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) May 7, 1999
QUALITY STORES, 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)
455 E. Ellis Road, Muskegon, MI 49443
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (616) 798-8787
Central Tractor Farm & Country, Inc.
3915 Delaware Avenue
Des Moines, Iowa 50316-0330
(Former Name or Former Address, if Changed Since Last Report)
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Item 2. Acquisition or Disposition of Assets.
On May 7, 1999, the Registrant acquired Quality Stores, Inc. ("Quality
Stores") in a transaction in which Quality Stores was merged with and into the
Registrant (the "Merger"). In connection with the Merger, the former
shareholders and option holders of Quality Stores received, in the aggregate,
$111.5 million in cash and 792,430 shares of common stock of the Registrant's
parent company ("Holding"). In connection with the Merger, the Registrant also
repaid approximately $42.1 million in debt owed by Quality Stores.
Quality Stores, based in Muskegon, Michigan, had a strong presence in
Michigan and Ohio and, at the time of the Merger, operated a chain of 114
stores, with annual sales of approximately $525 million, which offer merchandise
oriented to farm and country living, including animal care products, farm and
ranch supplies, workwear, and lawn and garden products. In connection with the
Merger, the Registrant changed its name from "Central Tractor Farm & Country,
Inc." to "Quality Stores, Inc." and relocated its headquarters to Muskegon,
Michigan. The Registrant will continue to operate stores primarily under the
Central Tractor Farm & Country, Country General and Quality Farm & Fleet names.
The non-cash portion of the Merger consideration was contributed to the
Registrant by Holding. The Registrant funded the cash portion of the Merger
consideration and various fees and expenses associated with the Merger from
funds drawn under an amendment and restatement of the Registrant's Credit
Agreement with Fleet National Bank, as administrative agent for the banks,
financial institutions and other institutional lenders party thereto (the
"Credit Facility"). Among other things, the amendment and restatement of the
Credit Facility increased the aggregate principal amount of the facility from
$150,000,000 to $320,000,000, consisting of a $220,000,000 term loan facility
and a $100,000,000 revolving credit facility.
Following the transaction, which will be accounted for as a purchase,
J.W. Childs and affiliates own 41.4% of the common stock of Holding (which will
continue to own 100% of the common stock of the Registrant), Fenway Partners and
affiliates own 21.6%, former Quality Stores shareholders own 30.8% and other
shareholders own 6.2%. Pursuant to the stockholders agreement among the various
Holding shareholders, J.W. Childs and affiliates will continue to have the right
to designate a majority of the directors of Holding and will also continue to
have a so-called "drag-along" right to cause all shareholders to join J.W.
Childs and affiliates in disposing of all of their common stock and/or options
to acquire common stock of Holding.
Item 5. Other Events.
In connection with the Merger, the Board of Directors of the Registrant
was expanded to 14 members, including the existing 11 members of the
Registrant's board, plus David C. Bliss, Alan L. Fansler and John L. Hilt, three
directors nominated by Quality Stores' shareholders. James T. McKitrick, who
served as President and Chief Executive Officer of Central Tractor Farm &
Country prior to the Merger, will serve as President and Chief Executive Officer
of the Registrant. David Bliss, who served as Quality Stores' Chairman and Chief
Executive Officer prior to the Merger, will serve as Chairman of the Registrant.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Businesses Acquired.
The Registrant expects to file the required financial statements of
Quality Stores, Inc. by amendment to this report on or before July 21, 1999.
(b) Pro Forma Financial Information.
The Registrant expects to file the required pro forma financial
information relating to its acquisition of Quality Stores, Inc. by amendment to
this report on or before July 21, 1999.
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(c) Exhibits.
The following documents are filed as exhibits to this report:
Exhibit No. Description
2.1 Agreement and Plan of Reorganization, dated as of March 27, 1999,
among CT Holding, Inc., Central Tractor Farm & Country, Inc. and
Quality Stores, Inc.
99.1 Second Amended and Restated Credit Agreement, dated as of May 7,
1999.
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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.
QUALITY STORES, INC.
By: /s/ James F. Hurley
James F. Hurley
Senior Vice President of Finance and Chief
Financial Officer
Date: May 21, 1999
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EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
By and Among
CT HOLDING, INC.,
CENTRAL TRACTOR FARM & COUNTRY, INC.,
QUALITY STORES, INC.
and
THE PRINCIPAL STOCKHOLDERS
OF QUALITY STORES, INC.
dated as of
March 27, 1999
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
ARTICLE 1
THE MERGER..................................................................................................1
1.1 The Merger......................................................................................1
1.2 Action by Stockholders..........................................................................2
1.3 Closing.........................................................................................2
1.4 Effective Time..................................................................................2
1.5 Effect of the Merger............................................................................2
1.6 Certificate of Incorporation....................................................................3
1.7 Bylaws..........................................................................................3
1.8 Directors.......................................................................................3
ARTICLE 2
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES..........................................................3
2.1 Conversion of Company Securities................................................................3
2.2 Proration.......................................................................................5
2.3 Exchange of Certificates; Exchange Agent and Exchange Procedures................................7
2.4 Stock Transfer Books............................................................................9
2.5 Dissenting Shares...............................................................................9
2.6 Procedures for Making Rollover Elections.......................................................10
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY..............................................................11
3.1 Organization and Business; Power and Authority; Effect of Transaction..........................11
3.2 Financial and Other Information................................................................12
3.3 Authorized and Outstanding Capital Stock. ....................................................13
3.4 Changes in Condition...........................................................................13
3.5 Liabilities....................................................................................14
3.6 Title to Properties; Leases....................................................................14
3.7 Inventory......................................................................................16
3.8 Accounts and Notes Receivable..................................................................17
3.9 Compliance with Private Authorizations. .......................................................17
3.10 Compliance with Governmental Authorizations and Applicable Law. ..............................17
3.11 Intangible Assets; Intellectual Property. .....................................................18
3.12 Related Transactions...........................................................................20
3.13 Insurance......................................................................................20
3.14 Tax Matters....................................................................................20
3.15 Employee Retirement Income Security Act of 1974................................................22
3.16 Employment Arrangements. .....................................................................23
3.17 Material Agreements............................................................................23
3.18 Ordinary Course of Business. .................................................................24
3.19 Broker or Finder...............................................................................26
3.20 Environmental Matters..........................................................................27
3.21 Books and Records..............................................................................28
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3.22 Suppliers......................................................................................28
3.23 Officers and Directors.........................................................................28
3.24 Bank Accounts..................................................................................28
3.25 Anti-takeover Statutes Not Applicable..........................................................28
3.26 Litigation.....................................................................................28
3.27 Product Warranty...............................................................................28
3.28 Product Liability..............................................................................29
3.29 Continuing Representations and Warranties......................................................29
3.30 Disclosure.....................................................................................29
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL STOCKHOLDERS
..........................................................................................................29
4.1 Ownership......................................................................................29
4.2 Liens..........................................................................................29
4.3 Authorization of Agreement.....................................................................29
4.4 No Governmental Consents.......................................................................30
4.5 Investment Representations of Principal Stockholders...........................................30
4.6 Stockholder Representative.....................................................................31
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER SUBSIDIARY......................................................................................32
5.1 Organization and Business; Power and Authority; Effect of Transaction..........................32
5.2 Financial and Other Information................................................................33
5.3 Authorized and Outstanding Capital Stock.......................................................34
5.4 Changes in Condition...........................................................................35
5.5 Liabilities....................................................................................35
5.6 Title to Properties; Leases....................................................................35
5.7 Inventory......................................................................................37
5.8 Accounts and Notes Receivable..................................................................38
5.9 Compliance with Private Authorizations.........................................................38
5.10 Compliance with Governmental Authorizations and Applicable Law.................................38
5.11 Intangible Assets; Intellectual Property.......................................................39
5.12 Related Transactions...........................................................................40
5.13 Insurance......................................................................................41
5.14 Tax Matters....................................................................................41
5.15 Employee Retirement Income Security Act of 1974................................................41
5.16 Employment Arrangements........................................................................43
5.17 Material Agreements............................................................................43
5.18 Ordinary Course of Business....................................................................44
5.19 Broker or Finder...............................................................................46
5.20 Environmental Matters..........................................................................46
5.21 Anti-takeover Statutes Not Applicable..........................................................47
5.22 Litigation.....................................................................................47
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5.23 Solvency.......................................................................................47
5.24 Financing Commitment Letter....................................................................47
5.25 Continuing Representations and Warranties......................................................47
5.26 Disclosure.....................................................................................47
ARTICLE 6
ADDITIONAL COVENANTS.......................................................................................48
6.1 Access to Information; Confidentiality.........................................................48
6.2 Agreement to Cooperate.........................................................................49
6.3 Certain Collateral Documents...................................................................50
6.4 No Solicitation................................................................................50
6.5 Directors' and Officers' Indemnification and Insurance.........................................51
6.6 Notification of Certain Matters................................................................52
6.7 Public Announcements...........................................................................52
6.8 Certain Actions Concerning Business Combinations...............................................52
6.9 Tax Treatment..................................................................................52
6.10 Pre-Closing Covenants of the Company and its Subsidiaries......................................52
6.11 Pre-Closing Covenants of Parent and its Subsidiaries...........................................53
6.12 Employment Matters.............................................................................53
6.13 Employment Agreements..........................................................................53
6.14 Financing......................................................................................53
6.15 Surviving Corporation Headquarters.............................................................54
6.16 Fedco Pellet Systems, Inc......................................................................54
ARTICLE 7
CLOSING CONDITIONS.........................................................................................54
7.1 Conditions to Obligations of Each Party to Effect the Merger...................................54
7.2 Conditions to Obligations of Parent and Merger Subsidiary......................................54
7.3 Conditions to Obligations of the Company.......................................................56
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER..........................................................................57
8.1 Termination....................................................................................57
8.2 Effect of Termination..........................................................................58
8.3 Amendment......................................................................................58
8.4 Waiver.........................................................................................58
8.5 Fees, Expenses and Other Payments..............................................................59
8.6 Effect of Investigation........................................................................59
ARTICLE 9
INDEMNIFICATION............................................................................................59
9.1 Effectiveness of Representations, etc..........................................................59
9.2 Indemnification................................................................................59
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9.3 Procedures Concerning Claims by Third Parties; Payment of Damages; etc.........................64
9.4 Exclusive Remedy...............................................................................65
9.5 Net Recovery...................................................................................66
9.6 Appointment of Agent...........................................................................67
ARTICLE 10
GENERAL PROVISIONS.........................................................................................67
10.1 Notices........................................................................................67
10.2 Headings.......................................................................................68
10.3 Severability...................................................................................68
10.4 Entire Agreement...............................................................................68
10.5 Assignment.....................................................................................68
10.6 Parties in Interest............................................................................69
10.7 Governing Law..................................................................................69
10.8 Enforcement of the Agreement...................................................................69
10.9 Counterparts...................................................................................69
10.10 Mutual Drafting................................................................................69
ARTICLE 11
DEFINITIONS................................................................................................70
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EXHIBITS
Exhibit 2.8 - Form of Escrow Agreement
Exhibit 6.3(ii) - Form of Noncompetition Agreement
Exhibit 6.13 - Form of New Employment Agreements
Exhibit 7.1(d) - Form of Amended and Restated Stockholders Agreement
Exhibit 7.2(c) - Form of Opinion of Skadden, Arps, Slate Meagher &
Flom LLP
Exhibit 7.2(g) - Form of Backup Certificate for S&W Tax Opinion
Exhibit 7.2(j) - Financing Commitment Letter
Exhibit 7.3(a) - Form of Opinion of Sullivan & Worcester LLP
Exhibit 7.3(d) - Form of Backup Certificate for SASM&F Tax Opinion
SCHEDULES
Company Disclosure Schedule
Parent Disclosure Schedule
Schedule 7.2(e) - Consents Required at Closing
Schedule 9.2(g) - Contribution Percentages for Non-Escrowed
Indemnity Claims
Qualified Investor Schedule
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AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of March 27, 1999, among
CT Holding, Inc., a Delaware corporation ("Parent"), Central Tractor Farm &
Country, Inc., a Delaware corporation and a wholly owned Subsidiary of Parent
("Merger Subsidiary"or "CT"), Quality Stores, Inc., a Delaware corporation (the
"Company"), and the Persons listed as the Principal Stockholders on the
signature pages hereof (the "Principal Stockholders").
W I T N E S S E T H:
WHEREAS, upon the terms and subject to the conditions of this Agreement
(this and other capitalized terms used herein are either defined in Article 11
below or in another Section of this Agreement and, in such case, Article 11
includes a reference to such Section), in accordance with the General
Corporation Law of the State of Delaware (the "DGCL"), the Company and Merger
Subsidiary will carry out a business combination transaction pursuant to which
the Company will merge with and into Merger Subsidiary (the "Merger") and the
stockholders of the Company (the "Stockholders") will, except as otherwise
provided herein, convert their holdings into a combination of cash and shares of
Class A Common Stock, par value $.01 per share, of Parent ("Parent Stock");
WHEREAS, the Board of Directors of the Company has unanimously
determined that the Merger is fair to, and in the best interests of, the Company
and the Stockholders and has approved and adopted this Agreement as a plan of
tax-free reorganization within the provisions of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), has approved this Agreement, the
Merger and the Transactions and has recommended approval and adoption of this
Agreement and the Merger by the Stockholders; and
WHEREAS, the Board of Directors of Parent has unanimously approved and
adopted this Agreement, the Merger and the Transactions, and Parent has approved
and adopted this Agreement and the Merger as the sole stockholder of Merger
Subsidiary;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto, intending to be legally bound, agree as follows:
ARTICLE 1
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the DGCL, at the Effective Time the
Company shall be merged with and into Merger Subsidiary. As a result of the
Merger, the separate existence of the Company shall cease and Merger Subsidiary
shall continue as the surviving corporation of the Merger (the "Surviving
Corporation"). At the Effective Time, by virtue of the Merger, the name of the
Surviving Corporation shall be changed to "Quality Stores, Inc."
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1.2 Action by Stockholders.
(a) The Company, acting through its Board of Directors, shall, in
accordance with and subject to Applicable Law and its Organic Documents: as soon
as practicable (and regardless of whether, subsequent to the date hereof, the
Board of Directors shall have determined that this Agreement, the Merger and the
Transactions are no longer in the best interests of the Company and the
Stockholders, or shall have withdrawn, modified or changed its approval of this
Agreement, the Merger and the Transactions and its recommendation that the
Stockholders vote in favor of the approval and adoption of this Agreement and
the Merger), submit for approval and adoption by the Stockholders (at a special
meeting called for such purpose (the "Company Meeting") or by written consent)
this Agreement and the Merger; include in any materials delivered to the
Stockholders in connection with the solicitation of written consents the
conclusion and recommendation of the Board of Directors to the effect that the
Board of Directors, having determined that this Agreement, the Merger and the
Transactions are in the best interests of the Company and the Stockholders, has
approved this Agreement, the Merger and the Transactions and recommends that the
Stockholders entitled to vote thereon vote in favor of the approval and adoption
of this Agreement and the Merger, unless the Board of Directors shall have
withdrawn its recommendation that the Stockholders entitled to vote thereon vote
in favor of the approval and adoption of this Agreement and the Merger; and use
its reasonable best efforts to obtain the necessary approval and adoption of
this Agreement and the Merger by the Stockholders.
(b) Parent hereby represents that (i) Parent, as sole stockholder of
Merger Subsidiary, has approved and adopted this Agreement and the Merger and
(ii) the board of Directors of Merger Subsidiary has approved and adopted this
Agreement, the Merger and the Transactions. Parent shall take all additional
actions as sole stockholder of Merger Subsidiary necessary to adopt and approve
and effectuate the provisions of this Agreement, the Merger and the
Transactions.
1.3 Closing. Unless this Agreement shall have been terminated pursuant
to Section 8.1 hereof and the Merger and the Transactions shall have been
abandoned, the closing of the Merger (the "Closing") will take place at 10:00
A.M., local time, on the fifth business day (the "Closing Date") after the date
on which the last of the conditions set forth in Article 7 is satisfied or
waived (other than conditions requiring deliveries at the Closing), at the
offices of Sullivan & Worcester LLP, One Post Office Square, Boston,
Massachusetts, unless another date, time or place is agreed to in writing by the
Company and Parent.
1.4 Effective Time. As promptly as practicable after the satisfaction
or, if permissible, waiver of the conditions set forth in Article 7 (but subject
to Section 1.3 hereof), the Parties shall cause the Merger to be consummated by
filing a certificate of merger with the Secretary of State of the State of
Delaware, and by making any related filings required under the DGCL. The Merger
shall become effective at such time (but not prior to the Closing Date) as such
certificate is duly filed with the Secretary of State of the State of Delaware,
or at such later time as is specified in such certificate (the "Effective
Time").
1.5 Effect of the Merger. From and after the Effective Time, the
Surviving Corporation shall possess all the rights, privileges, immunities,
powers and franchises and be subject to all of the
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obligations, restrictions, disabilities, liabilities, debts and duties of the
Company and Merger Subsidiary, and the Merger shall have all the effects
provided under the DGCL.
1.6 Certificate of Incorporation.
(a) From and after the Effective Time, the Certificate of Incorporation
of Merger Subsidiary as in effect immediately prior to the Effective Time
(except that Article I of the Certificate of Incorporation shall, by virtue of
the Merger, be amended as of the Effective Time to read as follows, "The name of
the Corporation is Quality Stores, Inc.") shall be the Certificate of
Incorporation of the Surviving Corporation, until amended in accordance with
Applicable Law.
(b) Promptly following the Effective Time Article I of the Certificate
of Incorporation of Parent shall be amended to read as follows, "the name of the
Corporation is QSI Holdings, Inc."
1.7 Bylaws. From and after the Effective Time, the bylaws of Merger
Subsidiary as in effect immediately prior to the Effective Time shall be the
bylaws of the Surviving Corporation, until amended in accordance with Applicable
Law.
1.8 Directors. As contemplated by the Stockholders Agreement, at the
Effective Time the size of the board of directors of Parent shall be increased
by three members, and David C. Bliss, Alan L. Fansler and John L. Hilt shall be
elected to fill the vacancies created by such increase in the size of the board
of directors of Parent, each to serve until successors are duly elected or
appointed and qualified (or their earlier resignation or removal) in accordance
with Applicable Law and the terms of the Stockholders Agreement.
ARTICLE 2
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
2.1 Conversion of Company Securities.
(a) At the Effective Time, by virtue of the Merger and without any
action on the part of Merger Subsidiary, the Company or the holders of any of
the following securities:
(i) Each share of the Voting Common Stock, par value $1.00 per
share, of the Company (the "Company Voting Common Stock") and each
share of the Non-Voting Common Stock, par value $1.00 per share, of the
Company (the "Company Non-Voting Common Stock" and, collectively with
the Company Voting Common Stock , the "Company Common Stock") issued
and outstanding immediately prior to the Effective Time (other than any
shares of Company Common Stock to be canceled pursuant to Section
2.1(b) and any Dissenting Shares of Company Common Stock), shall,
subject to proration as provided in Section 2.2 and subject to Section
2.8, be converted into one of the following (the "Per Common Share
Merger Consideration"):
(a) for each share of Company Common Stock with
respect to which no Rollover Election has
been effectively made or with respect to
which a Rollover Election has been properly
revoked, the right to receive
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cash in an amount equal to the Share Price
(the "Cash Stockholder Merger
Consideration"); or
(b) for each share of Company Common Stock with
respect to which a Rollover Election has
been effectively made and not revoked, the
right to receive one share of Parent Stock
multiplied by the Exchange Ratio (the
"Rollover Stockholder Merger
Consideration").
(ii) Each share of the Preferred Stock, par value $100 per
share, of the Company (the "Preferred Stock") issued and outstanding
immediately prior to the Effective Time shall be converted into the
right to receive cash in an amount equal to the Per Preferred Share
Merger Consideration.
(iii) Each Vested Option issued and outstanding immediately
prior to the Effective Time shall, subject to Section 2.8, be converted
into the right to receive cash in an amount equal to the Share Price
minus the exercise price of such Vested Option (the "Per Option Merger
Consideration"). Each other Option Security or Convertible Security
issued by the Company and outstanding immediately prior to the
Effective Time shall automatically be canceled and extinguished without
any conversion thereof and no payment shall be made with respect
thereto.
(iv) All shares of Company Common Stock and Preferred Stock
(the "Shares") and all Vested Options issued and outstanding
immediately prior to the Effective Time shall no longer be outstanding
and shall automatically be canceled and retired and shall cease to
exist, and certificates previously evidencing any such Shares (each, a
"Share Certificate") and instruments or certificates previously
evidencing any such Vested Options (each, an "Option Certificate")
shall thereafter represent, subject to Section 2.8, the right to
receive, as applicable, upon the surrender of such Certificate in
accordance with the provisions of Section 2.3, the Per Common Share
Merger Consideration or the Per Preferred Share Merger Consideration
attributable to the number of Shares represented by such Share
Certificate or the Per Option Merger Consideration attributable to the
number of Vested Options represented by such Option Certificate, as the
case may be, and a holder of more than one Certificate shall have,
subject to Section 2.8, the right to receive the Merger Consideration
attributable to the number of Shares and/or Vested Options represented
by all such Certificates (the "Exchange Merger Consideration"). The
holders of Certificates previously evidencing Shares and Vested Options
outstanding immediately prior to the Effective Time shall cease to have
any rights with respect to such Shares and Vested Options except as
otherwise provided herein or by Applicable Law.
(b) At the Effective Time, by virtue of the Merger and without any
action on the part of Merger Subsidiary, the Company or the holders thereof,
each Share held in the treasury of the Company and each Share and Option
Security owned by Parent or any direct or indirect Subsidiary of Parent
immediately prior to the Effective Time shall automatically be canceled and
extinguished without any conversion thereof and no payment shall be made with
respect thereto.
(c) At the Effective Time, by virtue of the Merger and without any
action on the part of Merger Subsidiary, the Company or the holders thereof,
each share of common stock of Merger
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Subsidiary outstanding immediately prior to the Effective Time shall continue to
be outstanding and shall constitute the only outstanding shares of capital stock
of the Surviving Corporation.
(d) In lieu of issuing fractional shares, Parent may convert a
Stockholder's right to receive shares of Parent Stock pursuant to Section
2.1(a)(i)(b) into a right to receive the highest whole number of shares of
Parent Stock constituting the aggregate Rollover Stockholder Merger
Consideration to which such Stockholder is entitled plus cash equal to the
fraction of a share of Parent Stock to which such Stockholder would otherwise be
entitled multiplied by the Determination Price, and the aggregate Rollover
Stockholder Merger Consideration to which such Stockholder is entitled shall be
deemed to be such number of shares of Parent Stock plus such cash. For purposes
of carrying out the intent of this Section 2.1(d), Parent may aggregate
Certificates registered in the name of any single Stockholder so that fractional
shares of Parent Stock due in exchange for multiple Certificates may be combined
to yield a number of whole shares thereof plus a single fraction.
2.2 Proration.
(a) Notwithstanding anything in this Agreement to the contrary, (i) the
aggregate number of shares of Company Common Stock with respect to which
Rollover Elections shall be given effect in the Merger shall not exceed
1,286,013 shares (subject to adjustment for any change in the Exchange Ratio)
(the "Maximum Rollover Number") and (ii) the aggregate number of shares of
Company Common Stock that shall be converted into the right to receive shares of
Parent Stock in accordance with the terms of Section 2.1(a)(i)(b) hereof shall
not be less than such minimum number of shares as shall be necessary to cause
the ratio, expressed as a percentage, of (i) the value of the Stock Merger
Consideration (reduced by the amount thereof constituting the Escrow Deposit) to
(ii) the sum of (w) the value of the Stock Merger Consideration (reduced by the
amount thereof constituting the Escrow Deposit), (x) the Cash Merger
Consideration (increased by (1) any amount paid in cash to Rollover Stockholders
in lieu of fractional shares and (2) an amount equal to the product of the Share
Price and the number of Dissenting Shares), (y) the Preferred Stock Merger
Consideration, and (z) the total amount of cash paid pursuant to Section
2.1(a)(iii) hereof to Quality Future, Inc., a Delaware corporation, to equal
forty-two percent (42%) (the "Minimum Rollover Number").
(b) If the number of shares of Company Common Stock with respect to
which Rollover Elections have been effectively made and not revoked exceeds the
Maximum Rollover Number, then each share of Company Common Stock with respect to
which a Rollover Election has been effectively made and not revoked shall be
converted into the right to receive (x) shares of Parent Stock in accordance
with the terms of Section 2.1(a)(i)(b) hereof or (y) cash in accordance with the
terms of Section 2.1(a)(i)(a) hereof, in each case determined in the following
manner:
(i) A proration factor (the "Non-Cash Proration Factor") shall
be determined by dividing the Maximum Rollover Number by the number of
shares of Company Common Stock with respect to which a Rollover
Election has been effectively made and not revoked;
(ii) The number of shares of Company Common Stock convertible
into the right to receive shares of Parent Stock in accordance with the
terms of Section 2.1(a)(i)(b) hereof pursuant to each Rollover Election
shall be determined by multiplying the Non-Cash
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Proration Factor by the total number of shares of Company Common Stock
covered by such Rollover Election; and
(iii) All other shares of Company Common Stock with respect to
which a Rollover Election has been effectively made and not revoked
(other than those shares of Company Common Stock convertible into
shares of Parent Stock in accordance with Section 2.1(a)(i)(b) hereof
pursuant to Section 2.2(b)(ii) hereof), shall be converted into the
right to receive cash, on a consistent basis among Stockholders who
effectively made and did not revoke the Rollover Election, pro rata to
the number of such shares as to which they effectively made and did not
revoke such election, as if a Rollover Election had not been
effectively made with respect to such shares, in accordance with the
terms of Section 2.1(a)(i)(a) hereof.
(c) If the aggregate number of shares of Company Common Stock with
respect to which Rollover Elections are effectively made and not revoked is less
than the Minimum Rollover Number, then:
(i) All shares of Company Common Stock with respect to which a
Rollover Election has been effectively made and not revoked shall be
converted into the right to receive shares of Parent Stock in
accordance with the terms of Section 2.1(a)(i)(b) hereof;
(ii) Each share of Company Common Stock held by Stockholders
eligible to make Rollover Elections in accordance with Section 2.6
hereof, (other than shares of Company Common Stock with respect to
which a Rollover Election has been effectively made and not revoked),
shall be converted into the right to receive (x) cash in accordance
with the terms of Section 2.1(a)(i)(a) hereof or (y) shares of Parent
Stock in accordance with the terms of Section 2.1(a)(i)(b) hereof, in
each case determined in the following manner:
(a) A proration factor (the "Cash Proration
Factor") shall be determined by dividing (x)
the difference between the Minimum Rollover
Number and the number of shares of Company
Common Stock with respect to which a
Rollover Election has been effectively made
and not revoked by (y) the total number of
shares of Company Common Stock held by
Stockholders eligible to make Rollover
Elections in accordance with Section 2.6
hereof, other than shares of Company Common
Stock with respect to which a Rollover
Election has been effectively made and not
revoked;
(b) For each Stockholder eligible to make a
Rollover Election in accordance with Section
2.6 hereof, the number of shares of Company
Common Stock, in addition to shares of
Company Common Stock with respect to which a
Rollover Election has been effectively made
and not revoked by such Stockholder, to be
converted into the right to receive shares
of Parent Stock in accordance with the terms
of Section 2.1(a)(i)(b) hereof shall be
determined by multiplying the Cash Proration
factor by the total number of shares of
Company Common Stock held by such
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Stockholder, other than shares of Company
Common Stock with respect to which a
Rollover Election has been effectively made
and not revoked by such Stockholder; and
(c) All other shares of Company Common Stock
that are held by Stockholders eligible to
make Rollover Elections but with respect to
which a Rollover Election has not been
effectively made or has been revoked (other
than those shares of Company Common Stock
convertible into shares of Parent Stock in
accordance with Section 2.1(a)(i)(b) hereof
pursuant to Section 2.2(c)(ii)(b) hereof),
shall be converted into the right to receive
cash, on a consistent basis among
Stockholders eligible to make a Rollover
Election under Section 2.6 hereof who held
shares of Company Common Stock as to which
they did not effectively make a Rollover
Election or as to which they revoked a
Rollover Election, pro rata to the number of
shares of Company Common Stock as to which
they did not effectively make such Rollover
Election or as to which they revoked such
Rollover Election, in accordance with the
terms of Section 2.1(a)(i)(a) hereof.
