stating the proposed date and aggregate
principal amount of the prepayment, and if such notice is given the Borrower
shall, prepay the outstanding aggregate principal amount of the Advances
comprising part of the same Borrowing in whole or ratably in part, together with
accrued interest to the date of such prepayment on the aggregate principal
amount prepaid; provided, however, that (x) each partial prepayment (other than
in respect of a prepayment of the Swing Line Advances) shall be in an aggregate
principal amount of $250,000 or an integral multiple of $250,000 in excess
thereof, (y) each partial prepayment of Swing Line Advances shall be in an
aggregate principal amount of $250,000 or an integral multiple of $100,000 in
excess thereof and (z) if any prepayment of a Eurodollar Rate Advance is made on
a date other than the last day of an Interest Period for such Advance the
Borrower shall also pay any amounts owing pursuant to Section 9.04(c). In
respect of each such optional prepayment of the Term Facility, 50% of such
prepayment shall be applied to the
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38
installments of the Term Facility in direct order of maturity and the remaining
50% shall be applied to the installments of the Term Facility in inverse order
of maturity.
(b) Mandatory. (i) The Borrower shall, on the 15th day
following each date on which the Borrower delivers the annual financial
statements pursuant to Section 5.03(d) (commencing with Fiscal Year 1998),
prepay an aggregate principal amount of the Advances comprising part of the same
Borrowings in an amount equal to (x) if the Debt to EBITDA Ratio for the related
Fiscal Year is less than 3:1, 50% of Excess Cash Flow for such Fiscal Year and
(y) at all other times, 75% of Excess Cash Flow for such Fiscal Year. Each such
prepayment shall be applied to the Term Facility; provided, however, that 50% of
such amount shall be applied to the installments of the Term Facility in direct
order of maturity and the remaining 50% shall be applied to the installments of
the Term Facility in inverse order of maturity. Upon the payment in full of the
Term Advances, there shall be no further mandatory prepayments pursuant to this
Section 2.05(b)(i).
(ii) The Borrower shall, on the third Business Day following
the date of receipt of the Net Cash Proceeds by any Loan Party or any of its
Subsidiaries from (A) the sale, lease, transfer or other disposition of any
assets of any Loan Party or any of its Subsidiaries (other than any sale, lease,
transfer or other disposition of assets pursuant to clause (i) of Section
5.02(e)), (B) the incurrence or issuance by any Loan Party or any of its
Subsidiaries of any Debt (other than Debt incurred or issued pursuant to Section
5.02(b)), (C) the sale or issuance after the Effective Date by any Loan Party or
any of its Subsidiaries of any capital stock or other ownership or profit
interest, any securities convertible into or exchangeable for capital stock or
other ownership or profit interest or any warrants, rights or options to acquire
capital stock or other ownership or profit interest (other than (x) the sale or
issuance of common stock of Holdings to new managers of the Borrower and (y) the
issuance of common stock of Holdings to managers of the Borrower upon the
exercise by such managers of Stock options so long as the aggregate amount of
all such issuances and sales shall not exceed $500,000 in any Fiscal Year and
(D) any Extraordinary Receipt received by or paid to or for the account of any
Loan Party or any of its Subsidiaries and not otherwise included in clause (A),
(B) or (C) above, prepay an aggregate principal amount of the Advances
comprising part of the same Borrowings equal to the amount of such Net Cash
Proceeds. Each such prepayment shall be applied ratably to the Term Facility;
provided, however, that 50% of such amount shall be applied to the installments
of the Term Facility in direct order of maturity and the remaining 50% shall be
applied to the installments of the Term Facility in inverse order of maturity.
Upon the payment in full of the Term Advances, there shall be no further
mandatory prepayments pursuant to this Section 2.05(b)(ii).
(iii) The Borrower shall, on each Business Day, prepay an
aggregate principal amount of the Revolving Credit Advances comprising part of
the same Borrowings, the Letter of Credit Advances and the Swing Line Advances
equal to the amount by which (A) the sum of the aggregate principal amount of
(x) the Revolving Credit Advances, (y) the Letter of Credit Advances and (z) the
Swing Line Advances then outstanding plus the aggregate Available Amount of all
Letters of Credit then outstanding exceeds (B) the lesser
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39
of the Revolving Credit Facility and the Loan Value of Eligible Collateral on
such Business Day.
(iv) The Borrower shall, on each Business Day, pay to the
Administrative Agent for deposit in the L/C Cash Collateral Account an amount
sufficient to cause the aggregate amount on deposit in the L/C Cash Collateral
Account to equal the amount by which the aggregate Available Amount of all
Letters of Credit then outstanding exceeds the Letter of Credit Facility on such
Business Day.
(v) Prepayments of the Revolving Credit Facility made pursuant
to clause (iii) above shall be first applied to prepay Letter of Credit Advances
then outstanding until such Advances are paid in full, second applied to prepay
Swing Line Advances then outstanding until such Advances are paid in full, third
applied to prepay Revolving Credit Advances then outstanding comprising part of
the same Borrowings until such Advances are paid in full and fourth deposited in
the L/C Cash Collateral Account to cash collateralize 100% of the Available
Amount of the Letters of Credit then outstanding. Upon the drawing of any Letter
of Credit for which funds are on deposit in the L/C Cash Collateral Account,
such funds shall be applied to reimburse the Issuing Bank or the Revolving
Credit Lenders, as applicable.
(vi) All prepayments under this subsection (b) shall be made
together with accrued interest to the date of such prepayment on the principal
amount prepaid.
SECTION 2.07. Interest. (a) Scheduled Interest. The Borrower
shall pay interest on the unpaid principal amount of each Advance owing to each
Lender from the date of such Advance until such principal amount shall be paid
in full, at the following rates per annum:
(i) Prime Rate Advances. During such periods as such Advance
is a Prime Rate Advance, a rate per annum equal at all times to the sum
of (A) the Prime Rate in effect from time to time plus (B) the
Applicable Margin in effect from time to time, payable in arrears last
day of each March, June, September and December during such periods and
on the date such Prime Rate Advance shall be Converted or paid in full.
(ii) Eurodollar Rate Advances. During such periods as such
Advance is a Eurodollar Rate Advance, a rate per annum equal at all
times during each Interest Period for such Advance to the sum of (A)
the Eurodollar Rate for such Interest Period for such Advance plus (B)
the Applicable Margin in effect on the first day of such Interest
Period, payable in arrears on the last day of such Interest Period and,
if such Interest Period has a duration of more than three months, on
each day that occurs during such Interest Period every three months
from the first day of such Interest Period and on the date such
Eurodollar Rate Advance shall be Converted or paid in full.
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(b) Default Interest. Upon the occurrence and during the
continuance of a Default under Section 6.01(a) or 6.01(f), the Borrower shall
pay interest on (i) the unpaid principal amount of each Advance owing to each
Lender, payable in arrears on the dates referred to in clause (a)(i) or (a)(ii)
above and on demand, at a rate per annum equal at all times to 2% per annum
above the rate per annum required to be paid on such Advance pursuant to clause
(a)(i) or (a)(ii) above and (ii) to the fullest extent permitted by law, the
amount of any interest, fee or other amount payable hereunder that is not paid
when due, from the date such amount shall be due until such amount shall be paid
in full, payable in arrears on the date such amount shall be paid in full and on
demand, at a rate per annum equal at all times to 2% per annum above the rate
per annum required to be paid, in the case of interest, on the Type of Advance
on which such interest has accrued pursuant to clause (a)(i) or (a)(ii) above,
and, in all other cases, on Prime Rate Advances pursuant to clause (a)(i) above.
(c) Notice of Interest Rate. Promptly after receipt of a
Notice of Borrowing pursuant to Section 2.02(a), the Administrative Agent shall
give notice to the Borrower and each Appropriate Lender of the applicable
interest rate determined by the Administrative Agent for purposes of clause
(a)(i) or (ii).
SECTION 2.08. Fees. (a) Commitment Fee. The Borrower shall pay
to the Administrative Agent for the account of the Lenders a commitment fee,
from the date hereof in the case of each Initial Lender and from the effective
date specified in the Assignment and Acceptance pursuant to which it became a
Lender in the case of each other Lender until the Termination Date, payable in
arrears on the date of the initial Borrowing hereunder, thereafter quarterly on
the last Business Day of each March, June, September and December, commencing
September 30, 1997, and on the Termination Date, at a rate equal to the
Applicable Percentage per annum on the average daily unused portion of each
Appropriate Lender's Term Commitment and on the sum of the average daily Unused
Revolving Credit Commitment of such Lender plus its Pro Rata Share of the
average daily outstanding Swing Line Advances during such quarter; provided,
however, that no commitment fee shall accrue on any of the Commitments of a
Defaulting Lender so long as such Lender shall be a Defaulting Lender.
(b) Letter of Credit Fees, Etc. (i) The Borrower shall pay to
the Administrative Agent for the account of each Revolving Credit Lender a
commission, payable in arrears quarterly on the last Business Day of each March,
June, September and December, commencing September 30, 1997, and on the earliest
to occur of the full drawing expiration, termination or cancellation of any such
Letter of Credit and on the Termination Date, on such Lender's Pro Rata Share of
the average daily aggregate Available Amount during such quarter of all Letters
of Credit outstanding from time to time at a rate per annum equal to the
Applicable Margin in effect from time to time for Eurodollar Advances comprising
a Revolving Credit Borrowing.
(ii) The Borrower shall pay to the Issuing Bank, for its own
account, such commissions, issuance fees, fronting fees, transfer fees and other
fees and charges in
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connection with the issuance or administration of each Letter of Credit as the
Borrower and the Issuing Bank shall agree.
(c) Administrative Agent's Fees. The Borrower shall pay to the
Administrative Agent for its own account such fees as may from time to time be
agreed between the Borrower and the Administrative Agent.
SECTION 2.09. Conversion of Advances. (a) Optional. The
Borrower may on any Business Day (without the payment of any fee or premium),
upon notice given to the Administrative Agent not later than 12:00 Noon (Boston,
Massachusetts time) on the third Business Day prior to the date of the proposed
Conversion and subject to the provisions of Sections 2.07 and 2.10, Convert all
or any portion of the Advances of one Type comprising the same Borrowing into
Advances of the other Type; provided, however, that any Conversion of Eurodollar
Rate Advances into Prime Rate Advances shall be made only on the last day of an
Interest Period for such Eurodollar Rate Advances, any Conversion of Prime Rate
Advances into Eurodollar Rate Advances shall be in an amount not less than the
minimum amount specified in Section 2.02(c), no Conversion of any Advances shall
result in more separate Borrowings than permitted under Section 2.02(c) and each
Conversion of Advances comprising part of the same Borrowing under any Facility
shall be made ratably among the Appropriate Lenders in accordance with their
Commitments under such Facility. Each such notice of Conversion shall, within
the restrictions specified above, specify (i) the date of such Conversion, (ii)
the Advances to be Converted and (iii) if such Conversion is into Eurodollar
Rate Advances, the duration of the initial Interest Period for such Advances.
Each notice of Conversion shall be irrevocable and binding on the Borrower.
(b) Mandatory. (i) On the date on which the aggregate unpaid
principal amount of Eurodollar Rate Advances comprising any Borrowing shall be
reduced, by payment or prepayment or otherwise, to less than $1,000,000, such
Advances shall automatically Convert at the end of the existing Interest Period
into Prime Rate Advances.
(ii) If the Borrower shall fail to select the duration of any
Interest Period for any Eurodollar Rate Advances in accordance with the
provisions contained in the definition of "Interest Period" in Section 1.01, the
Administrative Agent will forthwith so notify the Borrower and the Appropriate
Lenders, whereupon each such Eurodollar Rate Advance will automatically, on the
last day of the then existing Interest Period therefor, Convert into a Prime
Rate Advance.
(iii) Upon the occurrence and during the continuance of any
Event of Default, (x) each Eurodollar Rate Advance will automatically, on the
last day of the then existing Interest Period therefor, Convert into a Prime
Rate Advance and (y) the obligation of the Lenders to make, or to Convert
Advances into, Eurodollar Rate Advances shall be suspended.
SECTION 2.10. Increased Costs, Etc. (a) If, due to either (i)
the introduction of or any change in or in the interpretation of any law or
regulation after the
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42
date hereof or (ii) the compliance with any guideline or request issued or
promulgated after the date hereof from any central bank or other governmental
authority (whether or not having the force of law), there shall be any increase
in the cost to any Lender Party of agreeing to make or of making, funding or
maintaining Eurodollar Rate Advances or of agreeing to issue or of issuing or
maintaining Letters of Credit or of agreeing to make or of making or maintaining
Letter of Credit Advances (excluding for purposes of this Section 2.10 any such
increased costs resulting from (i) Taxes or Other Taxes (as to which Section
2.12 shall govern) and (ii) changes in the basis of taxation of overall net
income or overall gross income by the United States or by the foreign
jurisdiction or state under the laws of which such Lender Party is organized or
has its Applicable Lending Office or any political subdivision thereof), then
the Borrower shall from time to time, on or prior to the third Business Day
following receipt by the Borrower of the certificate referred to below from such
Lender Party (with a copy of such demand to the Administrative Agent), pay to
the Administrative Agent for the account of such Lender Party additional amounts
sufficient to compensate such Lender Party for such increased cost; provided,
however, that the Borrower shall not be responsible for costs under this Section
2.10(a) arising more than 90 days prior to receipt by the Borrower of the
certificate from the affected Lender pursuant to this Section 2.10(a) with
respect to such costs; provided further that a Lender Party claiming additional
amounts under this Section 2.10(a) agrees to use reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions) to designate a
different Applicable Lending Office if the making of such a designation would
avoid the need for, or reduce the amount of, such increased cost that may
thereafter accrue and would not, in the reasonable judgment of such Lender
Party, be otherwise disadvantageous to such Lender Party. A certificate as to
the amount of such increased cost (together with a schedule setting forth in
reasonable detail the calculation thereof), submitted to the Borrower by such
Lender Party, shall be conclusive and binding for all purposes, absent manifest
error.
(b) If any Lender Party determines that compliance with any
law or regulation or any guideline or request issued or promulgated after the
date hereof from any central bank or other governmental authority (whether or
not having the force of law) affects or would affect the amount of capital
required or expected to be maintained by such Lender Party or any corporation
controlling such Lender Party and that the amount of such capital is increased
by or based upon the existence of such Lender Party's commitment to lend or to
issue Letters of Credit hereunder and other commitments of such type or the
issuance or maintenance of the Letters of Credit (or similar contingent
obligations), then, on or prior to the third Business Day following receipt by
the Borrower of the certificate referred to below from such Lender Party (with a
copy of such demand to the Administrative Agent), the Borrower shall pay to the
Administrative Agent for the account of such Lender Party, from time to time as
specified by such Lender Party, additional amounts sufficient to compensate such
Lender Party in the light of such circumstances, to the extent that such Lender
Party reasonably determines such increase in capital to be allocable to the
existence of such Lender Party's commitment to lend or to issue Letters of
Credit hereunder or to the issuance or maintenance of any Letters of Credit;
provided, however, that, the Borrower shall not be responsible for costs under
this Section 2.10(b) arising more than 90 days prior to receipt by the Borrower
of the certificate from the affected Lender pursuant to this Section 2.10(b)
with
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43
respect to such costs. A certificate as to such amounts (together with a
schedule setting forth in reasonable detail the calculation thereof) submitted
to the Borrower by such Lender Party shall be conclusive and binding for all
purposes, absent manifest error.
(c) If, with respect to any Eurodollar Rate Advances under any
Facility, Lenders owed at least a majority of the then aggregate unpaid
principal amount thereof notify the Administrative Agent that the Eurodollar
Rate for any Interest Period for such Advances will not adequately reflect the
cost to such Lenders of making, funding or maintaining their Eurodollar Rate
Advances for such Interest Period, the Administrative Agent shall forthwith so
notify the Borrower and the Appropriate Lenders, whereupon (i) each such
Eurodollar Rate Advance under any Facility will automatically, on the last day
of the then existing Interest Period therefor, Convert into a Prime Rate Advance
and (ii) the obligation of the Appropriate Lenders to make, or to Convert
Advances into, Eurodollar Rate Advances shall be suspended until the
Administrative Agent shall notify the Borrower that such Lenders have determined
that the circumstances causing such suspension no longer exist.
(d) Notwithstanding any other provision of this Agreement, if
the introduction of or any change in or in the interpretation of any law or
regulation shall make it unlawful, or any central bank or other governmental
authority shall assert that it is unlawful, for any Lender or its Eurodollar
Lending Office to perform its obligations hereunder to make Eurodollar Rate
Advances or to continue to fund or maintain Eurodollar Rate Advances hereunder,
then, on notice thereof and demand therefor by such Lender to the Borrower
through the Administrative Agent, (i) each Eurodollar Rate Advance under each
Facility under which such Lender has a Commitment will automatically, upon such
demand, Convert into a Prime Rate Advance and (ii) the obligation of the
Appropriate Lenders to make, or to Convert Advances into, Eurodollar Rate
Advances shall be suspended until the Administrative Agent shall notify the
Borrower that such Lender has determined that the circumstances causing such
suspension no longer exist; provided, however, that, before making any such
demand, such Lender agrees to use reasonable efforts (consistent with its
internal policy and legal and regulatory restrictions) to designate a different
Eurodollar Lending Office if the making of such a designation would allow such
Lender or its Eurodollar Lending Office to continue to perform its obligations
to make Eurodollar Rate Advances or to continue to fund or maintain Eurodollar
Rate Advances and would not, in the judgment of such Lender, be otherwise
disadvantageous to such Lender.
SECTION 2.11. Payments and Computations. (a) The Borrower
shall make each payment hereunder and under the Notes, irrespective of any right
of counterclaim or set-off (except as otherwise provided in Section 2.15), not
later than 12:00 Noon (Boston, Massachusetts time) on the day when due in U.S.
dollars to the Administrative Agent at the Administrative Agent's Account in
same day funds. The Administrative Agent will promptly thereafter cause like
funds to be distributed (i) if such payment by the Borrower is in respect of
principal, interest, commitment fees or any other Obligation then payable
hereunder and under the Notes to more than one Lender Party, to such Lender
Parties for the account of their respective Applicable Lending Offices ratably
in accordance with the amounts of such respective Obligations then payable to
such Lender Parties and (ii) if such payment by the
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44
Borrower is in respect of any Obligation then payable hereunder to one Lender
Party, to such Lender Party for the account of its Applicable Lending Office, in
each case to be applied in accordance with the terms of this Agreement. Upon its
acceptance of an Assignment and Acceptance and recording of the information
contained therein in the Register pursuant to Section 9.07(d), from and after
the effective date of such Assignment and Acceptance, the Administrative Agent
shall make all payments hereunder and under the Notes in respect of the interest
assigned thereby to the Lender Party assignee thereunder, and the parties to
such Assignment and Acceptance shall make all appropriate adjustments in such
payments for periods prior to such effective date directly between themselves.
(b) If the Administrative Agent receives funds for application
to the Obligations under the Loan Documents under circumstances for which the
Loan Documents do not specify the Advances or the Facility to which, or the
manner in which, such funds are to be applied, the Administrative Agent may, but
shall not be obligated to, elect to distribute such funds to each Lender Party
ratably in accordance with such Lender Party's proportionate share of the
principal amount of all outstanding Advances and the Available Amount of all
Letters of Credit then outstanding, in repayment or prepayment of such of the
outstanding Advances or other Obligations owed to such Lender Party, and for
application to such principal installments, as the Administrative Agent shall
direct.
(c) The Borrower hereby authorizes each Lender Party, if and
to the extent payment owed to such Lender Party is not made when due hereunder
or, in the case of a Lender, under the Note held by such Lender, to charge from
time to time against any or all of the Borrower's accounts with such Lender
Party any amount so due.
(d) All computations of interest, fees and Letter of Credit
commissions shall be made by the Administrative Agent on the basis of a year of
360 days, in each case for the actual number of days (including the first day
but excluding the last day) occurring in the period for which such interest,
fees or commissions are payable. Each determination by the Administrative Agent
of an interest rate, fee or commission hereunder shall be conclusive and binding
for all purposes, absent manifest error.
(e) Whenever any payment hereunder or under the Notes shall be
stated to be due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day, and such extension of time shall in such
case be included in the computation of payment of interest or commitment fee, as
the case may be; provided, however, that, if such extension would cause payment
of interest on or principal of Eurodollar Rate Advances to be made in the next
following calendar month, such payment shall be made on the next preceding
Business Day.
(f) Unless the Administrative Agent shall have received notice
from the Borrower prior to the date on which any payment is due to any Lender
Party hereunder that the Borrower will not make such payment in full, the
Administrative Agent may assume that the Borrower has made such payment in full
to the Administrative Agent on such date and the Administrative Agent may, in
reliance upon such assumption, cause to be distributed to
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45
each such Lender Party on such due date an amount equal to the amount then due
such Lender Party. If and to the extent the Borrower shall not have so made such
payment in full to the Administrative Agent, each such Lender Party shall repay
to the Administrative Agent forthwith on demand such amount distributed to such
Lender Party together with interest thereon, for each day from the date such
amount is distributed to such Lender Party until the date such Lender Party
repays such amount to the Administrative Agent, at the Federal Funds Rate.
SECTION 2.12. Taxes. (a) Any and all payments by the Borrower
hereunder or under the Notes shall be made, in accordance with Section 2.11,
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 Lender Party and the
Administrative Agent, taxes that are imposed on its overall net income by the
United States and taxes that are imposed on its overall net income (and
franchise taxes imposed in lieu thereof) by the state or foreign jurisdiction
under the laws of which such Lender Party or the Administrative Agent (as the
case may be) is organized or any political subdivision thereof and, in the case
of each Lender Party, taxes that are imposed on its overall net income (and
franchise taxes imposed in lieu thereof) by the state or foreign jurisdiction of
such Lender Party's Applicable Lending Office or any political subdivision
thereof (all such non-excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities in respect of payments hereunder or under the Notes
being hereinafter referred to 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 Party or the Administrative Agent, (i) the sum payable
shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 2.12) such Lender Party or the Administrative Agent (as the case
may be) receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and (iii) the
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any present or future
stamp, documentary, excise, property or similar taxes, charges or levies that
arise from any payment made hereunder or under the Notes or from the execution,
delivery or registration of, performing under, or otherwise with respect to,
this Agreement or the Notes (hereinafter referred to as "Other Taxes").
(c) The Borrower shall indemnify each Lender Party and the
Administrative Agent for and hold it harmless against the full amount of Taxes
and Other Taxes, and for the full amount of taxes of any kind imposed by any
jurisdiction on amounts payable under this Section 2.12, imposed on or paid by
such Lender Party or the Administrative Agent (as the case may be) and any
liability (including penalties, additions to tax, interest and expenses) arising
therefrom or with respect thereto. This indemnification shall be made within 30
days from the date such Lender Party or the Administrative Agent (as the case
may be) makes written demand therefor.
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46
(d) Within 30 days after the date of any payment of Taxes, the
Borrower shall furnish to the Administrative Agent, at its address referred to
in Section 9.02, the original or a certified copy of a receipt evidencing such
payment. In the case of any payment hereunder or under the Notes by or on behalf
of the Borrower through an account or branch outside the United States or by or
on behalf of the Borrower by a payor that is not a United States person, if the
Borrower determines that no Taxes are payable in respect thereof, the Borrower
shall furnish, or shall cause such payor to furnish, to the Administrative
Agent, at such address, an opinion of counsel acceptable to the Administrative
Agent stating that such payment is exempt from Taxes. For purposes of this
subsection (d) and subsection (e), the terms "United States" and "United States
person" shall have the meanings specified in Section 7701 of the Internal
Revenue Code.
(e) Each Lender Party organized under the laws of a
jurisdiction outside the United States shall, on or prior to the date of its
execution and delivery of this Agreement in the case of each Initial Lender or
Initial Issuing Bank, as the case may be, and on the date of the Assignment and
Acceptance pursuant to which it becomes a Lender Party in the case of each other
Lender Party, and from time to time thereafter as requested in writing by the
Borrower (but only so long thereafter as such Lender Party remains lawfully able
to do so), provide each of the Administrative Agent and the Borrower with two
original Internal Revenue Service forms 1001 or 4224, as appropriate, or any
successor or other form prescribed by the Internal Revenue Service, certifying
that such Lender Party is exempt from or entitled to a reduced rate of United
States withholding tax on payments pursuant to this Agreement or the Notes. If
the forms provided by a Lender Party at the time such Lender Party first becomes
a party to this Agreement indicates a United States interest withholding tax
rate in excess of zero, withholding tax at such rate shall be considered
excluded from Taxes unless and until such Lender Party provides the appropriate
form certifying that a lesser rate applies, whereupon withholding tax at such
lesser rate only shall be considered excluded from Taxes for periods governed by
such form; provided, however, that, if at the date of the Assignment and
Acceptance pursuant to which a Lender Party becomes a party to this Agreement,
the Lender Party assignor was entitled to payments under subsection (a) in
respect of United States withholding tax with respect to interest paid at such
date, then, to such extent, the term Taxes shall include (in addition to
withholding taxes that may be imposed in the future or other amounts otherwise
includable in Taxes) United States withholding tax, if any, applicable with
respect to the Lender Party assignee on such date. If any form or document
referred to in this subsection (e) requires the disclosure of information, other
than information necessary to compute the tax payable and information required
on the date hereof by Internal Revenue Service form 1001 or 4224, that the
Lender Party reasonably considers to be confidential, the Lender Party shall
give notice thereof to the Borrower and shall not be obligated to include in
such form or document such confidential information.
(f) For any period with respect to which a Lender Party has
failed to provide the Borrower with the appropriate form described in subsection
(e) above (other than if such failure is due to a change in law occurring after
the date on which a form originally was required to be provided or if such form
otherwise is not required under subsection (e)
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47
above), such Lender Party shall not be entitled to indemnification under
subsection (a) or (c) with respect to Taxes imposed by the United States by
reason of such failure; provided, however, that should a Lender Party become
subject to Taxes because of its failure to deliver a form required hereunder,
the Borrower shall take such steps as such Lender Party shall reasonably request
to assist such Lender Party to recover such Taxes.
(g) Any Lender Party claiming any additional amounts payable
pursuant to this Section 2.12 agrees to use reasonable efforts (consistent with
its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Eurodollar Lending Office if the making of such a change
would avoid the need for, or reduce the amount of, any such additional amounts
that may thereafter accrue and would not, in the reasonable judgment of such
Lender Party, be otherwise disadvantageous to such Lender Party.
(h) The Borrower shall not have an indemnification obligation
under subsection (a) or (c) with respect to Taxes imposed by the United States
as a result of a change in law occurring after the date hereof arising more than
90 days prior to receipt by the Borrower of notice from the affected Lender
Party with respect to such change in law.
SECTION 2.13. Sharing of Payments, Etc. If any Lender Party
shall obtain at any time any payment (whether voluntary, involuntary, through
the exercise of any right of set-off, or otherwise) (a) on account of
Obligations due and payable to such Lender Party hereunder and under the Notes
at such time in excess of its ratable share (according to the proportion of (i)
the amount of such Obligations due and payable to such Lender Party at such time
to (ii) the aggregate amount of the Obligations due and payable to all Lender
Parties hereunder and under the Notes at such time) of payments on account of
the Obligations due and payable to all Lender Parties hereunder and under the
Notes at such time obtained by all the Lender Parties at such time or (b) on
account of Obligations owing (but not due and payable) to such Lender Party
hereunder and under the Notes at such time in excess of its ratable share
(according to the proportion of (i) the amount of such Obligations owing to such
Lender Party at such time to (ii) the aggregate amount of the Obligations owing
(but not due and payable) to all Lender Parties hereunder and under the Notes at
such time) of payments on account of the Obligations owing (but not due and
payable) to all Lender Parties hereunder and under the Notes at such time
obtained by all of the Lender Parties at such time, such Lender Party shall
forthwith purchase from the other Lender Parties such participations in the
Obligations due and payable or owing to them, as the case may be, as shall be
necessary to cause such purchasing Lender Party to share the excess payment
ratably with each of them; provided, however, that if all or any portion of such
excess payment is thereafter recovered from such purchasing Lender Party, such
purchase from each other Lender Party shall be rescinded and such other Lender
Party shall repay to the purchasing Lender Party the purchase price to the
extent of such Lender Party's ratable share (according to the proportion of (i)
the purchase price paid to such Lender Party to (ii) the aggregate purchase
price paid to all Lender Parties) of such recovery together with an amount equal
to such Lender Party's ratable share (according to the proportion of (i) the
amount of such other Lender Party's required repayment to (ii) the total amount
so recovered from the purchasing Lender Party) of any interest or other amount
paid or payable by the
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48
purchasing Lender Party in respect of the total amount so recovered. The
Borrower agrees that any Lender Party so purchasing a participation from another
Lender Party pursuant to this Section 2.13 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 Party were the direct
creditor of the Borrower in the amount of such participation.
SECTION 2.14. Use of Proceeds. The proceeds of the Advances
and issuances of Letters of Credit shall be available (and the Borrower agrees
that it shall use such proceeds and Letters of Credit) solely to finance the
Acquisition, pay transaction fees and expenses, to refinance the Existing Debt
under the Existing Credit Agreement and provide working capital for the Borrower
and its Subsidiaries.
SECTION 2.15. Defaulting Lenders. (a) In the event that, at
any one time, (i) any Lender Party shall be a Defaulting Lender, (ii) such
Defaulting Lender shall owe a Defaulted Advance to the Borrower and (iii) the
Borrower shall be required to make any payment hereunder or under any other Loan
Document to or for the account of such Defaulting Lender, then the Borrower may,
so long as no Default (other than a Default which occurs directly as a result of
a Lender being a Defaulting Lender) shall occur or be continuing at such time
and to the fullest extent permitted by applicable law, set off and otherwise
apply the Obligation of the Borrower to make such payment to or for the account
of such Defaulting Lender against the obligation of such Defaulting Lender to
make such Defaulted Advance. In the event that, on any date, the Borrower shall
so set off and otherwise apply its obligation to make any such payment against
the obligation of such Defaulting Lender to make any such Defaulted Advance on
or prior to such date, the amount so set off and otherwise applied by the
Borrower shall constitute for all purposes of this Agreement and the other Loan
Documents an Advance by such Defaulting Lender made on the date under the
Facility pursuant to which such Defaulted Advance was originally required to
have been made pursuant to Section 2.01. Such Advance shall be a Prime Rate
Advance and shall be considered, for all purposes of this Agreement, to comprise
part of the Borrowing in connection with which such Defaulted Advance was
originally required to have been made pursuant to Section 2.01, even if the
other Advances comprising such Borrowing shall be Eurodollar Rate Advances on
the date such Advance is deemed to be made pursuant to this subsection (a). The
Borrower shall notify the Administrative Agent at any time the Borrower
exercises its right of set-off pursuant to this subsection (a) and shall set
forth in such notice (A) the name of the Defaulting Lender and the Defaulted
Advance required to be made by such Defaulting Lender and (B) the amount set off
and otherwise applied in respect of such Defaulted Advance pursuant to this
subsection (a). Any portion of such payment otherwise required to be made by the
Borrower to or for the account of such Defaulting Lender which is paid by the
Borrower, after giving effect to the amount set off and otherwise applied by the
Borrower pursuant to this subsection (a), shall be applied by the Administrative
Agent as specified in subsection (b) or (c) of this Section 2.15.
(b) In the event that, at any one time, (i) any Lender Party
shall be a Defaulting Lender, (ii) such Defaulting Lender shall owe a Defaulted
Amount to the Administrative Agent or any of the other Lender Parties and (iii)
the Borrower shall make
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49
any payment hereunder or under any other Loan Document to the Administrative
Agent for the account of such Defaulting Lender, then the Administrative Agent
may, on its behalf or on behalf of such other Lender Parties and to the fullest
extent permitted by applicable law, apply at such time the amount so paid by the
Borrower to or for the account of such Defaulting Lender to the payment of each
such Defaulted Amount to the extent required to pay such Defaulted Amount. In
the event that the Administrative Agent shall so apply any such amount to the
payment of any such Defaulted Amount on any date, the amount so applied by the
Administrative Agent shall constitute for all purposes of this Agreement and the
other Loan Documents payment, to such extent, of such Defaulted Amount on such
date. Any such amount so applied by the Administrative Agent shall be retained
by the Administrative Agent or distributed by the Administrative Agent to such
other Lender Parties, ratably in accordance with the respective portions of such
Defaulted Amounts payable at such time to the Administrative Agent and such
other Lender Parties and, if the amount of such payment made by the Borrower
shall at such time be insufficient to pay all Defaulted Amounts owing at such
time to the Administrative Agent and the other Lender Parties, in the following
order of priority:
(i) first, to the Administrative Agent for any Defaulted
Amount then owing to the Administrative Agent; and
(ii) second, to any other Lender Parties for any Defaulted
Amounts then owing to such other Lender Parties, ratably in accordance
with such respective Defaulted Amounts then owing to such other Lender
Parties.
Any portion of such amount paid by the Borrower for the account of such
Defaulting Lender remaining, after giving effect to the amount applied by the
Administrative Agent pursuant to this subsection (b), shall be applied by the
Administrative Agent as specified in subsection (c) of this Section 2.15.
(c) In the event that, at any one time, (i) any Lender Party
shall be a Defaulting Lender, (ii) such Defaulting Lender shall not owe a
Defaulted Advance or a Defaulted Amount and (iii) the Borrower, the
Administrative Agent or any other Lender Party shall be required to pay or
distribute any amount hereunder or under any other Loan Document to or for the
account of such Defaulting Lender, then the Borrower or such other Lender Party
shall pay such amount to the Administrative Agent to be held by the
Administrative Agent, to the fullest extent permitted by applicable law, in
escrow or the Administrative Agent shall, to the fullest extent permitted by
applicable law, hold in escrow such amount otherwise held by it. Any funds held
by the Administrative Agent in escrow under this subsection (c) shall be
deposited by the Administrative Agent in an account with Fleet, in the name and
under the control of the Administrative Agent, but subject to the provisions of
this subsection (c). The terms applicable to such account, including the rate of
interest payable with respect to the credit balance of such account from time to
time, shall be Fleet's standard terms applicable to escrow accounts maintained
with it. Any interest credited to such account from time to time shall be held
by the Administrative Agent in escrow under, and applied by the Administrative
Agent from time to time in accordance with
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the provisions of, this subsection (c). The Administrative Agent shall, to the
fullest extent permitted by applicable law, apply all funds so held in escrow
from time to time to the extent necessary to make any Advances required to be
made by such Defaulting Lender and to pay any amount payable by such Defaulting
Lender hereunder and under the other Loan Documents to the Administrative Agent
or any other Lender Party, as and when such Advances or amounts are required to
be made or paid and, if the amount so held in escrow shall at any time be
insufficient to make and pay all such Advances and amounts required to be made
or paid at such time, in the following order of priority:
(i) first, to the Administrative Agent for any amount then due
and payable by such Defaulting Lender to the Administrative Agent
hereunder;
(ii) second, to any other Lender Parties for any amount then
due and payable by such Defaulting Lender to such other Lender Parties
hereunder, ratably in accordance with such respective amounts then due
and payable to such other Lender Parties; and
(iii) third, to the Borrower for any Advance then required to
be made by such Defaulting Lender pursuant to a Commitment of such
Defaulting Lender.
In the event that any Lender Party that is a Defaulting Lender shall, at any
time, cease to be a Defaulting Lender, any funds held by the Administrative
Agent in escrow at such time with respect to such Lender Party shall be
distributed by the Administrative Agent to such Lender Party and applied by such
Lender Party to the Obligations owing to such Lender Party at such time under
this Agreement and the other Loan Documents ratably in accordance with the
respective amounts of such Obligations outstanding at such time.
(d) The rights and remedies against a Defaulting Lender under
this Section 2.15 are in addition to other rights and remedies that the Borrower
may have against such Defaulting Lender with respect to any Defaulted Advance
and that the Administrative Agent or any Lender Party may have against such
Defaulting Lender with respect to any Defaulted Amount.
SECTION 2.16. Removal of Lender. In the event that any Lender
Party demands payment of costs or additional amounts pursuant to Section 2.10 or
Section 2.12 or asserts, pursuant to Section 2.10(d) that it is unlawful for
such Lender Party to make Eurodollar Rate Advances, then (subject to such Lender
Party's right to rescind such demand or assertion within 10 days after the
notice from the Borrower referred to below) the Borrower may, upon 20 days'
prior written notice to such Lender Party and the Administrative Agent, elect to
cause such Lender Party to assign its Advances and Commitments in full to an
assignee institution selected by the Borrower that meets the criteria of an
Eligible Assignee and is reasonably satisfactory to the Administrative Agent, so
long as such Lender Party receives payment in full in cash of the outstanding
principal amount of all Advances made by it and all accrued and unpaid interest
thereon and all other amounts due and payable to such Lender Party as of the
date of such assignment (including
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without limitation amounts owing pursuant to Section 2.10 or 2.3), and in such
case such Lender Party agrees to make such assignment, and such assignee shall
agree to accept such assignment and assume all obligations of such Lender Party
hereunder, in accordance with Section 9.07.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent to Effective Date. Article
II hereof shall be effective on and as of the date (the "Effective Date"), on
which each of the following conditions precedent shall have been satisfied or
duly waived:
(a) The final terms and conditions of the Acquisition,
including, without limitation, all legal and tax aspects thereof, shall
be (i) as described in the Commitment Letter dated June 19, 1997 from
Fleet to the Borrower and otherwise consistent in all material respects
with the description thereof received in writing as part of the
Pre-Commitment Information and (ii) otherwise reasonably satisfactory
to the Lenders.
(b) The Stock Purchase Agreement shall be in full force and
effect.
(c) The Acquisition shall have been consummated in all
material respects in accordance with the Stock Purchase Agreement,
without any waiver or amendment not consented to by the Lender Parties
of any material term, provision or condition set forth therein, and in
compliance with all applicable laws.
(d) The Lender Parties shall be satisfied in their reasonable
discretion that the restrictions in Section 2.03 of the Delaware
General Corporation Law are not applicable to the Acquisition or that
any conditions to avoiding the restrictions contained therein have been
satisfied.
(e) The Lender Parties shall be satisfied with the corporate
and legal structure and capitalization of the Company and each of its
Subsidiaries, including the terms and conditions of the charter, bylaws
and each class of capital stock of the Company and each such Subsidiary
and of each agreement or instrument relating to such structure or
capitalization.
(f) The Lender Parties shall be satisfied with the terms and
conditions of the common equity (the "Equity") provided on or prior to
the consummation of the Acquisition by the Equity Investors; and
Holding shall have received at least $49,750,000 in gross cash proceeds
from the Equity.
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52
(g) The Lender Parties shall be satisfied that all Existing
Debt, other than the Debt of the Borrower set forth on Schedule XIV
(the "Surviving Debt"), has been prepaid, redeemed or defeased in full
or otherwise satisfied and extinguished.
(h) Before giving effect to the Acquisition and the other
transactions contemplated by this Agreement, there shall have occurred
no material adverse change in the business condition (financial or
otherwise), operations, performance, properties or prospects of (x) the
Borrower and its Subsidiaries, taken as a whole, since May 3, 1997 and
(y) the Company and its Subsidiaries, taken as a whole, since May 24,
1997.