2.3 Exchange of Certificates; Exchange Agent and Exchange Procedures.
(a) At or immediately prior to the Effective Time, Parent shall deposit
or cause to be deposited with a bank or trust company designated by Parent and
reasonably acceptable to the Company (the "Exchange Agent"), for the benefit of
the holders of Shares (other than Dissenting Shares) and Vested Options, for
exchange in accordance with this Article, through the Exchange Agent, for all of
the outstanding Shares and Vested Options (i) cash in an amount equal to the sum
of (w) the Preferred Stock Merger Consideration, (x) the Cash Merger
Consideration (other than any portion thereof in respect of Shares to be
canceled pursuant to Section 2.1(b) and any Dissenting Shares), (y) the Option
Merger Consideration, and (z) an amount sufficient to make payment for
fractional shares, and (ii) a number of shares of Parent Stock equal to the
Stock Merger Consideration minus the Escrow Deposit (collectively, the "Exchange
Fund"). The Exchange Agent shall, pursuant to irrevocable instructions from
Parent, deliver out of the Exchange Fund to each holder of Shares and Vested
Options such holder's pro rata portion of the Exchange Merger Consideration
payable to such holder in accordance with the provisions of Sections 2.1 and 2.2
upon transmittal of Certificates for exchange as provided therein and in Section
2.3(b). The Exchange Fund shall not be used for any other purpose. Any interest,
dividends or other income earned on the Exchange Fund shall be for the account
of Parent.
(b) Concurrently with the Company's mailing of proxy materials for the
Company Meeting, Parent and the Company will or will instruct the Exchange Agent
to issue (pursuant to instructions from each holder of record reasonably
satisfactory to Parent and the Exchange Agent, and otherwise by mail to the most
recent address of such holder as shown on the Company's books and records) to
such holder of a Certificate or Certificates which at that time evidence
outstanding Shares (other than Shares to be canceled pursuant to Section 2.1(b))
or Vested Options, a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon proper delivery of the Certificates to the Exchange Agent and shall
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<PAGE>
be in such form and have such other provisions as Parent and the Company may
reasonably specify) and instructions to effect the surrender of the Certificates
in exchange for such holder's pro rata portion of the Exchange Merger
Consideration. Upon surrender of a Certificate for cancellation to Parent, the
Exchange Agent or to such other agent or agents as may be appointed by Parent
and reasonably acceptable to the Company, together with such letter of
transmittal, duly executed, and such other customary documents as may be
reasonably required pursuant to such instructions (collectively, the
"Transmittal Documents"), the holder of such Certificate shall from and after
the Effective Time be entitled to receive in exchange therefor such holder's pro
rata portion of the Exchange Merger Consideration which such holder has the
right to receive, pursuant to Sections 2.1 and 2.2, and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of ownership
of Shares which is not registered in the transfer records of the Company, the
Exchange Merger Consideration may be issued and paid in accordance with this
Article to a transferee if the Certificate evidencing such Shares is presented
to the Exchange Agent, accompanied by all documents reasonably required to
evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. The Exchange Merger Consideration will be
delivered by the Exchange Agent promptly following the later to occur of (i)
surrender of a Certificate and the related Transmittal Documents and (ii) the
Effective Time; provided, however, that each holder of a Certificate or
Certificates who returns such Certificate or Certificates for cancellation,
along with the related Transmittal Documents, at least five (5) business days
prior to the Closing Date shall be paid his or her pro rata portion of the
Exchange Merger Consideration at the Closing. Cash payments for fractional
shares and the cash portion of the Exchange Merger Consideration may be made by
check (or in the case of any cash payment in excess of $50,000, pursuant to
instructions reasonably satisfactory to the Exchange Agent, by wire transfer).
No interest will be payable on the Exchange Merger Consideration regardless of
any delay in making payments. Until surrendered as contemplated by this Section,
each Certificate shall be deemed at any time after the Effective Time to
evidence only the right to receive, upon such surrender, the Exchange Merger
Consideration, without interest.
(c) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed and subject to such other
conditions as Parent reasonably may impose, the Surviving Corporation shall
issue in exchange for such lost, stolen or destroyed Certificate the pro rata
portion of the Exchange Merger Consideration deliverable in respect thereof as
determined in accordance with Sections 2.1 and 2.2. Parent may, in its
discretion and as a condition precedent to authorizing the issuance thereof by
the Surviving Corporation, require the owner of such lost, stolen or destroyed
Certificate to provide a bond or other surety to Parent and the Surviving
Corporation in such sum as Parent may reasonably direct as indemnity against any
claim that may be made against Parent or the Surviving Corporation (and their
Affiliates) with respect to the Certificate alleged to have been lost, stolen or
destroyed.
(d) Any portion of the Exchange Fund which remains undistributed to the
holders of Shares or Vested Options for six (6) months after the Effective Time
shall be delivered to Parent upon demand by Parent, and any holders of
Certificates who have not theretofore complied with this Article shall
thereafter look only to Parent for any portion of the Exchange Merger
Consideration to which they are entitled pursuant to this Article.
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<PAGE>
(e) None of Parent, Merger Subsidiary, the Company or the Surviving
Corporation shall be liable to any holder of Shares or Vested Options for any
shares of Parent Stock (or dividends or distributions with respect thereto) or
cash from the Exchange Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(f) Each of Parent, the Surviving Corporation and the Exchange Agent
shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of Shares or Vested Options
such amounts as Parent, the Surviving Corporation or the Exchange Agent is
required to deduct and withhold with respect to the making of such payment under
the Code, or any provision of federal, state, local or foreign tax law. To the
extent that amounts are so withheld by Parent, the Surviving Corporation or the
Exchange Agent, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Shares or Vested Options in
respect of which such deduction and withholding was made by Parent, the
Surviving Corporation or the Exchange Agent and shall be timely paid to the
relevant taxing authorities.
2.4 Stock Transfer Books. At the Effective Time, the stock transfer
books of the Company shall be closed, and there shall be no further registration
of transfers of Shares thereafter on the records of the Company other than to
Parent. On or after the Effective Time, any Certificate presented to the
Exchange Agent or the Surviving Corporation shall be converted into the Exchange
Merger Consideration.
2.5 Dissenting Shares.
(a) Notwithstanding any other provision of this Agreement to the
contrary, shares of Company Common Stock that are outstanding immediately prior
to the Effective Time and which are held by Stockholders who shall have not
voted in favor of the Merger or consented thereto in writing and who shall be
entitled to and shall have demanded properly in writing appraisal for such
Shares in accordance with the DGCL, and who shall not have withdrawn such demand
or otherwise have forfeited appraisal rights (collectively, the "Dissenting
Shares") shall not be converted into or represent the right to receive the
Merger Consideration. Such Stockholders shall be entitled to receive payment of
the appraised value of such Shares held by them in accordance with the
provisions of the DGCL, except that all Dissenting Shares held by Stockholders
who shall have failed to perfect or who effectively shall have withdrawn,
forfeited or lost their rights to appraisal of such Shares under the DGCL shall
thereupon be deemed to have been converted into and to have become exchangeable
for, as of the Effective Time, the right to receive, without any interest
thereon, the Exchange Merger Consideration attributable to such Shares, upon
surrender, in the manner provided in Section 2.3, of the Certificate or
Certificates that formerly evidenced such Shares.
(b) The Company shall give Parent prompt notice of any demands for
appraisal received by it, withdrawals of such demands, and any other instruments
served pursuant to the DGCL and received by the Company and relating thereto.
The Company and Parent shall jointly direct all negotiations and proceedings
with respect to demands for appraisal under Applicable Law. The Company shall
not, except with the prior written consent of Parent, make any payment with
respect to any demands for appraisal, or offer to settle, or settle, any such
demands.
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<PAGE>
2.6 Procedures for Making Rollover Elections.
(a) Each Person who, at the record date (the "Company Record Date") for
determining Stockholders eligible to vote the shares of Company Common Stock (at
the Company Meeting or by written consent) in connection with the Merger, (w) is
a record holder of shares of Company Common Stock (other than the Company or any
Subsidiary of the Company), (x) votes all shares of Company Voting Common Stock
held of record by such Person in favor of this Agreement, (y) does not make any
demand for an appraisal of any shares of Company Common Stock held of record by
such Person and (z) is a Qualified Investor, shall have the right to submit an
Election Form (as defined in Section 2.6(b)) specifying that such Person elects
to have some or all of such shares of Company Common Stock held by such Person
at the Effective Time converted into the right to receive the Rollover
Stockholder Merger Consideration (the "Rollover Election").
(b) The Company shall mail to Stockholders, together with the notice of
meeting and the other information to be delivered to such Stockholders, an
election form (the "Election Form") providing for such Stockholders (x) to make
a Rollover Election, (y) to certify as to their eligibility to make a Rollover
Election and (z) to agree to hold shares of Parent Stock received in the Merger
subject to the terms of the Stockholders Agreement. As of 12:00 noon local time
on the date of the Company Meeting (the "Election Deadline"), all Stockholders
on the Company Record Date that shall not have submitted to the Company or shall
have properly revoked an effective, properly completed Election Form shall be
deemed not to have made a Rollover Election and, accordingly, shall receive the
Cash Stockholder Merger Consideration, subject to Section 2.2(c).
(c) Any Rollover Election shall have been validly made only if the
Company shall have received by the Election Deadline, an Election Form properly
completed and executed by such Stockholder, along with such Stockholder's
Certificate or Certificates and the related Transmittal Documents. Such Rollover
Election shall be binding upon any subsequent holder of Company Common Stock in
respect of which a Rollover Election has been made. Any Stockholder (other than
a holder who has submitted an irrevocable election) may at any time prior to the
Election Deadline revoke such holder's election by written notice to the Company
received by the close of business on the day prior to the Election Deadline. As
soon as practicable after the Election Deadline, the Company and Parent shall
tabulate the Rollover Elections and determine therefrom the allocation of the
Cash Merger Consideration and the Stock Merger Consideration.
(d) The Company and Parent shall reasonably agree on such reasonable
rules, not inconsistent with the terms of this Agreement, governing the validity
of the Election Forms.
2.7 Intentionally left blank.
2.8 Escrow. On the Closing Date, pursuant to the terms of an Escrow
Agreement in or substantially in the form of Exhibit 2.8 (as such form may be
altered prior to the Closing by mutual agreement among the Parties acting
reasonably and in good faith to reflect and embody the intent hereof) among
Parent, the Surviving Corporation, the Escrow Agent and the Agent on behalf of
the Principal Stockholders (the "Escrow Agreement"), Parent shall cause to be
delivered to the Escrow Agent a stock certificate issued in the name of the
Escrow Agent evidencing a number of shares of Parent Stock having an aggregate
value (calculated based on the Determination Price) equal to $14,000,000 (the
"Escrow Deposit"). The Escrow Deposit shall be withheld from the shares of
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<PAGE>
Parent Stock otherwise issuable to (i) the Principal Stockholders in respect of
their Company Common Stock pursuant to Section 2.1(a)(i)(b), pro rata according
to the aggregate Exchange Merger Consideration to which each such Principal
Stockholder is entitled pursuant to Sections 2.1 and 2.2 with respect to the
first $10,000,000 of value of the Escrow Deposit and (ii) Quality Future, Inc.
in respect of its Company Common Stock pursuant to Section 2.1(a)(i)(b) with
respect to the remaining $4,000,000 of value of the Escrow Deposit. The
respective interests of the Principal Stockholders and of Quality Future, Inc.
in the Escrow Fund (the "Proportionate Share") shall initially be determined in
the manner set forth in the Escrow Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger
Subsidiary as follows:
3.1 Organization and Business; Power and Authority; Effect of
Transaction.
(a) Each of the Company and its Subsidiaries:
(i) is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation;
(ii) has all requisite corporate power and authority to own or
hold under lease its properties and to conduct its business as now
conducted and has in full force and effect all Governmental
Authorizations and Private Authorizations and has made all Governmental
Filings, to the extent required for such ownership and lease of its
property and conduct of its business, except to the extent that the
failure to have obtained any such Governmental Authorization or Private
Authorization or to have made any such Governmental Filing would not
have an Adverse Effect; and
(iii) has duly qualified and is authorized to do business and
is in good standing as a foreign corporation in each jurisdiction (a
true and correct list of which is set forth in Section 3.1(a)(iii) of
the Company Disclosure Schedule) in which the character of its property
or the nature of its business or operations requires such qualification
or authorization, except to the extent the failure to qualify or to
maintain such authorizations would not have an Adverse Effect.
(b) Each of the Company and its Subsidiaries has all requisite power
and authority (corporate and other) and, other than the filing and termination
of the waiting period pursuant to the HSR Act and the requisite approval of the
Company's stockholders, has in full force and effect all Governmental
Authorizations and Private Authorizations in order to enable it to execute and
deliver, and to perform its obligations under, this Agreement and each
Collateral Document executed or required to be executed by it pursuant hereto or
thereto and to consummate the Merger and the Transactions, and the execution,
delivery and performance of this Agreement and each Collateral Document executed
or required to be executed pursuant hereto or thereto have been duly authorized
by all requisite corporate or other action (other than that of the Company's
stockholders). This
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Agreement has been duly executed and delivered by the Company and constitutes,
and each Collateral Document executed or required to be executed pursuant hereto
or thereto or to consummate the Merger and the Transactions, when executed and
delivered by the Company will constitute, legal, valid and binding obligations
of the Company, enforceable in accordance with their respective terms, except as
such enforceability may be subject to bankruptcy, moratorium, insolvency,
reorganization, arrangement, voidable preference, fraudulent conveyance or other
similar laws relating to or affecting the rights and remedies of creditors, and
except as the same may be subject to the effect of general principles of equity
(regardless of whether enforcement is sought in a proceeding at law or in
equity). Approval by the affirmative vote of a majority of the outstanding
shares of Company Voting Common Stock entitled to vote is the only action by the
holders of any class or series of the capital stock of the Company necessary to
approve this Agreement and the Merger under Applicable Law and the Company's
Organic Documents. No action by the holders of any class or series of the
capital stock of the Company is required to approve the Transactions under
Applicable Law or the Company's Organic Documents.
(c) Except as set forth in Section 3.1(c) of the Company Disclosure
Schedule, neither the execution and delivery of this Agreement or any Collateral
Document executed or required to be executed pursuant hereto or thereto, nor the
consummation of the Merger or the Transactions, nor compliance with the terms,
conditions and provisions hereof or thereof by the Company or any of the other
parties hereto or thereto which is Affiliated with the Company:
(i) will materially conflict with, or result in a material
breach or violation of, or constitute a material default under, any
Applicable Law on the part of the Company or any Subsidiary or will
conflict with, or result in a breach or violation of, or constitute a
default under, or permit the acceleration of any obligation or
liability in, or but for any requirement of giving of notice or passage
of time or both would constitute such a conflict with, breach or
violation of, or default under, or permit any such acceleration in, any
material Contractual Obligation of the Company or any Subsidiary,
(ii) will result in or permit the creation or imposition of
any Lien upon any property now owned or leased by the Company or any
Subsidiary or any such other party, other than any Lien which is not
material in relation to the property it encumbers, or
(iii) will require any material Governmental Authorization or
Governmental Filing or Private Authorization, except for the approval
of the Company's stockholders, filing requirements under Applicable Law
in connection with the Merger and the Transactions and filing and
waiting period requirements pursuant to the HSR Act.
3.2 Financial and Other Information.
(a) The Company has heretofore furnished to the Parent copies of the
consolidated financial statements of the Company listed in Section 3.2(a) of the
Company Disclosure Schedule (the "Company Financial Statements"). The Company
Financial Statements, including in each case the notes thereto, have been
prepared in accordance with GAAP applied on a consistent basis with the
Company's past practice throughout the periods covered thereby (except as
otherwise noted therein), are true and correct in all material respects and,
except as otherwise noted therein, fairly and completely present the
consolidated financial condition, results of operations and cash flows of the
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Company and its Subsidiaries on the bases therein stated, as of the respective
dates thereof, and for the respective periods covered thereby subject, in the
case of unaudited Company Financial Statements, to the absence of footnotes and
other presentation items and to normal nonmaterial year-end audit adjustments
and accruals.
(b) The Company does not own any capital stock or equity or proprietary
interest in any Entity or enterprise and has no Subsidiaries, however organized
and however such interest may be denominated or evidenced, except as set forth
in Section 3.2(b) of the Company Disclosure Schedule. With respect to any
Subsidiary disclosed in such Section 3.2(b), the Company owns, and at the
Closing will own, directly or indirectly, 100% of the issued and outstanding
capital stock and all Convertible Securities and Option Securities of such
Subsidiary, and all of such securities are, and at the Closing will be, duly
authorized, validly issued, fully paid and non-assessable and free of preemptive
rights and Liens.
3.3 Authorized and Outstanding Capital Stock.
(a) The authorized capital stock of the Company consists of 775,000
shares of Company Voting Common Stock of which 310,897 shares are issued and
outstanding, 3,000,000 shares of Company Non-Voting Common Stock of which
1,988,502 shares are issued and outstanding and 117,961 shares of Preferred
Stock of which 101,024 shares are issued and outstanding. All of such
outstanding capital stock has been duly authorized and validly issued, is fully
paid and nonassessable and is not subject to any preemptive or similar rights.
The amount of the prepayment premium payable as part of the Preferred Stock
Merger Consideration will be equal to $1,010,240.
(b) (i) Except as set forth in Section 3.3 of the Company Disclosure
Schedule, there is neither outstanding nor has the Company or any Subsidiary
agreed to grant or issue any additional equity securities or any Option Security
or Convertible Security, (ii) all such securities listed in Section 3.3(b)(ii)
of the Company Disclosure Schedule have been duly authorized and validly issued
and are currently outstanding and (iii) all other securities listed in Section
3.3 of the Company Disclosure Schedule have been duly authorized and validly
issued and are currently outstanding.
(c) Except as set forth in Section 3.3 of the Company Disclosure
Schedule, neither the Company nor any Subsidiary is a party to or bound by any
agreement, put or commitment pursuant to which it is obligated to purchase,
redeem or otherwise acquire any equity securities or any Option Security or
Convertible Security. Except as contemplated by this Agreement or as set forth
in Section 3.3 of the Company Disclosure Schedule, between the date hereof and
the Closing, the Company will not, and will cause its Subsidiaries not to,
issue, sell or purchase or agree to issue, sell or purchase any equity
securities or any Option Security or Convertible Security of the Company or any
Subsidiary. No Option Securities or Convertible Securities of the Company (other
than the Preferred Stock) are exercisable or convertible into shares of Company
Voting Common Stock. All of the issued and outstanding shares of capital stock
of the Company and its Subsidiaries have been issued in compliance with
applicable Federal and state securities laws.
3.4 Changes in Condition. Since the date of the most recent audited
consolidated financial statements of the Company forming part of the Company
Financial Statements, except to the extent specifically described in Section 3.4
of the Company Disclosure Schedule, there has been no Adverse Change in the
Company. There is no Event known to the Company which Adversely
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<PAGE>
Affects the Company, or the ability of the Company to perform any of the
obligations set forth in this Agreement or any Collateral Document executed or
required to be executed pursuant hereto or thereto except for changes in general
economic conditions and to the extent set forth in Section 3.4 of the Company
Disclosure Schedule.
3.5 Liabilities.
(a) At the date of the most recent balance sheet forming part of the
Company Financial Statements, the Company and its Subsidiaries had no
obligations or liabilities, past, present or deferred, accrued or unaccrued,
fixed, absolute, contingent or other, except as disclosed in such balance sheet,
in the notes thereto or in Section 3.5 of the Company Disclosure Schedule, and
since such date no such obligations or liabilities have been incurred, other
than obligations and liabilities incurred in the ordinary course of business of
the Company and its Subsidiaries consistent with past practice, which do not, in
the aggregate, Adversely Affect the Company except to the extent set forth in
Section 3.5 of the Company Disclosure Schedule.
(b) Neither the Company nor any Subsidiary has Guaranteed or is
otherwise primarily or secondarily liable in respect of any obligation or
liability of any other Person material to the Company and its Subsidiaries taken
as a whole, except for endorsements of negotiable instruments for deposit in the
ordinary course of business, consistent with prior practice, or as disclosed in
the most recent audited balance sheet, or the notes thereto, forming part of the
Company Financial Statements or in Section 3.5 of the Company Disclosure
Schedule.
3.6 Title to Properties; Leases.
(a) The Company or one of its Subsidiaries has good, legal and
insurable title, with respect to all real property owned or leased (in fee
simple if owned and leasehold if leased), and good, clear, record and marketable
title with respect to all real property owned (in fee simple), if any, reflected
as an asset on the most recent audited balance sheet forming part of the Company
Financial Statements, or held by the Company or one of its Subsidiaries for use
in its business if not so reflected, and good and clear indefeasible and
merchantable title to all other assets, tangible and intangible, reflected on
such balance sheet, or (excluding leased property) held by the Company or one of
its Subsidiaries for use in its business if not so reflected, or purported to
have been acquired by the Company or one of its Subsidiaries since such date,
except inventory sold or depleted, or property, plant and other equipment used
up or retired, since such date, in each case in the ordinary course of business
consistent with past practice, free and clear of all Liens, except (w) such as
are reflected in the most recent audited balance sheet, or the notes thereto,
forming part of the Company Financial Statements, (x) Liens securing taxes,
assessments, governmental charges or levies, or the claims of mechanics,
materialmen, carriers, landlords and like persons, which are not yet due or
payable or are due but not yet payable, (y) Permitted Liens or (z) as set forth
in Section 3.6(a) of the Company Disclosure Schedule. Each Lease or other
occupancy or other agreement under which the Company or one of its Subsidiaries
holds real or personal property has been duly authorized, executed and delivered
by the Company or one of its Subsidiaries, and each such Lease is a legal and
valid obligation of the Company or one of its Subsidiaries. The Company or one
of its Subsidiaries has a valid leasehold interest in and enjoys peaceful and
undisturbed possession under all Leases pursuant to which it holds any real
property or material tangible personal property. All of such Leases are valid
and subsisting and in full force and effect; and neither the Company nor any
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Subsidiary nor, to the knowledge of the Company, any other party thereto is in
default in the performance, observance or fulfillment of any material
obligation, covenant or condition contained in any such Lease.
(b) Section 3.6(b) of the Company Disclosure Schedule contains a true,
correct and complete list of all real estate owned or leased by the Company or
any of its Subsidiaries and all Leases and an identification of all material
items of fixed assets and machinery and equipment. The real property (other than
land), fixtures, fixed assets and machinery and equipment of the Company and its
Subsidiaries are in a state of good repair and maintenance and are in good
operating condition, reasonable wear and tear excepted. The Company or one of
its Subsidiaries owns or leases all tangible assets necessary for the conduct of
the combined business of the Company and its Subsidiaries as presently conducted
and as presently proposed to be conducted until the Closing.
(c) With respect to each parcel of real property owned by the Company
or one of its Subsidiaries, except as set forth in Section 3.6(c) of the Company
Disclosure Schedule:
(i) there are no pending or, to the knowledge of the Company,
threatened condemnation proceedings relating to such parcel, and there
are no pending or, to the knowledge of the Company, threatened
litigation or administrative actions relating to such parcel or other
matters Adversely Affecting the use, occupancy or value thereof;
(ii) the buildings and improvements may be used as of right
under applicable zoning and land use laws for the operation of the
business as now conducted (the "Current Uses") by the Company or its
Subsidiaries and such buildings and improvements are located within the
boundary lines of the described parcels of land, are not in violation
of Applicable Laws and, to the best knowledge of the Company, do not
encroach on any easement which may burden the land; the land does not
serve any adjoining property for any purpose inconsistent with the use
of the land; and such parcel is not located within any flood plain or
subject to any similar type restriction for which any permits or
licenses necessary to the use thereof have not been obtained;
(iii) there are no outstanding options or rights of first
refusal to purchase such parcel, or any portion thereof or interest
therein;
(iv) all facilities located on such parcel are supplied with
utilities and other services necessary for the operation of such
facilities, including gas, electricity, water, telephone, sanitary
sewer and storm sewer, all of which services are adequate for the
Current Uses and in accordance with all Applicable Laws, and are
provided via public roads or via permanent, irrevocable, appurtenant
easements benefiting such parcel;
(v) such parcel abuts on and has direct vehicular access to a
public road or access to a public road via a permanent, irrevocable,
appurtenant easement benefiting such parcel;
(vi) neither the Company nor any of its Subsidiaries has
received written notice of any proposed or pending proceeding to change
or redefine the zoning classification of all or any portion of such
parcel; and
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(vii) such parcel is an independent unit which does not rely
on any facilities (other than the facilities of public utility and
water companies) located on any other property (a) to fulfill any
zoning, building code, or other municipal or governmental requirement,
(b) for structural support or the furnishing of any essential building
systems or utilities, including, but not limited to electric, plumbing,
mechanical, heating, ventilating, and air conditioning systems, or (c)
to fulfill the requirements of any lease. No building or other
improvement not included in such parcel relies on any part of such
parcel to fulfill any requirement of Applicable Laws or for structural
support or the furnishing of any essential building systems or
utilities. Such parcel is assessed by local property assessors as a tax
parcel separate from all other tax parcels.
(d) With respect to each Lease by which the Company or any Subsidiary
leases or subleases any real property, except as set forth in Section 3.6(d) of
the Company Disclosure Schedule:
(i) such Lease will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms following
the Closing;
(ii) no party to such Lease has repudiated any provision
thereof;
(iii) there are no material disputes, oral agreements, or
forbearance programs in effect as to such Lease;
(iv) such Lease contains no provision pursuant to which any
increased or additional rent or other charge will be or may be assessed
against the Company or any Subsidiary as a result of the Transactions
or as a condition to any consent required under such Lease required of
the Company or any Subsidiary on account of the Transactions, other
than any such increased or additional rent or other charge which is not
material in relation to such Lease;
(v) none of the Company and its Subsidiaries has assigned,
transferred, conveyed, mortgaged, deeded in trust, or encumbered any
interest in the leasehold or subleasehold;
(vi) all facilities leased or subleased thereunder have
received all material Governmental Authorizations required in
connection with the operation thereof and have been operated and
maintained in accordance with applicable laws, rules and regulations;
and
(vii) all facilities leased or subleased thereunder are
supplied with utilities and other services necessary for the operation
of said facilities.
3.7 Inventory. The inventory of the Company and its Subsidiaries as set
forth on the most recent balance sheet in the Company Financial Statements was,
and the inventory of the Company and its Subsidiaries on the date hereof is and
on the Closing Date will be, in good and merchantable condition, and in useable
or saleable condition in the ordinary course of business, except for obsolete or
defective materials and any excess stock items which either (i) are reserved for
in the Company Financial Statements or (ii) alone and in the aggregate are not
material. Such inventory does not include any amounts of any item that was at
any prior time written off or written
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down by the Company. There is no Adverse condition currently affecting the
supply of materials or inventory available to the Company. The inventory of the
Company and its Subsidiaries as set forth on the most recent balance sheet in
the Company Financial Statements is consistent in all material respects with the
results of the actual physical inventory conducted by the Company and its
Subsidiaries during the fiscal period ended on the date of such balance sheet.
3.8 Accounts and Notes Receivable. All accounts and notes receivable
reflected on the most recent balance sheet in the Company Financial Statements
and all accounts and notes receivable arising subsequent to the date of such
balance sheet have or will have arisen in the ordinary course of business,
represent valid obligations to the Company (or a Subsidiary), and have been
collected or will be collected in the aggregate amounts thereof recorded on the
books of the Company, except for (i) those accounts or notes receivable reserved
against on such balance sheet and (ii) those accounts or notes receivable that
have not been or will not be collected which individually and in the aggregate
are not material.
3.9 Compliance with Private Authorizations. Section 3.9 of the Company
Disclosure Schedule sets forth a true, correct and complete description of all
Private Authorizations which individually or in the aggregate are material to
the Company and its Subsidiaries taken as a whole, all of which are in full
force and effect. Each of the Company and its Subsidiaries has obtained all
Private Authorizations which are necessary for its ownership of its properties
and the conduct of its business as now conducted, except to the extent that the
failure to have obtained any such Private Authorization would not have an
Adverse Effect. Neither the Company nor any Subsidiary is in breach or violation
of, or in default in the performance, observance or fulfillment of, any Private
Authorization, except for such defaults, breaches or violations, as do not in
the aggregate have any Adverse Effect on the Company. No Private Authorization
is the subject of any pending or, to the Company's knowledge, threatened attack,
revocation or termination.
3.10 Compliance with Governmental Authorizations and Applicable Law.
(a) Section 3.10(a) of the Company Disclosure Schedule contains a
description of:
(i) all Legal Actions which are pending or, to the Company's
knowledge, threatened or contemplated against, and which in any manner
relate Adversely to, the Company or any Subsidiary; and
(ii) each Governmental Authorization to which the Company or
any of its Subsidiaries is subject and which is material to the
business, operations, properties, prospects, condition (financial or
other), or results of operations of the Company and its Subsidiaries,
all of which are in full force and effect.