(i) There shall exist no action, suit, investigation,
litigation or proceeding affecting any Loan Party or any of its
Subsidiaries pending or threatened before any court, governmental
agency or arbitrator that (i) could reasonably be expected to have a
material adverse effect on the business, condition (financial or
otherwise), operations, performance, properties or prospects of (x) the
Borrower and its Subsidiaries, taken as a whole, or (y) the Company and
its Subsidiaries, taken as a whole, other than the matters described on
Schedule II (the "Disclosed Litigation") or (ii) purports to affect the
legality, validity or enforceability of the Acquisition, this
Agreement, any Note, any other Loan Document, any Related Document or
the consummation of the transactions contemplated hereby, and there
shall have been no material adverse change in the status, or financial
effect on the Borrower, Company or any of their respective
Subsidiaries, of the Disclosed Litigation from that described on
Schedule II.
(j) The Lender Parties shall have been given such access to
the management, records, books of account, contracts and properties of
the Borrower, the Company and their respective Subsidiaries as they
shall have requested and shall have received such financial business
and other information regarding each of the foregoing Persons as they
shall have reasonably requested.
(k) All governmental and third party consents and approvals
necessary in connection with the Transaction and the Facilities shall
have been obtained (without the imposition of any conditions that are
not acceptable to the Lender Parties) and shall remain in effect; all
applicable waiting periods shall have expired without any adverse
action being taken by any competent authority; and no law or regulation
shall be applicable in the reasonable judgment of the Lender Parties
that restrains, prevents or imposes materially adverse conditions upon
the Transaction or the Facilities.
(l) All of the information provided by or on behalf of the
Borrower or by or on behalf of the Company to the Administrative Agent
and the Lender Parties prior to their commitment in respect of the
Facilities (the "Pre-Commitment Information") shall be true and correct
in all material respects; and no additional information shall have come
to the attention of the Administrative Agent or the Lender Parties that
is
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53
inconsistent in any material respect with the Pre-Commitment
Information or that could reasonably be expected to have a Material
Adverse Effect.
(m) The Borrower shall have paid all accrued fees of the
Administrative Agent and the Lender Parties.
(n) The Administrative Agent shall have received on or before
the Effective Date the following, each dated such day (unless otherwise
specified), in form and substance satisfactory to the Lender Parties
(unless otherwise specified) and (except for the Notes) in sufficient
copies for each Lender Party:
(i) The Notes payable to the order of the Lenders.
(ii) Certified copies of the resolutions of the Board
of Directors of the Borrower and each other Loan Party
approving the Acquisition, this Agreement, the Notes, each
other Loan Document and each Related Document to which it is
or is to be a party, and of all documents evidencing other
necessary corporate action and governmental and other third
party approvals and consents, if any, with respect to the
Acquisition, this Agreement, the Notes, each other Loan
Document and each Related Document.
(iii) A copy of the charter of the Borrower and each
other Loan Party and each amendment thereto, certified (as of
a date reasonably near the Effective Date) by the Secretary of
State of the jurisdiction of its incorporation as being a true
and correct copy thereof.
(iv) A copy of a certificate of the Secretary of
State of the jurisdiction of its incorporation, dated
reasonably near the Effective Date, listing the charter of the
Borrower and each other Loan Party and each amendment thereto
on file in his office and certifying that (A) such amendments
are the only amendments to the Borrower's or such other Loan
Party's charter on file in his office, (B) the Borrower and
each other Loan Party have paid all franchise taxes to the
date of such certificate and (C) the Borrower and each other
Loan Party are duly incorporated and in good standing under
the laws of the State of the jurisdiction of its
incorporation.
(v) A copy of a certificate of the Secretary of State
of each of the State of Ohio and the State of Iowa, dated
reasonably near the Effective Date, stating that the Borrower
is duly qualified and in good standing as a foreign
corporation in such State and has filed all annual reports
required to be filed to the date of such certificate.
(vi) A certificate of the Borrower and each other
Loan Party, signed on behalf of the Borrower and such other
Loan Party by its President or a Vice President and its
Secretary or any Assistant Secretary, dated the Effective
<PAGE>
54
Date (the statements made in which certificate shall be true
on and as of the Effective Date), certifying as to (A) the
absence of any amendments to the charter of the Borrower or
such other Loan Party since the date of the Secretary of
State's certificate referred to in Section 3.01(n)(iii), (B) a
true and correct copy of the bylaws of the Borrower and such
other Loan Party as in effect on the Effective Date, (C) the
due incorporation and good standing of the Borrower and such
other Loan Party as a corporation organized under the laws of
the State of Delaware, and the absence of any proceeding for
the dissolution or liquidation of the Borrower, the Company or
such other Loan Party, (D) the truth of the representations
and warranties contained in the Loan Documents as though made
on and as of the Effective Date and (E) the absence of any
event occurring and continuing, or resulting from the initial
Borrowing occurring on the Effective Date, that constitutes a
Default.
(vii) A certificate of the Secretary or an Assistant
Secretary of the Borrower and each other Loan Party certifying
the names and true signatures of the officers of the Borrower
and such other Loan Party authorized to sign this Agreement,
the Notes, each other Loan Document and each Related Document
to which they are or are to be parties and the other documents
to be delivered hereunder and thereunder.
(viii) An amended and restated security agreement in
substantially the form of Exhibit D (as amended, supplemented
or otherwise modified from time to time in accordance with its
terms, the "Security Agreement"), duly executed by the
Borrower and the Company, together with:
(A) certificates representing the Pledged
Shares referred to therein accompanied by undated
stock powers executed in blank and instruments
evidencing the Pledged Debt referred to therein
indorsed in blank,
(B) acknowledgment copies or stamped receipt
copies of proper financing statements, duly filed on
or before the Effective Date under the Uniform
Commercial Code of all jurisdictions that the
Administrative Agent may deem necessary or desirable
in order to perfect and protect the first priority
liens and security interests created under the
Security Agreement, covering the Collateral described
in the Security Agreement,
(C) completed requests for information,
dated on or before the Effective Date, listing the
financing statements referred to in clause (B) above
and all other effective financing statements filed in
the jurisdictions referred to in clause (B) above
that name the Company as debtor, together with copies
of such other financing statements,
<PAGE>
55
(D) evidence of the completion of all other
recordings and filings of or with respect to the
Security Agreement that the Administrative Agent may
deem necessary or desirable in order to perfect and
protect the Liens created thereby,
(E) evidence of the insurance required by
the terms of the Security Agreement,
(F) copies of the Assigned Agreements
referred to in the Security Agreement, and
(G) evidence that all other action that the
Administrative Agent may deem necessary or desirable
in order to perfect and protect the first priority
liens and security interests created under the
Security Agreement has been taken.
(ix) An amended and restated pledge agreement in
substantially the form of Exhibit E (as amended, supplemented
or otherwise modified from time to time in accordance with its
terms the "Pledge Agreement"), duly executed by Holding,
together with
(A) certificates representing the Pledged
Shares referred to therein accompanied by undated
stock powers executed in blank,
(B) acknowledgment copies or stamped receipt
copies of prior financing statements, duly filed on
or before the Effective Date under the Uniform
Commercial Code of all jurisdictions that the
Administrative Agent may deem necessary or desirable
in order to perfect and protect the first priority
liens and security interest created under the Pledge
Agreement, covering the Collateral, described in the
Pledge Agreement,
(C) completed requests for information,
dated on or before the Effective Date, listing the
financing statements referred to in clause (B) above
and all other effective financing statements field in
the jurisdictions referred to in clause (B) above
that name Holding as debtor, together with copies of
such other financing statements, and
(D) evidence that all other action that the
Administrative Agent may deem necessary or desirable
to perfect and protect the first priority liens and
security interests created under the Pledge Agreement
has been taken.
<PAGE>
56
(x) A subsidiary guaranty in substantially the form
of Exhibit F (as amended, supplemented or otherwise modified
from time to time in accordance with its terms, the
"Subsidiary Guaranty"), duly executed by the Company.
(xi) Certified copies of each of the Related
Documents in existence on such date, duly executed by the
parties thereto and in form and substance satisfactory to the
Lender Parties, together with all agreements, instruments and
other documents delivered in connection therewith, in each
case certified by a Responsible Officer.
(xii) Certificates, in substantially the form of
Exhibit G, attesting to the Solvency of each Loan Party after
giving effect to the Acquisition and the other transactions
contemplated hereby, from its chief financial officer.
(xiii) Evidence of insurance naming the
Administrative Agent as insured and loss payee with such
responsible and reputable insurance companies or associations,
and in such amounts and covering such risks, as is
satisfactory to the Lender Parties, including, without
limitation, business interruption insurance.
(xiv) Certified copies of each employment agreement
and other compensation arrangement with each executive officer
of any Loan Party or any of its Subsidiaries.
(xv) Certified copies of all Material Contracts of
each Loan Party and its Subsidiaries, in each case certified
by a Responsible Officer.
(xvi) A Borrowing Base Certificate.
(xvii) A favorable opinion of Sullivan & Worcester,
counsel for the Borrower and Holding, in substantially the
form of Exhibit H hereto and as to such other matter as any
Lender Party through the Administrative Agent may reasonably
request.
(xviii) A favorable opinion of Dickinson, Mackaman,
Tyler & Hagen, P.C., local counsel to the Loan Parties in the
State of Iowa, in substantially the form of Exhibit I hereto
and as to such other matters as any Lender Party through the
Administrative Agent may reasonably request.
(xix) A favorable opinion of Shearman & Sterling,
counsel for the Administrative Agent, in form and substance
satisfactory to the Administrative Agent.
SECTION 3.02. Conditions Precedent to Each Borrowing and
Issuance. The obligation of each Appropriate Lender to make an Advance (other
than a Letter of Credit
<PAGE>
57
Advance made by the Issuing Bank or a Revolving Credit Lender pursuant to
Section 2.03(c) and a Swing Line Advance made by a Revolving Credit Lender
pursuant to Section 2.02(b)) on the occasion of each Borrowing (including the
initial Borrowing), and the obligation of the Issuing Bank to issue a Letter of
Credit (including the initial issuance) or renew a Letter of Credit and the
right of the Borrower to request a Swing Line Borrowing, shall be subject to the
further conditions precedent that on the date of such Borrowing or issuance or
renewal (a) the following statements shall be true (and each of the giving of
the applicable Notice of Borrowing, Notice of Swing Line Borrowing, Notice of
Issuance or Notice of Renewal and the acceptance by the Borrower of the proceeds
of such Borrowing or of such Letter of Credit or the renewal of such Letter of
Credit shall constitute a representation and warranty by the Borrower that both
on the date of such notice and on the date of such Borrowing or issuance or
renewal such statements are true):
(i) the representations and warranties contained in each Loan
Document are correct on and as of such date, before and after giving
effect to such Borrowing or issuance or renewal and to the application
of the proceeds therefrom, as though made on and as of such date other
than any such representations or warranties that, by their terms, refer
to a specific date other than the date of such Borrowing or issuance or
renewal, in which case as of such specific date;
(ii) no event has occurred and is continuing, or would result
from such Borrowing or issuance or renewal or from the application of
the proceeds therefrom, that constitutes a Default; and
(iii) for each Revolving Credit Advance or Swing Line Advance
made by the Swing Line Bank or issuance or renewal of any Letter of
Credit, the sum of the Loan Values of the Eligible Collateral exceeds
the aggregate principal amount of the Revolving Credit Advances plus
Swing Line Advances plus Letter of Credit Advances to be outstanding
plus the aggregate Available Amount of all Letters of Credit then
outstanding after giving effect to such Advance or issuance or renewal,
respectively;
and (b) the Administrative Agent shall have received such other approvals,
opinions or documents as any Appropriate Lender through the Administrative Agent
may reasonably request.
SECTION 3.03. Determinations Under Section 3.01. For purposes
of determining compliance with the conditions specified in Section 3.01, each
Lender Party shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or satisfactory to the Lender Parties unless an
officer of the Administrative Agent responsible for the transactions
contemplated by the Loan Documents shall have received notice from such Lender
Party prior to the earlier of the initial Borrowing or the initial issuance of a
Letter of Credit specifying its objection thereto and if such earlier event
consists of a Borrowing, such Lender Party shall not have made available to the
Administrative Agent such Lender Party's ratable portion of such Borrowing.
<PAGE>
58
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties. Each of Holding
and the Borrower represents and warrants as follows:
(a) Each Loan Party (i) is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation, (ii) is duly qualified and in good
standing as a foreign corporation in each other jurisdiction in which
it owns or leases property or in which the conduct of its business
requires it to so qualify or be licensed except where the failure to so
qualify or be licensed is not reasonably likely to have a Material
Adverse Effect and (iii) has all requisite corporate power and
authority (including, without limitation, all governmental licenses,
permits and other approvals) to own or lease and operate its properties
and to carry on its business as now conducted and as proposed to be
conducted. All of the outstanding capital stock of the Company has been
validly issued, is fully paid and non-assessable and, after giving
effect to the Acquisition, is owned by the Borrower free and clear of
all Liens, except those created under the Collateral Documents; and all
of the outstanding capital stock of the Borrower has been validly
issued, is fully paid and non-assessable and is owned by Holding, free
and clear of all Liens, except those created under the Collateral
Documents.
(b) Set forth on Schedule III hereto is a complete and
accurate list of all Subsidiaries of each Loan Party, showing as of the
date hereof (as to each such Subsidiary) the jurisdiction of its
incorporation, the number of shares of each class of capital stock
authorized, and the number outstanding, on the date hereof and the
percentage of the outstanding shares of each such class owned (directly
or indirectly) by such Loan Party and the number of shares covered by
all outstanding options, warrants, rights of conversion or purchase and
similar rights at the date hereof. All of the outstanding capital stock
of all of such Subsidiaries has been validly issued, is fully paid and
non-assessable and is owned by such Loan Party or one or more of its
Subsidiaries free and clear of all Liens, except those created under
the Collateral Documents. Each such Subsidiary (i) is a corporation
duly organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation, (ii) is duly qualified and in
good standing as a foreign corporation in each other jurisdiction in
which it owns or leases property or in which the conduct of its
business requires it to so qualify or be licensed except where the
failure to so qualify or be licensed is not reasonably likely to have a
Material Adverse Effect and (iii) has all requisite corporate power and
authority (including, without limitation, all governmental licenses,
permits and other approvals) to own or lease and operate its properties
and to carry on its business as now conducted and as proposed to be
conducted.
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59
(c) The execution, delivery and performance by each Loan Party
of this Agreement, the Notes, each other Loan Document and each Related
Document to which it is or is to be a party, and the consummation of
the Acquisition and the other transactions contemplated hereby, are
within such Loan Party's corporate powers, have been duly authorized by
all necessary corporate action, and do not (i) contravene such Loan
Party's charter or bylaws, (ii) violate any law (including, without
limitation, the Securities Exchange Act of 1934 and the Racketeer
Influenced and Corrupt Organizations Chapter of the Organized Crime
Control Act of 1970), rule, regulation (including, without limitation,
Regulation X of the Board of Governors of the Federal Reserve System),
order, writ, judgment, injunction, decree, determination or award,
(iii) conflict with or result in the breach of, or constitute a default
under, any contract, loan agreement, indenture, mortgage, deed of
trust, lease or other instrument binding on or affecting any Loan
Party, any of its Subsidiaries or any of their properties or (iv)
except for the Liens created under the Loan Documents, result in or
require the creation or imposition of any Lien upon or with respect to
any of the properties of any Loan Party or any of its Subsidiaries. No
Loan Party or any of its Subsidiaries is in violation of any such law,
rule, regulation, order, writ, judgment, injunction, decree,
determination or award or in breach of any such contract, loan
agreement, indenture, mortgage, deed of trust, lease or other
instrument, the violation or breach of which is reasonably likely to
have a Material Adverse Effect.
(d) As of the date hereof and hereafter, no authorization or
approval or other action by, and no notice to or filing with, any
governmental authority or regulatory body or any other third party is
required for (A) the due execution, delivery, recordation, filing or
performance by any Loan Party of this Agreement, the Notes, any other
Loan Document or any Related Document to which it is or is to be a
party, or for the consummation of the Acquisition or the other
transactions contemplated hereby, (B) the grant by any Loan Party of
the Liens granted by it pursuant to the Collateral Documents, (C) the
perfection or maintenance of the Liens created by the Collateral
Documents (including the priority nature thereof required by the
Collateral Documents) or (D) the exercise by the Administrative Agent
or any Lender Party of its rights under the Loan Documents or the
remedies in respect of the Collateral pursuant to the Collateral
Documents, except for the authorizations, approvals, actions, notices
and filings listed on Schedule IV, all of which have been duly
obtained, taken, given or made and are in full force and effect, other
than any authorizations, approvals, actions, notices and filings which
the failure to obtain, take, give or make would not, in the aggregate,
be reasonably likely to have a Material Adverse Effect. All applicable
waiting periods in connection with the Acquisition and the other
transactions contemplated hereby have expired without any action having
been taken by any competent authority restraining, preventing or
imposing materially adverse conditions upon the Acquisition or the
rights of the Loan Parties or their Subsidiaries freely to transfer or
otherwise dispose of, or to create any Lien on, any properties now
owned or hereafter acquired by any of them.
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60
(e) This Agreement has been, and each of the Notes, each other
Loan Document and each Related Document when delivered hereunder will
have been, duly executed and delivered by each Loan Party thereto. This
Agreement is, and each of the Notes, each other Loan Document and each
Related Document when delivered hereunder will be, the legal, valid and
binding obligation of each Loan Party party thereto, enforceable
against such Loan Party in accordance with its terms.
(f) (i) The Consolidated balance sheet of the Borrower and its
Subsidiaries as at November 2, 1996, and the related Consolidated
statement of income and Consolidated statement of cash flows of the
Borrower and its Subsidiaries for the fiscal year then ended,
accompanied by an opinion of Ernst & Young, LLP, independent public
accountants, and the Consolidated balance sheet of the Borrower and its
Subsidiaries as at May 3, 1997 and the related Consolidated statement
of income and Consolidated statement of cash flows of the Borrower and
its Subsidiaries for the six months then ended, duly certified by the
chief financial officer of the Borrower, copies of which have been
furnished to each Lender Party, fairly present, subject, in the case of
said balance sheet as at May 3, 1997, and said statement of income and
cash flows for the six months then ended, to year-end audit
adjustments, the Consolidated financial condition of the Borrower and
its Subsidiaries as at such date and the Consolidated results of the
operations of the Borrower and its Subsidiaries for the period ended on
such date, all in accordance with generally accepted accounting
principles applied on a consistent basis, and since May 3, 1997, there
has been no Material Adverse Change in respect of the Borrower and its
Subsidiaries, taken as a whole.
(ii) The Consolidated balance sheet of the Company and its
Subsidiaries as at May 24, 1997, and the related Consolidated statement
of income and Consolidated statement of cash flows of the Company and
its Subsidiaries for the fiscal year then ended, accompanied by an
opinion of Deloitte & Touche, independent public accountants, copies of
which have been furnished to each Lender Party, fairly present, the
Consolidated financial condition of the Company and its Subsidiaries as
at such date and the Consolidated results of the operations of the
Company and its Subsidiaries for the period ended on such date, all in
accordance with generally accepted accounting principles applied on a
consistent basis, and since May 24, 1997, there has been no Material
Adverse Change in respect of the Company and its Subsidiaries, taken as
a whole.
(g) The Consolidated forecasted balance sheets, income
statements and cash flows statements of the Borrower and its
Subsidiaries delivered, or to be delivered, to the Lender Parties
pursuant to Section 3.01(l) or 5.03 were prepared in good faith on the
basis of the assumptions stated therein, which assumptions were fair in
the light of conditions existing at the time of delivery of such
forecasts, and represented, at the time of delivery, the Borrower's
best estimate of its future financial performance.
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61
(h) None of the information, exhibits or reports furnished by
any Loan Party to the Administrative Agent or any Lender Party in
connection with the negotiation of the Loan Documents or pursuant to
the terms of the Loan Documents contained any untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements made therein not misleading.
(i) There is no action, suit, investigation, litigation or
proceeding affecting any Loan Party or any of its Subsidiaries,
including any Environmental Action, pending or threatened before any
court, governmental agency or arbitrator that (i) would be reasonably
likely to have a Material Adverse Effect or (ii) purports to affect the
legality, validity or enforceability of the Acquisition, this
Agreement, any Note, any other Loan Document or any Related Document or
the consummation of the transactions contemplated hereby, and there has
been no adverse change in the status, or financial effect on any Loan
Party or any of its Subsidiaries, of the Disclosed Litigation from that
described on Schedule II.
(j) No proceeds of any Advance or drawings under any Letter of
Credit will be used to acquire any equity security of a class that is
registered pursuant to Section 12 of the Securities Exchange Act of
1934.
(k) The Borrower is not engaged in the business of extending
credit for the purpose of purchasing or carrying Margin Stock, and no
proceeds of any Advance or drawings under any Letter of Credit will be
used to purchase or carry any Margin Stock or to extend credit to
others for the purpose of purchasing or carrying any Margin Stock.
(l) Following application of the proceeds of each Advance or
drawing under each Letter of Credit, not more than 25 percent of the
value of the assets (either of the Borrower only or of the Borrower and
its Subsidiaries on a Consolidated basis) subject to the provisions of
Section 5.02(a) or 5.02(e) or subject to any restriction contained in
any agreement or instrument between the Borrower and any Lender Party
or any Affiliate of any Lender Party relating to Debt and within the
scope of Section 6.01(e) will be Margin Stock.
(m) All Plans of the Borrower and its ERISA Affiliates are
listed on Schedule V. No ERISA Event has occurred or is reasonably
expected to occur with respect to any Plan listed on Schedule V that
has resulted in or is reasonably expected to result in a material
liability of any Loan Party or any ERISA Affiliate.
(n) As of the last annual actuarial valuation date, the funded
current liability percentage, as defined in Section 302(d)(8) of ERISA,
of each Plan exceeds 90% and there has been no material adverse change
in the funding status of any such Plan since such date.
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62
(o) Schedule B (Actuarial Information) to the most recent
annual report (Form 5500 Series) for each Plan listed on Schedule V,
copies of which have been filed with the Internal Revenue Service and
furnished to the Lender Parties, is complete and accurate and fairly
presents the funding status of such Plan, and since the date of such
Schedule B there has been no material adverse change in such funding
status.
(p) Neither any Loan Party nor any ERISA Affiliate has
incurred or is reasonably expected to incur any Withdrawal Liability to
any Multiemployer Plan listed on Schedule V.
(q) Neither any Loan Party nor any ERISA Affiliate has been
notified by the sponsor of a Multiemployer Plan listed on Schedule V
that such Multiemployer Plan is in reorganization or has been
terminated, within the meaning of Title IV of ERISA, and no such
Multiemployer Plan is reasonably expected to be in reorganization or to
be terminated, within the meaning of Title IV of ERISA.
(r) Except as set forth in the financial statements referred
to in this Section 4.01 and in Section 5.03, the Loan Parties and their
respective Subsidiaries have no material liability with respect to
"expected post retirement benefit obligations" within the meaning of
Statement of Financial Accounting Standards No. 106.
(s) Neither the business nor the properties of any Loan Party
or any of its Subsidiaries are affected by any fire, explosion,
accident, strike, lockout or other labor dispute, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy or other
casualty (whether or not covered by insurance) that would be reasonably
likely to have a Material Adverse Effect.
(t) Except as disclosed in the Environmental Due Diligence
Investigation, Country General Stores dated June 1997 prepared by
O'Brien & Gere Engineers, Inc. or as otherwise disclosed on Schedule
XV, the operations and properties of each Loan Party and each of its
Subsidiaries comply in all material respects with all applicable
Environmental Laws and Environmental Permits, all past non-compliance
with such Environmental Laws and Environmental Permits has been
resolved without ongoing obligations or costs, and no circumstances
exist that would be reasonably likely to (i) form the basis of an
Environmental Action against any Loan Party or any of its Subsidiaries
or any of their properties that could reasonably be expected to have a
Material Adverse Effect or (ii) cause any such property to be subject
to any restrictions on ownership, occupancy, use or transferability
under any Environmental Law that could reasonably be expected to have a
Material Adverse Effect.
(u) Except as disclosed in the Phase I Environmental Site
Assessment Reports prepared by Dames & Moore for the properties at 3915
Delaware Avenue, Des Moines, Iowa and 650 Meridian Road, Youngstown,
Ohio, dated November 15, 1996, in the Environmental Due Diligence
Investigation, Country General Stores
<PAGE>
63
dated June 1997 prepared by O'Brien & Gere Engineers, Inc., or as
otherwise disclosed on Schedule XV, none of the properties currently or
formerly owned or operated by any Loan Party or any of its Subsidiaries
is listed or proposed for listing on the NPL or on the CERCLIS or any
analogous foreign, state or local list or is adjacent to any such
property other than any such properties that, in the aggregate, would
not be reasonably likely to have a Material Adverse Effect; there are
no and never have been any underground or aboveground storage tanks on
any property currently owned or operated by any Loan Party or any of
its Subsidiaries other than any such storage tanks that would not be
reasonably likely to have a Material Adverse Effect; there are no and
never have been any surface impoundments, septic tanks, pits, sumps or
lagoons in which Hazardous Materials are being or have been treated,
stored or disposed on any property currently or, to the best knowledge
of the Loan Parties and their Subsidiaries, formerly owned or operated
by any Loan Party or any of its Subsidiaries in a manner that would be
reasonably likely to have a Material Adverse Effect; there is no
asbestos or asbestos-containing material on any property currently
owned or operated by any Loan Party or any of its Subsidiaries in a
manner that would be reasonably likely to have a Material Adverse
Effect; and Hazardous Materials have not been released, discharged or
disposed of on any property currently or, to the best knowledge of the
Loan Parties and their Subsidiaries, formerly owned or operated by any
Loan Party or any of its Subsidiaries in a manner, quantity or
concentration that would be reasonably likely to have a Material
Adverse Effect.
(v) Except as disclosed in the Environmental Due Diligence
Investigation, Country General Stores dated June 1997 prepared by
O'Brien & Gere Engineers, Inc. or as otherwise disclosed on Schedule
XV, neither any Loan Party nor any of its Subsidiaries is undertaking,
and has not completed, either individually or together with other
potentially responsible parties, any investigation or assessment or
remedial or response action relating to any actual or threatened
release, discharge or disposal of Hazardous Materials at any site,
location or operation, either voluntarily or pursuant to the order of
any governmental or regulatory authority or the requirements of any
Environmental Law; and all Hazardous Materials generated, used,
treated, handled or stored at, or transported to or from, any property
currently or formerly owned or operated by any Loan Party or any of its
Subsidiaries have been disposed of in a manner not reasonably expected
to result in material liability to any Loan Party or any of its
Subsidiaries.
(w) Neither any Loan Party nor any of its Subsidiaries is a
party to any indenture, loan or credit agreement or any lease or other
agreement or instrument or subject to any charter or corporate
restriction that would be reasonably likely to have a Material Adverse
Effect.
(x) The Collateral Documents create a valid and perfected
security interest in the Collateral having the priority set forth in
such Collateral Documents, securing the payment of the Secured
Obligations, and all filings and other actions necessary or desirable
to perfect and protect such security interest have been duly taken. The
Loan
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Parties are the legal and beneficial owners of the Collateral free and
clear of any Lien, except for the liens and security interests created
or permitted under the Loan Documents.
(y) The Borrower has filed, has caused to be filed or has been
included in all Federal tax returns and all material other tax returns
(state, local and foreign) required to be filed and has paid all taxes
shown thereon to be due, together with applicable interest and
penalties.
(z) The aggregate unpaid amount, as of the date hereof, of
adjustments to the Federal income tax liability of the Borrower
proposed by the Internal Revenue Service with respect to Open Years
does not exceed $500,000. No issues have been raised by the Internal
Revenue Service in respect of Open Years that, in the aggregate, would
be reasonably likely to have a Material Adverse Effect.
(aa) The aggregate unpaid amount, as of the date hereof, of
adjustments to the state, local and foreign tax liability of the
Borrower proposed by all state, local and foreign taxing authorities
(other than amounts arising from adjustments to Federal income tax
returns) does not exceed $500,000. No issues have been raised by such
taxing authorities that, in the aggregate, would be reasonably likely
to have a Material Adverse Effect.
(bb) Neither any Loan Party nor any of its Subsidiaries is an
"investment company", or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company," as such terms are
defined in the Investment Company Act of 1940, as amended. Neither the
making of any Advances, nor the issuance of any Letters of Credit, nor
the application of the proceeds or repayment thereof by the Borrower,
nor the consummation of the other transactions contemplated hereby,
will violate any provision of such Act or any rule, regulation or order
of the Securities and Exchange Commission thereunder.
(cc) Each Loan Party is, individually and together with its
Subsidiaries, Solvent.
(dd) Set forth on Schedule VI hereto is a complete and
accurate list of all Existing Debt, showing as of the date hereof the
principal amount outstanding thereunder.
(ee) Set forth on Schedule VII hereto is a complete and
accurate list of all real property owned by any Loan Party or any of
its Subsidiaries as of the date hereof, showing as of the date hereof
the street address, county or other relevant jurisdiction, state,
record owner and book and estimated fair value thereof. Each Loan Party
or such Subsidiary has good, marketable and insurable fee simple title
to such real property, free and clear of all Liens, other than Liens
created or permitted by the Loan Documents.
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65
(ff) Set forth on Schedule VIII hereto is a complete and
accurate list of all leases of real property under which any Loan Party
or any of its Subsidiaries is the lessee as of the date hereof, showing
as of the date hereof the street address, county or other relevant
jurisdiction, state, lessor, lessee, expiration date and annual rental
cost thereof. To the best of the Borrower's knowledge, each such lease
is the legal, valid and binding obligation of the lessor thereof,
enforceable in accordance with its terms.
(gg) Set forth on Schedule IX hereto is a complete and
accurate list of all Material Contracts of each Loan Party and its
Subsidiaries as of the date hereof, showing as of the date hereof the
parties, subject matter and term thereof. To the best of the Borrower's
knowledge (with respect to parties other than the Loan Parties and
their Subsidiaries), each such Material Contract has been duly
authorized, executed and delivered by all parties thereto, has not been
amended or otherwise modified, is in full force and effect and is
binding upon and enforceable against all parties thereto in accordance
with its terms, and there exists no default under any Material Contract
by any party thereto.
(hh) Set forth on Schedule X hereto is a complete and accurate
list of all Investments held by any Loan Party or any of its
Subsidiaries as of the date hereof, showing as of the date hereof the
amount, obligor or issuer and maturity, if any, thereof.
(ii) Set forth on Schedule XI hereto is a complete and
accurate list of all patents, trademarks, trade names, service marks
and copyrights, and all applications therefor and licenses thereof, of
each Loan Party or any of its Subsidiaries as of the date hereof,
showing as of the date hereof the jurisdiction in which registered, the
registration number, the date of registration and the expiration date.
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. Affirmative Covenants. So long as any Advance
shall remain unpaid, any Letter of Credit shall be outstanding or any Lender
Party shall have any Commitment hereunder, each of Holding and the Borrower
will:
(a) Compliance with Laws, Etc. Comply, and cause each of its
Subsidiaries to comply, in all material respects, with all applicable
laws, rules, regulations and orders, such compliance to include,
without limitation, compliance with ERISA and the Racketeer Influenced
and Corrupt Organizations Chapter of the Organized Crime Control Act of
1970.
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66
(b) Payment of Taxes, Etc. Pay and discharge, and cause each
of its Subsidiaries to pay and discharge, before the same shall become
delinquent, (i) all taxes, assessments and governmental charges or
levies imposed upon it or upon its property and (ii) all lawful claims
that, if unpaid, might by law become a Lien upon its property;
provided, however, that neither the Borrower nor any of its
Subsidiaries shall be required to pay or discharge any such tax,
assessment, charge or claim that is being contested in good faith and
by proper proceedings and as to which appropriate reserves are being
maintained.
(c) Compliance with Environmental Laws. Comply, and cause each
of its Subsidiaries and use all reasonable efforts to cause all lessees
and other Persons operating or occupying its properties to comply, in
all material respects, with all applicable Environmental Laws and
Environmental Permits; obtain and renew and cause each of its
Subsidiaries to obtain and renew all material Environmental Permits
necessary for its operations and properties; and conduct, and cause
each of its Subsidiaries to conduct, any investigation, study, sampling
and testing, and undertake any cleanup, removal, remedial or other
action necessary to remove and clean up all Hazardous Materials from
any of its properties, to the extent required by, and in accordance
with, the requirements of applicable Environmental Laws; provided,
however, that neither the Borrower nor any of its Subsidiaries shall be
required to undertake any such cleanup, removal, remedial or other
action to the extent that its obligation to do so is being contested in
good faith and by proper proceedings and appropriate reserves are being
maintained with respect to such circumstances.
(d) Maintenance of Insurance. Maintain, and cause each of its
Subsidiaries to maintain, insurance with responsible and reputable
insurance companies or associations in such amounts and covering such
risks as is usually carried by companies engaged in similar businesses
and owning similar properties in the same general areas in which the
Borrower or such Subsidiary operates.
(e) Preservation of Corporate Existence, Etc. Preserve and
maintain, and cause each of its Subsidiaries to preserve and maintain,
its existence, legal structure, legal name, rights (charter and
statutory), permits, licenses, approvals, privileges and franchises;
provided, however, that the Company may merge with and into the
Borrower in accordance with Section 5.02(d), provided further that
neither the Borrower nor any of its Subsidiaries shall be required to
preserve any right, permit, license, approval, privilege or franchise
if the Board of Directors of the Borrower or such Subsidiary shall
determine that the preservation thereof is no longer desirable in the
conduct of the business of the Borrower or such Subsidiary, as the case
may be, and that the loss thereof is not disadvantageous in any
material respect to the Borrower, such Subsidiary or the Lender
Parties.
(f) Visitation Rights. At any reasonable time and from time to
time, permit the Administrative Agent or any of the Lender Parties or
any agents or representatives thereof, to examine and make copies of
and abstracts from the records
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67
and books of account of, and visit the properties of, the Borrower and
any of its Subsidiaries, and to discuss the affairs, finances and
accounts of the Borrower and any of its Subsidiaries with any of their
officers or directors and with their independent certified public
accountants, provided that the Borrower shall have received prior
notice of any such discussion with such independent certified public
accountants and shall have the opportunity, at its option, to
participate in such discussion.
(g) Keeping of Books. Keep, and cause each of its Subsidiaries
to keep, proper books of record and account, in which full and correct
entries shall be made of all financial transactions and the assets and
business of the Borrower and each such Subsidiary in accordance with
generally accepted accounting principles in effect from time to time.
(h) Maintenance of Properties, Etc. Maintain and preserve, and
cause each of its Subsidiaries to maintain and preserve, all of its
properties that are used or useful in the conduct of its business in
good working order and condition, ordinary wear and tear excepted.
(i) Performance of Related Documents. Perform and observe all
of the terms and provisions of each Related Document (other than the
Financing Documents) to be performed or observed by it, maintain each
such Related Document in full force and effect, enforce such Related
Document in accordance with its terms, take all such action to such end
as may be from time to time requested by the Administrative Agent and,
upon request of the Administrative Agent, make to each other party to
each such Related Document such demands and requests for information
and reports or for action as the Borrower is entitled to make under
such Related Document.
(j) Transactions with Affiliates. Conduct, and cause each of
its Subsidiaries to conduct, all transactions otherwise permitted under
the Loan Documents with any of their Affiliates on terms that are fair
and reasonable and no less favorable to the Borrower or such Subsidiary
than it would obtain in a comparable arm's-length transaction with a
Person not an Affiliate, other than the performance of its obligations
under the Management Agreement.
(k) Cash Concentration Accounts. Maintain main cash
concentration accounts with Fleet or one or more banks acceptable to
the Administrative Agent that, on or prior to September 3, 1997, have
accepted the assignment of such accounts to the Administrative Agent
pursuant to the Security Agreement.
(l) Termination of Financing Statements. Upon the request of
the Administrative Agent, and at the expense of the Borrower, within 10
days after such request, furnish to the Administrative Agent proper
termination statements on Form UCC-3 covering such financing statements
as the Administrative Agent may
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68
reasonably request that were listed in the completed requests for
information referred to in Sections 3.01(n)(viii)(C) and
3.01(n)(ix)(C).
(m) Deposit Accounts. On or prior to September 3, 1997,
instruct each bank at which a deposit account is maintained to transfer
to a main cash concentration account at the end of each Business Day,
in same day funds, an amount equal to the credit balance of such
deposit account.
(n) Mortgages. On or prior to October 3, 1997, and at the
expense of the Borrower, deliver to the Administrative Agent deeds of
trust, trust deeds, mortgages, leasehold mortgages and leasehold deeds
of trust in form and substance reasonably satisfactory to the
Administrative Agent (as amended, supplemented or otherwise modified
from time to time in accordance with their terms, the "Mortgages") and
covering the properties that the Administrative Agent determines, in
its reasonable judgment, to be necessary or desirable in connection
with the Facilities (provided that, in no event, shall the book value
of any such property be less than $500,000), duly executed by the
Company, together with:
(A) evidence that counterparts of the Mortgages have
been duly recorded on or before October 3, 1997 in all filing
or recording offices that the Administrative Agent may deem
necessary or desirable in order to create a valid first and
subsisting Lien on the property described therein in favor of
the Lender Parties and that all filing and recording taxes and
fees have been paid,
(B) fully paid American Land Title Association
Lender's Extended Coverage title insurance policies (the
"Mortgage Policies") in form and substance, with endorsements
and in amounts reasonably acceptable to the Administrative
Agent, issued, coinsured and reinsured by title insurers,
reasonably acceptable to the Administrative Agent, insuring
the Mortgages to be valid first and subsisting Liens on the
property described therein, free and clear of all defects
(including, but not limited to, mechanics' and materialmen's
Liens) and encumbrances, excepting only Permitted
Encumbrances, and providing for such other affirmative
insurance (including endorsements for future advances under
the Loan Documents and for mechanics' and materialmen's Liens)
and such coinsurance and direct access reinsurance as the
Administrative Agent may reasonably deem necessary or
desirable,
(C) American Land Title Association form surveys;
certified to the Administrative Agent and the issuer of the
Mortgage Policies in a manner reasonably satisfactory to the
Administrative Agent by a land surveyor duly registered and
licensed in the States in which the property described in such
surveys in located and reasonably acceptable to the
Administrative Agent, showing all buildings and other
improvements, any off-site improvements, the location of any
easements, parking spaces, rights of way, building set-back
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69
lines and other dimensional regulations and the absence of
encroachments, either by such improvements or on to such
property, and other defects, other than encroachments and
other defects reasonably acceptable to the Agent,
(D) the Assignments of Leases and Rents referred to
in the Mortgages, duly executed by the Company,
(E) such consents and agreements of lessors and other
third parties, and such estoppel letters and other
confirmations, as the Administrative Agent may reasonably deem
necessary or desirable,
(F) evidence of the insurance required by the terms
of the Mortgages, and
(G) evidence that all other action that the
Administrative Agent may reasonably deem necessary or
desirable in order to create valid first and subsisting Liens
on the property described in the Mortgages has been taken.
(o) Landlord Consents. In the case of the Borrower and the
Company, use their reasonable efforts to deliver, on or prior to
October 3, 1997, at the expense of the Borrower, to the Administrative
Agent consents, in form and substance reasonably satisfactory to the
Administrative Agent, from the landlord under each leasehold in respect
of which the Administrative Agent determines, in its reasonable
judgment, that such a consent is necessary or desirable in connection
with the Facilities, which consents shall provide that the
Administrative Agent has a right to repossess the Inventory located on
such leasehold upon the occurrence and during the continuance of an
Event of Default and such other rights as may be reasonably acceptable
to the Administrative Agent.