(b) Each of the Company and its Subsidiaries has obtained all
Governmental Authorizations which are necessary for the ownership or uses of its
properties and the conduct of its business as now conducted or as presently
proposed to be conducted by it or which, if not obtained and maintained, could
singly or in the aggregate have any Adverse Effect on the Company, except as
otherwise described in Section 3.10(b) of the Company Disclosure Schedule. No
Governmental Authorization is the subject of any pending or, to the Company's
knowledge, threatened attack, revocation or termination. Neither the Company nor
any Subsidiary is, or at any time since
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March 15, 1998 has been, or is or has during such time been charged with, or to
the Company's knowledge is threatened or under investigation with respect to,
any breach or violation of, or default in the performance, observance or
fulfillment of any Governmental Authorization or any Applicable Law, except (i)
for such breaches, violations or defaults as do not have in the aggregate any
Adverse Effect on the Company or (ii) as otherwise described in Section 3.10(b)
of the Company Disclosure Schedule.
(c) Except as set forth in Section 3.10(c) of the Company Disclosure
Schedule, the Company and its Subsidiaries, and the conduct and operations of
their respective businesses, are in compliance with all Applicable Laws which
(i) affect or relate to this Agreement or the Transactions or (ii) are
applicable to the Company or any of its Subsidiaries or their respective
businesses, except for any violation of, or default under, any Applicable Law
which would not reasonably be expected to have an Adverse Effect on the Company.
3.11 Intangible Assets; Intellectual Property.
(a) Section 3.11 of the Company Disclosure Schedule sets forth a true,
correct and complete list of all Governmental Authorizations relating to
Intangible Assets or Intellectual Property or rights with respect thereto, that
are necessary for the present conduct of the Company's consolidated business,
including without limitation the nature of the Company's or one of its
Subsidiaries' interest in each and the extent to which the same have been duly
registered in the offices as indicated therein. The Company or one of its
Subsidiaries owns or possesses or otherwise has the right to use all
Governmental Authorizations, Intangible Assets and Intellectual Property
necessary for the conduct of the Company's business free and clear of all Liens
and without any conflict with the rights of others, except as set forth in
Section 3.11 of the Company Disclosure Schedule. Except as otherwise described
in Section 3.11 of the Company Disclosure Schedule, no Governmental
Authorization, Intangible Asset or Intellectual Property has been or is now
involved in any opposition, invalidation, or cancellation, and no Intellectual
Property infringes any trade name, trademark or service mark of any third party.
Each of the Company and its Subsidiaries has taken all necessary or desirable
action to protect each item of Intellectual Property that it owns or uses. None
of the Company and its Subsidiaries has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual Property
rights of third parties, and none of the Company and its Subsidiaries has ever
received any charge, complaint, claim, or notice alleging any such knowledge of
the Company, no third party has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any material Intellectual
Property rights of any of the Company and its Subsidiaries.
(b) With respect to each item of Intellectual Property that any of the
Company and its Subsidiaries owns:
(i) the identified owner possesses all right, title, and
interest in and to the item;
(ii) the item is not subject to any outstanding judgment,
order, decree, stipulation, injunction, or charge;
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(iii) no charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand is pending or, to the knowledge of the
Company, is threatened which challenges the legality, validity,
enforceability, use, or ownership of the item; and
(iv) none of the Company and its Subsidiaries has ever agreed
to indemnify any person or entity for or against any interference,
infringement, misappropriation, or other conflict with respect to the
item.
(c) Section 3.11 of the Company Disclosure Schedule also identifies
each item of Intellectual Property that any third party owns and that any of the
Company and its Subsidiaries uses pursuant to license, sublicense, agreement or
permission. The Company has supplied the Parent with correct and complete copies
of all such licenses, sublicenses, and permissions (as amended to date). With
respect to each such item of used Intellectual Property, except as set forth in
Section 3.11 of the Company Disclosure Schedule:
(i) the license, sublicense, agreement or permission covering
the item is legal, valid, binding, enforceable and in full force and
effect;
(ii) the license, sublicense, agreement or permission will
continue to be legal, valid, binding, enforceable and in full force and
effect on identical terms following the Closing;
(iii) none of the Company or its Subsidiaries nor, to the
knowledge of the Company, any other party to the license, sublicense,
agreement or permission is in breach or default, and no event has
occurred which with notice or lapse of time would constitute a breach
or default or permit termination, modification or acceleration
thereunder;
(iv) none of the Company or its Subsidiaries nor, to the
knowledge of the Company, any other party to the license, sublicense,
agreement or permission has repudiated any provision thereof;
(v) with respect to each sublicense, the representation and
warranties set forth in subsections (i) through (iv) above are true and
correct in all material respects with respect to the underlying
license;
(vi) the underlying item of Intellectual Property is not
subject to any material outstanding judgment, order, decree,
stipulation, injunction or charge;
(vii) no material charge, complaint, action, suit, proceeding,
hearing, investigation, claim, or demand is pending, or, to the
knowledge of the Company, is threatened which challenges the legality,
validity, or enforceability of the underlying item of Intellectual
property; and
(viii) none of the Company and its Subsidiaries has granted
any sublicense or similar right with respect to the license,
sublicense, agreement or permission.
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3.12 Related Transactions. Section 3.12 of the Company Disclosure
Schedule sets forth a true, correct and complete description of any Contractual
Obligation or transaction between the Company and any of its officers,
directors, employees, stockholders, or any Affiliate of any thereof (other than
reasonable compensation for services as officers, directors and employees and
reimbursement for out-of-pocket expenses reasonably incurred in support of the
Company's business), including without limitation any providing for the
furnishing of services to or by, providing for rental of property, real,
personal or mixed, to or from, or providing for the lending or borrowing of
money to or from or otherwise requiring payments to or from, any officer,
director, stockholder or employee, or any Affiliate of any thereof.
3.13 Insurance. Each of the Company and its Subsidiaries has been
covered during the past three (3) years by insurance in scope and amount
customary and reasonable for the business in which it has been engaged during
such period. Section 3.13 of the Company Disclosure Schedule lists all material
insurance policies maintained by the Company or any of its Subsidiaries and
includes the insurers' names, policy numbers, expiration dates, risks insured
against, amounts of coverage, annual premiums, exclusions, deductibles and
self-insured retention and describes in reasonable detail any retrospective
rating plan, fronting arrangement or any other self-insurance or risk assumption
agreed to by the Company or any of its Subsidiaries or imposed upon the Company
or any of its Subsidiaries by any such insurers, as well as any self-insurance
program that is in effect. Neither the Company nor any Subsidiary is in breach
or violation of or in default under any such policy, and all premiums due
thereon have been paid, and each such policy or a comparable replacement policy
will continue to be in force and effect up to and including the Closing Date.
Neither the Company nor any Subsidiary has received any written notice from the
insurer disclaiming coverage or reserving rights with respect to a particular
claim or such policy in general. Neither the Company nor any Subsidiary has
incurred any material loss, damage, expense or liability covered by any such
insurance policy for which it has not properly asserted a claim under such
policy.
3.14 Tax Matters. Except as set forth in Section 3.14 of the Company
Disclosure Schedule:
(a) Each of the Company and its Subsidiaries has filed all Tax Returns
that it was required to file. All such Tax Returns are correct and complete in
all material respects. All Taxes owed by the Company and its Subsidiaries
(whether or not shown on any Tax Return) that are due on or prior to the Closing
Date have been paid or will have been paid on or prior to the Closing Date. All
material Taxes which the Company and its Subsidiaries are required by law to
withhold and collect have been duly withheld and collected, and have been paid
over, in a timely manner, to the proper Authorities to the extent due and
payable. Neither the Company nor any Subsidiary has executed any waiver to
extend the applicable statute of limitations or agreed to any extension of time
with respect to any Tax assessment or deficiency in respect of any Tax
liabilities of the Company (or any Subsidiary) for the fiscal years prior to and
including the most recent fiscal year. Neither the Company nor any Subsidiary is
a "consenting corporation" within the meaning of Section 341(f) of the Code.
(b) From the end of its most recent fiscal year to the date hereof, the
Company and its Subsidiaries have not made any payment on account of any Taxes
except regular payments required
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in the ordinary course of business, consistent with prior practice, with respect
to current operations or property presently owned.
(c) On or before the Closing Date the Company and its Subsidiaries
shall have paid, accrued or made full, adequate and complete provision (without
regard to whether such provision would or would not be required or sufficient
under GAAP) on their books for all Taxes (whether or not shown on any Tax
Return) attributable to taxable periods ending on or before the Closing Date.
For purposes of the preceding sentence, the Closing Date shall be treated as the
last day of a taxable period, whether or not the taxable period in fact ends on
the Closing Date.
(d) There is no existing or previously effective Tax sharing agreement
that may or will require that any payment be made by the Company or its
Subsidiaries on or after the Closing Date and all Tax sharing agreements to
which the Company or its Subsidiaries is a party shall be canceled as of the
Closing Date and thereafter the Company shall have no obligation thereunder. Any
payments to which the Company or any of its Subsidiaries is or would be entitled
on or prior to the Closing Date under any such Tax sharing agreement has been or
will be paid to the Company or any such Subsidiary on or prior to the Closing
Date.
(e) Each of the Stockholders of the Company is a "United States Person"
within the meaning of Section 7701(a)(30) of the Code.
(f) Neither the Company nor its Subsidiaries has (i) agreed to make any
adjustment pursuant to Section 481(a) of the Code, (ii) knowledge that the IRS
has proposed any such adjustment or change in accounting method with respect to
the Company, (iii) an application pending with any Governmental Entity
requesting permission for any change in accounting method or (iv) applied for or
entered into any Advance Pricing Agreement or similar agreement with any
Governmental Entity with respect to its international sales or purchases.
(g) Neither the Company nor any of its Subsidiaries has in effect any
Tax elections for Federal Income Tax purposes under Sections 108, 168, 338, 441,
1017, 1033 or 4977 of the Code.
(h) There is no contract, agreement, plan or arrangement of the Company
or any of its Subsidiaries covering any Person that, individually or
collectively, as a consequence of the trans actions contemplated by this
Agreement could give rise to the payment of any amount that would not be
deductible by Parent, the Company or its Subsidiaries, as appropriate, by reason
of Section 280G of the Code.
(i) The Company does not own an interest in any (i) domestic
international sales cor poration, (ii) foreign sales corporation, (iii)
controlled foreign corporation, or (iv) passive foreign investment company.
(j) Neither the Company nor any of its Subsidiaries is a party to any
industrial development bond.
(k) During the two (2) year period ending on the date of this
Agreement, neither the Company nor any of its Subsidiaries has engaged in any
exchange under which the gain realized on such exchange was not recognized due
to Section 1031 of the Code.
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(l) There is no express written agreement or understanding relating to
Taxes (i) between the Company or any of its Subsidiaries and any Governmental
Entity, or (ii) to which the Company, its Subsidiaries or any Affiliate of
either is a party affecting or which could affect the Company or any of its
Subsidiaries, by which the Company or any of its Subsidiaries will be bound
after the Closing Date, or which could affect the computation of Taxes by the
Company or any of its Subsidiaries for any period beginning after the Closing
Date.
(m) Schedule 3.14(m) of the Company Disclosure Schedule lists all
state, local and foreign jurisdictions in which Tax Returns are filed by the
Company and its Subsidiaries. No claim has been made in writing by an Authority
in a jurisdiction where any of the Company and its Subsidiaries does not file
Tax Returns that it is or may be subject to taxation by that jurisdiction.
(n) Notwithstanding anything in this Agreement to the contrary, no
representations are being made regarding the Tax deductibility of the amount
paid to Quality Future, Inc. in respect of Option Securities of the Company
pursuant to Section 2.1(a)(iii) hereof.
3.15 Employee Retirement Income Security Act of 1974.
(a) The Company (which for purposes of this Section 3.15 shall include
any Subsidiary or ERISA Affiliate with respect to any Plan subject to Title IV
of ERISA) does not contribute to any Plan or sponsor any Plan or Benefit
Arrangement and has not contributed to or sponsored any Plan or Benefit
Arrangement, except as set forth in Section 3.15(a) of the Company Disclosure
Schedule. As to all Plans and Benefit Arrangements listed in Section 3.15(a) of
the Company Disclosure Schedule, and except as disclosed in such Section 3.15(a)
of the Company Disclosure Schedule:
(i) all Plans and Benefit Arrangements comply and have been
administered in form and in operation in all material respects with all
Applicable Laws, and the Company has not received any outstanding
notice from any Authority questioning or challenging such compliance;
(ii) all Plans maintained or previously maintained by the
Company that are or were intended to comply with Section 401 of the
Code comply and complied in form and in operation in all material
respects with all applicable requirements of such Section, and no event
has occurred which will or could reasonably be expected to give rise to
disqualification of any such Plan under such Section;
(iii) except for the ESOP, none of the assets of any Plan are
invested in employer securities or employer real property;
(iv) there have been no "prohibited transactions" (as
described in Section 406 of ERISA or Section 4975 of the Code) with
respect to any Plan for which the Company has any material liability;
(v) there are no Claims (other than routine claims for
benefits) pending or threatened involving Plans or the assets of Plans;
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(vi) neither the Company nor any ERISA Affiliate has
maintained any Plan that is subject to Title IV of ERISA;
(vii) to the extent that the most recent balance sheet forming
part of the Company Financial Statements does not include a pro rata
amount of the contributions which would otherwise have been made in
accordance with past practices for the Plan years which include the
Closing Date, such amounts are set forth in Section 3.15(a) of the
Company Disclosure Schedule;
(viii) the Company has not, nor has any of its directors,
officers, employees or any other fiduciary, committed any breach of
fiduciary responsibility imposed by ERISA that would subject the
Company or any of its directors, officers or employees to any material
liability under ERISA;
(ix) except as set forth in Section 3.15(a) of the Company
Disclosure Schedule (which entry, if applicable, shall indicate the
present value of accumulated plan liabilities calculated in a manner
consistent with FAS 106 and actual annual expense for such benefits for
each of the last two (2) years) and pursuant to the provisions of
COBRA, the Company does not maintain any Plan that provides benefits
described in Section 3(1) of ERISA to any former employees or retirees
of the Company; and
(x) the Company has made available to Parent a copy of the two
most recently filed Federal Form 5500 series and accountant's opinion,
if applicable, for each Plan.
(b) The Company is not nor has it ever been a party to any
Multiemployer Plan or made contributions to any such plan.
3.16 Employment Arrangements.
(a) The Company (which term for purposes of this Section 3.16 shall
include any Subsidiary) has no obligation or liability, contingent or other,
under any Employment Arrangement (whether or not listed in Section 3.15(a) of
the Company Disclosure Schedule), other than those listed or described in
Section 3.16(a) of the Company Disclosure Schedule. The Company is not now nor
during the past three (3) years has it been subject to or involved in or, to the
Company's knowledge, threatened with any union elections, petitions therefor or
other organizational activities, except as described in Section 3.16(a) of the
Company Disclosure Schedule. None of the employees of the Company is represented
by any labor union or other employee collective bargaining organization and
there are no pending grievances, disputes or controversies with any union or any
other employee collective bargaining organization of such employees.
(b) Except as set forth in Section 3.16(b) of the Company Disclosure
Schedule, no employee shall accrue or receive additional benefits, service or
accelerated rights to payments of benefits under any Employment Arrangement, or
become entitled to severance, termination allowance or similar payments as a
direct result of this Agreement, the Merger or the Transactions.
3.17 Material Agreements. Listed in Section 3.17 of the Company
Disclosure Schedule are all Material Agreements relating to the ownership or
operation of the business and property of
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each of the Company and its Subsidiaries presently held or used by it or to
which it is a party or to which it or any of its property is subject or bound.
True, complete and correct copies of each of the Material Agreements have been
furnished by the Company to the Parent (or, if oral, true, complete and correct
descriptions thereof have been set forth in Section 3.17 of the Company
Disclosure Schedule). Except as set forth in Section 3.17 of the Company
Disclosure Schedule, all of the Material Agreements are valid, binding and
legally enforceable obligations of the Company or one of its Subsidiaries and,
to the Company's knowledge, the other parties thereto (except as such
enforceability may be subject to bankruptcy, moratorium, insolvency,
reorganization, arrangement, voidable preference, fraudulent conveyance and
other similar laws relating to or affecting the rights of creditors and except
as the same may be subject to the effect of general principles of equity), and
the Company or one of its Subsidiaries is validly and lawfully operating its
business and owning its property under each of the Material Agreements. Neither
the Company nor any Subsidiary is in default in the payment or performance of
any of its obligations under any Material Agreement. No Event which, with the
giving of notice or the passage of time, or both, constitutes an event of
default by the Company or any of its Subsidiaries under any Material Agreement
has occurred and is continuing, except as set forth in Section 3.17 of the
Company Disclosure Schedule. To the knowledge of the Company, no other party to
any Material Agreement is in default in any material respect in the payment or
performance of its obligations thereunder and no Event which, with the giving of
notice or the passage of time, or both, constitutes a material event of default
by such other party under any Material Agreement has occurred and is continuing.
3.18 Ordinary Course of Business.
(a) The Company (which term for purposes of this Section 3.18 shall
include any Subsidiary), from the date of the most recent audited balance sheet
forming part of the Company Financial Statements to the date hereof and until
the Closing Date, except as may be described in Section 3.18(a) of the Company
Disclosure Schedule or as may expressly be required or permitted by the terms of
this Agreement:
(i) has operated, and will continue to operate, its business
in the normal, usual and customary manner in the ordinary course of
business, consistent with prior practice;
(ii) has not sold or otherwise disposed of, or contracted to
sell or otherwise dispose of, and will not sell or otherwise dispose of
or contract to sell or otherwise dispose of, any of its properties or
assets, other than in the ordinary course of business;
(iii) except in each case in the ordinary course of business,
consistent with prior practice,
(a) has not incurred and will not incur any
Indebtedness, obligations or liabilities
(fixed, contingent or other);
(b) has not entered and will not enter into any
commitments;
(c) has not canceled and will not cancel any
debts or claims; and
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(d) has not prepaid and will not prepay any
Indebtedness in advance of its contractual
maturity date.
(iv) has not made or committed to make, and will not make or
commit to make, any additions to its property or any purchases of
machinery or equipment, except for normal maintenance and replacements;
(v) has not discharged or satisfied, and will not discharge or
satisfy, any Lien and has not paid and will not pay any obligation or
liability (absolute or contingent) other than Taxes in the ordinary
course of business, current liabilities or obligations under contracts
then existing or thereafter entered into in the ordinary course of
business, consistent with prior practice, and commitments under Leases
existing on that date or incurred since that date in the ordinary
course of business;
(vi) has not created or permitted to be created, and will not
create or permit to be created any Lien on any of its tangible
property;
(vii) has not transferred or created, or permitted to be
created, and will not transfer or create, or permit to be created, any
Lien on any Intangible Assets;
(viii) except in the ordinary course of business, consistent
with prior practice, has not increased and will not increase the
compensation payable or to become payable to any of its directors,
officers, employees, advisers, consultants, salesmen or agents or
otherwise alter, modify or change the terms of their employment or
engagement;
(ix) has not suffered any material damage, destruction or loss
(whether or not covered by insurance) or any acquisition or taking of
property by any Authority;
(x) has not waived, and will not waive, any rights of material
value without fair and adequate consideration;
(xi) has not experienced any work stoppage;
(xii) has not entered into, amended or terminated and will not
enter into, amend or terminate any Lease, Governmental Authorization,
Private Authorization, Material Agreement or Employment Arrangement or
any Contractual Obligation or transaction with any Affiliate, except
for amendments or terminations in the ordinary course of business,
consistent with prior practice, in accordance with the terms thereof;
(xiii) has not amended or terminated and will not amend or
terminate, and has kept and will keep in full force and effect
including without limitation renewing to the extent the same would
otherwise expire or terminate, all insurance policies and coverage;
(xiv) has not entered into, and will not enter into, any other
transaction or series of related transactions which individually or in
the aggregate is material to the Company, except in the ordinary course
of business, consistent with prior practice;
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(xv) has not incurred and will not incur any Indebtedness
owing to any Stockholder and has not made and will not make any loans
or advances to any Stockholder;
(xvi) has not split, combined or reclassified any of the
Company's capital stock or issued or authorized the issuance of any
securities in respect of, in lieu of or in substitution of any shares
of the Company's capital stock, and will not do any of the foregoing;
(xvii) has not issued, sold or otherwise disposed of any of
its capital stock (other than pursuant to the exercise of Vested
Options in accordance with the terms thereof), or issued Option
Securities or Convertible Securities or preemptive rights or other
rights to purchase or obtain any of its capital stock, or accelerated
the vesting or otherwise amended or waived the terms of any Option
Securities or Convertible Securities, and has not declared, set aside,
or paid any dividend or distributions with respect to its capital stock
or redeemed, purchased, or otherwise acquired any of its capital stock,
and will not do any of the foregoing;
(xviii) has not amended and will not amend any of its Organic
Documents;
(xix) has not changed and will not change any method of
accounting or accounting practice or policy, except as required by
Applicable Law or by GAAP;
(xx) has not accelerated accounts receivable, delayed accounts
payable, or liquidated inventory, and will not do so, except in the
ordinary course of business consistent with past practice; and
(xxi) has not made any Tax election that could reasonably be
expected to have an Adverse Effect or settle or compromise any material
Tax liability, and will not do any of the foregoing.
(b) From the end of its most recent fiscal year to the date hereof,
except as described in Section 3.18(b) of the Company Disclosure Schedule, the
Company has not, and on or prior to the Closing Date will not have, declared,
made or paid, or agreed to declare, make or pay, any Distribution.
3.19 Broker or Finder. Other than Peter J. Solomon Company, which acted
as the financial adviser to the Company (and the fees of which are to be paid by
the Company at or prior to the Closing), no Person assisted in or brought about
the negotiation of this Agreement, the Merger or the subject matter of the
Transactions in the capacity of broker, agent or finder or in any similar
capacity on behalf of the Company (or a Subsidiary).
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3.20 Environmental Matters. Except as set forth in Section 3.20 of the
Company Disclosure Schedule:
(a) Each of the Company and its Subsidiaries is in compliance in all
material respects with all applicable Environmental Laws.
(b) As of the date hereof, no underground storage tanks are present
under any property that the Company (which term for purposes of this Section
3.20 shall include any Subsidiary) or any Affiliate now owns, operates, occupies
or leases. As of the date hereof, no material amount of any substance that has
been designated by any federal, state or local governmental agency, board or
authority (a "Governmental Entity") or by applicable federal, state or local law
to be radioactive, toxic, hazardous or otherwise a danger to health or the
environment, including, without limitation, PCB's, asbestos, gasoline,
petroleum, urea-formaldehyde and all substances listed as hazardous substances
pursuant to the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, or defined as a hazardous waste pursuant to
the Resource Conservation and Recovery Act of 1976, as amended, and the
regulations promulgated pursuant to said laws, (a "Hazardous Material"), but
excluding routine quantities of office and janitorial supplies, has been
released, discharged, spilled, buried or disposed of, as a result of the actions
of the Company, or to the knowledge of the Company, any actions of any third
party or otherwise, in, on or under any property, including the land and the
improvements, ground water and surface water, that the Company or any Affiliate
has at any time owned, operated, occupied or leased in such circumstances as
would constitute a violation of Applicable Law or be reasonably expected to
result in liability on the Company pursuant to any Environmental Law. To the
Company's knowledge, no Event has occurred which could reasonably be expected to
result in a claim against the Company in any environmental litigation or impose
upon the Company any environmental liabilities which could reasonably be
expected to have an Adverse Effect on the Company.
(c) At no time has the Company or an Affiliate transported, stored,
used, manufactured, disposed of, released or exposed its employees or others to
Hazardous Materials in violation of any Law in effect on or before the Closing
Date, nor has the Company or any Affiliate disposed of, transported, sold, or
manufactured any product containing a Hazardous Material (collectively,
"Hazardous Materials Activities") in violation of any rule, regulation, treaty
or statute promulgated by any Governmental Entity to prohibit, regulate or
control Hazardous Materials or any Hazardous Materials Activity, which such
violation could reasonably be expected to have an Adverse Effect on the Company.
The Company has not treated, stored, disposed of, arranged for the disposal of
or transported any Hazardous Material to or at any property or facility at which
there has been a release or threat of release of Hazardous Materials in a manner
that has given or is reasonably likely to give rise to liability under any
Environmental Law.
(d) The Company currently holds all environmental approvals, permits,
licenses, clearances and consents (the "Environmental Permits") necessary for
the conduct of its Hazardous Materials Activities and other businesses as such
activities and businesses are currently being conducted, the absence of which
reasonably could be expected to have an Adverse Effect on the Company.
(e) No action, proceeding, revocation proceeding, amendment proceeding,
writ, injunction or claim is pending or, to the Company's knowledge, threatened
concerning any
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Environmental Permit or any Hazardous Materials Activity of the Company, and the
Company has not received from any Governmental Entity any written request for
information, notice of violation or notice of responsibility or similar
notification of liability, investigatory, corrective action or remedial
obligation under any Environmental Law.
3.21 Books and Records. Except as set forth in Section 3.21 of the
Company Disclosure Schedule, the minute books and other similar records of the
Company and its Subsidiaries contain true and complete records of all actions
taken at any meetings of the Company's and Subsidiaries' stockholders, Board of
Directors, members, managers or any committee thereof and of all written
consents executed in lieu of the holding of any such meeting.
3.22 Suppliers. Section 3.22 of the Company Disclosure Schedule sets
forth a list of the ten (10) largest suppliers of the Company and its
Subsidiaries based on dollar values of purchases during the most recently
completed fiscal year. Neither the Company nor any Subsidiary has any reason to
believe that any supplier listed on Section 3.22 of the Company Disclosure
Schedule has any plan or intention to materially alter its relationship with the
Company or any Subsidiary.
3.23 Officers and Directors. Section 3.23 of the Company Disclosure
Schedule sets forth a true and complete list of all officers, directors, members
and managers of the Company and its Subsidiaries.
3.24 Bank Accounts. Section 3.24 of the Company Disclosure Schedule
sets forth all checking accounts, savings accounts, custodial accounts,
certificates of deposit, safe deposit boxes or other similar accounts maintained
by the Company and its Subsidiaries, together with the name of each person with
signature authority for each such account.
3.25 Anti-takeover Statutes Not Applicable. No "fair price",
"moratorium", "control share acquisition" or other form of anti-takeover statute
or regulation is applicable to the Company's or the Stockholders' entering into
this Agreement and consummating the transactions contemplated hereby.
3.26 Litigation. Section 3.26 of the Company Disclosure Schedule sets
forth each instance in which the Company or any of its Subsidiaries is subject
to any unsatisfied judgment, order, decree, stipulation, injunction, or charge.
3.27 Product Warranty. To the Company's knowledge, each product
manufactured, distributed, sold, or delivered by any of the Company and its
Subsidiaries has been in conformity with all applicable contractual commitments
and all express and implied warranties, and none of the Company and its
Subsidiaries has any liability for damages in connection therewith, subject only
to the reserve for product warranty claims set forth in the most recent audited
balance sheet contained in the Company Financial Statements as adjusted for the
passage of time through the Closing Date in accordance with the past custom and
practice of the Company. No product manufactured, sold, distributed, serviced,
leased, or delivered by any of the Company and its Subsidiaries is subject to
any guaranty, warranty, or other indemnity of the company or any Subsidiary
beyond the applicable standard terms and conditions of sale or lease.
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3.28 Product Liability. To the Company's knowledge, except as set forth
in Section 3.26 or 3.28 of the Company Disclosure Schedule, none of the Company
and its Subsidiaries has any material liability arising out of any injury to
persons or property as a result of the ownership, possession, or use of any
product manufactured, distributed, sold, leased, serviced or delivered by any of
the Company and its Subsidiaries.
3.29 Continuing Representations and Warranties. Except for those
representations and warranties which speak as of a specific date, all of the
representations and warranties of the Company set forth in this Article shall be
true and correct on the Closing Date with the same force and effect as though
made on and as of that date and those, if any, which speak as of a specific date
shall be true and correct as of such date on the Closing Date.
3.30 Disclosure. No representation or warranty by the Company contained
in this Agreement, and no statement contained in the Company Disclosure
Schedule, contains or will contain any untrue statement of a material fact or
omits or will omit to state any material fact necessary, in light of the
circumstances under which it was or will be made, in order to make the
statements herein or therein not misleading.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL STOCKHOLDERS
Each Principal Stockholder, for himself or itself only, hereby
represents and warrants to, and agrees with, Parent and Merger Subsidiary as
follows:
4.1 Ownership. Such Principal Stockholder is the lawful owner of record
and beneficial owner of the number of shares of Company Common Stock set forth
opposite his or its name in Section 4.1 of the Company Disclosure Schedule. Such
Principal Stockholder is not party to or bound by any agreement or commitment
pursuant to which it is obligated to purchase or otherwise acquire any equity
securities, Option Securities or Convertible Securities of the Company, and
between the date hereof and the Closing, such Principal Stockholder will not
sell or purchase, or agree to sell or purchase, any equity securities, Option
Securities or Convertible Securities of the Company.