(p) New York Opinion. Deliver to the Administrative Agent, on
or prior to July 24, 1997, a favorable opinion of Sullivan & Worcester
LLP, special counsel for the Borrower and Holding, as to matters
relating to New York law in connection with the Loan Documents.
SECTION 5.02. Negative Covenants. So long as any Advance shall
remain unpaid, any Letter of Credit shall be outstanding or any Lender Party
shall have any Commitment hereunder, each of Holding and the Borrower will not,
at any time:
(a) Liens, Etc. Create, incur, assume or suffer to exist, or
permit any of its Subsidiaries to create, incur, assume or suffer to
exist, any Lien on or with respect to any of its properties of any
character (including, without limitation, accounts) whether now owned
or hereafter acquired, or sign or file or suffer to exist, or permit
any of its Subsidiaries to sign or file or suffer to exist, under the
Uniform Commercial Code of any jurisdiction, a financing statement
(other than any precautionary filings filed under ss. 9-408 of the
Uniform Commercial Code of any
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70
jurisdiction) that names Holding, the Borrower or any of its
Subsidiaries as debtor, or sign or suffer to exist, or permit any of
its Subsidiaries to sign or suffer to exist, any security agreement
authorizing any secured party thereunder to file such financing
statement, or assign, or permit any of its Subsidiaries to assign, any
accounts or other right to receive income, excluding, however, from the
operation of the foregoing restrictions the following:
(i) Liens created under the Loan Documents;
(ii) in the case of the Borrower and its
Subsidiaries, Permitted Liens;
(iii) Liens existing on the date hereof and described
on Schedule XIII hereto;
(iv) in the case of the Borrower and its
Subsidiaries, purchase money Liens upon or in real property or
equipment acquired or held by the Borrower or any of its
Subsidiaries in the ordinary course of business to secure the
purchase price of such property or equipment or to secure Debt
incurred solely for the purpose of financing the acquisition,
construction or improvement of any such property or equipment
to be subject to such Liens, or Liens existing on any such
property or equipment at the time of acquisition (other than
any such Liens created in contemplation of such acquisition
that do not secure the purchase price), or extensions,
renewals or replacements of any of the foregoing for the same
or a lesser amount; provided, however, that no such Lien shall
extend to or cover any property or equipment other than the
property or equipment being acquired, constructed or improved,
and no such extension, renewal or replacement shall extend to
or cover any property or equipment not theretofore subject to
the Lien being extended, renewed or replaced; and provided
further that the aggregate principal amount of the Debt
secured by Liens permitted by this clause (iv) at the time of
acquisition, construction or improvement of the property
subject thereto shall not exceed 80% of the cost of such
property, construction or improvement or of the then fair
value thereof, whichever shall be less and that any such Debt
shall not otherwise be prohibited by the terms of the Loan
Documents; and
(v) in the case of the Borrower and its Subsidiaries,
Liens arising in connection with Capitalized Leases permitted
under Section 5.02(b)(iv)(C), provided that no such Lien shall
extend to or cover any Collateral or assets other than the
assets subject to such Capitalized Leases.
(b) Debt. Create, incur, assume or suffer to exist, or permit
any of its Subsidiaries to create, incur, assume or suffer to exist,
any Debt other than:
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(i) in the case of Holding, (A) Debt under the Loan
Documents, (B) Debt in an aggregate principal amount not to
exceed $5,000,000 at any time outstanding to certain members
of management of the Borrower in exchange for their equity
ownership interests in Holding, provided that (w) such Debt is
subordinated in right of payment to the Obligations of Holding
under the Loan Documents on terms and conditions reasonably
satisfactory to the Lender Parties, (x) such Debt shall not
bear interest on a cash basis prior to the Termination Date,
(y) the final maturity of such Debt is after the Termination
Date and (z) there is no amortization of such Debt on or prior
to the Termination Date, and (C) Debt under the 13%
Subordinated Notes due May 31, 2009 issued by Holding.
(ii) in the case of the Borrower and its
Subsidiaries, the Permanent Debt in an aggregate principal
amount not to exceed $115,000,000;
(iii) Debt owed to the Borrower by any wholly-owned
Subsidiary of the Borrower or Debt owed to a wholly-owned
Subsidiary of the Borrower by the Borrower or any other
wholly-owned Subsidiary of the Borrower, provided that any
such Debt shall be (A) evidenced by a promissory note and (B)
pledged in favor of the Lender Parties pursuant to the terms
of the Security Agreement; and
(iv) in the case of the Borrower and any of its
Subsidiaries,
(A) Debt under the Loan Documents,
(B) Debt secured by Liens permitted by
Section 5.02(a)(iv) not to exceed in the aggregate
$7,500,000 at any time outstanding,
(C) Capitalized Leases not to exceed in the
aggregate $15,000,000 at any time outstanding,
(D) unsecured Debt incurred in the ordinary
course of business for the deferred purchase price of
property or services, maturing within one year from
the date created, and aggregating, on a Consolidated
basis, not more than $7,500,000 at any one time
outstanding,
(E) indorsement of negotiable instruments
for deposit or collection or similar transactions in
the ordinary course of business, and
(F) Debt (whether or not of the types
described above in clauses (A) through (D)) in an
aggregate principal amount not to exceed $3,750,000
at any time outstanding.
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72
(c) Lease Obligations. Create, incur, assume, extend, renew,
modify or amend, or permit any of its Subsidiaries to create, incur,
assume, extend, renew, modify or amend, any obligations as lessee (i)
for the rental or hire of real or personal property in connection with
any sale and leaseback transaction, or (ii) for the rental or hire of
other real or personal property of any kind under leases or agreements
to lease (including Capitalized Leases) having an original term of one
year or more that would cause the direct and contingent liabilities of
the Borrower and its Subsidiaries, on a Consolidated basis, in respect
of all such obligations to exceed, in the 12 month period following
incurrence, assumption, extension, renewal, modification or amendment,
5.0% of Consolidated sales of the Borrower and its Subsidiaries for the
12 month period immediately prior thereto.
(d) Mergers, Etc. Merge into or consolidate with any Person or
permit any Person to merge into it, or permit any of its Subsidiaries
to do so, except that (i) the Company may merge with and into the
Borrower, provided that the Borrower shall be the surviving corporation
and (ii) any Subsidiary of the Borrower may merge into or consolidate
with any other Subsidiary of the Borrower, provided that, in the case
of any such merger or consolidation, the Person formed by such merger
or consolidation shall be a wholly-owned Subsidiary of the Borrower;
provided, however, that in each case, immediately after giving effect
thereto, no event shall occur and be continuing that constitutes a
Default.
(e) Sales, Etc. of Assets. Sell, lease, transfer or otherwise
dispose of, or permit any of its Subsidiaries to sell, lease, transfer
or otherwise dispose of, any assets, or grant any option or other right
to purchase, lease or otherwise acquire any assets, except:
(i) sales of Inventory by the Borrower and its
Subsidiaries in the ordinary course of its business and sales
or other disposals of obsolete inventory,
(ii) sales or other disposals of obsolete or worn-out
equipment or other assets in the ordinary course of business,
(iii) in a transaction authorized by subsection (d)
of this Section,
(iv) sales of assets by the Borrower or any
Subsidiary of the Borrower for cash and for fair value in an
aggregate amount not to exceed $2,000,000 in any Fiscal Year,
provided that the Borrower shall, on the third Business Date
following the date of receipt by the Borrower or any of its
Subsidiaries of the Net Cash Proceeds from such sale, prepay
the Advances pursuant to, and in the amount and order of
priority set forth in, Section 2.06(b)(ii), and
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73
(v) sales or other transfers of assets from the
Borrower or any of the Borrower's Subsidiaries to the Borrower
or a wholly-owned domestic Subsidiary of the Borrower,
provided that such wholly-owned domestic Subsidiary shall
become an additional grantor pursuant to the terms of the
Security Agreement and shall become a Subsidiary Guarantor
pursuant to the terms of the Subsidiary Guaranty;
(f) Investments in Other Persons. Make or hold, or permit any
of its Subsidiaries to make or hold, any Investment in any Person other
than:
(i) Investments by the Borrower and its Subsidiaries
in their Subsidiaries outstanding on the date hereof and
additional investments in wholly-owned Subsidiaries in an
aggregate amount invested from the date hereof not to exceed
$7,500,000; provided that, with respect to Investments in any
newly acquired or created wholly-owned Subsidiary, such
Subsidiary shall become an additional grantor pursuant to the
terms of the Security Agreement and shall become an additional
subsidiary guarantor pursuant to the terms of the Subsidiary
Guaranty;
(ii) loans and advances to employees of the Borrower
and its Subsidiaries in an aggregate principal amount not to
exceed $750,000 at any time outstanding;
(iii) Investments by the Borrower and its
Subsidiaries in Cash Equivalents;
(iv) Investments consisting of intercompany Debt
permitted under Section 5.02(b)(iii);
(v) Investments existing on the date hereof and
described on Schedule X hereto;
(vi) in the case of the Borrower and its
Subsidiaries, other Investments in an aggregate amount
invested not to exceed $3,750,000; provided that with respect
to Investments made under this clause (vi): (1) any newly
acquired or created Subsidiary of the Borrower or any of its
Subsidiaries shall be a wholly-owned Subsidiary thereof, shall
become an additional grantor pursuant to the terms of the
Security Agreement and shall become an additional subsidiary
guarantor pursuant to the terms of the Subsidiary Guaranty;
(2) immediately before and after giving effect thereto, no
Default shall have occurred and be continuing or would result
therefrom; and (3) any business acquired or invested in
pursuant to this clause (vi) shall be in the same line of
business as the business of the Borrower or any of its
Subsidiaries;
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(vii) Investments by the Borrower in the capital
stock of the Company; and
(viii) in the case of Holding, Investments by Holding
in its capital stock as a result of the transactions described
in Section 5.02(b)(i)(B).
(g) Dividends, Etc. In the case of the Borrower, declare or
pay any dividends, purchase, redeem, retire, defease or otherwise
acquire for value any of its capital stock or any warrants, rights or
options to acquire such capital stock, now or hereafter outstanding,
return any capital to its stockholders as such, make any distribution
of assets, capital stock, warrants, rights, options, obligations or
securities to its stockholders as such or issue or sell any capital
stock or any warrants, rights or options to acquire such capital stock,
or permit any of its Subsidiaries to do any of the foregoing or permit
any of its Subsidiaries to purchase, redeem, retire, defease or
otherwise acquire for value any capital stock of the Borrower or any
warrants, rights or options to acquire such capital stock or to issue
or sell any capital stock or any warrants, rights or options to acquire
such capital stock, except that, so long as no Default shall have
occurred and be continuing at the time of any action described in
clauses (A) through (C) below or would result therefrom, (i) the
Borrower may (A) declare and pay dividends and distributions payable
only in common stock of the Borrower, (B) except to the extent the Net
Cash Proceeds thereof are required to be applied to the prepayment of
the Advances pursuant to Section 2.06(b), purchase, redeem, retire,
defease or otherwise acquire shares of its capital stock with the
proceeds received from the issue of new shares of its capital stock
with equal or inferior voting powers, designations, preferences and
rights, and (C) declare and pay cash dividends to Holding solely to
make payments required to be made by Holding under the Stockholders
Agreement and to permit Holding to pay its current obligations in the
ordinary course of business, provided, that the aggregate payments made
pursuant to this clause (C) shall not exceed $100,000 in any Fiscal
Year and (ii) any Subsidiary of the Borrower may (A) declare and pay
cash dividends to the Borrower and (B) declare and pay cash dividends
to any other wholly-owned Subsidiary of the Borrower of which it is a
Subsidiary.
(h) Change in Nature of Business. Make, or permit any of its
Subsidiaries to make, any material change in the nature of its business
as carried on at the date hereof.
(i) Charter Amendments. Amend, or permit any of its
Subsidiaries to amend, its certificate of incorporation or bylaws,
unless such amendment would not have a Material Adverse Effect and does
not adversely affect the rights and remedies of the Administrative
Agent or any Lender Party under any Loan Document or any Related
Document.
(j) Accounting Changes. Make or permit, or permit any of its
Subsidiaries to make or permit, any change in (i) accounting policies
or reporting practices, except
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75
as required or permitted by generally accepted accounting principles or
(ii) Fiscal Year.
(k) Prepayments, Etc. of Debt. Prepay, redeem, purchase,
defease or otherwise satisfy prior to the scheduled maturity thereof in
any manner, or make any payment in violation of any subordination terms
of, any Debt, other than the prepayment of the Advances in accordance
with the terms of this Agreement, or amend, modify or change in any
manner any term or condition of the Permanent Debt Documents that would
impair the value of the interest or rights of the Loan Parties
thereunder or that would impair the rights or interests of the
Administrative Agent or any Lender Party, or permit any of its
Subsidiaries to do any of the foregoing other than to prepay any Debt
payable to the Borrower.
(l) Amendment, Etc. of Related Documents. Cancel or terminate
any Related Document (other than the Financing Documents) or consent to
or accept any cancellation or termination thereof, amend, modify or
change in any manner any term or condition of any such Related Document
or give any consent, waiver or approval thereunder, waive any default
under or any breach of any term or condition of any such Related
Document, agree in any manner to any other amendment, modification or
change of any term or condition of any such Related Document or take
any other action in connection with any such Related Document that
would, in any such case, impair the value of the interest or rights of
the Loan Parties thereunder or that would impair the rights or
interests of the Administrative Agent or any Lender Party, or permit
any of its Subsidiaries to do any of the foregoing.
(m) Negative Pledge. Enter into or suffer to exist, or permit
any of its Subsidiaries to enter into or suffer to exist, any agreement
prohibiting or conditioning the creation or assumption of any Lien upon
any of its property or assets other than (i) in favor of the Secured
Parties or (ii) any prohibition or condition contained in the Permanent
Debt Documents.
(n) Partnerships, Etc. Become a general partner in any general
or limited partnership or joint venture, or permit any of its
Subsidiaries to do so, other than any Subsidiary the sole assets of
which consist of its interest in such partnership or joint venture.
(o) Speculative Transactions. Engage, or permit any of its
Subsidiaries to engage, in any transaction involving commodity options
or futures contracts or any similar speculative transactions
(including, without limitation, take-or-pay contracts), except for
Hedge Agreements permitted under Section 5.02(b).
(p) Capital Expenditures. In the case of the Borrower, make,
or permit any of its Subsidiaries to make, any Capital Expenditures
that would cause the aggregate of all such Capital Expenditures made by
the Borrower and its Subsidiaries in any period set forth below to
exceed the amount set forth below for such period:
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76
Fiscal Year Ending In Amount
--------------------- ------
1997 $10,000,000
1998 $10,000,000
1999 $15,000,000
2000 $15,000,000
2001 $15,000,000
2002 $16,000,000
2003 $17,000,000
; provided, however, that if, in any Fiscal Year specified above, the
amount of Capital Expenditures set forth above for such period exceeds
the amount of Capital Expenditures actually made by the Borrower and
its Subsidiaries in such Fiscal Year, the Borrower and its Subsidiaries
shall be entitled to make additional Capital Expenditures in the next
Fiscal Year up to the amount of such excess; provided further that for
purposes of calculating the Capital Expenditures made by the Borrower
and its Subsidiaries for the Fiscal Year ending in 1997, any Capital
Expenditures made by the Company prior to the date of the consummation
of the Acquisition shall not be taken into account.
SECTION 5.03. Reporting Requirements. So long as any Advance
shall remain unpaid, any Letter of Credit shall be outstanding or any Lender
Party shall have any Commitment hereunder, the Borrower will furnish to the
Lender Parties:
(a) Default Notice. As soon as possible and in any event
within two Business Days after a Responsible Officer of a Loan Party
knows, or has reason to know, of the occurrence of a Default or any
event, development or occurrence reasonably likely to have a Material
Adverse Effect continuing on the date of such statement, a statement of
the chief financial officer of the Borrower setting forth details of
such Default and the action that the Borrower has taken and proposes to
take with respect thereto.
(b) Monthly Financials. As soon as available and in any event
within 30 days after the end of each month (other than any month which
is the last month of a fiscal quarter), a Consolidated balance sheet of
the Borrower and its Subsidiaries as of the end of such month and a
Consolidated statement of income and a Consolidated statement of cash
flows of the Borrower and its Subsidiaries for the period commencing at
the end of the previous month and ending with the end of such month and
a Consolidated statements of income and a Consolidated statement of
cash flows of the Borrower and its Subsidiaries for the period
commencing at the end of the
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77
previous Fiscal Year and ending with the end of such month, setting
forth in each case in comparative form the corresponding figures for
the corresponding month of the preceding Fiscal Year, all in reasonable
detail and duly certified by the chief financial officer of the
Borrower.
(c) Quarterly Financials. As soon as available and in any
event within 45 days after the end of each of the first three quarters
of each Fiscal Year, a Consolidated balance sheet of the Borrower and
its Subsidiaries as of the end of such quarter and Consolidated
statement of income and a Consolidated statement of cash flows of the
Borrower and its Subsidiaries for the period commencing at the end of
the previous fiscal quarter and ending with the end of such fiscal
quarter and a Consolidated statement of income and a Consolidated
statement of cash flows of the Borrower and its Subsidiaries for the
period commencing at the end of the previous Fiscal Year and ending
with the end of such quarter, setting forth in each case in comparative
form the corresponding figures for the corresponding period of the
preceding Fiscal Year, all in reasonable detail and duly certified
(subject to year-end audit adjustments) by the chief financial officer
of the Borrower as having been prepared in accordance with GAAP,
together with (i) a certificate of said officer stating that no Default
has occurred and is continuing or, if a Default has occurred and is
continuing, a statement as to the nature thereof and the action that
the Borrower has taken and proposes to take with respect thereto and
(ii) a schedule in form satisfactory to the Administrative Agent of the
computations used by the Borrower in determining compliance with the
covenants contained in Sections 5.04(a) through (d), provided that in
the event of any change in GAAP used in the preparation of such
financial statements, the Borrower shall also provide, if necessary for
the determination of compliance with Section 5.04, a statement of
reconciliation conforming such financial statements to GAAP.
(d) Annual Financials. As soon as available and in any event
within 90 days after the end of each Fiscal Year, a copy of the annual
audit report for such year for the Borrower and its Subsidiaries,
including therein a Consolidated balance sheet of the Borrower and its
Subsidiaries as of the end of such Fiscal Year and a Consolidated
statement of income and a Consolidated statement of cash flows of the
Borrower and its Subsidiaries for such Fiscal Year, in each case
accompanied by an unqualified opinion of Ernst & Young, LLP or other
independent public accountants of recognized standing acceptable to the
Required Lenders, together with (i) a certificate of such accounting
firm to the Lender Parties stating that in the course of the regular
audit of the business of the Borrower and its Subsidiaries, which audit
was conducted by such accounting firm in accordance with generally
accepted auditing standards, such accounting firm has obtained no
knowledge that a Default has occurred and is continuing under Section
5.02(p) or Section 5.04, or if, in the opinion of such accounting firm,
such a Default has occurred and is continuing, a statement as to the
nature thereof, (ii) a schedule in form satisfactory to the
Administrative Agent of the computations used by such accountants in
determining, as of the end of such Fiscal Year, compliance with the
covenants contained in Sections 5.04(a)
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78
through (d), provided that in the event of any change in GAAP used in
the preparation of such financial statements, the Borrower shall also
provide, if necessary for the determination of compliance with Section
5.04, a statement of reconciliation conforming such financial
statements to GAAP and (iii) a certificate of the chief financial
officer of the Borrower stating that no Default has occurred and is
continuing or, if a default has occurred and is continuing, a statement
as to the nature thereof and the action that the Borrower has taken and
proposes to take with respect thereto.
(e) Annual Forecasts. As soon as available and in any event no
later than 30 days after the end of each Fiscal Year, forecasts
prepared by management of the Borrower, in form reasonably satisfactory
to the Administrative Agent, of balance sheets, income statements and
cash flow statements on a monthly basis for the Fiscal Year following
such Fiscal Year then ended and on an annual basis for each Fiscal Year
thereafter until the Termination Date.
(f) ERISA Events and ERISA Reports. Promptly and in any event
within 10 days after any Loan Party or any ERISA Affiliate knows or has
reason to know that any ERISA Event has occurred, a statement of the
chief financial officer of the Borrower describing such ERISA Event and
the action, if any, that such Loan Party or such ERISA Affiliate has
taken and proposes to take with respect thereto and on the date any
records, documents or other information must be furnished to the PBGC
with respect to any Plan pursuant to Section 4010 of ERISA, a copy of
such records, documents and information.
(g) Plan Terminations. Promptly and in any event within two
Business Days after receipt thereof by any Loan Party or any ERISA
Affiliate, copies of each notice from the PBGC stating its intention to
terminate any Plan or to have a trustee appointed to administer any
Plan.
(h) Actuarial Reports. Promptly upon receipt thereof by any
Loan Party or any ERISA Affiliate, a copy of the annual actuarial
valuation report for each Plan the funded current liability percentage
(as defined in Section 302(d)(8) of ERISA) of which is less than 90% or
the unfunded current liability of which exceeds $100,000.
(i) Multiemployer Plan Notices. Promptly and in any event
within five Business Days after receipt thereof by any Loan Party or
any ERISA Affiliate from the sponsor of a Multiemployer Plan, copies of
each notice concerning (i) the imposition of Withdrawal Liability by
any such Multiemployer Plan, (ii) the reorganization or termination,
within the meaning of Title IV of ERISA, of any such Multiemployer Plan
or (iii) the amount of liability incurred, or that may be incurred, by
such Loan Party or any ERISA Affiliate in connection with any event
described in clause (i) or (ii).
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79
(j) Litigation. Promptly after the commencement thereof,
notice of all actions, suits, investigations, litigation and
proceedings before any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign,
affecting any Loan Party or any of its Subsidiaries of the type
described in Section 4.01(i), and promptly after the occurrence
thereof, notice of any adverse change in the status or the financial
effect on any Loan Party or any of its Subsidiaries of the Disclosed
Litigation from that described on Schedule II.
(k) Securities Reports. Promptly after the sending or filing
thereof, copies of all proxy statements, financial statements and
reports that Holding sends to its stockholders generally, and copies of
all regular, periodic and special reports, and all registration
statements, that any Loan Party or any of its Subsidiaries files with
the Securities and Exchange Commission or any governmental authority
that may be substituted therefor, or with any national securities
exchange.
(l) Creditor Reports. Promptly after the furnishing thereof,
copies of any statement or report furnished to any other holder of the
securities of any Loan Party or of any of its Subsidiaries pursuant to
the terms of any indenture, loan or credit or similar agreement and not
otherwise required to be furnished to the Lender Parties pursuant to
any other clause of this Section 5.03.
(m) Agreement Notices. Promptly upon receipt thereof, copies
of all notices, requests and other documents received by any Loan Party
or any of its Subsidiaries under or pursuant to any Related Document or
indenture, loan or credit or similar agreement relating to Debt in an
aggregate principal amount in excess of $2,500,000 regarding or related
to any breach or default by any party thereto or any other event that
could materially impair the value of the interests or the rights of any
Loan Party or otherwise have a Material Adverse Effect and copies of
any amendment, modification or waiver of any provision of any Related
Agreement or Material Contract or indenture, loan or credit or similar
agreement and, from time to time upon request by the Administrative
Agent, such information and reports regarding the Related Documents and
the Material Contracts as the Administrative Agent may reasonably
request.
(n) Revenue Agent Reports. Within 10 days after receipt,
copies of all Revenue Agent Reports (Internal Revenue Service Form
886), or other written proposals of the Internal Revenue Service, that
propose, determine or otherwise set forth positive adjustments to the
Federal income tax liability of the affiliated group (within the
meaning of Section 1504(a)(1) of the Internal Revenue Code) of which
the
Borrower is a member aggregating $1,000,000 or more.
(o) Tax Certificates. Promptly, and in any event within five
Business Days after the due date (with extensions) for filing the final
Federal income tax return in respect of each taxable year, a
certificate (a "Tax Certificate"), signed by the President or the chief
financial officer of the Borrower, stating that the common
<PAGE>
80
parent of the affiliated group (within the meaning of Section
1504(a)(1) of the Internal Revenue Code) of which the Borrower is a
member has paid to the Internal Revenue Service or other taxing
authority the full amount that such affiliated group is required to pay
in respect of Federal income tax for such year.
(p) Environmental Conditions. Promptly after the assertion or
occurrence thereof, notice of any Environmental Action against or of
any noncompliance by any Loan Party or any of its Subsidiaries with any
Environmental Law or Environmental Permit that (i) could reasonably be
expected to have a Material Adverse Effect or (ii) cause any property
described in the Mortgages to be subject to any restrictions on
ownership, occupancy, use or transferability under any Environmental
Law that could reasonably be expected to have a Material Adverse
Effect.
(q) Real Property. As soon as available and in any event
within 30 days after the end of each Fiscal Year, a report
supplementing Schedules 4.01(gg) and 4.01(hh) hereto, including an
identification of all real and leased property disposed of by the
Borrower or any of its Subsidiaries during such Fiscal Year, a list and
description (including the street address, county or other relevant
jurisdiction, state, record owner, book value thereof, and in the case
of leases of property, lessor, lessee, expiration date and annual
rental cost thereof) of all real property acquired or leased during
such Fiscal Year and a description of such other changes in the
information included in such Schedules as may be necessary for such
Schedules to be accurate and complete.
(r) Insurance. As soon as available and in any event within 30
days after the end of each Fiscal Year, a report summarizing the
insurance coverage (specifying type, amount and carrier) in effect for
the Borrower and its Subsidiaries and containing such additional
information as any Lender Party (through the Administrative Agent) may
reasonably specify.
(s) Borrowing Base Certificate. As soon as available and in
any event within 15 days after the end of each month, a Borrowing Base
Certificate, as at the end of the previous month, certified by the
chief financial officer of the Borrower.
(t) Plan Schedule. As soon as practicable and in any event
within 10 days after the Borrower or one of its ERISA Affiliates
becomes a party to a Plan, an updated Schedule V listing all Plans of
the Borrower and its ERISA Affiliates.
(u) Other Information. Such other information respecting the
business, condition (financial or otherwise), operations, performance,
properties or prospects of any Loan Party or any of its Subsidiaries as
any Lender Party (through the Administrative Agent) may from time to
time reasonably request.
<PAGE>
81
SECTION 5.04. Financial Covenants. So long as any Advance
shall remain unpaid, any Letter of Credit shall be outstanding or any Lender
Party shall have any Commitment hereunder, Holding will:
(a) Minimum Net Worth. Maintain at all times an excess of
Consolidated total assets over Consolidated total liabilities, in each
case, of the Borrower and its Subsidiaries of not less than
$100,000,000 plus 75% of Consolidated net income of the Borrower and
its Subsidiaries (excluding the amortization of the write-up of
inventory pursuant to the Acquisition) for the period after June 28,
1997 to and including each date of determination computed on a
cumulative basis for said entire period.
(b) Minimum EBITDA. Maintain at the end of each fiscal quarter
of Holding Consolidated EBITDA for the most recently completed four
fiscal quarters of Holding and its Subsidiaries of not less than the
amount set forth below for such period:
Four Fiscal Quarters Ending Closest To Amount
July 31, 1997 $33,000,000
October 31, 1997 $33,000,000
January 31, 1998 $33,000,000
April 30, 1998 $33,000,000
July 31, 1998 $37,000,000
October 31, 1998 $39,000,000
January 31, 1999 $40,000,000
April 30, 1999 $41,000,000
July 31, 1999 $43,000,000
October 31, 1999 $44,000,000
January 31, 2000 $45,000,000
April 30, 2000 $46,000,000
July 31, 2000 $48,000,000
October 31, 2000 $49,000,000
January 31, 2001 $50,000,000
April 30, 2001 $51,000,000
July 31, 2001 $53,000,000
October 31, 2001 $54,000,000
January 31, 2002 $56,000,000
April 30, 2002 $57,000,000
July 31, 2002 $59,000,000
October 31, 2002 $61,000,000
January 31, 2003 $62,000,000
April 30, 2003 $63,000,000
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82
; provided, however, that for each fiscal quarter of Holding ending
closest to July 31, 1997, October 31, 1997, January 31, 1998 and April
30, 1998, Consolidated EBITDA shall be calculated for such four fiscal
quarter period by adding Consolidated EBITDA for such period of Holding
and its Subsidiaries and Pro Forma
EBITDA for such fiscal quarter.
(c) Interest Coverage Ratio. Maintain at the end of each
fiscal quarter of Holding a ratio of Consolidated EBITDA for the most
recently completed four fiscal quarters of Holding and its Subsidiaries
to cash interest payable on all Debt payable by the Borrower and its
Subsidiaries during such four fiscal quarter period of not less than
the ratio set forth below for such fiscal quarter:
Four Fiscal Quarters Ending Closest To Ratio
July 31, 1997 1.65
October 31, 1997 1.65
January 31, 1998 1.65
April 30, 1998 1.65
July 31, 1998 1.75
October 31, 1998 1.95
January 31, 1999 2.00
April 30, 1999 2.05
July 31, 1999 2.20
October 31, 1999 2.25
January 31, 2000 2.30
April 30, 2000 2.30
July 31, 2000 2.35
October 31, 2000 2.40
January 31, 2001 2.45
April 30, 2001 2.50
July 31, 2001 2.60
October 31, 2001 2.65
January 31, 2002 2.75
April 30, 2002 2.80
July 31, 2002 2.90
October 31, 2002 3.00
January 31, 2003 3.10
April 30, 2003 3.20
; provided, however, that for each fiscal quarter of Holding ending
closest to July 31, 1997, October 31, 1997, January 31, 1998 and April
30, 1998, (x) Consolidated EBITDA shall be calculated for such four
fiscal quarter period by adding Consolidated EBITDA for such period of
Holding and its Subsidiaries and Pro Forma EBITDA for such fiscal
quarter and (y) cash interest payable for such four fiscal quarter
period shall be the actual cash interest payable during such period
since the
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83
date of the consummation of the Acquisition multiplied by a fraction
the numerator of which is twelve and the denominator of which is the
number of fiscal months that have elapsed since such date.
(d) Total Debt to EBITDA Ratio. Maintain at the end of each
fiscal quarter of Holding a Total Debt to EBITDA Ratio of Holding and
its Subsidiaries of not more than the ratio set forth below for each
period set forth below:
Four Fiscal Quarters Ending Closest To Ratio
July 31, 1997 5.65
October 31, 1997 5.65
January 31, 1998 5.65
April 30, 1998 5.65
July 31, 1998 5.00
October 31, 1998 5.00
January 31, 1999 5.00
April 30, 1999 5.00
July 31, 1999 4.75
October 31, 1999 4.75
January 31, 2000 4.75
April 30, 2000 4.75
July 31, 2000 4.35
October 31, 2000 4.35
January 31, 2001 4.35
April 30, 2001 4.35
July 31, 2001 4.00
October 31, 2001 4.00
January 31, 2002 4.00
April 30, 2002 4.00
July 31, 2002 3.50
October 31, 2002 3.50
January 31, 2003 3.50
April 30, 2003 3.50
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following
events ("Events of Default") shall occur and be continuing:
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84
(a) (i) the Borrower shall fail to pay any principal of any
Advance when the same shall become due and payable or (ii) the Borrower
shall fail to pay any interest on any Advance, or any Loan Party shall
fail to make any other payment under any Loan Document, in each case
under this clause (ii) within three Business Days after the same
becomes due and payable; or
(b) any representation or warranty made by any Loan Party (or
any of its officers) under or in connection with any Loan Document
shall prove to have been incorrect in any material respect when made;
or
(c) (i) any Loan Party shall fail to perform or observe any
term, covenant or agreement contained in Section 2.14, 5.01(f), (j),
(l), or (o), 5.02 or 5.04 or (ii) any Loan Party shall fail to maintain
its corporate existence or to perform or observe any term, covenant or
agreement contained in Section 5.03 if such failure shall remain
unremedied for 10 days; or
(d) any Loan Party shall fail to perform any other term,
covenant or agreement contained in any Loan Document on its part to be
performed or observed if such failure shall remain unremedied for 30
days after the earlier of the date on which (A) a Responsible Officer
of the Borrower becomes aware of such failure or (B) written notice
thereof shall have been given to the Borrower by the Administrative
Agent or any Lender Party; or
(e) any Loan Party or any of its Subsidiaries shall fail to
pay any principal of, premium or interest on or any other amount
payable in respect of any Debt that is outstanding in a principal or
notional amount of at least $5,000,000 either individually or in the
aggregate (but excluding Debt outstanding hereunder) of such Loan Party
or such Subsidiary (as the case may be), when the same becomes due and
payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), and such failure shall continue
after the applicable grace period, if any, specified in the agreement
or instrument relating to such Debt; or any other event shall occur or
condition shall exist under any agreement or instrument relating to any
such Debt and shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of such event
or condition is to accelerate, or to permit the acceleration of, the
maturity of such Debt or otherwise to cause, or to permit the holder
thereof to cause, such Debt to mature; or any such Debt shall be
declared to be due and payable or required to be prepaid or redeemed
(other than by a regularly scheduled required prepayment or
redemption), purchased or defeased, or an offer to prepay, redeem,
purchase or defease such Debt shall be required to be made, in each
case prior to the stated maturity thereof; or
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85
(f) any Loan Party or any of its Subsidiaries shall generally
not pay its debts as such debts become due, or shall admit in writing
its inability to pay its debts generally, or shall make a general
assignment for the benefit of creditors; or any proceeding shall be
instituted by or against any Loan Party or any of its Subsidiaries
seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment
of a receiver, trustee, or other similar official for it or for any
substantial part of its property and, in the case of any such
proceeding instituted against it (but not instituted by it) that is
being diligently contested by it in good faith, either such proceeding
shall remain undismissed or unstayed for a period of 45 days or any of
the actions sought in such proceeding (including, without limitation,
the entry of an order for relief against, or the appointment of a
receiver, trustee, custodian or other similar official for, it or any
substantial part of its property) shall occur; or any Loan Party or any
of its Subsidiaries shall take any corporate action to authorize any of
the actions set forth above in this subsection (f); or
(g) any judgment or order for the payment of money in excess
of $5,000,000 shall be rendered against any Loan Party or any of its
Subsidiaries and either (i) enforcement proceedings shall have been
commenced by any creditor upon such judgment or order or (ii) there
shall be any period of 30 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or
(h) any non-monetary judgment or order shall be rendered
against any Loan Party or any of its Subsidiaries that is reasonably
likely to have a Material Adverse Effect, and there shall be any period
of 10 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall
not be in effect; or
(i) any provision of any Loan Document after delivery thereof
pursuant to Section 3.01 or 5.01(l) shall for any reason cease to be
valid and binding on or enforceable against any Loan Party party to it,
or any such Loan Party shall so state in writing; or
(j) any Collateral Document after delivery thereof pursuant to
Section 3.01 or 5.01(p) shall for any reason (other than pursuant to
the terms thereof) cease to create a valid and perfected lien on and
security interest in the Collateral purported to be covered thereby
with the priority required thereunder; or
(k) J.W. Childs and its Affiliates and co-investors shall
cease to have beneficial ownership (within the meaning of Rule 13d-3 of
the Securities and Exchange Commission under the Securities Exchange
Act of 1934), directly or indirectly, of Voting Stock of Holding
representing 35% or more of the combined
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86
voting power of all Voting Stock of Holding so long as J.W. Childs and
its Affiliates and co-investors shall have voting control of the Board
of Directors of Holding; or
(l) any ERISA Event shall have occurred with respect to a Plan
and the sum (determined as of the date of occurrence of such ERISA
Event) of the Insufficiency of such Plan and the Insufficiency of any
and all other Plans with respect to which an ERISA Event shall have
occurred and then exist (or the liability of the Loan Parties and the
ERISA Affiliates related to such ERISA Event) exceeds $5,000,000; or
(m) any Loan Party or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred
Withdrawal Liability to such Multiemployer Plan in an amount that, when
aggregated with all other amounts required to be paid to Multiemployer
Plans by the Loan Parties and the ERISA Affiliates as Withdrawal
Liability (determined as of the date of such notification), exceeds
$5,000,000 or requires payments exceeding $1,000,000 per annum; or
(n) any Loan Party or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that such Multiemployer
Plan is in reorganization or is being terminated, within the meaning of
Title IV of ERISA, and as a result of such reorganization or
termination the aggregate annual contributions of the Loan Parties and
the ERISA Affiliates to all Multiemployer Plans that are then in
reorganization or being terminated have been or will be increased over
the amounts contributed to such Multiemployer Plans for the plan years
of such Multiemployer Plans immediately preceding the plan year in
which such reorganization or termination occurs by an amount exceeding
$5,000,000; or
(o) any Borrowing Base Deficiency shall occur and be
continuing;
then, and in any such event, the Administrative Agent (i) shall at the request,
or may with the consent, of the Required Lenders, by notice to the Borrower,
declare the obligation of each Appropriate Lender to make Advances (other than
Letter of Credit Advances by the Issuing Bank or a Revolving Credit Lender
pursuant to Section 2.03(c) and Swing Line Advances by a Revolving Credit Lender
pursuant to Section 2.02(b)) and of the Issuing Bank to issue Letters of Credit
to be terminated, whereupon the same shall forthwith terminate, and (ii) shall
at the request, or may with the consent, of the Required Lenders, by notice to
the Borrower, declare the Notes, all interest thereon and all other amounts
payable under this Agreement and the other Loan Documents to be forthwith due
and payable, whereupon the Notes, all such interest and all such amounts shall
become and be forthwith due and payable, without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by the
Borrower; provided, however, that in the event of an actual or deemed entry of
an order for relief with respect to any Loan Party under the Federal Bankruptcy
Code, (x) the obligation of each Lender to make Advances (other than Letter of
Credit Advances by the Issuing Bank or a Lender pursuant to Section 2.03(c) and
Swing Line Advances by a Revolving Credit Lender pursuant to Section 2.02(b))
and of the Issuing Bank
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to issue Letters of Credits shall automatically be terminated and (y) the Notes,
all such interest and all such amounts shall automatically become and be due and
payable, without presentment, demand, protest or any notice of any kind, all of
which are hereby expressly waived by the Borrower.
SECTION 6.02. Actions in Respect of the Letters of Credit upon
Default. If any Event of Default shall have occurred and be continuing, the
Administrative Agent may, or shall at the request of the Required Lenders,
irrespective of whether it is taking any of the actions described in Section
6.01 or otherwise, make demand upon the Borrower to, and forthwith upon such
demand the Borrower will, pay to the Administrative Agent on behalf of the
Lender Parties in same day funds at the Administrative Agent's office designated
in such demand, for deposit in the L/C Cash Collateral Account, an amount equal
to the aggregate Available Amount of all Letters of Credit then outstanding. If
at any time the Administrative Agent determines that any funds held in the L/C
Cash Collateral Account are subject to any right or claim of any Person other
than the Administrative Agent and the Lender Parties or that the total amount of
such funds is less than the aggregate Available Amount of all Letters of Credit,
the Borrower will, forthwith upon demand by the Administrative Agent, pay to the
Administrative Agent, as additional funds to be deposited and held in the L/C
Cash Collateral Account, an amount equal to the excess of (a) such aggregate
Available Amount over (b) the total amount of funds, if any, then held in the
L/C Cash Collateral Account that the Administrative Agent determines to be free
and clear of any such right and claim.