4.2 Liens. The shares of the Company Common Stock owned by such
Principal Stockholder are free and clear of all Liens, and none of such shares
of the Company Common Stock is subject to any written or oral agreement
whatsoever with respect to the voting thereof (except as set forth in the Voting
Agreement), the sale of pledge thereof (including, without limitation, any
option or right of first refusal to sell any such shares) or any like matter,
nor has any proxy been granted to any Person with respect to any such shares of
the Company Common Stock.
4.3 Authorization of Agreement. This Agreement has been duly and
validly executed and delivered on behalf of such Principal Stockholder and
constitutes a valid obligation of such Principal Stockholder, enforceable in
accordance with its terms, except to the extent that its enforceability may be
limited by applicable insolvency, bankruptcy, reorganization, arrangement,
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voidable preference, fraudulent conveyance or other similar laws affecting the
enforcement of creditors' rights generally and except as the same may be subject
to the general principles of equity.
4.4 No Governmental Consents. Except as set forth in Section 4.4 of the
Company Disclosure Schedule, no Governmental Authorization or Governmental
Filing or Private Authorization is required to be obtained or made by the
Company or such Principal Stockholder in connection with the Merger and the
Transactions except for filing requirements under Applicable Laws in connection
with the Merger and the Transactions and except pursuant to the HSR Act.
4.5 Investment Representations of Principal Stockholders.
(a) Such Principal Stockholder is acquiring Parent Stock for his or its
own account for the purpose of investment, and not with a view to, or sale in
connection with, any distribution thereof.
(b) Such Principal Stockholder has such knowledge and experience in
financial and business matters that he or it is capable of evaluating the merits
and risks of his proposed investment in Parent Stock.
(c) Such Principal Stockholder understands and acknowledges that all of
the Parent Stock to be delivered to him pursuant to the provisions of this
Agreement will be "restricted securities" within the meaning of the Securities
Act, and agrees that the certificates therefor shall bear a legend in
substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES LAW AND MAY NOT BE SOLD, PLEDGED,
TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT SUCH
REGISTRATION IS NOT REQUIRED.
(d) Such Principal Stockholder understands and acknowledges that all of
the Parent Stock to be delivered to him or it pursuant to the provisions of this
Agreement will not be registered under the Securities Act and, accordingly, such
Principal Stockholder recognizes that he or it may be required to bear the
economic risk of his investment until such shares are registered and, after such
registration, until any other restrictions on transfer may lapse.
(e) Such Principal Stockholder understands and acknowledges that the
provisions of this Section 4.5 apply to all of the Parent Stock to be delivered
to him or it pursuant to the provisions of this Agreement.
(f) Each Principal Stockholder that is a corporation has all requisite
power and authority (corporate and other) necessary in order to enable it to
execute and deliver, and to perform its obligations under, this Agreement and
each Collateral Document which it has entered into or will enter into in
connection therewith and to consummate the transactions contemplated hereby and
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thereby, and the execution, delivery and performance of this Agreement and each
such Collateral Document have been duly authorized by all requisite corporate or
other action. This Agreement and each Collateral Document which such corporate
Principal Stockholder has entered into or will enter into in connection
therewith has been duly executed and delivered by such corporate Principal
Stockholder and constitutes the legal, valid and binding obligation of such
corporate Principal Stockholder, enforceable in accordance with its respective
terms, except as such enforceability may be subject to bankruptcy, moratorium,
insolvency, reorganization, arrangement, voidable preference, fraudulent
conveyance or other similar laws relating to or affecting the rights and
remedies of creditors, and except as the same may be subject to the effect of
general principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).
(g) Each Principal Stockholder that is a trust has all requisite power
and authority (trust and other) necessary in order to enable it to execute and
deliver, and to perform its obligations under, this Agreement and each
Collateral Document which it has entered into or will enter into in connection
therewith and to consummate the transactions contemplated hereby and thereby,
and the execution, delivery and performance of this Agreement and each such
Collateral Document have been duly authorized by all requisite trust or other
action. This Agreement and each Collateral Document which such trust Principal
Stockholder has entered into or will enter into in connection therewith has been
duly executed and delivered by such trust Principal Stockholder and constitutes
the legal, valid and binding obligation of such trust Principal Stockholder,
enforceable in accordance with its respective terms, except as such
enforceability may be subject to bankruptcy, moratorium, insolvency,
reorganization, arrangement, voidable preference, fraudulent conveyance or other
similar laws relating to or affecting the rights and remedies of creditors, and
except as the same may be subject to the effect of general principles of equity
(regardless of whether enforcement is sought in a proceeding at law or in
equity).
4.6 Stockholder Representative. Each Principal Stockholder hereby
designates and appoints David C. Bliss with full power of substitution (the
"Stockholder Representative") the representative of each such Person to perform
all such acts as are required, authorized or contemplated by this Agreement to
be performed by any such Person and hereby acknowledges that the Stockholder
Representative shall be the only Person authorized to take any action so
required, authorized or contemplated by this Agreement by each such Person. Each
such Person further acknowledges that the foregoing appointment and designation
shall be deemed to be coupled with an interest and shall survive the death or
incapacity of such Person. Each such Person hereby authorizes the other Parties
hereto to disregard any notice or other action taken by such Person pursuant to
this Agreement except for the Stockholder Representative. The other Parties
hereto are and will be entitled to rely on any action so taken or any notice
given by the Stockholder Representative and are and will be entitled and
authorized to give notices only to the Stockholder Representative for any notice
contemplated by this Agreement to be given to any such Person. A successor to
the Stockholder Representative may be chosen by the holders of a majority of the
outstanding shares of Company Common Stock at the time held by the Principal
Stockholders, provided that written notice thereof is given by the successor
Stockholder Representative to the Parent.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER SUBSIDIARY
Parent and Merger Subsidiary, jointly and severally, represent, warrant
and covenant to, and agree with, the Company as follows:
5.1 Organization and Business; Power and Authority; Effect of
Transaction.
(a) Each of Parent and its Subsidiaries:
(i) is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation,
(ii) has all requisite corporate power and authority to own or
hold under lease its properties and to conduct its business as now
conducted and has in full force and effect all Governmental
Authorizations and Private Authorizations and has made all Governmental
Filings, to the extent required for such ownership and lease of its
property and conduct of its business, except to the extent that the
failure to have obtained any such Governmental Authorization or Private
Authorization or to have made any such Governmental Filing would not
have an Adverse Effect; and
(iii) has duly qualified and is authorized to do business and
is in good standing as a foreign corporation in each jurisdiction (a
true and correct list of which is set forth in Section 5.1(a)(iii) of
the Parent Disclosure Schedule) in which the character of its property
or the nature of its business or operations requires such qualification
or authorization, except to the extent the failure to qualify or to
maintain such authorizations would not have an Adverse Effect.
(b) Each of Parent and Merger Subsidiary has all requisite power and
authority (corporate and other) and, other than the filing and termination of
the waiting period pursuant to the HSR Act and as set forth in Section 5.1(c) of
the Parent Disclosure Schedule, has in full force and effect all Governmental
Authorizations and Private Authorizations in order to enable it to execute and
deliver, and to perform its obligations under, this Agreement and each
Collateral Document executed or required to be executed by it pursuant hereto or
thereto and to consummate the Merger and the Transactions, and the execution,
delivery and performance of this Agreement and each Collateral Document executed
or required to be executed pursuant hereto or thereto have been duly authorized
by all requisite corporate or other action, except for the approval of Parent's
stockholders required to amend Parent's certificate of incorporation (to
authorize additional shares of Parent Stock to be issued in connection with the
Merger). This Agreement has been duly executed and delivered by Parent and
Merger Subsidiary and constitutes, and each Collateral Document executed or
required to be executed pursuant hereto or thereto or to consummate the Merger
and the Transactions, when executed and delivered by Parent and Merger
Subsidiary will constitute, legal, valid and binding obligations of Parent and
Merger Subsidiary, enforceable in accordance with their respective terms, except
as such enforceability may be subject to bankruptcy, moratorium, insolvency,
reorganization, arrangement, voidable preference, fraudulent conveyance or other
similar laws relating to or
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affecting the rights and remedies of creditors, and except as the same may be
subject to the effect of general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(c) Except as set forth in Section 5.1(c) of the Parent Disclosure
Schedule, neither the execution and delivery of this Agreement or any Collateral
Document executed or required to be executed pursuant hereto or thereto, nor the
consummation of the Merger or the Transactions, nor compliance with the terms,
conditions and provisions hereof or thereof by Parent, Merger Subsidiary or any
of the other parties hereto or thereto which is Affiliated with Parent or Merger
Subsidiary:
(i) will materially conflict with, or result in a material
breach or violation of, or constitute a material default under, any
Applicable Law on the part of Parent or any Subsidiary or will conflict
with, or result in a breach or violation of, or constitute a default
under, or permit the acceleration of any obligation or liability in, or
but for any requirement of giving of notice or passage of time or both
would constitute such a conflict with, breach or violation of, or
default under, or permit any such acceleration in, any material
Contractual Obligation of Parent or any Subsidiary,
(ii) will result in or permit the creation or imposition of
any Lien upon any property now owned or leased by Parent or any such
other party, other than any Lien which is not material in relation to
the property it encumbers, or
(iii) will require any material Governmental Authorization or
Governmental Filing or Private Authorization, except for the approval
of Parent's stockholders required to amend Parent's certificate of
incorporation (to authorize additional shares of Parent Stock to be
issued in connection with the Merger), and filing requirements under
Applicable Law in connection with the Merger and the Transactions and
pursuant to the HSR Act.
5.2 Financial and Other Information.
(a) Parent and CT have filed all forms, reports and documents required
to be filed by them under Section 13 of the Exchange Act with the SEC since
March 19, 1997. Parent has previously furnished to the Company complete and
accurate copies, as amended or supplemented, of (a) CT's Annual Report on Form
10-K for the fiscal year ended October 31, 1998; (b) CT's Quarterly Report on
Form 10-Q for the quarter ended January 30, 1999, and (c) all other forms,
reports and documents filed by Parent or CT under Section 13 of the Exchange Act
with the SEC since January 30, 1999, which reports are listed in Section 5.2 of
the Parent Disclosure Schedule (the forms, reports and other documents referred
to in clauses (a) through (c) above being referred to herein collectively as the
"SEC Reports"). As of their respective dates, the SEC Reports did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
audited financial statements and unaudited interim financial statements of CT
included in the SEC Reports (i) comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, (ii) have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods covered thereby (except as
may be indicated therein or in the notes thereto, and in the case of quarterly
financial statements, as permitted by Form 10-Q under the Exchange Act) and
(iii)
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fairly present the consolidated financial condition, results of operations and
cash flows of CT and its Subsidiaries as of the respective dates thereof and for
the periods referred to therein, subject, in the case of unaudited financial
statements, to the absence of footnotes and other presentation items and to
normal year-end audit adjustments and accruals.
(b) Parent does not directly own any capital stock or equity or
proprietary interest in any Entity or enterprise and has no direct Subsidiaries,
however organized and however such interest may be denominated or evidenced,
except for CT. Parent does not indirectly own any capital stock or equity or
proprietary interest in any Entity or enterprise and has no indirect
Subsidiaries, however organized and however such interest may be denominated or
evidenced, except as set forth in Section 5.2(b) of the Parent Disclosure
Schedule. With respect to Merger Subsidiary and any Subsidiary disclosed in such
Section 5.2(b), Parent owns, and at the Closing will own, directly or
indirectly, 100% of the issued and outstanding capital stock and all Convertible
Securities and Option Securities of such Subsidiary, and all of such securities
are, and at the Closing will be, duly authorized, validly issued, fully paid and
non-assessable and free of preemptive rights and, except as set forth in Section
5.2(b) of the Parent Disclosure Schedule, free of Liens. Parent is a holding
company whose sole assets consist of its interests in CT, except as set forth in
Section 5.2(b) of the Parent Disclosure Schedule. Parent has heretofore
furnished to the Company copies of the consolidated financial statements of
Parent listed in Section 5.2(b) of the Parent Disclosure Schedule (the "Parent
Financial Statements"). The Parent Financial Statements, including in each case
the notes thereto, (x) have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby (except as otherwise
noted therein) and (y) except as otherwise noted therein, fairly present the
consolidated financial condition, results of operations and cash flows of Parent
and its Subsidiaries as of the respective dates thereof and for the periods
referred to therein, subject, in the case of unaudited Parent Financial
Statements, to the absence of footnotes and other presentation items and to
normal year-end audit adjustments and accruals.
5.3 Authorized and Outstanding Capital Stock. The authorized and
outstanding capital stock of each of Parent and each Subsidiary is as set forth
in Section 5.3 of the Parent Disclosure Schedule. All of such outstanding
capital stock has been duly authorized and validly issued, is fully paid and
nonassessable, has not been issued in violation of any preemptive rights and is,
except as set forth in Section 5.3 of the Parent Disclosure Schedule, not
subject to any preemptive or similar rights. There is neither outstanding nor
has Parent or any Subsidiary agreed to grant or issue any equity securities or
any Option Security or Convertible Security (except as set forth in Section 5.3
of the Parent Disclosure Schedule). Neither Parent nor any Subsidiary is a party
to nor is either bound by any agreement, put or commitment pursuant to which it
is obligated to purchase, redeem or otherwise acquire any equity securities or
any Option Security or Convertible Security, except as set forth in Section 5.3
of the Parent Disclosure Schedule. Except as set forth in Section 5.3 of the
Parent Disclosure Schedule, between the date hereof and the Closing, neither
Parent nor any Subsidiary will issue, sell or purchase or agree to issue, sell
or purchase any equity securities or any Option Security or Convertible Security
of Parent or any Subsidiary. All of the issued and outstanding capital stock of
Parent has been issued in compliance with applicable Federal and state
securities laws. Prior to the Closing, Parent will have taken all necessary
action to permit it to issue the number of shares of Parent Stock required to be
issued by it pursuant to this Agreement. Shares of Parent Stock issued pursuant
to this Agreement will, when issued, be validly issued, fully paid and
nonassessable and no Person will have any preemptive right of subscription or
purchase in respect thereof and, assuming the accuracy of the investment
representations of the Stockholders
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receiving Stock Merger Consideration, the issuance thereof will be exempt from
registration under Federal and state securities laws.
5.4 Changes in Condition. Since the date of the most recent financial
statements included in the SEC Reports, except to the extent specifically
described in Section 5.4 of the Parent Disclosure Schedule, there has been no
Adverse Change in Parent. There is no Event known to Parent which Adversely
Affects Parent, or the ability of Parent to perform any of the obligations set
forth in this Agreement or any Collateral Document executed or required to be
executed pursuant hereto or thereto except for changes in general economic
conditions and to the extent set forth in Section 5.4 of the Parent Disclosure
Schedule.
5.5 Liabilities.
(a) At the date of the most recent balance sheet forming part of the
SEC Reports, Parent and its Subsidiaries had no obligations or liabilities,
past, present or deferred, accrued or unaccrued, fixed, absolute, contingent or
other, except as disclosed in such balance sheet, in the notes thereto or in
Section 5.5 of the Parent Disclosure Schedule, and since such date Parent and
its Subsidiaries have not incurred any such obligations or liabilities, other
than obligations and liabilities incurred in the ordinary course of business of
Parent and its Subsidiaries consistent with past practice, which do not, in the
aggregate, Adversely Affect Parent and its Subsidiaries taken as a whole except
to the extent set forth in Section 5.5 of the Parent Disclosure Schedule.
(b) None of Parent and its Subsidiaries has Guaranteed or is otherwise
primarily or secondarily liable in respect of any obligation or liability of any
other Person material to Parent and its Subsidiaries taken as a whole, except
for endorsements of negotiable instruments for deposit in the ordinary course of
business, consistent with prior practice, or as disclosed in the most recent
balance sheet, or the notes thereto, forming part of the SEC Reports or in
Section 5.5 of the Parent Disclosure Schedule.
5.6 Title to Properties; Leases.
(a) Parent or one of its Subsidiaries has good legal and insurable
title, with respect to all real property owned or leased (in fee simple if owned
and leasehold if leased) and good, clear, record and marketable title if owned
(in fee simple), if any, reflected as an asset on the most recent balance sheet
forming part of the SEC Reports, or held by Parent or a Subsidiary of Parent for
use in its business if not so reflected, and good and clear indefeasible and
merchantable title to all other assets, tangible and intangible, reflected on
such balance sheet, or (excluding leased property) held by Parent or a
Subsidiary of Parent for use in its business if not so reflected, or purported
to have been acquired by Parent or a Subsidiary of Parent since such date,
except inventory sold or depleted, or property, plant and other equipment used
up or retired, since such date, in each case in the ordinary course of business
consistent with past practice of Parent, free and clear of all Liens, except (w)
such as are reflected in the most recent balance sheet, or the notes thereto,
forming part of the SEC Reports, (x) Liens securing taxes, assessments,
governmental charges or levies, or the claims of mechanics materialmen,
carriers, landlords and like persons, which are not yet due or payable, (y)
Permitted Liens or (z) as set forth in Section 5.6(a) of the Parent Disclosure
Schedule. Each Lease or other occupancy or other agreement under which Parent or
a Subsidiary of Parent holds real or personal property has been duly authorized,
executed and delivered by Parent or such Subsidiary
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and each such Lease is a legal and valid obligation of Parent or such
Subsidiary. Parent or a Subsidiary has a valid leasehold interest in and enjoys
peaceful and undisturbed possession under all Leases pursuant to which it holds
any real property or material tangible personal property. All of such Leases are
valid and subsisting and in full force and effect; and neither Parent nor such
Subsidiary nor, to the knowledge of Parent, any other party thereto is in
default in the performance, observance or fulfillment of any obligation,
covenant or condition contained in any such Lease.
(b) The real property owned or leased by Parent or its Subsidiaries is
in all material respects disclosed in the SEC Reports or Section 5.6(b) of the
Parent Disclosure Schedule, and the real property, fixtures, fixed assets and
machinery and equipment owned or leased by Parent or its Subsidiaries are in a
state of good repair and maintenance and are in good operating condition,
reasonable wear and tear excepted. Each of Parent and its Subsidiaries owns or
leases all tangible assets necessary for the conduct of its business as
presently conducted and as presently proposed to be conducted until the Closing.
(c) With respect to each parcel of real property owned by Parent or one
of its Subsidiaries, except as set forth in Section 5.6(c) of the Parent
Disclosure Schedule:
(i) there are no pending or, to the knowledge of Parent,
threatened condemnation proceedings relating to such parcel, and there
are no pending or, to the knowledge of Parent, threatened litigation or
administrative actions relating to such parcel or other matters
Adversely Affecting the use, occupancy or value thereof;
(ii) the buildings and improvements may be used as of right
under applicable zoning and land use laws for the Current Uses and such
buildings and improvements are located within the boundary lines of the
described parcel of land, are not in violation of Applicable Laws and,
to the best knowledge of Parent, do not encroach on any easement which
may burden the land; the land does not serve any adjoining property for
any purpose inconsistent with the use of the land; and such parcel is
not located within any flood plain or subject to any similar type
restriction for which any permits or licenses necessary to the use
thereof have not been obtained;
(iii) there are no outstanding options or rights of first
refusal to purchase such parcel, or any portion thereof or interest
therein;
(iv) all facilities located on such parcel are supplied with
utilities and other services necessary for the operation of such
facilities, including gas, electricity, water, telephone, sanitary
sewer and storm sewer, all of which services are adequate for the
Current Uses and in accordance with all Applicable Laws, and are
provided via public roads or via permanent, irrevocable, appurtenant
easements benefiting such parcel;
(v) such parcel abuts on and has direct vehicular access to a
public road or access to a public road via a permanent, irrevocable,
appurtenant easement benefiting such parcel;
(vi) neither Parent nor any of its Subsidiaries has received
no written notice of any proposed or pending proceeding to change or
redefine the zoning classification of all or any portion of such
parcel; and
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(vii) such parcel is an independent unit which does not rely
on any facilities (other than the facilities of public utility and
water companies) located on any other property (a) to fulfill any
zoning, building code, or other municipal or governmental requirement,
(b) for structural support or the furnishing of any essential building
systems or utilities, including, but not limited to electric, plumbing,
mechanical, heating, ventilating, and air conditioning systems, or (c)
to fulfill the requirements of any lease. No building or other
improvement not included in such parcel relies on any part of such
parcel to fulfill any requirement of Applicable Laws or for structural
support or the furnishing of any essential building systems or
utilities. Such parcel is assessed by local property assessors as a tax
parcel separate from all other tax parcels.
(d) With respect to each Lease by which Parent or any Subsidiary leases
or subleases any real property, except as set forth in Section 5.6(d) of the
Parent Disclosure Schedule:
(i) such Lease will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms following
the Closing;
(ii) no party to such Lease has repudiated any provision
thereof;
(iii) there are no disputes, oral agreements, or forbearance
programs in effect as to such Lease;
(iv) such Lease contains no provision pursuant to which any
increased or additional rent or other charge will be or may be assessed
against Parent or any Subsidiary as a result of the Transactions or as
a condition to any consent required under such Lease required of Parent
or any Subsidiary on account of the Transactions, other than any such
increased or additional rent or other charge which is not material in
relation to such Lease;
(v) none of Parent and its Subsidiaries has assigned,
transferred, conveyed, mortgaged, deeded in trust, or encumbered any
interest in the leasehold or subleasehold;
(vi) all facilities leased or subleased thereunder have
received all material Governmental Authorizations required in
connection with the operation thereof and have been operated and
maintained in accordance with applicable laws, rules and regulations;
and
(vii) all facilities leased or subleased thereunder are
supplied with utilities and other services necessary for the operation
of said facilities.
5.7 Inventory. The inventory of CT and its Subsidiaries as set forth on
the most recent consolidated balance sheet forming part of the SEC Reports was,
and the inventory of CT and its Subsidiaries on the date hereof is and on the
Closing Date will be, in good and merchantable condition, and in useable or
saleable condition in the ordinary course of business, except for obsolete or
defective materials and any excess stock items which either (i) are reserved for
on the most recent consolidated balance sheet forming part of the SEC Reports or
(ii) alone and in the aggregate are not material. Such inventory does not
include any amounts of any item that was at any prior time written off or
written down by CT. There is no Adverse condition currently affecting the supply
of
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materials or inventory available to CT. The inventory of CT and its Subsidiaries
as set forth on the most recent consolidated balance sheet forming part of the
SEC Reports is consistent in all material respects with the results of the
actual physical inventory conducted by CT and its Subsidiaries most recently
prior to the date of such balance sheet.
5.8 Accounts and Notes Receivable. All accounts and notes receivable
reflected on the most recent consolidated balance sheet forming part of the SEC
Reports and all accounts and notes receivable arising subsequent to the date of
such balance sheet have or will have arisen in the ordinary course of business,
represent valid obligations to CT (or a Subsidiary), and have been collected or
will be collected in the aggregate amounts thereof recorded on the books of CT,
except for (i) those accounts or notes receivable reserved against on such
balance sheet and (ii) those accounts or notes receivable that have not been or
will not be collected which individually and in the aggregate are not material.
5.9 Compliance with Private Authorizations. All Private Authorizations
which individually or in the aggregate are material to Parent and its
Subsidiaries taken as a whole are in full force and effect. Each of Parent and
its Subsidiaries has obtained all Private Authorizations which are necessary for
the ownership by Parent or such Subsidiary of its properties and the conduct of
its business as now conducted, except to the extent that the failure to have
obtained any such Private Authorization would not have an Adverse Effect.
Neither Parent nor any Subsidiary is in breach or violation of, or in default in
the performance, observance or fulfillment of, any Private Authorization, except
for such defaults, breaches or violations, as do not in the aggregate have any
Adverse Effect on Parent. No Private Authorization is the subject of any pending
or, to Parent's knowledge, threatened attack, revocation or termination.
5.10 Compliance with Governmental Authorizations and Applicable Law.
(a) Section 5.10(a) of the Parent Disclosure Schedule contains a
description or disclosure of or reference to:
(i) all Legal Actions which are pending or, to Parent's
knowledge, threatened or contemplated against, and which in any manner
relate Adversely to, Parent; and
(ii) each Governmental Authorization to which Parent or any of
its Subsidiaries is subject and which is material to the business,
operations, properties, prospects, condition (financial or other), or
results of operations of Parent and its Subsidiaries, all of which are
in full force and effect.
(b) Parent or a Subsidiary of Parent has obtained all Governmental
Authorizations which are necessary for the ownership or uses of its properties
and the conduct of its business as now conducted or as presently proposed to be
conducted by Parent or such Subsidiary or which, if not obtained and maintained,
could singly or in the aggregate have any Adverse Effect on Parent. No
Governmental Authorization is the subject of any pending or, to Parent's
knowledge, threatened attack, revocation or termination. Neither Parent nor any
Subsidiary of Parent is or at any time since March 15, 1998 has been, or is or
has during such time been charged with, or to Parent's knowledge is threatened
or under investigation with respect to, any breach or violation of, or default
in the performance, observance or fulfillment of any Governmental Authorization
or any Applicable Law,
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except (i) for such breaches, violations or defaults as do not have in the
aggregate any Adverse Effect on Parent or (ii) as otherwise described in Section
5.10(b) of the Parent Disclosure Schedule.
(c) Except as set forth in Section 5.10(c) of the Parent Disclosure
Schedule, Parent and its Subsidiaries, and the conduct and operation of their
respective businesses, are in compliance with all Applicable Laws which (i)
affect or relate to this Agreement or the Transactions or (ii) are applicable to
Parent or any of its Subsidiaries or their respective businesses, except for any
violation of, or default under, any Applicable Law which would not reasonably be
expected to have an Adverse Effect on Parent.
5.11 Intangible Assets; Intellectual Property.
(a) Section 5.11 of the Parent Disclosure Schedule sets forth a true,
correct and complete list of all Governmental Authorizations relating to
Intangible Assets or Intellectual Property or rights with respect thereto, that
are necessary for the present conduct of Parent's consolidated business,
including without limitation the nature of Parent's or one of its Subsidiaries'
interest in each and the extent to which the same have been duly registered in
the offices as indicated therein. Parent or one of its Subsidiaries owns or
possesses or otherwise has the right to use all Governmental Authorizations,
Intangible Assets and Intellectual Property necessary for the conduct of
Parent's business free and clear of all Liens and without any conflict with the
rights of others, except as set forth in Section 5.11 of the Parent Disclosure
Schedule. Except as otherwise described in Section 5.11 of the Parent Disclosure
Schedule, no Governmental Authorization, Intangible Asset or Intellectual
Property has been or is now involved in any opposition, invalidation, or
cancellation, and no Intellectual Property infringes any trade name, trademark
or service mark of any third party. Each of Parent and its Subsidiaries has
taken all necessary or desirable action to protect each item of Intellectual
Property that it owns or uses. None of Parent and its Subsidiaries has
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of third parties, and none of
Parent and its Subsidiaries has ever received any charge, complaint, claim, or
notice alleging any such knowledge of Parent, no third party has interfered
with, infringed upon, misappropriated, or otherwise come into conflict with any
material Intellectual Property rights of any of Parent and its Subsidiaries.
(b) With respect to each item of Intellectual Property that any of
Parent and its Subsidiaries owns:
(i) the identified owner possesses all right, title, and
interest in and to the item;
(ii) the item is not subject to any outstanding judgment,
order, decree, stipulation, injunction, or charge;
(iii) no charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand is pending or, to the knowledge of
Parent, is threatened which challenges the legality, validity,
enforceability, use, or ownership of the item; and
(iv) none of Parent and its Subsidiaries has ever agreed to
indemnify any person or entity for or against any interference,
infringement, misappropriation, or other conflict with respect to the
item.
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(c) Section 5.11 of the Parent Disclosure Schedule also identifies each
item of Intellectual Property that any third party owns and that any of Parent
and its Subsidiaries uses pursuant to license, sublicense, agreement or
permission. Parent has supplied the Company with correct and complete copies of
all such licenses, sublicenses, and permissions (as amended to date). With
respect to each such item of used Intellectual Property, except as set forth in
Section 5.11 of the Parent Disclosure Schedule:
(i) the license, sublicense, agreement or permission covering
the item is legal, valid, binding, enforceable and in full force and
effect;
(ii) the license, sublicense, agreement or permission will
continue to be legal, valid, binding, enforceable and in full force and
effect on identical terms following the Closing;
(iii) none of Parent or its Subsidiaries nor, to the knowledge
of Parent, any other party to the license, sublicense, agreement or
permission is in breach or default, and no event has occurred which
with notice or lapse of time would constitute a breach or default or
permit termination, modification or acceleration thereunder;
(iv) none of Parent or its Subsidiaries nor, to the knowledge
of Parent, any other party to the license, sublicense, agreement or
permission has repudiated any provision thereof;
(v) with respect to each sublicense, the representation and
warranties set forth in subsections (i) through (iv) above are true and
correct with respect to the underlying license;
(vi) the underlying item of Intellectual Property is not
subject to any outstanding judgment, order, decree, stipulation,
injunction or charge;
(vii) no charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand is pending, or, to the knowledge of
Parent, is threatened which challenges the legality, validity, or
enforceability of the underlying item of Intellectual property; and
(viii) none of Parent and its Subsidiaries has granted any
sublicense or similar right with respect to the license, sublicense,
agreement or permission.
5.12 Related Transactions. Section 5.12 of the Parent Disclosure
Schedule sets forth a true, correct and complete description of any Contractual
Obligation or transaction between Parent and any of its officers, directors,
employees, stockholders, or any Affiliate of any thereof (other than reasonable
compensation for services as officers, directors and employees and reimbursement
for out-of-pocket expenses reasonably incurred in support of Parent's business),
including without limitation any providing for the furnishing of services to or
by, providing for rental of property, real, personal or mixed, to or from, or
providing for the lending or borrowing of money to or from or otherwise
requiring payments to or from, any officer, director, stockholder or employee,
or any Affiliate of any thereof.
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5.13 Insurance. Each of Parent and its Subsidiaries has been covered
during the past three (3) years by insurance in scope and amount customary and
reasonable for the business in which it is engaged. Neither Parent nor any of
its Subsidiaries is in breach or violation of or in default under any such
policy, and all premiums due thereon have been paid, and each such policy or a
comparable replacement policy will continue to be in force and effect up to and
including the Closing Date. Neither Parent nor any of its Subsidiaries has
received any written notice from any insurer disclaiming coverage or reserving
rights with respect to a particular claim or such policy in general. Neither
Parent nor any of its Subsidiaries has incurred any material loss, damage,
expense or liability covered by any such insurance policy for which it has not
properly asserted a claim under such policy.
5.14 Tax Matters. Except as set forth on Section 5.14 of the Parent
Disclosure Schedule:
(a) Each of Parent and its Subsidiaries has filed all Tax Returns that
it was required to file. All such Tax Returns are correct and complete in all
material respects. All Taxes owed by the Parent and its Subsidiaries (whether or
not shown on any Tax Return) that are due on or prior to the Closing Date have
been paid or will have been paid on or prior to the Closing Date. All material
Taxes which the Parent and its Subsidiaries are required by law to withhold and
collect have been duly withheld and collected, and have been paid over, in a
timely manner, to the proper Authorities to the extent due and payable. Neither
the Parent nor any Subsidiary has executed any waiver to extend the applicable
statute of limitations or agreed to any extension of time with respect to any
Tax assessment or deficiency in respect of any Tax liabilities of the Parent (or
any Subsidiary) for the fiscal years prior to and including the most recent
fiscal year. Neither the Parent nor any Subsidiary is a "consenting corporation"
within the meaning of Section 341(f) of the Code.
(b) From the end of its most recent fiscal year to the date hereof, the
Parent and its Subsidiaries have not made any payment on account of any Taxes
except regular payments required in the ordinary course of business, consistent
with prior practice, with respect to current operations or property presently
owned.
(c) Parent and its Subsidiaries have, or will on or before the Closing
Date have, paid, accrued or made full, adequate and complete provision (without
regard to whether such provision would or would not be required or sufficient
under GAAP) on their books for all Taxes (whether or not shown on any Tax
Return) attributable to taxable periods ending on or before the Closing Date.
For purposes of the preceding sentence, the date of the most recently prepared
monthly internal financial statements of Parent and Merger Subsidiary shall be
treated as the last day of a taxable period, whether or not the taxable period
in fact ends on such date.
5.15 Employee Retirement Income Security Act of 1974.
(a) Parent (which for purposes of this Section 5.15 shall include any
ERISA Affiliate with respect to any Plan subject to Title IV of ERISA) does not
contribute to any Plan or sponsor any Plan or Benefit Arrangement and has not
contributed to or sponsored any Plan or Benefit Arrangement that Parent is
required to disclose in its filings with the SEC, except as set forth in Section
5.15(a) of the Parent Disclosure Schedule. As to all such Plans and Benefit
Arrangements, and except as disclosed in such Section 5.15(a) of the Parent
Disclosure Schedule:
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(i) all Plans and Benefit Arrangements comply and have been
administered in form and in operation in all material respects with all
Applicable Laws, and Parent has not received any outstanding notice
from any Authority questioning or challenging such compliance;
(ii) all Plans maintained or previously maintained by Parent
that are or were intended to comply with Section 401 of the Code comply
and complied in form and in operation in all material respects with all
applicable requirements of such Section, and no event has occurred
which will or could reasonably be expected to give rise to
disqualification of any such Plan under such Section;
(iii) none of the assets of any Plan are invested in employer
securities or employer real property;
(iv) there are no "prohibited transactions" (as described in
Section 406 of ERISA or Section 4975 of the Code) with respect to any
Plan for which Parent has any material liability;
(v) there are no Claims (other than routine claims for
benefits) pending or threatened involving Plans or the assets of Plans;
(vi) neither Parent nor any ERISA Affiliate has maintained any
Plan that is subject to Title IV of ERISA;
(vii) to the extent that the most recent balance sheet forming
part of the SEC Reports does not include a pro rata amount of the
contributions which would otherwise have been made in accordance with
past practices for the Plan years which include the Closing Date, such
amounts are set forth in Section 5.15(a) of the Parent Disclosure
Schedule;
(viii) Parent has not, nor has any of its respective
directors, officers, employees or any other fiduciary, committed any
breach of fiduciary responsibility imposed by ERISA that would subject
Parent or any of its directors, officers or employees to any material
liability under ERISA;
(ix) except as set forth in Section 5.15(a) of the Parent
Disclosure Schedule (which entry, if applicable, shall indicate the
present value of accumulated plan liabilities calculated in a manner
consistent with FAS 106 and actual annual expense for such benefits for
each of the last two (2) years) and pursuant to the provisions of
COBRA, Parent does not maintain any Plan that provides benefits
described in Section 3(1) of ERISA to any former employees or retirees
of Parent; and
(x) Parent has made available to the Company a copy of the two
most recently filed Federal Form 5500 series and accountant's opinion,
if applicable, for each Plan.
(b) Parent is not nor has it ever been a party to any Multiemployer
Plan or made contributions to any such plan.
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5.16 Employment Arrangements.
(a) Parent and its Subsidiaries have no obligation or liability,
contingent or other, under any Employment Arrangement that is required to be
disclosed in Parent's or any Subsidiary's filings with the SEC (whether or not
listed in Section 5.15(a) of the Parent Disclosure Schedule), other than those
listed or described in Section 5.16(a) of the Parent Disclosure Schedule.
Neither Parent nor any of its Subsidiaries is now nor during the past three (3)
years has it been subject to or involved in or, to Parent's knowledge,
threatened with any union elections, petitions therefor or other organizational
activities, except as described in Section 5.16(a) of the Parent Disclosure
Schedule. None of the employees of Parent or any of its Subsidiaries is
represented by any labor union or other employee collective bargaining
organization and there are no pending grievances, disputes or controversies with
any union or any other employee collective bargaining organization of such
employees.
(b) Except as set forth in Section 5.16(b) of the Parent Disclosure
Schedule, no employee shall accrue or receive additional benefits, service or
accelerated rights to payments of benefits under any Employment Arrangement, or
become entitled to severance, termination allowance or similar payments as a
direct result of this Agreement, the Merger or the Transactions.
5.17 Material Agreements. Listed in Section 5.17(a) of the Parent
Disclosure Schedule are all Material Agreements that Parent or any of its
Subsidiaries is required to disclose in its filings with the SEC relating to the
ownership or operation of the business and property of Parent and its
Subsidiaries presently held or used by Parent or any of its Subsidiaries or to
which Parent or any of its Subsidiaries is a party or to which it or any of its
property is subject or bound. True, complete and correct copies of each of the
Material Agreements have been furnished by Parent to the Company (or, if oral,
true, complete and correct descriptions thereof have been set forth in Section
5.17(a) of the Parent Disclosure Schedule). Except as set forth in Section
5.17(a) of the Parent Disclosure Schedule, all of the Material Agreements are
valid, binding and legally enforceable obligations of Parent or such Subsidiary,
as the case may be, and, to Parent's knowledge, the other parties thereto
(except as such enforceability may be subject to bankruptcy, moratorium,
insolvency, reorganization, arrangement, voidable preference, fraudulent
conveyance and other similar laws relating to or affecting the rights of
creditors and except as the same may be subject to the effect of general
principles of equity), and Parent or such Subsidiary is validly and lawfully
operating its business and owning its property under each of the Material
Agreements. Neither Parent nor any of its Subsidiaries is in default in the
payment or performance of any of its obligations under any Material Agreement.
No Event which, with the giving of notice or the passage of time, or both,
constitutes an event of default by Parent or any of its Subsidiaries under any
Material Agreement has occurred and is continuing, except for such defaults that
would not, individually or in the aggregate, have an Adverse Effect on Parent.
To the knowledge of Parent, no other party to any Material Agreement is in
default in any material respect in the payment or performance of its obligations
thereunder and no Event which, with the giving of notice or the passage of time,
or both, constitutes a material event of default by such other party under any
Material Agreement has occurred and is continuing.
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5.18 Ordinary Course of Business.
(a) Parent (which term for purposes of this Section 5.18 shall include
any Subsidiary), from the date of the most recent balance sheet forming part of
the SEC Reports to the date hereof, and until the Closing Date, except as may be
described on Section 5.18(a) of the Parent Disclosure Schedule or as may
expressly be required or permitted by the terms of this Agreement:
(i) has operated, and will continue to operate, its business
in the normal, usual and customary manner in the ordinary course of
business, consistent with prior practice;
(ii) has not sold or otherwise disposed of, or contracted to
sell or otherwise dispose of, and will not sell or otherwise dispose of
or contract to sell or otherwise dispose of, any of its properties or
assets, other than in the ordinary course of business;
(iii) except in each case in the ordinary course of business,
consistent with prior practice,
(a) has not incurred and will not incur any
Indebtedness, obligations or liabilities
(fixed, contingent or other);
(b) has not entered and will not enter into any
commitments; and
(c) has not canceled and will not cancel any
debts or claims; and
(d) has not prepaid and will not prepay any
Indebtedness in advance of its contractual
maturity date.
(iv) has not made or committed to make, and will not make or
commit to make, any additions to its property or any purchases of
machinery or equipment, except for normal maintenance and replacements;
(v) has not discharged or satisfied, and will not discharge or
satisfy, any Lien and has not paid and will not pay any obligation or
liability (absolute or contingent) other than taxes in the ordinary
course of business, current liabilities or obligations under contracts
then existing or thereafter entered into in the ordinary course of
business, consistent with prior practice, and commitments under Leases
existing on that date or incurred since that date in the ordinary
course of business;
(vi) has not created or permitted to be created, and will not
create or permit to be created any Lien on any of its tangible
property;
(vii) has not transferred or created, or permitted to be
created, and will not transfer or create, or permit to be created, any
Lien on any Intangible Assets;
(viii) except in the ordinary course of business, consistent
with prior practice, has not increased and will not increase the
compensation payable or to become payable to any
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of its directors, officers, employees, advisers, consultants, salesmen
or agents or otherwise alter, modify or change the terms of their
employment or engagement;
(ix) has not suffered any material damage, destruction or loss
(whether or not covered by insurance) or any acquisition or taking of
property by any Authority;
(x) has not waived, and will not waive, any rights of material
value without fair and adequate consideration;
(xi) has not experienced any work stoppage;
(xii) has not entered into, amended or terminated and will not
enter into, amend or terminate any Lease, Governmental Authorization,
Private Authorization, Material Agreement or Employment Arrangement or
any Contractual Obligation or transaction with any Affiliate, except
for amendments or terminations in the ordinary course of business,
consistent with prior practice, in accordance with the terms thereof;
(xiii) has not amended or terminated and will not amend or
terminate, and has kept and will keep in full force and effect
including without limitation renewing to the extent the same would
otherwise expire or terminate, all insurance policies and coverage;
(xiv) has not entered into, and will not enter into, any other
transaction or series of related transactions which individually or in
the aggregate is material to Parent, except in the ordinary course of
business, consistent with prior practice;
(xv) has not incurred and will not incur any Indebtedness
owing to any stockholder and has not made and will not make any loans
or advances to any stockholder ;
(xvi) has not split, combined or reclassified any of Parent's
capital stock or issued or authorized the issuance of any securities in
respect of, in lieu of or in substitution of any shares of Parent's
capital stock, and will not do any of the foregoing;
(xvii) has not issued, sold or otherwise disposed of any of
its capital stock (other than pursuant to the exercise of Option
Securities in accordance with the terms thereof), or issued Option
Securities or Convertible Securities or preemptive rights or other
rights to purchase or obtain any of its capital stock (other than
pursuant to option plans in effect on the date hereof), or accelerated
the vesting or otherwise amended or waived the terms of any Option
Securities or Convertible Securities, and has not declared, set aside,
or paid any dividend or distributions with respect to its capital stock
or redeemed, purchased, or otherwise acquired any of its capital stock
(other than pursuant to the exercise of put or call rights under the
Stockholders Agreement), and will not do any of the foregoing (other
than as set forth above);
(xviii) has not amended and will not amend any of its Organic
Documents (other than the amendment to its certificate of incorporation
contemplated by this Agreement);
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(xix) has not changed and will not change any method of
accounting or accounting practice or policy, except as required by
Applicable Law or by GAAP;
(xx) has not accelerated accounts receivable, delayed accounts
payable, or liquidated inventory, and will not do so, except in the
ordinary course of business consistent with past practice; and
(xxi) has not made any Tax election that could reasonably be
expected to have an Adverse Effect or settle or compromise any material
Tax liability, and will not do any of the foregoing.
(b) From the end of its most recent fiscal year to the date hereof,
except as described in Section 5.18(b) of the Parent Disclosure Schedule, Parent
has not, and on or prior to the Closing Date will not have, declared, made or
paid, or agreed to declare, make or pay, any Distribution.
5.19 Broker or Finder. No Person assisted in or brought about the
negotiation of this Agreement, the Merger or the subject matter of the
Transactions in the capacity of broker, agent or finder or in any similar
capacity on behalf of Parent.
5.20 Environmental Matters. Except as set forth in Section 5.20 of the
Parent Disclosure Schedule:
(a) each of Parent and its Subsidiaries is in compliance in all
material respects with all applicable Environmental Laws.
(b) As of the date hereof, no underground storage tanks are present
under any property that Parent (which term for purposes of this Section 5.20
shall include any Subsidiary) or any Affiliate now owns, operates, occupies or
leases. As of the date hereof, no material amount of any Hazardous Material, but
excluding routine quantities of office and janitorial supplies, has been
released, discharged, spilled, buried or disposed of, as a result of the actions
of Parent, or to the knowledge of Parent, any actions of any third party or
otherwise, in, on or under any property, including the land and the
improvements, ground water and surface water, that Parent or any Affiliate has
at any time owned, operated, occupied or leased in such circumstances as would
constitute a violation of Applicable Law or be reasonably expected to result in
liability on Parent pursuant to any Environmental Law. To Parent's knowledge, no
Event has occurred which could reasonably be expected to result in a claim
against Parent in any environmental litigation or impose upon Parent any
environmental liabilities which could reasonably be expected to have an Adverse
Effect on Parent.
(c) At no time has Parent or an Affiliate engaged in Hazardous
Materials Activities in violation of any rule, regulation, treaty or statute
promulgated by any Governmental Entity to prohibit, regulate or control
Hazardous Materials or any Hazardous Materials Activity, which such violation
could reasonably be expected to have an Adverse Effect on Parent. Parent has not
treated, stored, disposed of, arranged for the disposal of or transported any
Hazardous Material to or at any property or facility at which there has been a
release or threat of release of Hazardous Materials in a manner that has given
or is reasonably likely to give rise to liability under any Environmental Law.
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(d) Parent currently holds all Environmental Permits necessary for the
conduct of its Hazardous Materials Activities and other businesses as such
activities and businesses are currently being conducted, the absence of which
could reasonably be expected to have an Adverse Effect on Parent.
(e) No action, proceeding, revocation proceeding, amendment proceeding,
writ, injunction or claim is pending or, to Parent's knowledge, threatened
concerning any Environmental Permit or any Hazardous Materials Activity of
Parent and Parent has not received from any Governmental Entity any written
request for information, notice of violation or notice of responsibility or
similar notification of liability, investigatory, corrective action or remedial
obligation under any Environmental Law.
5.21 Anti-takeover Statutes Not Applicable. No "fair price",
"moratorium", "control share acquisition" or other form of anti-takeover statute
or regulation is applicable to Parent's or Merger Subsidiary's entering into
this Agreement and consummating the transactions contemplated hereby.
5.22 Litigation. Section 5.22 of the Parent Disclosure Schedule sets
forth each instance in which Parent or any of its Subsidiaries is subject to any
unsatisfied judgment, order, decree, stipulation, injunction, or charge.
5.23 Solvency. At the Closing, Parent and its Subsidiaries will be, on
a consolidated basis, Solvent after giving effect to the Merger and the
Transactions. For purposes of this Agreement, "Solvent" shall mean with respect
to any Person that (a) the fair saleable value of the property of such Person
is, on the date of determination, greater than the total amount of liabilities
(including contingent and unliquidated liabilities) of such Person as of such
date, (b) the fair saleable value of the property of such Person is, on such
date, not less than the amount that will be required to pay the probable
liability of such Person on such Person's existing debts as they become absolute
and mature, (c) such Person does not have unreasonably small capital for
conducting the business theretofore or proposed to be conducted by such Person
and (d) such Person has not incurred nor does it plan to incur debts beyond its
ability to pay as they mature.
5.24 Financing Commitment Letter. CT has executed the financing
commitment letter attached as Exhibit 7.2(j).
5.25 Continuing Representations and Warranties. Except for those
representations and warranties which speak as of a specific date, all of the
representations and warranties of Parent and Merger Subsidiary set forth in this
Article shall be true and correct on the Closing Date with the same force and
effect as though made on and as of that date and those, if any, which speak as
of a specific date shall be true and correct as of such date on the Closing
Date.
5.26 Disclosure. No representation or warranty by Parent contained in
this Agreement, and no statement contained in the Parent Disclosure Schedule or
any document, certificate of other instrument delivered to or to be delivered by
or on behalf of Parent pursuant to this Agreement, contains or will contain any
untrue statement of a material fact or omit or will omit to state any material
fact necessary, in light of the circumstances under which it was or will be
made, in order to make the statements herein or therein not misleading.
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ARTICLE 6
ADDITIONAL COVENANTS
6.1 Access to Information; Confidentiality.
(a) The Company shall afford to Parent and its Representatives, and the
Parent shall afford to the Company and its Representatives, reasonable access
during normal business hours throughout the period prior to the Effective Time
to all of its and its Subsidiaries' properties, books, contracts, commitments
and records (including without limitation Tax Returns). To the extent not
provided for pursuant to the preceding sentence, during such period, the Company
shall furnish promptly upon request (i) all financial records, ledgers,
workpapers and other sources of financial information possessed or controlled by
the Company, any Company Subsidiary or the Company's accountants reasonably
deemed by Parent or its Representatives necessary or useful for the purpose of
performing an audit of the Company and its Subsidiaries and certifying financial
statements and financial information, and (ii) such other information concerning
any of the foregoing as Parent shall reasonably request. In addition, each Party
shall furnish promptly upon request a copy of each report, schedule and other
document filed or received by any of them pursuant to the requirements of any
Applicable Law (including without limitation federal or state securities laws)
or filed by it or any of its Subsidiaries with any Authority in connection with
the Transactions or which may have a material effect on their respective
businesses, operations, properties, prospects, personnel, condition (financial
or other), or results of operations. The Company and Parent acknowledge that
they have heretofore executed a confidentiality agreement, executed by the
Company on July 27, 1998 and by Parent on July 18, 1998 (the "Confidentiality
Agreement"), which separately and as incorporated herein shall remain in full
force and effect after and notwithstanding the execution and delivery of this
Agreement, and that information obtained from the Company by Parent or its
Representatives or by the Company or its Representatives from Parent, pursuant
to this Section 6.1(a), the Confidentiality Agreement or otherwise, shall be
subject to the provisions of the Confidentiality Agreement.
(b) Subject to the terms and conditions of the Confidentiality
Agreement, Parent and the Company may disclose such information as may be
necessary in connection with seeking all Governmental and Private Authorizations
or that is required by Applicable Law to be disclosed. In the event that this
Agreement is terminated in accordance with its terms, Parent and the Company
shall each promptly redeliver all non-public written material provided pursuant
to this Section 6.1 or any other provision of this Agreement or otherwise in
connection with the Merger and the Transactions and shall not retain any copies,
extracts or other reproductions in whole or in part of such written material
other than one copy thereof which shall be delivered to independent counsel for
such party.
(c) No investigation pursuant to this Section 6.1 shall affect any
representation or warranty in this Agreement of any Party hereto or any
condition to the obligations of the Parties hereto.
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6.2 Agreement to Cooperate.
(a) Each of the Parties shall use its reasonable best efforts to take,
or cause to be taken, all actions and to do, or cause to be done, all things
necessary under Applicable Law to consummate the Merger and make effective the
Transactions, including using its reasonable best efforts (i) to prepare and
file with the applicable Authorities as promptly as practicable after the
execution of this Agreement all requisite applications and amendments thereto,
together with related information, data and exhibits, necessary to request
issuance of orders approving the Merger and the Transactions by all such
applicable Authorities, each of which must be obtained or become final in order
to satisfy the condition applicable to it set forth in Section 7.1(d), (ii) to
obtain all necessary or appropriate waivers, consents and approvals, (iii) to
effect all necessary registrations, filings and submissions (including without
limitation filings under federal or state securities laws or the HSR Act and any
other submissions requested by the SEC, the Federal Trade Commission or the
Department of Justice) and (iv) to lift any injunction or other legal bar to the
Merger and the Transactions (and, in such case, to proceed with the Merger and
the Transactions as expeditiously as possible), subject, however, to the
requisite vote of the Stockholders. Each of the Parties recognizes that the
consummation of the Merger and the Transactions is subject to the preacquisition
notification requirements of the HSR Act. Each agrees that, to the extent
required by Applicable Law to consummate the Merger, it will file with the
Antitrust Division of the Department of Justice and the Federal Trade Commission
a Notification and Report Form in a manner so as to constitute substantial
compliance with the notification requirements of the HSR Act. Each covenants and
agrees to use its reasonable best efforts to achieve the prompt termination or
expiration of any waiting period or any extension thereof under the HSR Act.
Notwithstanding anything to the contrary contained in this Agreement, in
connection with or as a condition to receiving the consent or approval of any
Authority or otherwise, Parent shall not be required to divest, abandon, license
or take similar action with respect to any assets (tangible or intangible) of it
or any of its Subsidiaries (including, without limitation, the Surviving
Corporation after consummation of the Merger).
(b) Parent shall use its reasonable best efforts to assist the Company
in the preparation of any materials, and shall provide information about its and
its Subsidiaries' operations and financial condition for inclusion therein, to
be distributed to the Stockholders prior to the Company Meeting.
(c) The Company will use its reasonable best efforts on or prior to the
Closing Date to obtain the satisfaction of the conditions specified in Sections
7.1 and 7.3. Each of Parent and Merger Subsidiary will use its reasonable best
efforts on or prior to the Closing Date to obtain the satisfaction of the
conditions applicable to it specified in Sections 7.1 and 7.2.
(d) The Company shall take such steps as are necessary and appropriate
to obtain, and shall promptly obtain on or prior to the Closing Date,
satisfaction and discharge of all Liens set forth in Section 3.6(a) of the
Company Disclosure Schedule.
(e) The Parties shall cooperate with one another in the preparation,
execution and filing of all Tax Returns, questionnaires, applications, or other
documents regarding any real property transfer or gains, sales, use, transfer,
value added, stock transfer and stamp Taxes or any Plan, Benefit Arrangement or
Employment Arrangement, any transfer, recording, registration and other
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fees, and any similar Taxes which become payable in connection with the
Transactions that are re quired or permitted to be filed on or before the
Effective Time.
6.3 Certain Collateral Documents. Prior to the Closing Date, the
Company shall deliver to Parent (i) counterpart signature pages to the
Stockholders Agreement, executed by each Stockholder who will receive Parent
Stock in the Merger, and (ii) a noncompetition agreement, substantially in the
form attached hereto as Exhibit 6.3(ii) (a "Noncompetition Agreement"), executed
by John L. Hilt, and Parent shall countersign such Noncompetition Agreement on
or prior to the Closing Date. Notwithstanding anything to the contrary herein,
it shall be a condition to a Stockholder's right to receive shares of Parent
Stock pursuant to the Merger that such Stockholder shall have executed and
delivered to Parent a counterpart signature page to the Stockholders Agreement.
In the event a Stockholder does not so execute and deliver a counterpart
signature page to the Stockholders Agreement, such Stockholder shall not be
entitled to receive any shares of Parent Stock in the Merger and shall receive,
in lieu thereof, cash in an amount equal to the product of (a) the shares of
Parent Stock such Stockholder would have been entitled to and (b) the
Determination Price.
6.4 No Solicitation. The Principal Stockholders and the Company shall
not, nor shall the Company permit any of its Subsidiaries, or any of their or
the Company's or any Company Subsidiary's Representatives (including, without
limitation, any investment banker, attorney or accountant) to, initiate, solicit
or facilitate, directly or indirectly, any inquiries or the making of any
proposal with respect to an Other Transaction, engage in any discussions or
negotiations concerning, or provide to any other person any information or data
relating to, the Company or any Company Subsidiary for the purposes of, or
otherwise cooperate in any way with or assist or participate in, or facilitate
any inquiries or the making of any proposal which constitutes, or may reasonably
be expected to lead to, a proposal to seek or effect an Other Transaction, or
agree to or endorse any Other Transaction; provided, however, that nothing
contained in this Section 6.4 shall prohibit the Company or its Board of
Directors from furnishing information and access to a third party, in each case
only: (i) in response to an unsolicited bona fide written proposal for an Other
Transaction with terms which the Company's Board of Directors determines in its
reasonable, good faith judgment to be more favorable from a financial point of
view to the Stockholders than the Merger (a "Superior Proposal"), (ii) to the
extent the Company's Board of Directors determines, in accordance with and based
upon the written advice of outside counsel, that the furnishing of such
information and access is required under Applicable Law, and (iii) pursuant to a
confidentiality agreement in form and substance reasonably satisfactory to
Parent; and provided, further, that nothing contained in this Section shall
prohibit the Company or its Board of Directors from making any disclosure to
Stockholders that, in the reasonable judgment of its Board of Directors in
accordance with and based upon the written advice of outside counsel, is
required under Applicable Law. Nothing in the foregoing provisos shall affect in
any way the obligations of the Company under Section 1.2(a). The Company and
each Principal Stockholder, as applicable, shall promptly advise Parent of, and
communicate the material terms of, any proposal he, she or it may receive, or
any inquiries he, she or it receives which may reasonably be expected to lead to
such a proposal relating to an Other Transaction, and the identity of the Person
making it. The Company and each Principal Stockholder, as applicable, shall
further advise Parent of the status and changes in the material terms of any
such proposal or inquiry (or any amendment to any of them). Other than a
confidentiality agreement entered into in connection with a Superior Proposal as
provided for herein, during the term of this Agreement, the Company and the
Principal Stockholders shall not enter into any agreement oral or
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written, and whether or not legally binding, with any Person that provides for,
or in any way facilitates, an Other Transaction, or affects any other obligation
of the Company under this Agreement.
6.5 Directors' and Officers' Indemnification and Insurance.
(a) For a period of six years from and after the Effective Time, the
Surviving Corporation shall indemnify, defend and hold harmless the present and
former officers and directors of the Company and its Subsidiaries against all
Claims or amounts that, with the approval of the Surviving Corporation as to
settlements only, are paid in settlement of or otherwise in connection with any
Claim based in whole or in part on the fact that such Person is or was a
director or officer of the Company or any of its Subsidiaries and arising out of
actions or omissions occurring at or prior to the Effective Time (including,
without limitation, the Merger and the Transactions), in each case to the
fullest extent currently provided under the Company's or such Subsidiary's
Organic Documents (but only to the extent permitted under the DGCL), and shall
pay any expenses in advance of the final disposition of any such action or
proceeding to each such Person to the fullest extent permitted under the DGCL,
upon receipt from the Person to whom expenses are advanced of an undertaking to
repay such advances to the extent required under the DGCL; provided, however,
that all rights to indemnification in respect of any claim asserted or made
within such six year period shall continue until the disposition of such claim.
To the maximum extent permitted by the DGCL, such indemnification shall be
mandatory rather than permissive. The provisions of this paragraph shall not
apply to any Claim in respect of which a present or former officer or director
of the Company is required to provide indemnification to any Parent Indemnified
Party pursuant to Section 9.2(a)(iv)(d).
(b) Parent shall, and Parent shall cause the Surviving Corporation to,
cause to be maintained in effect for three years following the Closing Date the
current policies of directors' and officers' liability insurance maintained by
the Company (provided that Parent or the Surviving Corporation may substitute
therefor policies of at least the same coverage and amounts containing terms and
conditions which are no less advantageous to such officers and directors) with
respect to claims arising from facts or events which occurred at or before the
Effective Time. In the event that any person is entitled to coverage under a
directors' and officers' liability insurance policy pursuant to this Section 6.5
and such policy has lapsed, terminated, been repudiated or is otherwise in
breach or default as a result of the Surviving Corporation's failure to maintain
and fulfill its obligations pursuant to this Section 6.5, the Surviving
Corporation shall pay to such persons such amounts and provide any other
coverage or benefits as such person shall have received pursuant to such policy.
(c) Notwithstanding any other provisions hereof, the obligations of the
Surviving Corporation under this Section 6.5 shall be binding upon the
successors and assigns of the Surviving Corporation. In the event the Surviving
Corporation or any of its successors or assigns (i) consolidates with or merges
into any other Person and shall not be the continuing or surviving corporation
or entity of such consolidation or merger or (ii) transfers or conveys all or
substantially all of its properties and assets to any Person, then, and in each
such case, proper provision shall be made so that the successors and assigns of
the Surviving Corporation assume the obligations set forth in this Section 6.5.
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(d) Notwithstanding any other provisions hereof, Parent hereby
expressly agrees to guarantee the obligations of the Surviving Corporation under
this Section 6.5.
(e) The provisions in this Section 6.5 are intended to be for the
benefit of, and shall be enforceable by, each person entitled to indemnification
hereunder, and each such person's heirs and representatives (it being expressly
agreed that such persons shall be the third party beneficiaries of this Section
6.5).
6.6 Notification of Certain Matters. Each Party shall give prompt
notice to the other of the occurrence or non-occurrence of any Event the
occurrence or non-occurrence of which would be likely to cause in any material
respect (i) any representation or warranty made by it contained in this
Agreement to be untrue or inaccurate, or (ii) any change to be made in the
Company Disclosure Schedule or the Parent Disclosure Schedule, as the case may
be, or (iii) any failure of the Company or Parent, as the case may be, to comply
with or satisfy, or be able to comply with or satisfy, any material covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section 6.6
shall not limit or otherwise affect the remedies available hereunder to the
Party receiving such notice.
6.7 Public Announcements. Until the Closing, or in the event of
termination of this Agreement, each Party shall consult with the other before
issuing any press release or otherwise making any public statements with respect
to this Agreement, the Merger or any Transaction and shall not issue any such
press release or make any such public statement without the prior consent of the
other, which consent shall not be unreasonably withheld or delayed.
Notwithstanding the foregoing, the Company acknowledges and agrees that Parent
may, without the prior consent of the Company, issue such press releases or make
such public statements as may be required by Applicable Law, in which case, to
the extent practicable, Parent will consult with, and exercise in good faith,
all reasonable business efforts to agree with the Company regarding the nature,
extent and form of such press release or public statement, and, in any event,
with prior notice to the Company.
6.8 Certain Actions Concerning Business Combinations. The Company will
not apply, and will not take any action resulting in the application of, or
otherwise elect to apply, the provisions of applicable state takeover laws, if
any, with respect to or as a result of the Merger or the Transactions.
6.9 Tax Treatment. Each party hereto shall use all reasonable business
efforts to cause the Merger to qualify, and shall not take, and shall use all
reasonable business efforts to prevent any Affiliate of such party from taking,
any action that could reasonably be expected to prevent the Merger from
qualifying as a reorganization under the provisions of Section 368(a) of the
Code.
6.10 Pre-Closing Covenants of the Company and its Subsidiaries. Between
the date hereof and the Closing Date, each of the Company and its Subsidiaries
(except (i) as may be described on Schedule 3.18 of the Company Disclosure
Schedule, (ii) as may be required or expressly contemplated by the terms of this
Agreement, or (iii) as may be consented to by Parent) will operate its business
in the normal, usual and customary manner in the ordinary course, consistent
with prior practice as provided and specified in Section 3.18.
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6.11 Pre-Closing Covenants of Parent and its Subsidiaries. Between the
date hereof and the Closing Date, each of Parent and its Subsidiaries (except
(i) as may be described on Schedule 5.18 of the Parent Disclosure Schedule, (ii)
as may be required or expressly contemplated by the terms of this Agreement, or
(iii) as may be consented to by the Company) will operate its business in the
normal, usual and customary manner in the ordinary course of business,
consistent with prior practice as provided and specified in Section 5.18.
6.12 Employment Matters.
(a) Parent and Merger Subsidiary agree that, for so long as any active
employee of the Company who continues to be employed by the Company as of the
Effective Time (each, a "Continuing Employee") remains in the employ of the
Surviving Corporation or any of its Subsidiaries, the Surviving Corporation or
such Subsidiary will provide to such Continuing Employee coverage by benefit
plans or arrangements substantially equivalent to those at the time in effect
for the employees of CT.
(b) Except with respect to accruals under any defined benefit pension
plans, Parent and Merger Subsidiary will, or will cause the Surviving
Corporation and its Subsidiaries to, give Continuing Employees full credit for
purposes of eligibility and vesting under any employee benefit plans or
arrangements maintained by Parent, the Surviving Corporation or any Subsidiary
of Parent or the Surviving Corporation for such Continuing Employee's service
with the Company or any Subsidiary of the Company to the same extent recognized
by the Company immediately prior to the Effective Time. Parent and Merger
Subsidiary will, or will cause the Surviving Corporation and its Subsidiaries
to, (i) waive all limitations as to preexisting conditions, exclusions and
waiting periods with respect to participation and coverage requirements
applicable to the Continuing Employees under any welfare plan that such
employees may be eligible to participate in after the Effective Time, other than
limitations or waiting periods that are already in effect with respect to such
employees and that have not been satisfied as of the Effective Time under any
welfare plan maintained for the Continuing Employees immediately prior to the
Effective Time, and (ii) provide each Continuing Employee with credit for any
co-payments and deductibles paid prior to the Effective Time in satisfying any
applicable deductible or out-of-pocket requirements under any welfare plans that
such employees are eligible to participate in after the Effective Time.
6.13 Employment Agreements. After the date hereof, and prior to the
Effective Time, Parent and CT, or both as applicable, shall enter into
Employment and Noncompetition Agreements, substantially in the forms attached
hereto as Exhibit 6.13, with David C. Bliss, Alan L. Fansler, Wayne McCollum and
James F. Hurley, which agreements shall be effective at the Effective Time and
shall reflect the terms and conditions of their respective employment with the
Surviving Corporation (the "New Employment Agreements").
6.14 Financing. From the date hereof and prior to the Effective Time,
Parent shall use its reasonable best efforts to obtain the financing of the
Transactions as contemplated by the financing commitment letter attached hereto
as Exhibit 7.2(j). In the event that the financing of the Transactions is not
funded pursuant to such commitment letter, Parent shall use its reasonable best
efforts to obtain reasonably available alternative financing to consummate the
Transactions.
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6.15 Surviving Corporation Headquarters. The Parent hereby agrees that,
except as otherwise provided below in this Section 6.15, the headquarters of the
Surviving Corporation shall be maintained in Muskegon, Michigan for a period of
not less than five years following the Closing Date. The preceding sentence
shall not obligate the Parent or the Surviving Corporation to continue to
maintain the headquarters of the Surviving Corporation in Muskegon, Michigan in
the event there is a change of control of Parent or the Surviving Corporation.
6.16 Fedco Pellet Systems, Inc. The Parent and the Surviving
Corporation hereby agree that, so long as the Principal Stockholders are
obligated to indemnify any Parent Indemnified Party with respect to Section
9.2(a)(v), they will not unreasonably withhold their consent to any course of
action or disposition requested by the Stockholder Representative in respect of
the Company's investment (or any matter related thereto) in Fedco Pellet
Systems, Inc. as set forth in Section 3.2(b) of the Company Disclosure Schedule
and will not take any action in respect thereof without the consent of the
Stockholder Representative (which consent will not be unreasonably withheld).
ARTICLE 7
CLOSING CONDITIONS
7.1 Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each Party to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following conditions,
any or all of which may be waived, in whole or in part, to the extent permitted
by Applicable Law:
(a) This Agreement, the Merger and the Transactions shall have been
approved and adopted in accordance with the DGCL by the affirmative vote, or to
the extent permitted by Applicable Law, by written consent, of the Stockholders
holding at least the minimum number of shares of the Company Voting Common Stock
then issued and outstanding as are required by Applicable Law and the Company's
Organic Documents for such approval and adoption;
(b) As of the Closing Date, no Legal Action shall be pending or
threatened in writing by or before any Authority seeking to restrain, prohibit,
make illegal or delay materially the Merger, or seeking material damages from
the Party seeking to invoke this Section 7.1(b) (or, if Parent is seeking to
invoke this Section 7.1(b), from the Company), or to impose any Adverse
conditions in connection with the consummation of the Merger and the
Transactions which might, in the reasonable business judgment of Parent, have an
Adverse Effect on Parent and its Subsidiaries (including the Surviving
Corporation) taken as a whole assuming consummation of the Merger;
(c) The filing and waiting period requirements under the HSR Act
relating to the consummation of the Merger shall have been complied with; and
(d) The Stockholders Agreement shall have been amended and restated in
substantially the form attached as Exhibit 7.1(d) hereto.
7.2 Conditions to Obligations of Parent and Merger Subsidiary. The
obligations of Parent and Merger Subsidiary to effect the Merger shall be
subject to the satisfaction at or prior to the
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Effective Time of the following conditions, any or all of which may be waived,
in whole or in part, to the extent permitted by Applicable Law:
(a) All agreements, certificates, opinions and other documents shall be
reasonably satisfactory in form, scope and substance to Parent and its counsel,
and Parent and its counsel shall have received all information and copies of all
documents, including records of corporate proceedings, which they may reasonably
request in connection therewith, such documents where appropriate to be
certified by proper corporate officers;
(b) The representations and warranties of each of the Company and the
Principal Stockholders contained in this Agreement or in any Collateral Document
shall be true and correct in all material respects at and as of the Closing Date
with the same force and effect as though made on and as of such date except
those which speak as of a certain date which shall continue to be true and
correct in all material respects as of such date on the Closing Date; each and
all of the covenants, agreements and conditions to be performed or satisfied by
the Company or the Principal Stockholders hereunder or under the Stockholders'
Agreement at or prior to the Closing Date shall have been duly performed or
satisfied in all material respects; and each of the Company and the Principal
Stockholders shall have furnished Parent with such certificates and other
documents evidencing the truth of such representations and warranties and the
performance of such covenants, agreements or conditions as Parent shall have
reasonably requested;
(c) The Company shall have furnished Parent with an opinion of Skadden,
Arps, Slate Meagher & Flom LLP, counsel for the Company, dated the Closing Date
and addressed to Parent and otherwise in the form attached hereto as Exhibit
7.2(c);
(d) Each Stockholder of the Company receiving shares of Parent Stock
shall have executed and delivered a counterpart signature page to the
Stockholders Agreement, John L. Hilt shall have executed and delivered a
Noncompetition Agreement in the form of Exhibit 6.3(ii) hereto and each of David
C. Bliss, Alan L. Fansler, Wayne McCollum and James F. Hurley shall have
executed and delivered a New Employment Agreement in the form of Exhibit 6.13;
(e) The Company shall have obtained consents to the assignment and
continuation of all Material Agreements listed on Schedule 7.2(e);
(f) As of the Closing Date, there shall not have occurred and be
continuing any Adverse Change affecting the Company since the date of the most
recent audited consolidated financial statements of the Company forming part of
the Company Financial Statements;
(g) Parent shall have received from its counsel, Sullivan & Worcester
LLP, an opinion, dated as of the Closing Date, to the effect that the Merger
constitutes a reorganization within the meaning of Section 368 of the Code and,
in connection with such opinion, the Company, Parent and Merger Subsidiary shall
have executed and delivered to Parent and such counsel a certificate
substantially in the form attached hereto as Exhibit 7.2(g) and made a part
hereof;
(h) The ESOP shall not have made a Rollover Election in respect of any
shares of Company Common Stock held by it;
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(i) Dissenting Shares shall constitute no more than two and one-half
percent (2 1/2%) of the Pro Forma Outstanding Company Shares at the Effective
Time; and
(j) The financing of the Transactions contemplated in the financing
commitment letter attached as Exhibit 7.2(j) shall have been funded in
accordance with the terms of such letter (and Parent hereby acknowledges that
there shall not be a failure of this condition solely because Fleet shall have
been willing to fund such financing only after exercise of its rights under the
eighth paragraph of such financing commitment letter) or on reasonably
comparable terms pursuant to an alternative financing commitment obtained under
Section 6.14 hereof.
7.3 Conditions to Obligations of the Company. The obligations of the
Company to effect the Merger shall be subject to the satisfaction at or prior to
the Effective Time of the following conditions, any or all of which may be
waived, in whole or in part to the extent permitted by Applicable Law:
(a) Parent shall have furnished the Company with an opinion of Sullivan
& Worcester LLP, counsel to Parent, dated the Closing Date and addressed to the
Company and the Principal Stockholders and otherwise in the form attached hereto
as Exhibit 7.3(a);
(b) All agreements, certificates, opinions and other documents shall be
reasonably satisfactory in form, scope and substance to the Company and its
counsel, and the Company and its counsel shall have received all information and
copies of all documents, including records of corporate proceedings, which they
may reasonably request in connection therewith, such documents where appropriate
to be certified by proper corporate officers;
(c) The representations and warranties of each of Parent and Merger
Subsidiary contained in this Agreement or in any Collateral Document shall be
true and correct in all material respects at and as of the Closing Date with the
same force and effect as though made on and as of such date except those which
speak as of a certain date which shall continue to be true and correct in all
material respects as of such date on the Closing Date; each and all of the
covenants, agreements and conditions to be performed or satisfied by each of
Parent and Merger Subsidiary hereunder at or prior to the Closing Date shall
have been duly performed or satisfied in all material respects; and each of
Parent and Merger Subsidiary shall have furnished the Company with such
certificates and other documents evidencing the truth of such representations
and warranties and the performance of such covenants, agreements or conditions
as the Company shall have requested; and
(d) The Company shall have received from its counsel, Skadden, Arps,
Slate, Meagher & Flom LLP, an opinion, dated as of the Closing Date, to the
effect that the Merger constitutes a reorganization within the meaning of
Section 368 of the Code and, in connection with such opinion, the Company,
Parent and Merger Subsidiary shall have executed and delivered to such counsel a
certificate substantially in the form attached hereto as Exhibit 7.3(d) and made
a part hereof;
(e) As of the Closing Date, there shall not have occurred and be
continuing any Adverse Change affecting Parent or CT since the date of the most
recent audited consolidated financial statements of CT forming part of the SEC
Reports;
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(f) The cash and shares of Parent Stock into which Shares and Vested
Options are to be Converted at the Effective Time pursuant to Article 2 shall
have been deposited with the Exchange Agent or the Escrow Agent, as applicable;
(g) As of the Closing Date, Parent shall have executed and delivered
the Stockholders Agreement and the New Employment Agreements as set forth in
Sections 6.3 and 6.13 hereof; and
7.4 Materiality. The use of the term "material" in Sections 7.2(b) and
7.3(c) hereinabove shall be disregarded when determining for purposes of such
aforesaid Sections whether the breach of any provision of this Agreement has
occurred, or whether any representation or warranty has become untrue or
incorrect, as and to the extent the word "material," "materially" or any other
similar term is used in the text of any such provision of this Agreement or such
representation or warranty.
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of this Agreement, the
Merger and the Transactions by the Stockholders:
(a) by mutual consent of Parent and the Company;
(b) by either Parent or the Company if any permanent injunction, decree
or judgment by any Authority preventing the consummation of the Merger shall
have become final and nonappealable;
(c) by the Company in the event (i) the Company is not in breach of
this Agreement and none of its representations and warranties shall have become
and continue to be untrue in any material respect, unless such breach or untruth
is capable of being cured by and will not prevent or delay consummation of the
Merger by or beyond the Termination Date, and (ii) either (A) Parent or Merger
Subsidiary is in breach of this Agreement or any of its representations or
warranties contained in this Agreement or any Collateral Document shall have
become and continue to be untrue in any material respect, unless, in either case
such breach or untruth is capable of being cured by and will not prevent or
delay consummation of the Merger by or beyond the Termination Date, or (B) the
Merger and the Transaction have not been consummated by the Termination Date;
(d) by Parent:
(i) if the Merger and the Transactions fail to receive the
approval required by Applicable Law, by vote (or to the extent
permitted by Applicable Law, by consent) of the Stockholders; provided,
that if Parent shall not have exercised its right of termination under
this Section 8.1(d)(i) within seven (7) business days after Parent
receives notice of the failure to receive such required approval, the
right of termination under this Section 8.1(d)(i) shall cease;
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(ii) in the event (A) neither Parent nor Merger Subsidiary is
in breach of this Agreement and none of their representations or
warranties shall have become and continue to be untrue in any material
respect, unless such breach or untruth is capable of being cured by and
will not prevent or delay consummation of the Merger by or beyond the
Termination Date, and (B) either (I) the Company or any of the
Principal Stockholders is in breach of this Agreement or any of its or
their representations or warranties contained in this Agreement or any
Collateral Document shall have become and continue to be untrue in any
material respect, unless, in either case, such breach or untruth is
capable of being cured by and will not prevent or delay consummation of
the Merger by or beyond the Termination Date, (II) the Merger and the
Transactions have not been consummated prior to the Termination Date,
or (III) any Principal Stockholder is in breach of the Voting Agreement
or any of his representations or warranties shall have become and
continue to be untrue in any material respect, unless, in either case,
such breach or untruth is capable of being cured by and will not
prevent or delay consummation of the Merger by or beyond the
Termination Date; or
(iii) if the Company shall have entered into or agreed to
enter into any Other Transaction.
(e) The use of the term "material" in Sections 8.1(c) and (d)
hereinabove shall be disregarded when determining for purposes of such aforesaid
Sections whether the breach of any provision of this Agreement has occurred, or
whether any representation or warranty has become untrue or incorrect, as and to
the extent the word "material," "materially" or any other similar term is used
in the text of any such provision of this Agreement or such representation or
warranty.
8.2 Effect of Termination. Except as provided in Sections 6.1, 6.7, 8.2
and 8.5, in the event of the termination of this Agreement pursuant to Section
8.1, this Agreement shall forthwith become void, there shall be no liability on
the part of any Party, or any of their respective officers or directors, to the
other and all rights and obligations of any Party shall cease; provided,
however, that such termination shall not relieve any Party from liability for
the knowing and willful breach of any of its representations, warranties,
covenants or agreements set forth in this Agreement, or impair the right of the
Company, on the one hand, and Parent and Merger Subsidiary, on the other hand,
to compel specific performance of the other party of its or their obligations
under this Agreement which survive termination.
8.3 Amendment. This Agreement may be amended by the Parties by action
taken by or on behalf of the Parties (or the respective Boards of Directors
thereof in the case of the Company, Parent or Merger Subsidiary) at any time
prior to the Effective Time; provided, however, that, after approval of this
Agreement and the Merger by the Stockholders, no amendment, which under
Applicable Law may not be made without the approval of the Stockholders, may be
made without such approval. This Agreement may not be amended except by an
instrument in writing signed by the Parties hereto.
8.4 Waiver. At any time prior to the Effective Time, except to the
extent Applicable Law does not permit, either Parent and Merger Subsidiary or
the Company may (i) extend the time for the performance of any of the
obligations or other acts of the other, subject, however, to the terms and
conditions of Section 8.1, (ii) waive any inaccuracies in the representations
and warranties of
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the other (and, in the case of Parent or Merger Subsidiary, of the Principal
Stockholders) contained herein or in any document delivered pursuant hereto and
(iii) waive compliance by the other with any of the agreements, covenants or
conditions contained herein. Any such extension or waiver shall be valid only if
set forth in an agreement in writing signed by the Party or Parties to be bound
thereby.
8.5 Fees, Expenses and Other Payments. All costs and expenses incurred
in connection with this Agreement, the Merger and the Transactions, and
compliance with Applicable Law and Contractual Obligations as a consequence
hereof and thereof, including, without limitation, filing fees under the HSR
Act, fees and disbursements of counsel, financial advisors and accountants,
incurred by the Parties shall be borne solely and entirely by the Party which
has incurred such costs and expenses (with respect to such Party, its
"Expenses"). Without limiting the generality of the foregoing, the Company
agrees to pay its and its Subsidiaries' Expenses in full prior to the Effective
Time, it being the understanding of the Parties that none of Parent, the
Surviving Corporation or Merger Subsidiary shall become liable for any of the
Company's Expenses by virtue of the Merger.
8.6 Effect of Investigation. The right of any Party to terminate this
Agreement pursuant to Section 8.1 shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any Party, or any
Person controlling any such party or any of their respective Representatives
whether prior to or after the execution of this Agreement.
ARTICLE 9
INDEMNIFICATION
9.1 Effectiveness of Representations, etc. Regardless of any
investigation made by or on behalf of any other Party hereto, any Person
controlling such Party or any of their respective Representatives whether prior
to or after the execution and consummation of this Agreement, the
representations, warranties, covenants and agreements set forth in Article 3 and
Article 4 and Article 5 hereof shall survive the Merger and remain operative and
in full force and effect for a period of two (2) years following the Closing
Date (the "First Survival Period"), except that the provisions of Section
3.3(b)(ii) shall survive for a period of six (6) years following the Closing
Date (the "Second Survival Period").
9.2 Indemnification.
(a) The Principal Stockholders, severally and not jointly, agree to
make whole, indemnify and hold Parent and its Affiliates, agents, successors and
assigns (collectively, the "Parent Indemnified Parties") harmless as a result
of, from or against:
(i) (a) any and all Claims of the Parent
Indemnified Parties or other Persons based
upon, attributable to or resulting from any
inaccuracy in or breach of any
representation or warranty (other than the
representation contained in Section
3.3(b)(ii)) on the part of any one or more
of the Company or any Principal Stockholder
under this Agreement or any Collateral
Document, provided, however, that the
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Principal Stockholders shall have no
obligation to indemnify the Parent
Indemnified Parties for Taxes imposed on any
Parent Indemnified Party by reason of the
treatment of the transfer of the Company's
assets to Merger Subsidiary pursuant to the
Merger as a taxable asset sale as a result
of the failure of the Merger to qualify as a
reorganization under Section 368 of the
Code, unless such failure resulted solely
from the inaccuracy or breach of any
representation, warranty or agreement on the
part of the Company set forth in the
Officer's Certificates attached hereto as
Exhibits 7.2(g) and 7.3(d), and further
provided, however, that the Principal
Stockholders shall have no obligation to
indemnify the Parent Indemnified Parties for
Taxes imposed on any Parent Indemnified
Party by reason of the failure of the cash
paid pursuant to Section 2.1(a)(iii) hereof
to Quality Future, Inc. to be deductible for
income Tax purposes;
(b) any and all Claims of the Parent Indemnified
Parties or other Persons based upon,
attributable to or resulting from the
disposal of waste tires in Whitley County,
Indiana described in Section 3.10(a) of the
Company Disclosure Schedule;
(ii) any and all Claims of the Parent Indemnified Parties or
other Persons based upon, attributable to or resulting from the
material breach of any covenant or other agreement on the part of any
one or more of the Company or any Principal Stockholder under this
Agreement or any Collateral Document;
(iii) any and all Claims of the Parent Indemnified Parties or
other Persons incident to the foregoing or to the enforcement of this
Section; and
(iv) any and all Claims of the Parent Indemnified Parties or
other Persons based upon, attributable to or resulting from:
(a) any breach or alleged breach by the Company
of the contract with Exide Corporation
(including without limitation the Claim of
Exide Corporation currently pending in Berks
County, Pennsylvania); or
(b) the amount by which the costs and expenses
actually incurred by the Company in
connection with the Merger and the
Transactions, including legal and accounting
fees and disbursements, and any other
payments to any broker, finders, agents or
similar intermediary (regardless of whether
such costs and expenses have been paid on or
before the Closing), exceed $4,000,000; or
(c) the declaration or payment of any dividends
or distributions or the issuance of or
acceleration of the vesting of any Option
Securities or other rights to purchase or
obtain any capital stock of the Company in
contravention of Section 3.18 or 6.10
hereof; or
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(d) any actual or alleged inaccuracy in or
breach of Section 3.3(b)(ii) or any actual
or alleged breach by the Company, or any
officer, director or stockholder thereof, of
any duty to the Company or any security
holder thereof in connection with the
allocation of the Merger Consideration among
the security holders of the Company pursuant
to this Agreement, but only to the extent
arising out of matters within the scope of
Section 3.3(b)(ii); or
(v) any Claim in the nature of a guarantee in respect of
indebtedness of Fedco Pellet Systems, Inc. referenced in Section 3.5 of
the Company Disclosure Schedule.
(b) Parent hereby agrees to make whole, indemnify and hold the Rollover
Stockholders and their respective Affiliates, agents, heirs, successors and
assigns (collectively, the "Company Indemnified Parties") harmless as a result
of, from or against:
(i) any and all Claims of the Company Indemnified Parties or
other Persons based upon, attributable to or resulting from any
inaccuracy in or breach of any representation or warranty on the part
of Parent or Merger Subsidiary under this Agreement or any Collateral
Document;
(ii) any and all Claims of the Company Indemnified Parties or
other Persons based upon, attributable to or resulting from the
material breach of any covenant or other agreement on the part of
Parent under this Agreement or any Collateral Document; and
(iii) any and all Claims of the Company Indemnified Parties or
other Persons incident to the foregoing or to the enforcement of this
Section; and
(iv) any and all claims of the Company Indemnified Parties or
other Persons based upon, attributable to or resulting from:
(a) the amount by which the costs and expenses
actually incurred by Parent in connection
with the Merger and the Transactions
(excluding the financing under the financing
commitment letter attached as Exhibit 7.2(j)
or an alternative financing commitment
obtained under Section 6.14), including
legal and accounting fees and disbursements,
and any other payments to any broker,
finders, agents or similar intermediary
(regardless of whether such costs and
expenses have been paid on or before the
Closing), exceed $900,000; or
(b) the declaration or payment of any dividends
or distributions or the issuance of or
acceleration of the vesting of any Option
Securities or other rights to purchase or
obtain any capital stock of Parent in
contravention of Section 5.18 or 6.11
hereof.
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(c) Notwithstanding the foregoing:
(i) Except to the extent otherwise provided in clause (iv) of
this Section 9.2(c), no indemnifying party shall be required to pay any
amount for indemnification to any indemnified party hereunder except to
the extent the aggregate amount of Claims under this Section 9.2
asserted by all such indemnified parties (excluding Claims under
Section 9.2(a)(v)) against all such indemnifying parties exceeds Five
Hundred Thousand Dollars ($500,000) or, solely in the case of Claims
under Section 9.2(a)(v), One Hundred Thousand Dollars ($100,000), and
then only with respect to such Claims in excess of such sum (the
"Deductible").
(ii) Except to the extent otherwise provided in clause (iv) of
this Section 9.2(c), the aggregate amount that all indemnifying parties
shall be required to pay for indemnification to all indemnified parties
under this Section 9.2 shall be limited to Ten Million Dollars
($10,000,000).
(iii) Notwithstanding anything else in this Article 9, to the
extent that any Claim relates to a breach by a Principal Stockholder of
a representation or warranty contained in Article 4 of this Agreement,
then only such breaching Principal Stockholder shall be subject to this
Article 9 with respect to the Claim resulting from such breach.
(iv) The Deductible and cap set forth in clauses (i) and (ii)
of this Section 9.2(c) shall not apply to or limit indemnification
Claims under Section 9.2(a)(ii), 9.2(a)(iv), 9.2(b)(ii) or 9.2(b)(iv)
or indemnification Claims in respect of a breach of the representation
and warranty in the first sentence of Section 3.3(a) as to the number
of shares of Preferred Stock issued and outstanding, nor shall Claims
under such Sections be taken into account in calculating whether such
Deductible or cap has been exceeded.
(v) No claim for indemnification may be asserted after the
expiration of the survival period in Section 9.1 applicable to the
representation, warranty, covenant or agreement which is the subject of
such claim. Notwithstanding anything herein to the contrary, any
representation, warranty, covenant or agreement which is the subject of
a Claim which is asserted in writing prior to the expiration of the
applicable survival period shall survive with respect to such Claim or
any dispute with respect thereto until the final resolution thereof.
The Escrow Fund shall be the sole amount available to satisfy any
indemnity claims hereunder against any Principal Stockholder under
Section 9.2(a)(i).
(vi) In the event of any recovery by the Company on its
counterclaims in the pending litigation described in Section
9.2(a)(iv)(a), the amount of such recovery shall be credited (in shares
of Parent Stock valued at the Determination Price) against any amounts
required to be paid by the Principal Stockholders for indemnification
to the Parent Indemnified Parties pursuant to Section 9.2(a) hereof.
(d) The use of the term "material," "materially" or any other similar
term in any representation, warranty, covenant or agreement contained in this
Agreement or any Collateral Document shall be disregarded when determining
whether a Party is entitled to seek indemnification from any other Party
pursuant to Section 9.2(a)(i) or (ii) or Section 9.2(b)(i) or (ii).
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(e) On or before the Closing Date, Parent, the Company and the Agent
shall execute and deliver the Escrow Agreement. Any Claims of Parent for
indemnification to be satisfied out of the Escrow Fund shall be made in
accordance with the terms of the Escrow Agreement (it being hereby understood
that for purposes of determining the number of shares of Parent Stock necessary
to satisfy such Claim, the Determination Price shall be used). In accordance
with the terms of the Escrow Agreement, each Principal Stockholder shall be
entitled to receive all ordinary cash dividends paid in respect of his or her
Proportionate Share of Parent Stock that would otherwise be registered in his or
her name but for such shares being a part of the Escrow Fund and to vote and to
give consents, waivers and ratifications in respect of his or her Proportionate
Share of Parent Stock which is part of the Escrow Fund. In connection with any
such vote or consent, the Agent and Parent, at Parent's expense, shall cause to
be delivered to such Stockholder such information (including, without
limitation, any proxy statement and cards). The Agent shall vote the shares of
Parent Stock forming part of the Escrow Fund in accordance with the directions
of the Principal Stockholders. In order to take such vote, the Agent shall
tabulate the votes it receives from the Principal Stockholders and inform Parent
in writing of the aggregate percent of all votes received for, against and in
abstention with respect to each matter voted upon. Parent shall then convert
such percent to a number based on the then-existing Escrow Fund, rounded in each
case down to the nearest whole number.
(f) In the event there are no Unresolved Claims (as defined in the
Escrow Agreement), as soon as reasonably practicable and in any event not later
than the fifth business day after the expiration of the First Survival Period,
the Escrow Fund then remaining (other than the $4,000,000 portion of the Escrow
Deposit withheld from the shares of Parent Stock otherwise issuable to Quality
Future, Inc., and the interest and dividends accrued thereon and held as part of
the Escrow Fund) shall be distributed to the Principal Stockholders entitled
thereto in accordance with their Proportionate Share (provided that cash in lieu
of fractional shares may be distributed in accordance with Section 2.1(d)
hereof). In the event there are no Unresolved Claims (as defined in the Escrow
Agreement), as soon as reasonably practicable and in any event not later than
the fifth business day after the fourth anniversary of the Closing Date, the
then remaining balance of the $4,000,000 portion of the Escrow Deposit withheld
from the shares of Parent Stock otherwise issuable to Quality Future, Inc., and
the interest and dividends accrued thereon and held as part of the Escrow Fund
shall be distributed to Quality Future, Inc. (provided that cash in lieu of
fractional shares may be distributed in accordance with Section 2.1(d) hereof).
In the event one or more Unresolved Claims with respect to the Escrow Fund, if
any, shall exist upon the expiration of the First Survival Period, a portion of
the Escrow Fund (consisting of cash and shares of Parent Stock) having an
aggregate value (with shares of Parent Stock valued for such purpose at
Determination Price (as adjusted from time to time to reflect any split or
combination of shares of Parent Stock)) equal to the sum of (i) the aggregate
amount of such Unresolved Claims and (ii) the amount reasonably estimated by
Parent to cover the fees, expense and other costs (including reasonable counsel
fees and expenses) which will be required to resolve such Unresolved Claims
shall be retained as part of the Escrow Fund and the balance thereof, if any
(other than the $4,000,000 portion of the Escrow Deposit withheld from the
shares of Parent Stock otherwise issuable to Quality Future, Inc., and the
interest and dividends accrued thereon and held as part of the Escrow Fund),
shall be distributed to the Persons entitled thereto. In the event one or more
Unresolved Claims with respect to the Escrow Fund arising under Section
9.2(a)(iv)(d) hereof, if any, shall exist on the fourth anniversary of the
Closing Date, a portion of the Escrow Fund (consisting of cash and shares of
Parent Stock) having an aggregate
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value (with shares of Parent Stock valued for such purpose at Determination
Price (as adjusted from time to time to reflect any split or combination of
shares of Parent Stock)) equal to the sum of (i) the aggregate amount of such
Unresolved Claims and (ii) the amount reasonably estimated by Parent to cover
the fees, expense and other costs (including reasonable counsel fees and
expenses) which will be required to resolve such Unresolved Claims shall be
retained as part of the Escrow Fund and the balance thereof, if any (other than
amounts retained pursuant to the preceding sentence), shall be distributed to
the Persons entitled thereto. Upon the resolution of all such Claims and the
payment of all such fees, expenses and costs out of the Escrow Fund, the balance
of the cash and shares of Parent Stock, if any, shall be distributed to the
Persons entitled thereto.
(g) For purposes of this Article 9, claims for indemnification against
the Principal Stockholders not covered by the Escrow Fund shall be allocated
among the Principal Stockholders based upon the applicable contribution
percentages set forth on Schedule 9.2(g) hereto.
(h) Any amounts paid by the Principal Stockholders for indemnification
to the Parent Indemnified Parties pursuant to Section 9.2(a) hereof or by Parent
to the Company Indemnified Parties pursuant to Section 9.2(b) hereof shall be
treated as an adjustment to the Merger Consideration.
(i) Any amounts to be paid by Parent to the Company Indemnified Parties
pursuant to Section 9.2(b) hereof shall be paid as follows: First, to the extent
the Principal Stockholders shall have paid amounts for indemnification to the
Parent Indemnified Parties pursuant to Section 9.2(a) hereof in the form of
shares of Parent Stock held in the Escrow Fund, an equivalent amount of Parent's
payments to the Company Indemnified Parties pursuant to Section 9.2(b) hereof
(less any such amounts that have been previously paid by Parent in the form of
shares of Parent Stock) shall be paid in the form of shares of Parent Stock
(with each share valued for such purpose at the Determination Price).
Thereafter, Parent's payments to the Company Indemnified Parties pursuant to
Section 9.2(b) hereof shall be made in the form of cash until the Merger
Consideration Ratio (as defined in the ESOP Distribution Allocation Agreement)
is reduced to 42%, or until such earlier time as both counsel to the Principal
Stockholders and counsel to Parent issue opinions that further payments in the
form of cash will adversely affect the status of the Merger as a tax-free
reorganization. Thereafter, Parent's payments to the Company Indemnified Parties
pursuant to Section 9.2(b) hereof shall be made in the form of shares of Parent
Stock (with each share valued for such purpose at the Determination Price)
unless both counsel to the Principal Stockholders and counsel to Parent issue
opinions that a payment in the form of cash will not adversely affect the status
of the Merger as a tax-free reorganization.
9.3 Procedures Concerning Claims by Third Parties; Payment of Damages;
etc.
(a) In the event that any Legal Action shall be instituted or asserted
by any Person other than such indemnified party in respect of which payment may
be sought hereunder, the indemnified party shall reasonably and promptly cause
written notice of the assertion of any Legal Action of which it has knowledge
which is covered by the indemnities under Section 9.2 to be forwarded to the
indemnifying party. In such event, unless in such indemnified party's reasonable
judgement a conflict of interest between the indemnified party and the
indemnifying party may exist in respect of the Claims, the indemnifying party
shall have the right, at its sole option and expense, to be represented by
counsel of its choice, which must be reasonably satisfactory to the indemnified
party,
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and to defend against, negotiate, settle or otherwise deal with any Legal Action
which relates to any Claims instituted or asserted by any Person other than such
indemnified party and indemnified against hereunder; provided, however, that no
settlement thereof shall be made without the prior written consent of the
indemnified party, which consent shall not be unreasonably withheld, conditioned
or delayed. If the indemnifying party elects to defend against, negotiate,
settle or otherwise deal with any Legal Action which relates to any such Claims,
it shall within thirty (30) days (or sooner, if the nature of the Legal Action
so requires) notify the indemnified party of its intent to do so. If the
indemnifying party elects not to defend against, negotiate, settle or otherwise
deal with any Legal Action which relates to any such Claims, fails to notify the
indemnified party of its election as herein provided or contests its obligation
to indemnify the indemnified party for such Claims under this Agreement, or the
indemnified party determines that a conflict of interest may exist, the
indemnified party may defend against, negotiate, settle or otherwise deal with
such Legal Action. If the indemnified party defends any Legal Action (other than
as a participant in such defense pursuant to the last sentence of this Section
9.3(a)), then the indemnifying party shall reimburse the indemnified party for
Claims incurred in defending such Legal Action upon submission of periodic
bills. The indemnified party may not settle any Legal Action without the prior
written consent of the indemnifying party, which consent shall not be
unreasonably withheld, conditioned or delayed. If the indemnifying party shall
assume the defense of any Legal Action instituted or asserted by any Person
other than an indemnified party, the indemnified party may participate in the
defense of but shall not control such Legal Action at such party's own expense.
(b) After any final judgment or award shall have been rendered by a
court, arbitration board (which may be engaged as required by law or contract or
upon the consent of each of the indemnifying party and the indemnified parties)
or administrative agency of competent jurisdiction and the expiration of the
time in which to appeal therefrom, or a settlement shall have been consummated,
or the indemnified party and the indemnifying party shall have arrived at a
mutually binding agreement with respect to a Legal Action hereunder, the
indemnifying party shall deliver to the indemnified party, by wire transfer of
immediately available funds, an amount equal to the sums due and owing to the
indemnified party within five business days after the date of notice of such
judgment or award.
(c) The failure of the indemnified party to give reasonably prompt
notice of any Legal Action instituted or asserted by any Person other than such
indemnified party and indemnified against hereunder shall not release, waive or
otherwise affect the indemnifying party's obligations with respect thereto
except to the extent that the indemnifying party can demonstrate actual loss or
material prejudice as a result of such failure. The indemnified parties shall
not be deemed to have notice of any Legal Action by virtue of knowledge acquired
on or prior to the Closing Date by an employee or other Representative of the
Company or Parent.
(d) No Legal Action to enforce a claim for indemnity shall be stayed or
dismissed for failure to join one or more indemnifying parties or to permit an
indemnifying party to cross-claim against another indemnifying party, nor shall
the failure to join an indemnifying party be deemed grounds for preventing a
separate or subsequent Legal Action to enforce a Claim for indemnification
against such party, each such Legal Action being deemed a separate and
independent Claim for indemnification.
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(e) If such claim does not arise from the Claim of a third party, the
indemnifying party shall have forty five (45) days after notice thereof to
either cure the conditions giving rise to such claim or to present the
indemnified party with materials indicating that such Claim is not subject to
indemnity under Section 9.2 hereof before the indemnified party may commence
legal action against the indemnifying party in respect thereof.
9.4 Exclusive Remedy. The indemnification provisions set forth in this
Article 9 shall be the exclusive remedy following and subject to the Closing for
any breaches or alleged breaches of any representation, warranty or covenant
contained in this Agreement or any Collateral Document (other than the ESOP
Distribution Allocation Agreement), except for breaches arising from fraud or
willful misconduct or for breaches of any covenant or agreement contained herein
or in any Collateral Document which, by its terms, is required to be performed
after the Closing. Moreover, (i) with respect to any claim for breach of the
representations and warranties in Section 3.20 hereof, the rights of the Parent
Indemnified Parties to indemnification set forth in this Agreement shall
constitute a Parent Indemnified Party's exclusive post-Closing remedy for such
claim, and, upon and subject to the Closing, Parent and its Affiliates expressly
waive and relinquish, on behalf of themselves, their successors and any assigns,
any and all rights, claims, or remedies such persons may have against any and
all of the Principal Stockholders under any Environmental Laws, as presently in
force or hereafter enacted, promulgated, or amended (including, without
limitation, under the Comprehensive Environmental Response Compensation and
Liability Act, or any similar state or local law), or at common law with respect
to the subject matter of such representations and warranties and (ii) with
respect to any claim for breach of the representations and warranties in Section
5.20 hereof, the rights of the Company Indemnified Parties to indemnification
set forth in this Agreement shall constitute a Company Indemnified Party's
exclusive post-Closing remedy for such claim, and, upon and subject to the
Closing, the Rollover Stockholders and their Affiliates expressly waive and
relinquish, on behalf of themselves, their successors and any assigns, any and
all rights, claims, or remedies such persons may have against Parent or the
Surviving Corporation under any Environmental Laws, as presently in force or
hereafter enacted, promulgated, or amended (including, without limitation, under
the Comprehensive Environmental Response Compensation and Liability Act, or any
similar state or local law), or at common law with respect to the subject matter
of such representations and warranties.
9.5 Net Recovery. The amount to which a Parent Indemnified Party or a
Company Indemnified Party may become entitled in respect of any Claim under this
Article 9 shall be reduced by any insurance or other third party recovery,
reimbursement or benefit realized in respect of such Claim on or before the date
which is twelve (12) months after the date such Claim arose, or any Tax benefit
actually realized on or before the due date (including extensions thereof) for
the filing of the Federal income Tax Return for the taxable year in which the
payment giving rise to such benefit is made. For purposes of this Section 9.5, a
Tax benefit shall be deemed to have been actually realized on the date that a
Tax return claiming such benefit is filed, and the amount of such Tax benefit
shall be equal to the amount by which the Taxes shown on such return are lower
(computed on a "but for" basis) than they would have been had such Tax benefit
item not been claimed. The amount of any such recovery, less all reasonable
costs, charges and expenses incurred by the relevant Parent Indemnified Party or
Company Indemnified Party, as the case may be, in obtaining such recovery from
the third party, shall be repaid by the relevant Parent Indemnified Party or
Company Indemnified Party, as the case may be, to the relevant indemnifying
Party promptly upon the receipt thereof from the third party. Without limiting
the generality of the foregoing, in the case of a Tax
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benefit, the amount to which a Parent Indemnified Party or a Company Indemnified
Party may become entitled in respect of any Claim under this Article 9 shall
initially be payable in full (without regard to the net recovery provisions of
this Section 9.5), and the amount of such Tax benefit shall be repaid by the
relevant Parent Indemnified Party or Company Indemnified Party, as the case may
be, to the relevant indemnifying Party promptly at the time of the filing of the
Federal income Tax Return for the taxable year in which the payment giving rise
to such benefit is made.
9.6 Appointment of Agent. The Company hereby appoints, and by
completing and signing his, her or its Transmittal Documents, each Stockholder
shall appoint the Stockholder Representative (the "Agent", with full and
unqualified power to delegate to one or more persons the authority granted to
him hereunder) to act as his, her or its agent and attorney-in-fact, with full
power of substitution, to take all actions called for by this Article 9 and the
Escrow Agreement on his, her or its behalf, in accordance with the terms of this
Article 9 and the Escrow Agreement.
ARTICLE 10
GENERAL PROVISIONS
10.1 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered or transmitted, and shall be effective upon
receipt, if delivered personally, mailed by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
changes of address) or sent by electronic transmission to the telecopier number
specified below:
(a) If to Parent or Merger Subsidiary:
CT Holding, Inc.
c/o J.W. Childs Associates, L.P.
One Federal Street, 21st Floor
Boston, MA 02110
Attention: President
Telecopier No.: (617) 753-1101
with a copy to:
Sullivan & Worcester LLP
One Post Office Square
Boston, MA 02109
Attention: Christopher Cabot, Esq.
Telecopier No.: (617) 338-2880
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(b) If to the Company or the Principal Stockholders:
Quality Stores, Inc.
455 E. Ellis Road
P.O. Box 3315
Muskegon, MI 49443-3315
Attention: David C. Bliss, Chairman and CEO
Telecopier No.: (616) 798-3479
with copies to:
Skadden, Arps, Slate Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
Attention: Howard L. Ellin, Esq.
Telecopier No.: (212) 451-7221
Culver Sheridan Knowlton Even & Franks
250 Terrace Plaza, P.O. Box 629
Muskegon, Michigan 49443
Attention: Fred Culver, Esq.
Telecopier No.: (616) 724-4330
10.2 Headings. The headings contained in this Agreement are for
purposes of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
10.3 Severability. If any term or provision of this Agreement shall be
held or deemed to be, or shall in fact be, invalid, inoperative, illegal or
unenforceable as applied to any particular case in any jurisdiction or
jurisdictions, or in all jurisdictions or in all cases, because of the
conflicting of any provision with any constitution or statute or rule of public
policy or for any other reason, such circumstance shall not have the effect of
rendering the provision or provisions in question invalid, inoperative, illegal
or unenforceable in any other jurisdiction or in any other case or circumstance
or of rendering any other provision or provisions herein contained invalid,
inoperative, illegal or unenforceable to the extent that such other provisions
are not themselves actually in conflict with such constitution, statute or rule
of public policy, but this Agreement shall be reformed and construed in any such
jurisdiction or case as if such invalid, inoperative, illegal or unenforceable
provision had never been contained herein and such provision reformed so that it
would be valid, operative and enforceable to the maximum extent permitted in
such jurisdiction or in such case. Notwithstanding the foregoing, in the event
of any such determination the effect of which is to Affect Materially and
Adversely any Party, the Parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible to the fullest extent permitted by Applicable Law in an acceptable
manner to the end that the Transactions are fulfilled and consummated to the
maximum extent possible.
10.4 Entire Agreement. This Agreement (together with the
Confidentiality Agreement, the Company Disclosure Schedule, the Parent
Disclosure Schedule and the other Collateral Documents delivered in connection
herewith) constitutes the entire agreement of the Parties and
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supersedes all prior agreements and undertakings, both written and oral (other
than the Confidentiality Agreement), between the Parties, or any of them, with
respect to the subject matter hereof.
10.5 Assignment. This Agreement shall not be assigned by operation of
law or otherwise and any purported assignment shall be null and void, provided
that Parent may (i) cause a wholly owned direct Subsidiary of Parent to be
substituted for Merger Subsidiary as the party to the Merger and may, in
addition, assign the other rights, but not its obligations, including, without
limitation, its obligation to pay the Merger Consideration under this Agreement
to such Subsidiary and (ii) assign its rights under this Agreement to lenders as
collateral for Parent's financing of all or a portion of the Cash Merger
Consideration.
10.6 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each Party, and nothing in this Agreement
(including without limitation the provisions of Section 6.12 hereof), except for
the provisions of Section 6.5 hereof, express or implied, is intended to or
shall confer upon any other Person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
10.7 Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by, and construed in accordance
with, the applicable laws of the United States of America and the laws of the
State of Delaware applicable to contracts made and performed in such State and,
in any event, without giving effect to any choice or conflict of laws provision
or rule that would cause the application of domestic substantive laws of any
other jurisdiction.
10.8 Enforcement of the Agreement. Each Party recognizes and agrees
that each other Party's remedy at law for any breach of the provisions of this
Agreement would be inadequate and agrees that, subject to the exclusivity of the
indemnification remedy after Closing as provided in Section 9.4, for breach of
such provisions, such Party shall, in addition to such other remedies as may be
available to it at law or in equity or as provided in this Agreement, be
entitled to injunctive relief and to enforce its rights by an action for
specific performance to the extent permitted by Applicable Law. Each Party
hereby waives any requirement for security or the posting of any bond or other
surety in connection with any temporary or permanent award of injunctive,
mandatory or other equitable relief. Nothing herein contained shall be construed
as prohibiting a Party from pursuing any other remedies available to such Party
as provided in this Agreement for any breach or threatened breach hereof or
failure to take or refrain from any action as required hereunder to consummate
the Merger and carry out the Transactions. Anything in this Agreement to the
contrary notwithstanding, including without limitation the provisions of Article
9, in the event of any dispute between or among the Parties which results in a
Legal Action, the prevailing Party shall be entitled to receive from the
non-prevailing Party reimbursement for reasonable legal fees and expenses
incurred by such prevailing Party in such Legal Action.
10.9 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different Parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
10.10 Mutual Drafting. This Agreement is the result of the joint
efforts of Parent and the Company, and each provision hereof has been subject to
the mutual consultation, negotiation and
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agreement of the Parties and there shall be no construction against any Party
based on any presumption of that Party's involvement in the drafting thereof.
ARTICLE 11
DEFINITIONS
As used herein, unless the context otherwise requires, the following
terms (or any variant in the form thereof) have the following respective
meanings. Terms defined in the singular shall have a comparable meaning when
used in the plural, and vice versa, and the reference to any gender shall be
deemed to include all genders. Unless otherwise defined or the context otherwise
clearly requires, terms for which meanings are provided herein shall have such
meanings when used in the Company Disclosure Schedule, the Parent Disclosure
Schedule and each Collateral Document, notice, certificate, communication,
opinion or other document executed or required to be executed pursuant hereto or
thereto or otherwise delivered, from time to time, pursuant hereto or thereto.
Accredited Investor shall have the meaning given such term in Rule 501
under the Securities Act.
Acquisition Agreement shall mean each stock purchase agreement, merger
agreement, asset purchase agreement or similar acquisition agreement pursuant to
which the stock or assets of the Company Subsidiaries were acquired from third
parties by the Company or the Company Subsidiaries, respectively.
Adverse, Adversely, when used alone or in conjunction with other terms
(including without limitation "Affect," "Change" and "Effect") shall mean, with
respect to the Company or Parent or Merger Subsidiary, as the case may be, any
Event which could reasonably be expected to (a) adversely affect the validity or
enforceability of this Agreement or any Collateral Document or the likelihood of
consummation of the Merger, (b) adversely affect in any material respect the
business, operations, management, properties, prospects or the condition,
(financial or other), or results of operation (including without limitation,
earnings before interest, taxes, depreciation and amortization) of the Company
and its Subsidiaries, taken as a whole, or Parent and its Subsidiaries, taken as
a whole, as the case may be, (c) impair the Company's or Parent's or Merger
Subsidiary's, as the case may be, ability to fulfill its obligations under the
terms of this Agreement or any Collateral Document in any material respect, or
(d) adversely affect in any material respect the aggregate rights and remedies
of the Company or Parent, as the case may be, under this Agreement or any
Collateral Document.
Affiliate, Affiliated shall mean, with respect to any Person, (a) any
other Person at the time directly or indirectly controlling, controlled by or
under direct or indirect common control with such Person, (b) any other Person
of which such Person at the time owns, or has the right to acquire, directly or
indirectly, ten percent (10%) or more of any class of the capital stock or
beneficial interest, (c) any other Person which at the time owns, or has the
right to acquire, directly or indirectly, ten percent (10%) or more of any class
of the capital stock or beneficial interest of such Person, (d) any executive
officer or director of such Person, (e) with respect to any partnership, joint
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venture or similar Entity, any general partner thereof, and (f) when used with
respect to an individual, shall include any member of such individual's
immediate family or a family trust.
Agent shall have the meaning give to it in Section 9.6.
Agreement shall mean this Agreement as originally in effect, including
unless the context otherwise specifically requires, all schedules and exhibits
hereto, as the same may from time to time be supplemented, amended, modified or
restated in the manner herein or therein provided.
Applicable Law shall mean any Law of any Authority, whether domestic or
foreign, including without limitation the DGCL, all federal and state securities
laws, the Code, ERISA and Environmental Laws, to or by which a Person or it or
any of its business or operations is subject or any of its property or assets is
bound.
Authority shall mean any governmental or quasi-governmental authority,
whether administrative, executive, judicial, legislative or other, or any
combination thereof, including without limitation any federal, state,
territorial, county, municipal or other government or governmental or
quasi-governmental agency, arbitrator, authority, board, body, branch, bureau,
central bank or comparable agency or Entity, commission, corporation, court,
department, instrumentality, master, mediator, panel, referee, system or other
political unit or subdivision or other Entity of any of the foregoing, whether
domestic or foreign.
Benefit Arrangement shall mean any material benefit arrangement that is
not a Plan, including (i) any employment or consulting agreement, (ii) any
arrangement providing for insurance coverage or workers' compensation benefits,
(iii) any incentive bonus or deferred bonus arrangement, (iv) any arrangement
providing termination allowance, severance pay, salary continuation for
disability, or other leave of absence, supplemental unemployment benefits,
lay-off, reduction in force or similar benefits, (v) any stock option or equity
compensation plan, (vi) any deferred compensation plan, (vii) any compensation
policy or practice, (viii) any educational assistance arrangements or policies
and (ix) any change of control arrangements or policies.
Cash Merger Consideration means the product of the Share Price
multiplied by the number of shares of Company Common Stock outstanding at or
immediately prior to the Effective Time as to which no Rollover Election is in
effect, including all shares of Company Common Stock with respect to which a
Rollover Election is deemed not to have been made pursuant to Section
2.2(b)(iii) hereof.
Cash Stockholder Merger Consideration shall have the meaning given to
it in Section 2.1(a)(i)(a).
Certificate means any Share Certificate or Option Certificate.
Claims shall mean any and all debts, liabilities, obligations, losses,
damages, deficiencies, assessments and penalties, together with all Legal
Actions, pending or threatened, claims and judgments of whatever kind and nature
relating thereto, and all fees, costs, expenses and disbursements (including
without limitation reasonable attorneys' and other legal fees, costs and
expenses) relating to any of the foregoing.
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Closing shall have the meaning given to it in Section 1.3.
Closing Certificate shall mean any certificate delivered by the Company
to Parent pursuant to Article 7.
Closing Date shall have the meaning given to it in Section 1.3.
COBRA shall mean the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended, as set forth in Section 4980B of the Code and Part 6 of Title
I of ERISA.
Code shall have the meaning given to it in the Preamble.
Collateral Document shall mean any agreement, instrument, certificate,
opinion or schedule delivered by a Party or a Stockholder pursuant to this
Agreement.
Company shall have the meaning given to it in the Preamble.
Company Common Stock shall have the meaning given to it in Section
2.1(a)(i).
Company Disclosure Schedule shall mean the disclosure schedule dated as
of the date of this Agreement delivered by the Company to Parent.
Company Financial Statements shall have the meaning given to it in
Section 3.2(a).
Company Indemnified Parties shall have the meaning given to it in
Section 9.2(b).
Company Meeting shall have the meaning given to it in Section 1.2(a).
Company Record Date shall have the meaning given to it in Section
2.6(a).
Company Non-Voting Common Stock shall have the meaning given to it in
Section 2.1(a)(i).
Company Subsidiary shall mean any Subsidiary of the Company.
Company Voting Common Stock shall have the meaning given to it in
Section 2.1(a)(i).
Confidentiality Agreement shall have the meaning given to it in Section
6.1(a).
Contract, Contractual Obligation shall mean any term, condition,
provision, representation, warranty, agreement, covenant, undertaking,
commitment, indemnity or other obligation which is outstanding or existing under
any instrument, contract, lease or other contractual undertaking to which the
obligee is a party or by which it or any of its business is subject or property
or assets is bound.
control (including the terms "controlled," "controlled by" and "under
common control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the management or
policies of a Person, or the disposition of such Person's
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assets or properties, whether through the ownership of stock, equity or other
ownership, by contract, arrangement or understanding, or as trustee or executor,
by contract or credit arrangement or otherwise.
Convertible Securities shall mean, with respect to a corporation, any
evidences of indebtedness, shares of capital stock (other than common stock) or
other securities directly or indirectly convertible into or exchangeable for
shares of capital stock of such corporation or any of its Subsidiaries, whether
or not the right to convert or exchange thereunder is immediately exercisable or
is conditioned upon the passage of time, the occurrence or non-occurrence or
existence or non-existence of some other Event, or both.
CT shall have the meaning given to it in the Preamble.
Current Uses shall have the meaning given to it in Section 3.6(c)(ii).
Deductible shall have the meaning given to it in Section 9.2(c).
Determination Price shall mean $218,974,747 divided by the Pro Forma
Outstanding Parent Shares immediately prior to the Effective Time, which
(assuming compliance with Sections 5.18 and 6.11) will equal $115.80.
DGCL shall have the meaning given to it in the Preamble.
Dissenting Shares shall have the meaning given to it in Section 2.5(a).
Distribution shall mean, with respect to any Entity: (a) the
declaration or payment of any dividend (including dividends payable in common
stock or similar equity securities of such Entity) on or in respect of any
shares of any class of capital stock or other equity securities of such Entity
owned by a Person other than such Entity or any Subsidiary of such Entity, (b)
the purchase, redemption or other retirement of any shares of any class of
capital stock or other equity securities of such Entity owned by a Person other
than such Entity or any Subsidiary of such Entity, and (c) any other
distribution on or in respect of any shares of any class of capital stock or
other equity securities of such Entity owned by a Person other than such Entity
or any Subsidiary of such Entity.
Effective Time shall have the meaning given to it in Section 1.4.
Election Deadline shall have the meaning given to it in Section 2.6(b).
Election Form shall have the meaning given to it in Section 2.6(b).
Employment Arrangement shall mean, with respect to any Person, any
employment, consulting, retainer, severance or similar contract, agreement,
plan, arrangement or policy (exclusive of any which is terminable within thirty
(30) days without liability, penalty or payment of any kind by such Person or
any Affiliate (other than any such liability, penalty or payment of general
application to all such Person's employees)), providing for severance,
termination payments, insurance coverage (including any self-insured
arrangements), workers compensation, disability benefits, life, health, medical,
dental or hospitalization benefits, supplemental unemployment
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benefits, vacation or sick leave benefits, pension or retirement benefits or for
deferred compensation, profit-sharing, bonuses, stock options, stock purchase or
appreciation rights or other forms of incentive compensation or post-retirement
insurance, compensation or benefits, or any collective bargaining or other labor
agreement, whether or not any of the foregoing is subject to the provisions of
ERISA.
Encumber shall mean to suffer, accept, agree to or permit the
imposition of any Lien.
Entity shall mean any corporation, firm, unincorporated organization,
association, partnership, limited liability company, trust (inter vivos or
testamentary), estate of a deceased, insane or incompetent individual, business
trust, joint stock company, joint venture or other organization, entity or
business, whether acting in an individual, fiduciary or other capacity, or any
Authority.
Environmental Law shall mean any Law relating to or otherwise imposing
liability or standards of conduct concerning pollution or protection of the
environment or occupational health and safety, including without limitation Laws
relating to emissions, discharges, releases or threatened releases of Hazardous
Materials or other pollutants, contaminants, chemicals, noises, odors or
industrial, toxic or hazardous substances, materials or wastes, whether as
matter or energy, into the environment (including, without limitation, ambient
air, surface water, ground water, land surface or subsurface strata) or
otherwise relating to the manufacture, processing, generation, distribution,
use, treatment, storage, disposal, cleanup, transport or handling of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances, materials
or wastes.
Environmental Permits shall have the meaning given to it in Section
3.20(d).
ERISA shall mean the Employee Retirement Income Security Act of 1974,
and the rules and regulations thereunder, all as from time to time in effect, or
any successor law, rules or regulations, and any reference to any statutory or
regulatory provision shall be deemed to be a reference to any successor
statutory or regulatory provision.
ERISA Affiliate shall mean any Person that is or has ever been treated
as a single employer with the Company or any Company Subsidiary under Sections
414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA.
Escrow Agent shall mean State Street Bank and Trust Company or another
financial institution selected by Parent and reasonably acceptable to the
Stockholder Representative.
Escrow Agreement shall have the meaning given to it in Section 2.8.
Escrow Deposit shall have the meaning given to it in Section 2.8.
Escrow Fund means the Escrow Deposit, plus any interest or dividends
accrued thereon from and after the Effective Time.
ESOP shall mean the Quality Stores, Inc. Employee Stock Ownership Plan.
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ESOP Distribution Allocation Agreement shall mean the ESOP Distribution
Allocation Agreement, dated as of the date hereof, among Parent and certain
Stockholders, as the same may be amended and in effect from time to time.
Event shall mean the occurrence or existence of any act, action,
activity, circumstance, condition, event, fact, failure to act, omission,
incident or practice, or any set or combination of any of the foregoing.
Exchange Act shall mean the Securities Exchange Act of 1934, and the
rules and regulations of the Commission thereunder, all as from time to time in
effect, or any successor law, rules or regulations, and any reference to any
statutory or regulatory provision shall be deemed to be a reference to any
successor statutory or regulatory provision.
Exchange Agent shall have the meaning given to it in Section 2.3.
Exchange Fund shall have the meaning given to it in Section 2.3.
Exchange Merger Consideration shall have the meaning given to it in
Section 2.1(a)(iv).
Exchange Ratio shall mean the ratio of the Share Price to the
Determination Price, which (assuming the accuracy of the representations and
warranties in the first sentence of Section 3.3(a) and in the first sentence of
Section 5.3 and the related part of Section 5.3 of the Parent Disclosure
Schedule and compliance with Sections 3.18, 5.18, 6.10 and 6.11) will equal
0.660622.
Expenses shall have the meaning set forth in Section 8.5.
First Survival Period shall have the meaning given to it in Section
9.1.
GAAP shall mean generally accepted accounting principles as in effect
from time to time in the United States of America.
Governmental Authorizations shall mean all approvals, concessions,
consents, franchises, licenses, permits, plans, registrations and other
authorizations of all Authorities.
Governmental Entity shall have the meaning given to it in Section
3.20(b).
Governmental Filings shall mean all filings, including franchise and
similar Tax filings, and the payment of all fees, assessments, interest and
penalties associated with such filings, with all Authorities.
Guaranty or Guaranteed shall mean any agreement, undertaking or
arrangement by which the Company or any Company Subsidiary guarantees, endorses
or otherwise becomes or is liable, directly or indirectly, contingently or
otherwise, upon any indebtedness of any other Person including without
limitation the payment of amounts drawn down by beneficiaries of letters of
credit (other than by endorsements of negotiable instruments for deposit or
collection in the ordinary course of business). The amount of the obligor's
obligation under any Guaranty shall be deemed
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to be the outstanding amount (or maximum permitted amount, if larger) of the
indebtedness directly or indirectly guaranteed thereby (subject to any
limitation set forth therein).
Hazardous Materials shall have the meaning given to it in Section
3.20(b).
Hazardous Materials Activities shall have the meaning given to it in
Section 3.20(c).
HSR Act shall mean the Hart-Scott-Rodino Antitrust Improvement Act of
1976, and the rules and regulations thereunder, all as from time to time in
effect, or any successor law, rules or regulations, and any reference to any
statutory or regulatory provision shall be deemed to be a reference to any
successor statutory or regulatory provision.
Indebtedness shall mean, with respect to any Person, (a) all items,
except items of capital stock or of surplus or of general contingency or
deferred tax reserves or any minority interest in any Subsidiary to the extent
such interest is treated as a liability with indeterminate term on the
consolidated balance sheet of such Person, which in accordance with GAAP would
be included in determining total liabilities as shown on the liability side of a
balance sheet of such Person or such Subsidiary, (b) all obligations secured by
any Lien to which any property or asset owned or held by such Person or any
Subsidiary is subject, whether or not the obligation secured thereby shall have
been assumed, and (c) to the extent not otherwise included, all Contractual
Obligations of such Person or any Subsidiary constituting capitalized leases and
all obligations of such Person or any Subsidiary with respect to Leases
constituting part of a sale and leaseback arrangement and off-balance sheet
financings (including, without limitation, synthetic leases and other similar
financing arrangements).
Intangible Assets shall mean all assets and property lacking physical
properties the evidence of ownership of which must customarily be maintained by
independent registration, documentation, certification, recordation or other
means.
Intellectual Property means all (a) patents, patent applications,
patent disclosures, and improvements thereto, (b) trademarks, service marks,
trade dress, logos, tradenames, and corporate names and registrations and
applications for registration thereof, (c) copyrights and registrations and
applications for registration thereof, (d) mask works and registrations and
applications for registration thereof, (e) computer software, data, and
documentation, (f) trade secrets and confidential business information
(including ideas, formulas, compositions, inventions (whether patentable or
unpatentable and whether or not reduced to practice), know-how, manufacturing
and production processes and techniques, research and development information,
drawings, specifications, designs, plans, proposal, technical data,
copyrightable works, financial, marketing, and business data, pricing and cost
information, business and marketing plans, and customer and supplier lists and
information), (g) other proprietary rights, and (h) copies and tangible
embodiments thereof (in whatever form or medium).
knowledge (including the terms "known" and "to the knowledge of") shall
mean, with respect to the Company or Parent, as the case may be, the knowledge,
information or belief of corporate officers of the Company or any Subsidiary of
the Company or of Parent or any Subsidiary of Parent, as the case may be, after
reasonable investigation (or what such officer(s) would have known if reasonable
investigation had been made).
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Law shall mean any (a) administrative, judicial, legislative or other
action, code, consent decree, constitution, decree, directive, enactment,
finding, guideline, law, injunction, interpretation, judgment, order, ordinance,
policy statement, proclamation, promulgation, regulation, requirement, rule,
rule of law, rule of public policy, settlement agreement, statute, treaty or
writ of any Authority, domestic or foreign; (b) the common law, or other legal
or quasi-legal precedent; or (c) arbitrator's, mediator's or referee's award,
decision, finding or recommendation; including, in each such case or instance,
any interpretation, directive, guideline or request, whether or not having the
force of law including, in all cases, without limitation any particular section,
part or provision thereof.
Lease shall mean any lease or sublease of property, whether real,
personal or mixed, and all amendments thereto.
Legal Action shall mean any litigation or legal or other actions,
arbitrations, counterclaims, proceedings, requests for material information by
or pursuant to the order of any Authority, or suits, at law or in arbitration,
equity or admiralty commenced by any Person, whether or not purported to be
brought on behalf of a party hereto affecting such party or any of such party's
business, property or assets and all appeals in respect of the foregoing.
Lien shall mean any of the following: mortgage; lien (statutory or
other); preference, priority or other security agreement, arrangement or
interest; hypothecation, pledge or other deposit arrangement; assignment;
charge; levy; executory seizure; attachment; garnishment; encumbrance (including
any easement, exception, variance, reservation or limitation, right of way,
zoning restriction, building or use restriction, and the like); conditional
sale, title retention or other similar agreement, arrangement, device or
restriction; preemptive or similar right; any financing lease involving
substantially the same economic effect as any of the foregoing; the filing of
any financing statement under the Uniform Commercial Code or comparable law of
any jurisdiction; restriction on sale, transfer, assignment, disposition or
other alienation; or any option, equity, claim or right of or obligation to, any
other Person, of whatever kind and character.
Material or materiality for the purposes of this Agreement, shall,
unless specifically stated to the contrary, be determined without regard to the
fact that various provisions of this Agreement set forth specific dollar
amounts.
Material Agreement or Material Commitment shall mean any Contractual
Obligation (a) which (i) involves the purchase, sale or lease of goods or
materials or performance of services aggregating more than $100,000, (ii)
extends for more than three (3) months, or (iii) is not terminable on thirty
(30) days or less notice without penalty or other payment, (b) which involves
indebtedness for money borrowed in excess of $100,000 or (c) which is or
otherwise constitutes a written agency, dealer, license, distributorship, sales
representative or similar written agreement.
Maximum Rollover Number shall have the meaning given to it in Section
2.2(a).
Merger shall have the meaning given to it in the Preamble.
Merger Consideration shall mean the Stock Merger Consideration, the
Cash Merger Consideration, the Option Merger Consideration and the Preferred
Stock Merger Consideration.
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Merger Subsidiary shall have the meaning given to it in the Preamble.
Minimum Rollover Number shall have the meaning given to it in Section
2.2(a).
Multiemployer Plan shall mean a "multiemployer plan" within the meaning
of Section 4001(a)(3) of ERISA.
New Employment Agreements shall have the meaning given to it in Section
6.13.
Non-Cash Proration Factor shall have the meaning given to it in Section
2.2(b)(i).
Noncompetition Agreement shall have the meaning given to it in Section
6.3.
Option Certificate shall have the meaning given to it in Section
2.1(a)(iv).
Option Merger Consideration means (x) the product of the Share Price
multiplied by the number of Vested Options outstanding immediately prior to the
Effective time minus (y) the aggregate exercise price of such Vested Options.
Option Securities shall mean, with respect to a corporation, all
rights, options and warrants, and calls or commitments evidencing the right, to
subscribe for, purchase or otherwise acquire shares of capital stock of such
corporation or any of its Subsidiaries or Convertible Securities, whether or not
the right to subscribe for, purchase or otherwise acquire is immediately
exercisable or is conditioned upon the passage of time, the occurrence or
non-occurrence or the existence or non-existence of some other Event.
Organic Document shall mean the Company's Certificate of Incorporation,
its by-laws and all stockholder agreements, voting trusts and similar
arrangements applicable to any of its capital stock, each as in effect from time
to time.
Other Transaction shall mean a transaction or series of related
transactions (other than the Merger) resulting in (a) any change in control of
the Company, (b) any merger or consolidation of the Company or any of its
Subsidiaries, regardless of whether the Company or such Subsidiary is the
surviving Entity, (c) any tender offer or exchange offer for, or any acquisition
of, any securities of the Company or any of its Subsidiaries, (d) any sale or
other disposition of assets or shares of capital stock of the Company or any of
its Subsidiaries not otherwise permitted under Sections 3.18 or 6.10 hereof, or
(e) so long as this Agreement remains in effect, any issue or sale, or any
agreement to issue or sell, any capital stock, Convertible Securities or Option
Securities of the Company (other than the issuance of shares in accordance with
the terms of Option Securities outstanding on the date hereof).
Parent shall have the meaning given to it in the Preamble.
Parent Disclosure Schedule shall mean the disclosure schedule dated as
of the date of this Agreement delivered by Parent to the Company.
Parent Indemnified Parties shall have the meaning given to it in
Section 9.2(a).
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Parent Stock shall have the meaning given to it in the Preamble.
Party shall mean a signatory to this Agreement.
PBGC shall mean the Pension Benefit Guaranty Corporation and any Entity
succeeding to any or all of its functions under ERISA.
Per Common Share Merger Consideration shall have the meaning given to
it in Section 2.1(a)(i).
Permitted Liens shall mean any of the following Liens: (i) building and
zoning ordinances and by-laws of any applicable Authority applicable to the
property; (ii) taxes assessed or to be assessed on the property for the then
current year to the extent the same are not yet due or payable; and (iii)
rights, easements and restrictions of record, provided the same do not
materially interfere with the current occupancy and use of the property by the
Company or its Subsidiaries or by Parent or its Subsidiaries, as the case may
be.
Per Option Merger Consideration shall have the meaning given to it in
Section 2.1(a)(iii).
Per Preferred Share Merger Consideration shall mean the Preferred Stock
Merger Consideration divided by the number of shares of Preferred Stock
outstanding at the Effective Time.
Person shall mean any natural individual or any Entity.
Plan shall mean, with respect to the Company or any of its Subsidiaries
and at a particular time, any employee benefit plan as defined in Section 3(3)
of ERISA.
Preferred Stock shall have the meaning given to it in Section
2.1(a)(ii).
Preferred Stock Merger Consideration shall mean the aggregate par
amount of all shares of the Preferred Stock outstanding as of the Effective
Time, including without limitation, any applicable prepayment premiums and any
amounts payable in respect of accrued and unpaid dividends on such shares.
Principal Stockholders shall have the meaning given to it in the
Preamble.
Private Authorizations shall mean all approvals, concessions, consents,
franchises, licenses, permits, and other authorizations of all Persons (other
than Authorities) including without limitation those with respect to patents,
trademarks, service marks, trade names, copyrights, computer software programs,
technology and know-how, but not including those with respect to Leases.
Pro Forma Outstanding Company Shares means the sum of (i) the aggregate
number of shares of Company Common Stock outstanding at or immediately prior to
the Effective Time, plus (ii) the aggregate number of shares of Company Common
Stock into which all Vested Options are then exercisable.
79
<PAGE>
Pro Forma Outstanding Parent Shares means the sum of (i) the aggregate
number of shares of Parent Stock and Class B Common Stock, par value $.01 per
share, of Parent outstanding at or immediately prior to the Effective Time plus
(ii) the aggregate number of shares of Parent Stock and Class B Common Stock,
par value $.01 per share, of Parent into which all Option Securities issued by
Parent are then exercisable.
Proportionate Share shall have the meaning given to it in Section 2.8.
Qualified Investor shall mean any Person who either (i) is an
Accredited Investor or (ii) is a key manager or employee identified on the
Qualified Investor Schedule attached hereto.
Representatives of a Party shall mean the officers, directors,
employees, accountants, counsel, financial advisors, consultants and other
representatives of such Party.
Rollover Election shall have the meaning given to it in Section 2.6(a).
Rollover Stockholder shall mean any Stockholder who or which receives
any Rollover Stockholder Merger Consideration.
Rollover Stockholder Merger Consideration shall have the meaning given
to it in Section 2.1(a)(i)(b).
SEC shall mean the Securities and Exchange Commission of the United
States or any successor Authority.
Second Survival Period shall have the meaning given to it in Section
9.1.
SEC Reports shall have the meaning given to it in Section 5.2(a).
Securities Act shall mean the Securities Act of 1933, and the rules and
regulations of the Commission thereunder, all as from time to time in effect, or
any successor law, rules or regulations, and any reference to any statutory or
regulatory provision shall be deemed to be a reference to any successor
statutory or regulatory provision.
Share Certificate shall have the meaning given to it in Section
2.1(a)(iv).
Share Price equals $196,830,981 divided by the Pro Forma Outstanding
Company Shares immediately prior to the Effective Time, which (assuming
compliance with Sections 3.18 and 6.10) will equal $76.50.
Shares shall have the meaning given to it in Section 2.1(a)(iv).
Stock Merger Consideration means a number of shares of Parent Stock
equal to the product of the Rollover Stockholder Merger Consideration and the
number of shares of Company Common Stock outstanding at or immediately prior to
the Effective Time that, in accordance with the terms hereof, will be converted
at the Effective Time into the right to receive shares of Parent Stock in
accordance with the terms of Section 2.1(a)(i)(b) hereof, after the application
of Section 2.2 hereof.
80
<PAGE>
Stockholder Representative shall have the meaning given to it in
Section 4.6.
Stockholders shall mean the Principal Stockholders and all other
Persons entitled to Merger Consideration (or who would be entitled thereto but
for their dissent from the Merger) pursuant to Section 2.1(a).
Stockholders Agreement shall mean the Amended and Restated Stockholders
Agreement, dated as of July 3, 1997, by and among Parent, those persons listed
as the JWC Holders on the signature pages thereof, those persons listed as the
Management Holders on the signature pages thereof and those persons listed as
the Other Holders on the signature pages thereof, as such agreement is amended
as contemplated by Section 7.1(e) hereof.
Subsidiary shall mean, with respect to a Person, any Entity a majority
of the capital stock ordinarily entitled to vote for the election of directors
of which, or if no such voting stock is outstanding, a majority of the equity
interests of which, is owned directly or indirectly, legally or beneficially, by
such Person or any other Person controlled by such Person.
Superior Proposal shall have the meaning given to it in Section 6.4.
Surviving Corporation shall have the meaning given to it in Section
1.1.
Tax (and "Taxable", which shall mean subject to Tax), shall mean, with
respect to any Person, (a) all taxes (domestic or foreign), including without
limitation any income (net, gross or other including recapture of any tax items
such as investment tax credits), alternative or add-on minimum tax, gross
income, gross receipts, gains, sales, use, leasing, lease, user, ad valorem,
transfer, recording, franchise, profits, property (real or personal, tangible or
intangible), fuel, license, withholding on amounts paid to or by such Person or
any of its Subsidiaries, payroll, employment, unemployment, social security,
excise, severance, stamp, occupation, premium, environmental or windfall profit
tax, custom, duty or other tax, governmental fee or other like assessment or
charge of any kind whatsoever, together with any interest, levies, assessments,
charges, penalties, addition to tax or additional amount imposed by any Taxing
Authority, (b) any joint or several liability of such Person or any of its
Subsidiaries with any other Person for the payment of any amounts of the type
described in (a), and (c) any liability of such Person or any of its
Subsidiaries for the payment of any amounts of the type described in (a) as a
result of any express obligation to indemnify any other Person.
Tax Claim shall mean any Claim which relates to Taxes, including
without limitation the representations and warranties set forth in Section 3.14.
Tax Return or Returns shall mean all returns, consolidated or otherwise
(including without limitation information returns), required to be filed with
any Authority with respect to Taxes.
Taxing Authority shall mean any Authority responsible for the
imposition of any Tax.
Termination Date shall mean July 27, 1999 or such other date as the
Parties may, from time to time, mutually agree.
81
<PAGE>
Transactions shall mean the other transactions contemplated by this
Agreement or the Merger or by any Collateral Document executed or required to be
executed in connection herewith or therewith.
Transmittal Documents shall have the meaning given to it in Section
2.3(b).
Vested Option means an option or other right to acquire shares of
Company Common Stock, but only to the extent such option or right is at the time
of reference thereto validly outstanding and exercisable in accordance with its
terms.
Voting Agreement shall mean that certain Voting Agreement of even date
herewith between the Principal Stockholders and Parent, as the same may from
time to time be supplemented, amended, modified or restated in the manner
therein provided.
[Signatures appear on following page(s).]
82
<PAGE>
Signature Page to Agreement and Plan of Reorganization
IN WITNESS WHEREOF, Parent, Merger Subsidiary, the Company and the
corporate and trust Principal Stockholders have caused this Agreement to be
executed by their respective officers or trustees thereunto duly authorized, and
the individual Principal Stockholder has executed this Agreement, in each case
as of the date first written above.
Parent:
CT HOLDING, INC.
By: /S/ ADAM L. SUTTIN
Name: Adam L. Suttin
Title: Vice President
Merger Subsidiary:
CENTRAL TRACTOR FARM & COUNTRY, INC.
By: /S/ ADAM L. SUTTIN
Name: Adam L. Suttin
Title: Vice President
Company:
QUALITY STORES, INC.
By: /S/ DAVID C. BLISS
Name: David C. Bliss
Title: Chairman of the Board and
Chief Executive Officer
Principal Stockholders:
QUALITY FUTURE, INC.
By: /S/ DAVID C. BLISS
Name: David C. Bliss
Title: President
<PAGE>
Signature Page to Agreement and Plan of Reorganization
JOHN L. HILT LIVING TRUST
By: /S/ JOHN L. HILT
Name: John L. Hilt
Title: Trustee
DAVID C. BLISS LIVING TRUST
By: /S/ DAVID C. BLISS
Name: David C. Bliss
Title: Trustee
ALAN L. FANSLER LIVING TRUST
By: /S/ ALAN L. FANSLER
Name: Alan L. Fansler
Title: Trustee
WAYNE E. McCOLLUM LIVING TRUST
By: /S/ WAYNE E. MCCOLLUM
Name: Wayne E. McCollum
Title: Trustee
JAMES M. DAVIS LIVING TRUST
By: /S/ JAMES M. DAVIS
Name: James M. Davis
Title: Trustee
/S/ JAMES F. HURLEY
James F. Hurley
<PAGE>
Signature Page to Agreement and Plan of Reorganization
LINDA P. HILT LIVING TRUST
By: /S/ LINDA P. HILT
Name: Linda P. Hilt
Title: Trustee
SANDRA R. BLISS LIVING TRUST
By: /S/ DAVID C. BLISS
Name: David C. Bliss
Title: Trustee
<PAGE>
The following Exhibits and Schedules to this agreement have been
omitted from this filing. The Registrant will furnish supplementally a copy of
any such Exhibit or Schedule to the Securities and Exchange Commission upon
request.
EXHIBITS
Exhibit 2.8 - Form of Escrow Agreement
Exhibit 6.3(ii) - Form of Noncompetition Agreement
Exhibit 6.13 - Form of New Employment Agreements
Exhibit 7.1(d) - Form of Amended and Restated Stockholders Agreement
Exhibit 7.2(c) - Form of Opinion of Skadden, Arps, Slate Meagher & Flom LLP
Exhibit 7.2(g) - Form of Backup Certificate for S&W Tax Opinion
Exhibit 7.2(j) - Financing Commitment Letter
Exhibit 7.3(a) - Form of Opinion of Sullivan & Worcester LLP
Exhibit 7.3(d) - Form of Backup Certificate for SASM&F Tax Opinion
SCHEDULES
Company Disclosure Schedule
Parent Disclosure Schedule
Schedule 7.2(e) - Consents Required at Closing
Schedule 9.2(g) - Contribution Percentages for Non-Escrowed Indemnity Claims
Qualified Investor Schedule
EXHIBIT 99.1
EXECUTION COPY
$320,000,000
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of May 7, 1999
Among
CENTRAL TRACTOR FARM & COUNTRY, INC.
(to be renamed "Quality Stores, Inc.")
as Borrower,
CT HOLDING, INC.,
(to be renamed "QSI Holdings, 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
and
U.S. BANK NATIONAL ASSOCIATION,
FIRST UNION NATIONAL BANK and
THE HUNTINGTON NATIONAL BANK
as Co-Agents
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Section Page
<S> <C>
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.01. Certain Defined Terms.............................................................................2
1.02. Computation of Time Periods......................................................................33
1.03. Accounting Terms.................................................................................33
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
AND THE LETTERS OF CREDIT
2.01. The Advances.....................................................................................33
2.02. Making the Advances..............................................................................35
2.03. Issuance of and Drawings and Reimbursement Under Letters of Credit...............................38
2.04. Repayment of Advances............................................................................39
2.05. Termination or Reduction of the Commitments......................................................42
2.06. Prepayments......................................................................................43
2.07. Interest.........................................................................................46
2.08. Fees.............................................................................................47
2.09. Conversion of Advances...........................................................................48
2.10. Increased Costs, Etc.............................................................................48
2.11. Payments and Computations........................................................................50
2.12. Taxes............................................................................................52
2.13. Sharing of Payments, Etc.........................................................................54
2.14. Use of Proceeds..................................................................................55
2.15. Defaulting Lenders...............................................................................55
2.16. Removal of Lender................................................................................57
ARTICLE III
CONDITIONS OF LENDING
3.01. Conditions Precedent to Effective Date...........................................................58
3.02. Conditions Precedent to Each Borrowing and Issuance..............................................63
3.03. Determinations Under Section 3.01................................................................64
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.01. Representations and Warranties...................................................................64
<PAGE>
ii
ARTICLE V
COVENANTS OF THE BORROWER
5.01. Affirmative Covenants............................................................................73
5.02. Negative Covenants...............................................................................77
5.03. Reporting Requirements...........................................................................85
5.04. Financial Covenants..............................................................................89
ARTICLE VI
EVENTS OF DEFAULT
6.01. Events of Default................................................................................92
6.02. Actions in Respect of the Letters of Credit upon Default.........................................95
ARTICLE VII
THE ADMINISTRATIVE AGENT
7.01. Authorization and Action.........................................................................96
7.02. Administrative Agent's Reliance, Etc.............................................................96
7.03. Fleet and Affiliates.............................................................................97
7.04. Lender Party Credit Decision.....................................................................97
7.05. Indemnification..................................................................................97
7.06. Successor Administrative Agents..................................................................99
ARTICLE VIII
GUARANTY
8.01. Guaranty........................................................................................100
8.02. Guaranty Absolute. .............................................................................100
8.03. Waivers and Acknowledgments.....................................................................101
8.04. Subrogation.....................................................................................102
8.05. Continuing Guarantee; Assignments...............................................................103
ARTICLE IX
MISCELLANEOUS
9.01. Amendments, Etc.................................................................................103
<PAGE>
iii
9.02. Notices, Etc. ..................................................................................104
9.03. No Waiver; Remedies.............................................................................104
9.04. Costs and Expenses..............................................................................104
9.05. Right of Set-off................................................................................106
9.06. Binding Effect..................................................................................107
9.07. Assignments and Participations..................................................................107
9.08. Execution in Counterparts.......................................................................110
9.09. No Liability of the Issuing Bank................................................................110
9.10. Confidentiality.................................................................................111
9.11. Jurisdiction, Etc...............................................................................111
9.12. Governing Law...................................................................................111
9.13. Waiver of Jury Trial............................................................................111
</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 - Reserved
Schedule XIII - Liens
Schedule XIV - Surviving Debt
Schedule XV - Environmental Disclosure
Schedule XVI - Excluded Asset Acquisitions
EXHIBITS
Exhibit A-1 - Form of Tranche A Term Note
Exhibit A-2 - Form of Tranche B