ARTICLE VII
THE ADMINISTRATIVE AGENT
SECTION 7.01. Authorization and Action. Each Lender Party (in
its capacities as a Lender, the Swing Line Bank (if applicable) and the Issuing
Bank (if applicable) hereby appoints and authorizes the Administrative Agent to
take such action as agent on its behalf and to exercise such powers and
discretion under this Agreement and the other Loan Documents as are delegated to
the Administrative Agent by the terms hereof and thereof, together with such
powers and discretion as are reasonably incidental thereto. As to any matters
not expressly provided for by the Loan Documents (including, without limitation,
enforcement or collection of the Notes), the Administrative Agent shall not be
required to exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Required Lenders, and such
instructions shall be binding upon all Lender Parties and all holders of Notes;
provided, however, that the Administrative Agent shall not be required to take
any action that exposes the Administrative Agent to personal liability or that
is contrary to this Agreement or applicable law. The Administrative Agent agrees
to give to each Lender Party prompt notice of each notice given to it by the
Borrower pursuant to the terms of this Agreement.
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SECTION 7.02. Administrative Agent's Reliance, Etc. Neither
the Administrative Agent nor any of its directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them under
or in connection with the Loan Documents, except for its or their own gross
negligence or willful misconduct. Without limitation of the generality of the
foregoing, the Administrative Agent: (a) may treat the payee of any Note as the
holder thereof until the Administrative Agent receives and accepts an Assignment
and Acceptance entered into by the Lender that is the payee of such Note, as
assignor, and an Eligible Assignee, as assignee, as provided in Section 8.07;
(b) may consult with legal counsel (including counsel for any Loan Party),
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (c) makes no
warranty or representation to any Lender Party and shall not be responsible to
any Lender Party for any statements, warranties or representations (whether
written or oral) made in or in connection with the Loan Documents; (d) shall not
have any duty to ascertain or to inquire as to the performance or observance of
any of the terms, covenants or conditions of any Loan Document on the part of
any Loan Party or to inspect the property (including the books and records) of
any Loan Party; (e) shall not be responsible to any Lender Party for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of, or the perfection or priority of any lien or security interest created or
purported to be created under or in connection with, any Loan Document or any
other instrument or document furnished pursuant thereto; and (f) shall incur no
liability under or in respect of any Loan Document by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telegram or
telecopy) believed by it to be genuine and signed or sent by the proper party or
parties.
SECTION 7.03. Fleet and Affiliates. With respect to its
Commitments, the Advances made by it and the Notes issued to it, Fleet shall
have the same rights and powers under the Loan Documents as any other Lender
Party and may exercise the same as though it were not the Administrative Agent;
and the term "Lender Party" or "Lenders Parties" shall, unless otherwise
expressly indicated, include Fleet in its individual capacity. Fleet and its
affiliates may accept deposits from, lend money to, act as trustee under
indentures of, accept investment banking engagements from and generally engage
in any kind of business with, any Loan Party, any of its Subsidiaries and any
Person who may do business with or own securities of any Loan Party or any such
Subsidiary, all as if Fleet were not the Administrative Agent and without any
duty to account therefor to the Lender Parties.
SECTION 7.04. Lender Party Credit Decision. Each Lender Party
acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender Party and based on the financial
statements referred to in Section 4.01 and such other documents and information
as it has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement. Each Lender Party also acknowledges that it will,
independently and without reliance upon the Administrative Agent or any other
Lender Party and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.
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SECTION 7.05. Indemnification. (a) Each Lender Party severally
agrees to indemnify the Administrative Agent (to the extent not promptly
reimbursed by the Borrower) from and against such Lender Party's ratable share
(determined as provided below) of any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever that may be imposed on, incurred by, or
asserted against the Administrative Agent in any way relating to or arising out
of the Loan Documents or any action taken or omitted by the Administrative Agent
under the Loan Documents; provided, however, that no Lender Party shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Administrative Agent's gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender Party agrees to reimburse the
Administrative Agent promptly upon demand for its ratable share of any costs and
expenses (including, without limitation, fees and expenses of counsel) payable
by the Borrower under Section 9.04, to the extent that the Administrative Agent
is not promptly reimbursed for such costs and expenses by the Borrower. For
purposes of this Section 7.05(a), the Lender Parties' respective ratable shares
of any amount shall be determined, at any time, according to the sum of (a) the
aggregate principal amount of the Advances outstanding at such time and owing to
the respective Lender Parties, (b) their respective Pro Rata Shares of the
aggregate Available Amount of all Letters of Credit outstanding at such time,
(c) the aggregate unused portion of their respective Term Commitments at such
time and (d) their respective Unused Revolving Credit Commitments at such time;
provided, that the aggregate principal amount of Swing Line Advances owing to
the Swing Line Bank and of Letter of Credit Advances owing to the Issuing Bank
shall be considered to be owed to the Revolving Credit Lenders ratably in
accordance with their respective Revolving Credit Commitments. In the event that
any Defaulted Advance shall be owing by any Defaulting Lender at any time, such
Lender Party's Commitment with respect to the Facility under which such
Defaulted Advance was required to have been made shall be considered to be
unused for purposes of this Section 7.05(a) to the extent of the amount of such
Defaulted Advance. The failure of any Lender Party to reimburse the
Administrative Agent promptly upon demand for its ratable share of any amount
required to be paid by the Lender Party to the Administrative Agent as provided
herein shall not relieve any other Lender Party of its obligation hereunder to
reimburse the Administrative Agent for its ratable share of such amount, but no
Lender Party shall be responsible for the failure of any other Lender Party to
reimburse the Administrative Agent for such other Lender Party's ratable share
of such amount. Without prejudice to the survival of any other agreement of any
Lender Party hereunder, the agreement and obligations of each Lender Party
contained in this Section 7.05(a) shall survive the payment in full of
principal, interest and all other amounts payable hereunder and under the other
Loan Documents.
(b) Each Lender Party severally agrees to indemnify the
Issuing Bank (to the extent not promptly reimbursed by the Borrower) from and
against such Lender Party's ratable share (determined as provided below) of any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever that may be imposed on, incurred by, or asserted against the Issuing
Bank in any way relating to or arising out of the Loan Documents or any action
taken or
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omitted by the Issuing Bank under the Loan Documents; provided, however, that no
Lender Party shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Issuing Bank's gross negligence or willful
misconduct. Without limitation of the foregoing, each Lender Party agrees to
reimburse the Issuing Bank promptly upon demand for its ratable share of any
costs and expenses (including, without limitation, fees and expenses of counsel)
payable by the Borrower under Section 9.04, to the extent that the Issuing Bank
is not promptly reimbursed for such costs and expenses by the Borrower. For
purposes of this Section 7.05(b), the Lender Parties' respective ratable shares
of any amount shall be determined, at any time, according to the sum of (a) the
aggregate principal amount of the Advances outstanding at such time and owing to
the respective Lender Parties, (b) their respective Pro Rata Shares of the
aggregate Available Amount of all Letters of Credit outstanding at such time,
(c) the aggregate unused portion of their respective Term Commitments at such
time plus (d) their respective Unused Working Revolving Credit Commitments at
such time; provided that the aggregate principal amount of Swing Line Advances
owing to the Swing Line Bank and of Letter of Credit Advances owing to the
Issuing Bank shall be considered to be owed to the Revolving Credit Lenders
ratably in accordance with their respective Revolving Credit Commitments. In the
event that any Defaulted Advance shall be owing by any Defaulting Lender at any
time, such Lender Party's Commitment with respect to the Facility under which
such Defaulted Advance was required to have been made shall be considered to be
unused for purposes of this Section 7.05(b) to the extent of the amount of such
Defaulted Advance. The failure of any Lender Party to reimburse the Issuing Bank
promptly upon demand for its ratable share of any amount required to be paid by
the Lender Parties to the Issuing Bank as provided herein shall not relieve any
other Lender Party of its obligation hereunder to reimburse the Issuing Bank for
its ratable share of such amount, but no Lender Party shall be responsible for
the failure of any other Lender Party to reimburse the Issuing Bank for such
other Lender Party's ratable share of such amount. Without prejudice to the
survival of any other agreement of any Lender Party hereunder, the agreement and
obligations of each Lender Party contained in this Section 7.05(b) shall survive
the payment in full of principal, interest and all other amounts payable
hereunder and under the other Loan Documents.
SECTION 7.06. Successor Administrative Agents. The
Administrative Agent may resign as to any or all of the Facilities at any time
by giving written notice thereof to the Lender Parties and the Borrower and may
be removed as to all of the Facilities at any time with or without cause by the
Required Lenders. Upon any such resignation or removal, the Required Lenders
shall have the right to appoint a successor Administrative Agent as to such of
the Facilities as to which the Administrative Agent has resigned or been
removed. If no successor Administrative Agent shall have been so appointed by
the Required Lenders, and shall have accepted such appointment, within 30 days
after the retiring Administrative Agent's giving of notice of resignation or the
Required Lenders' removal of the retiring Administrative Agent, then the
retiring Administrative Agent may, on behalf of the Lender Parties, appoint a
successor Administrative Agent, which shall be a commercial bank organized under
the laws of the United States or of any State thereof and having a combined
capital and surplus of at least $250,000,000. Upon the acceptance of any
appointment as
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Administrative Agent hereunder by a successor Administrative Agent as to all of
the Facilities and upon the execution and filing or recording of such financing
statements, or amendments thereto, and such amendments or supplements to the
Mortgages, and such other instruments or notices, as may be necessary or
desirable, or as the Required Lenders may request, in order to continue the
perfection of the Liens granted or purported to be granted by the Collateral
Documents, such successor Administrative Agent shall succeed to and become
vested with all the rights, powers, discretion, privileges and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations under the Loan Documents. Upon the
acceptance of any appointment as Administrative Agent hereunder by a successor
Administrative Agent as to less than all of the Facilities and upon the
execution and filing or recording of such financing statements, or amendments
thereto, and such amendments or supplements to the Mortgages, and such other
instruments or notices, as may be necessary or desirable, or as the Required
Lenders may request, in order to continue the perfection of the Liens granted or
purported to be granted by the Collateral Documents, such successor
Administrative Agent shall succeed to and become vested with all the rights,
powers, discretion, privileges and duties of the retiring Administrative Agent
as to such Facilities, other than with respect to funds transfers and other
similar aspects of the administration of Borrowings under such Facilities,
issuances of Letters of Credit (notwithstanding any resignation as
Administrative Agent with respect to the Letter of Credit Facility) and payments
by the Borrower in respect of such Facilities, and the retiring Administrative
Agent shall be discharged from its duties and obligations under this Agreement
as to such Facilities, other than as aforesaid. After any retiring
Administrative Agent's resignation or removal hereunder as Administrative Agent
as to all of the Facilities, the provisions of this Article VII shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent as to any Facilities under this Agreement.
ARTICLE VIII
GUARANTY
SECTION 8.01. Guaranty. Holding unconditionally and
irrevocably guarantees (the undertaking by Holding under this Article VIII being
the "Guaranty") the punctual payment when due, whether at stated maturity, by
acceleration or otherwise, of all Obligations of each other Loan Party now or
hereafter existing under the Loan Documents, whether for principal, interest,
fees, commissions, expenses or otherwise (such Obligations being the "Guaranteed
Obligations"), and agrees to pay any and all expenses (including, without
limitation, reasonable fees and expenses of counsel) incurred by the
Administrative Agent or any other Lender Party in enforcing any rights under
this Guaranty. Without limiting the generality of the foregoing, Holding's
liability shall extend to all amounts that constitute part of the Guaranteed
Obligations and would be owed by any other Loan Party to the Administrative
Agent or any other Lender Party under the Loan Documents but for the fact that
they are unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving such other Loan Party.
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SECTION 8.02. Guaranty Absolute. Holding guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the terms of the
Loan Documents, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of the
Administrative Agent or any other Secured Party with respect thereto. The
Obligations of Holding under this Guaranty are independent of the Guaranteed
Obligations or any other Obligations of any Loan Party under the Loan Documents,
and a separate action or actions may be brought and prosecuted against Holding
to enforce this Guaranty, irrespective of whether any action is brought against
any other Loan Party or whether any other Loan Party is joined in any such
action or actions. The liability of Holding under this Guaranty shall be
absolute, unconditional and irrevocable irrespective of, and Holding hereby
irrevocably waives any defenses it may now or hereafter have in any way relating
to, any and all of the following:
(a) any lack of validity or enforceability of any Loan
Document or any other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Guaranteed Obligations or any
other Obligations of any Loan Party under the Loan Documents, or any
other amendment or waiver of or any consent to departure from any Loan
Document (including, without limitation, any increase in the Guaranteed
Obligations resulting from the extension of additional credit to any
Loan Party or any of its Subsidiaries or otherwise);
(c) any taking, exchange, release or nonperfection of any
Collateral, or any taking, release or amendment or waiver of or consent
to departure from any other guarantee, for all or any of the Guaranteed
Obligations;
(d) any manner of application of Collateral, or proceeds
thereof, to all or any of the Guaranteed Obligations, or any manner of
sale or other disposition of any Collateral for all or any of the
Guaranteed Obligations or any other Obligations of any Loan Party under
the Loan Documents, or any other property and assets of any other Loan
Party or any of its Subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of any other Loan Party or any of its
Subsidiaries;
(f) any failure of the Administrative Agent or any Lender
Party to disclose to any Loan Party any information relating to the
financial condition, operations, properties or prospects of any other
Loan Party now or hereafter known to the Administrative Agent or such
Lender Party, as the case may be; or
(g) any other circumstance (including, without limitation, any
statute of limitations or any existence of or reliance on any
representation by the Administrative Agent or any Lender Party) that
might otherwise constitute a defense available to, or a discharge of,
Holding, any other Loan Party or any other guarantor or surety.
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This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by the Administrative Agent or any Lender Party or
by any other Person upon the insolvency, bankruptcy or reorganization of any
other Loan Party or otherwise, all as though such payment had not been made.
SECTION 8.03. Waivers and Acknowledgments. (a) Holding hereby
unconditionally and irrevocably waives promptness, diligence, notice of
acceptance and any other notice with respect to any of the Guaranteed
Obligations and this Guaranty, and any requirement that the Administrative Agent
or any Lender Party protect, secure, perfect or insure any Lien or any property
or assets subject thereto or exhaust any right or take any action against any
other Loan Party or any other Person or any Collateral.
(b) Holding hereby unconditionally and irrevocably waives any
duty on the part of the Administrative Agent or any other Lender Party to
disclose to Holding any matter, fact or thing relating to the business,
operation or condition of any other Loan Party or any of its Subsidiaries or its
property and assets now or hereafter known by the Administrative Agent or such
Lender Party.
(c) Holding hereby unconditionally waives any right to revoke
this Guaranty, and acknowledges that this Guaranty is continuing in nature and
applies to all Guaranteed Obligations, whether existing now or in the future.
(d) Holding acknowledges that it will receive substantial
direct and indirect benefits from the financing arrangements contemplated by the
Loan Documents and that the waivers set forth in this Section 8.03 are knowingly
made in contemplation of such benefits.
SECTION 8.04. Subrogation. Holding hereby unconditionally and
irrevocably agrees not to exercise any rights that it may now have or may
hereafter acquire against any other Loan Party or any other insider guarantor
that arise from the existence, payment, performance or enforcement of its
Obligations under this Guaranty or under any other Loan Document, including,
without limitation, any right of subrogation, reimbursement, exoneration,
contribution or indemnification and any right to participate in any claim or
remedy of the Administrative Agent or any Lender against such other Loan Party
or any other insider guarantor or any Collateral, whether or not such claim,
remedy or right arises in equity or under contract, statute or common law,
including, without limitation, the right to take or receive from such other Loan
Party or any other insider guarantor, directly or indirectly, in cash or other
property or by setoff or in any other manner, payment or security on account of
such claim, remedy or right, until such time as all of the Guaranteed
Obligations and all other amounts payable under this Guaranty shall have been
paid in full in cash, all of the Letters of Credit shall have expired,
terminated or been cancelled and the Commitments shall have expired or
terminated. If any amount shall be paid to Holding in violation of the
immediately preceding sentence at any time prior to the latest of (a) the
payment in full in cash of all of the Guaranteed Obligations and all other
amounts payable under this Guaranty, (b) the full drawing, termination,
expiration or
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cancellation of all Letters of Credit and, (c) the Termination Date, such amount
shall be held in trust for the benefit of the Administrative Agent and the other
Lender Parties and shall forthwith be paid to the Administrative Agent to be
credited and applied to the Guaranteed Obligations and all other amounts payable
under this Guaranty, whether matured or unmatured, in accordance with the terms
of the Loan Documents, or to be held as Collateral for any Guaranteed
Obligations or other amounts payable under this Guaranty thereafter arising. If
(i) Holding shall pay to the Administrative Agent all or any part of the
Guaranteed Obligations, (ii) all of the Guaranteed Obligations and all other
amounts payable under this Guaranty shall have been paid in full in cash, (iii)
all of the Letters of Credit shall have expired, terminated or been cancelled,
and (iv) the Termination Date shall have occurred, the Administrative Agent and
the Lender Parties will, at Holding's request and expense, execute and deliver
to Holding appropriate documents, without recourse and without representation or
warranty, necessary to evidence the transfer of subrogation to Holding of an
interest in the Guaranteed Obligations resulting from the payment made by
Holding.
SECTION 8.05. Continuing Guarantee; Assignments. This Guaranty
is a continuing guaranty and shall (a) remain in full force and effect until the
latest of (i) the payment in full in cash of all of the Guaranteed Obligations
and all other amounts payable under this Guaranty, (ii) the full drawing,
termination, expiration or cancellation of all Letters of Credit, and (iii) the
Termination Date, (b) be binding upon Holding and its successors and assigns and
(c) inure to the benefit of, and be enforceable by, the Administrative Agent and
the Lender Parties and their respective successors, transferees and assigns.
Without limiting the generality of clause (c) of the immediately preceding
sentence, any Lender Party may assign or otherwise transfer all or any portion
of its rights and obligations under this Agreement (including, without
limitation, all or any portion of its Commitment or Commitments, the Advances
owing to it and the Notes held by it) to any other Person, and such other Person
shall thereupon become vested with all the benefits in respect thereof granted
to such Lender Party under this Article VIII or otherwise, in each case as
provided in Section 9.07.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or the Notes or any other Loan Document, nor consent
to any departure by the Borrower therefrom, shall in any event be effective
unless the same shall be in writing and signed (or, in the case of the
Collateral Documents, consented to) by the Required Lenders, 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 (a) no amendment,
waiver or consent shall, unless in writing and signed by all of the Lenders
(other than any Lender Party that is, at such time, a Defaulting Lender), do any
of the following at any time: (i) waive any of the conditions specified in
Section 3.01, (ii) change the number of Lenders or the percentage of (x) the
Commitments, (y) the aggregate unpaid
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principal amount of the Advances or (z) the aggregate Available Amount of
outstanding Letters of Credit that, in each case, shall be required for the
Lenders or any of them to take any action hereunder, (iii) reduce or limit the
obligations of Holding under Section 8.01 or otherwise limit Holding's liability
with respect to the Obligations owing to the Administrative Agent and the Lender
Parties, (iv) release any material portion of the Collateral in any transaction
or series of related transactions or permit the creation, incurrence, assumption
or existence of any Lien on any material portion of the Collateral in any
transaction or series of related transactions to secure any Obligations other
than Obligations owing to the Secured Parties under the Loan Documents and other
than Debt owing to any other Person, provided that, in the case of any Lien on
any material portion of the Collateral to secure Debt owing to any other Person,
(A) the Borrower shall, on the date such Debt shall be incurred or issued,
prepay the Advances pursuant to, and in the order of priority set forth in,
Section 2.06(b)(ii) in an aggregate principal amount equal to the amount of such
Net Cash Proceeds to the extent required to do so under Section 2.06(b)(ii) and
(B) the Required Lenders shall otherwise permit the creation, incurrence,
assumption or existence of such Lien and, to the extent not otherwise permitted
under Section 5.02(b), of such Debt, and (v) amend this Section 9.01 and (b) no
amendment, waiver or consent shall, unless in writing and signed by the Required
Lenders and each Lender that has a Commitment under the Term Facility or
Revolving Credit Facility if affected by such amendment, waiver or consent, (i)
increase the Commitments of such Lender or subject such Lender to any additional
obligations, (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 any date fixed for any payment of principal of, 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 prepayment set forth in
Section 2.06 in any manner that materially affects such Lender; provided further
that no amendment, waiver or consent shall, unless in writing and signed by the
Swing Line Bank or the Issuing Bank, as the case may be, in addition to the
Lenders required above to take such action, affect the rights or obligations of
the Swing Line Bank or of the Issuing Bank, as the case may be, under this
Agreement; and provided further that no amendment, waiver or consent shall,
unless in writing and signed by the Administrative Agent in addition to the
Lenders required above to take such action, affect the rights or duties of the
Administrative Agent under this Agreement.
SECTION 9.02. Notices, Etc. All notices and other
communications provided for hereunder shall be in writing (including telecopy
communication) and mailed, telecopied or delivered, if to the Borrower, at its
address at 3915 Delaware Avenue, Des Moines, Iowa 50313, Attention: Dean
Longnecker; if to any Initial Lender or the Initial Issuing Bank, at its
Domestic Lending Office specified opposite its name on Schedule I hereto; if to
any other Lender Party, at its Domestic Lending Office specified in the
Assignment and Acceptance pursuant to which it became a Lender Party; and if to
the Administrative Agent, at its address at One Federal Street, Boston, MA
02110, Attention: Jed Duncan; or, as to each party, at such other address as
shall be designated by such party in a written notice to the other parties. All
such notices and communications shall, when mailed or telecopied, be effective
when deposited in the mails or transmitted by telecopier, respectively, except
that notices and communications to the Administrative Agent pursuant to
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Article II, III or VII shall not be effective until received by the
Administrative Agent. Delivery by telecopier of an executed counterpart of any
amendment or waiver of any provision of this Agreement or the Notes or of any
Exhibit hereto to be executed and delivered hereunder shall be effective as
delivery of a manually executed counterpart thereof.
SECTION 9.03. No Waiver; Remedies. No failure on the part of
any Lender Party or the Administrative Agent to exercise, and no delay in
exercising, any right hereunder or under any Note shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right preclude any
other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
SECTION 9.04. Costs and Expenses. (a) The Borrower agrees to
pay on demand (i) all reasonable costs and expenses of the Administrative Agent
in connection with the preparation, execution, delivery, administration,
modification and amendment of the Loan Documents (including, without limitation,
(A) all due diligence, collateral review, syndication, transportation, computer,
duplication, appraisal, audit, insurance, consultant, search, filing and
recording fees and expenses and (B) the reasonable fees and expenses of counsel
for the Administrative Agent with respect thereto, with respect to advising the
Administrative Agent as to its rights and responsibilities, or the perfection,
protection or preservation of rights or interests, under the Loan Documents,
with respect to negotiations with any Loan Party or with other creditors of any
Loan Party or any of its Subsidiaries arising out of any Default or any events
or circumstances that may give rise to a Default and with respect to presenting
claims in or otherwise participating in or monitoring any bankruptcy, insolvency
or other similar proceeding involving creditors' rights generally and any
proceeding ancillary thereto) and (ii) all costs and expenses of the
Administrative Agent and the Lender Parties in connection with the enforcement
of the Loan Documents, whether in any action, suit or litigation, any
bankruptcy, insolvency or other similar proceeding affecting creditors' rights
generally (including, without limitation, the reasonable fees and expenses of
counsel for the Administrative Agent and each Lender Party with respect
thereto).
(b) The Borrower agrees to indemnify and hold harmless the
Administrative Agent, the Syndication Agent, the Documentation Agent, each
Lender Party and each of their Affiliates and their officers, directors,
employees, agents and advisors (each, an "Indemnified Party") from and against
any and all claims, damages, losses, liabilities and expenses (including,
without limitation, reasonable fees and expenses of counsel) that may be
incurred by or asserted or awarded against any Indemnified Party, in each case
arising out of or in connection with or by reason of (including, without
limitation, in connection with any investigation, litigation or proceeding or
preparation of a defense in connection therewith) (i) the Facilities, the actual
or proposed use of the proceeds of the Advances or the Letters of Credit, the
Loan Documents or any of the transactions contemplated thereby, including,
without limitation, any acquisition or proposed acquisition (including, without
limitation, the Acquisition and any of the other transactions contemplated
hereby) by Holding, the Equity Investors or any of their Subsidiaries or
Affiliates of all or
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any portion of the stock or substantially all the assets of the Company or any
of its Subsidiaries or (ii) the actual or alleged presence of Hazardous
Materials on any property of any Loan Party or any of its Subsidiaries or any
Environmental Action relating in any way to any Loan Party or any of its
Subsidiaries, except to the extent such claim, damage, loss, liability or
expense results from such Indemnified Party's gross negligence or willful
misconduct. In the case of an investigation, litigation or other proceeding to
which the indemnity in this Section 9.04(b) applies, such indemnity shall be
effective whether or not such investigation, litigation or proceeding is brought
by any Loan Party, its directors, shareholders or creditors or an Indemnified
Party or any Indemnified Party is otherwise a party thereto and whether or not
the transactions contemplated hereby are consummated. The Borrower also agrees
not to assert any claim against the Administrative Agent, the Syndication Agent,
the Documentation Agent, any Lender Party or any of their Affiliates, or any of
their respective officers, directors, employees, attorneys and agents, on any
theory of liability, for special, indirect, consequential or punitive damages
arising out of or otherwise relating to the Facilities, the actual or proposed
use of the proceeds of the Advances or the Letters of Credit, the Loan Documents
or any of the transactions contemplated thereby.
(c) If any payment of principal of, or Conversion of, any
Eurodollar Rate Advance is made by the Borrower to or for the account of a
Lender Party other than on the last day of the Interest Period for such Advance,
as a result of a payment or Conversion pursuant to Section 2.09(b)(i) or
2.10(d), acceleration of the maturity of the Notes pursuant to Section 6.01 or
for any other reason, the Borrower shall pay to the Administrative Agent for
each Appropriate Lender an amount equal to the present value (calculated in
accordance with this Section 9.04(c)) of interest for the remaining portion of
the relevant Interest Period on the amount of such Advance, at a rate per annum
equal to the excess of (a) the existing Eurodollar Rate applicable to such
Advance over (b) the Eurodollar Rate then applicable to a deemed Interest Period
ending on the last day of such Interest Period. The present value of such
additional interest shall be calculated by discounting the amount of such
interest for each day in the remaining portion of such Interest Period from such
date of payment or Conversion at a rate per annum equal to the interest rate
determined pursuant to the preceding sentence, and by adding all such amounts
for all such days during such period. The determination by the Administrative
Agent of such amount of interest shall, in the absence of manifest error, be
conclusive.
(d) If any Loan Party fails to pay when due any costs,
expenses or other amounts payable by it under any Loan Document, including,
without limitation, fees and expenses of counsel and indemnities, such amount
may be paid on behalf of such Loan Party by the Administrative Agent or any
Lender Party, in its sole discretion.
(e) Without prejudice to the survival of any other agreement
of any Loan Party hereunder or under any other Loan Document, the agreements and
obligations of the Borrower contained in Sections 2.10 and 2.12 and this Section
9.04 shall survive the payment in full of principal, interest and all other
amounts payable hereunder and under any of the other Loan Documents.
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SECTION 9.05. Right of Set-off. Upon (a) the occurrence and
during the continuance of any Event of Default and (b) the making of the request
or the granting of the consent specified by Section 6.01 to authorize the
Administrative Agent to declare the Notes due and payable pursuant to the
provisions of Section 6.01, each Lender Party and each of its respective
Affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and otherwise apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Lender Party or such
Affiliate to or for the credit or the account of the Borrower against any and
all of the Obligations of the Borrower now or hereafter existing under this
Agreement and the Note or Notes (if any) held by such Lender Party, irrespective
of whether such Lender Party shall have made any demand under this Agreement or
such Note or Notes and although such obligations may be unmatured. Each Lender
Party agrees promptly to notify the Borrower after any such set-off and
application; provided, however, that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of each Lender
Party and its respective Affiliates under this Section are in addition to other
rights and remedies (including, without limitation, other rights of set-off)
that such Lender Party and its respective Affiliates may have.
SECTION 9.06. Binding Effect. This Agreement shall become
effective when it shall have been executed by the Borrower, the Administrative
Agent, the Syndication Agent and the Documentation Agent and when the
Administrative Agent shall have been notified by each Initial Lender and the
Initial Issuing Bank that such Initial Lender and the Initial Issuing Bank has
executed it and thereafter shall be binding upon and inure to the benefit of the
Borrower, the Administrative Agent and each Lender Party and their respective
successors and assigns, except that the Borrower shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of the Lender Parties.
SECTION 9.07. Assignments and Participations. (a) Each Lender
may and, if demanded by the Borrower (following a demand to such Lender pursuant
to Section 2.16), will, assign to one or more Eligible Assignees all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment or Commitments, the Advances
owing to it and the Note or Notes held by it); provided, however, that (i) each
such assignment shall be of a uniform, and not a varying, percentage of all
rights and obligations under and in respect of the Facilities, (ii) except in
the case of an assignment to a Person that, immediately prior to such
assignment, was a Lender or an assignment of all of a Lender's rights and
obligations under this Agreement, the amount of the Commitment of the assigning
Lender being assigned pursuant to each such assignment (determined as of the
date of the Assignment and Acceptance with respect to such assignment) shall in
no event be less than $5,000,000, (iii) each such assignment shall be to an
Eligible Assignee, (iv) each such assignment made as a result of a demand by the
Borrower pursuant to this Section 9.07(a) shall be arranged by the Borrower
after consultation with the Administrative Agent and shall be either an
assignment of all of the rights and obligations of the assigning Lender under
this Agreement or an assignment of a portion of such rights and obligations made
concurrently with another such assignment or other such assignments that
together cover all of the rights and obligations of the assigning
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Lender under this Agreement, (v) no Lender shall be obligated to make any such
assignment as a result of a demand by the Borrower pursuant to this Section
9.07(a) unless and until such Lender shall have received one or more payments
from either the Borrower or one or more Eligible Assignees in an aggregate
amount at least equal to the aggregate outstanding principal amount of the
Advances owing to such Lender, together with accrued interest thereon to the
date of payment of such principal amount and all other amounts payable to such
Lender under this Agreement, (vi) no such assignments shall be permitted without
the consent of the Administrative Agent until the Administrative Agent shall
have notified the Lender Parties that syndication of the Commitments hereunder
has been completed, and (vii) the parties to each such assignment shall execute
and deliver to the Administrative Agent, for its acceptance and recording in the
Register, an Assignment and Acceptance, together with any Note or Notes subject
to such assignment and a processing and recordation fee of $3000.00.
(b) Upon such execution, delivery, acceptance and recording,
from and after the effective date specified in such Assignment and Acceptance,
(x) the assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of a Lender or
Issuing Bank, as the case may be, hereunder and (y) the Lender or Issuing Bank
assignor thereunder shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights and be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance covering all or the remaining portion
of an assigning Lender's or Issuing Bank's rights and obligations under this
Agreement, such Lender or Issuing Bank shall cease to be a party hereto).
(c) By executing and delivering an Assignment and Acceptance,
the Lender Party assignor thereunder and the assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender Party makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any other Loan Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any lien or security interest created or purported to be created
under or in connection with, this Agreement or any other Loan Document or any
other instrument or document furnished pursuant hereto or thereto; (ii) such
assigning Lender Party makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or any
other Loan Party or the performance or observance by any Loan Party of any of
its obligations under any Loan Document or any other instrument or document
furnished pursuant thereto; (iii) such assignee confirms that it has received a
copy of this Agreement, together with copies of the financial statements
referred to in Section 4.01 and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (iv) such assignee will, independently and
without reliance upon the Administrative Agent, such assigning Lender Party or
any other Lender Party and based on such documents and information as it shall
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deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (v) such assignee confirms
that it is an Eligible Assignee; (vi) such assignee appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers and discretion under the Loan Documents as are delegated to the
Administrative Agent by the terms hereof, together with such powers and
discretion as are reasonably incidental thereto; and (vii) such assignee agrees
that it will perform in accordance with their terms all of the obligations which
by the terms of this Agreement are required to be performed by it as a Lender or
Issuing Bank, as the case may be.
(d) The Administrative Agent shall maintain at its address
referred to in Section 9.02 a copy of each Assignment and Acceptance delivered
to and accepted by it and a register for the recordation of the names and
addresses of the Lender Parties and the Commitment under each Facility of, and
principal amount of the Advances owing under each Facility to, each Lender Party
from time to time (the "Register"). The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and the
Borrower, the Administrative Agent and the Lender Parties may treat each Person
whose name is recorded in the Register as a Lender Party hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrower or any Lender Party at any reasonable time and from time to time
upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender Party and an assignee, together with any Note or Notes
subject to such assignment, the Administrative Agent shall, if such Assignment
and Acceptance has been completed and is in substantially the form of Exhibit C
hereto, (i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to the
Borrower. In the case of any assignment by a Lender, within five Business Days
after its receipt of such notice, the Borrower, at its own expense, shall
execute and deliver to the Administrative Agent in exchange for the surrendered
Note or Notes a new Note to the order of such Eligible Assignee in an amount
equal to the Commitment assumed by it under a Facility pursuant to such
Assignment and Acceptance and, if the assigning Lender has retained a Commitment
hereunder under such Facility, a new Note to the order of the assigning Lender
in an amount equal to the Commitment retained by it hereunder. 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 effective date of
such Assignment and Acceptance and shall otherwise be in substantially the form
of Exhibit A-1 or A-2 hereto, as the case may be.
(f) The Issuing Bank may assign to an Eligible Assignee all
of its rights and obligations under the undrawn portion of its Letter of Credit
Commitment at any time; provided, however, that (i) each such assignment shall
be to an Eligible Assignee and (ii) the parties to each such assignment shall
execute and deliver to the Administrative Agent, for its acceptance and
recording in the Register, an Assignment and Acceptance, together with a
processing and recordation fee of $3000.00.
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(g) Each Lender Party may sell participations to one or more
Persons (other than any Loan Party or any of its Affiliates) in or to all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitments, the Advances owing to it and
the Note or Notes (if any) held by it); provided, however, that (i) such Lender
Party's obligations under this Agreement (including, without limitation, its
Commitments) shall remain unchanged, (ii) such Lender Party shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such Lender Party shall remain the holder of any such Note for all
purposes of this Agreement, (iv) the Borrower, the Administrative Agent and the
other Lender Parties shall continue to deal solely and directly with such Lender
Party in connection with such Lender Party's rights and obligations under this
Agreement and (v) no participant under any such participation shall have any
right to approve any amendment or waiver of any provision of any Loan Document,
or any consent to any departure by any Loan Party therefrom, except to the
extent that such amendment, waiver or consent would reduce the principal of, or
interest on, the Notes or any fees or other amounts payable hereunder, in each
case to the extent subject to such participation, postpone any date fixed for
any payment of principal of, or interest on, the Notes or any fees or other
amounts payable hereunder, in each case to the extent subject to such
participation.
(h) Any Lender Party may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.07, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrower furnished to such Lender
Party by or on behalf of the Borrower; provided, however, that, prior to any
such disclosure, the assignee or participant or proposed assignee or participant
shall agree to preserve the confidentiality of any Confidential Information
received by it from such Lender Party.
(i) Notwithstanding any other provision set forth in this
Agreement, any Lender Party may at any time create a security interest in all or
any portion of its rights under this Agreement (including, without limitation,
the Advances owing to it and the Note or Notes held by it) in favor of any
Federal Reserve Bank in accordance with Regulation A of the Board of Governors
of the Federal Reserve System.
SECTION 9.08. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 9.09. No Liability of the Issuing Bank. The Borrower
assumes all risks of the acts or omissions of any beneficiary or transferee of
any Letter of Credit with respect to its use of such Letter of Credit. Neither
the Issuing Bank nor any of its officers or directors shall be liable or
responsible for: (a) the use that may be made of any Letter of Credit or any
acts or omissions of any beneficiary or transferee in connection therewith;
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(b) the validity, sufficiency or genuineness of documents, or of any endorsement
thereon, even if such documents should prove to be in any or all respects
invalid, insufficient, fraudulent or forged; (c) payment by the Issuing Bank
against presentation of documents that do not comply with the terms of a Letter
of Credit, including failure of any documents to bear any reference or adequate
reference to the Letter of Credit; or (d) any other circumstances whatsoever in
making or failing to make payment under any Letter of Credit, except that the
Borrower shall have a claim against the Issuing Bank, and the Issuing Bank shall
be liable to the Borrower, to the extent of any direct, but not consequential,
damages suffered by the Borrower that the Borrower proves were caused by (i) the
Issuing Bank's willful misconduct or gross negligence in determining whether
documents presented under any Letter of Credit comply with the terms of the
Letter of Credit or (ii) the Issuing Bank's willful failure to make lawful
payment under a Letter of Credit after the presentation to it of a draft and
certificates strictly complying with the terms and conditions of the Letter of
Credit. In furtherance and not in limitation of the foregoing, the Issuing Bank
may accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary.
SECTION 9.10. Confidentiality. Neither the Administrative
Agent nor any Lender Party shall disclose any Confidential Information to any
Person without the consent of the Borrower, other than (a) to the Administrative
Agent's or such Lender Party's Affiliates and their officers, directors,
employees, agents and advisors and to actual or prospective Eligible Assignees
and participants, and then only on a confidential basis, (b) as required by any
law, rule or regulation or judicial process and (c) as requested or required by
any state, federal or foreign authority or examiner regulating banks or banking.
SECTION 9.11. Jurisdiction, Etc. (a) Each of the parties
hereto hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or any of the other Loan Documents to which it is a
party, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in any such
New York State court or, to the extent permitted by law, in such federal court.
Each of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Agreement shall affect any right that any party may otherwise have to bring any
action or proceeding relating to this Agreement or any of the other Loan
Documents in the courts of any jurisdiction.
(b) Each of the parties hereto irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or any of the
other Loan Documents to which it is a party in any New York State or federal
court. Each of the parties hereto hereby irrevocably waives, to
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the fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
SECTION 9.12. Governing Law. This Agreement and the Notes
shall be governed by, and construed in accordance with, the laws of the State of
New York.
SECTION 9.13. Waiver of Jury Trial. Each of the Borrower, the
Administrative Agent, the Syndication Agent, the Documentation Agent and the
Lender Parties irrevocably waives all right to trial by jury in any action,
proceeding or counterclaim (whether based on contract, tort or otherwise)
arising out of or relating to any of the Loan Documents, the Advances or the
actions of the Administrative Agent, the Syndication Agent, the Documentation
Agent or any Lender Party in the negotiation, administration, performance or
enforcement thereof.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
CENTRAL TRACTOR FARM & COUNTRY, INC.
By: /s/Adam Suttin
Title:
CT HOLDING, INC.
By: /s/Adam Suttin
Title:
FLEET NATIONAL BANK, as
Administrative Agent
By: /s/John E. Duncan
Title:
NATIONSBANK, N.A. as
Syndication Agent
By: /s/Robert Wilson
Title: Vice President
DLJ CAPITAL FUNDING, INC. as
Documentation Agent
By: /s/Stephen P. Hailey
Title:
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Initial Issuing Bank
FLEET NATIONAL BANK
By: /s/John E. Duncan
Title:
Initial Lenders
FLEET NATIONAL BANK
By: /s/John E. Duncan
Title:
NATIONSBANK, N.A.
By: /s/Robert Wilson
Title: Vice President
DLJ CAPITAL FUNDING, INC.
By: /s/Stephen P. Hailey
Title:
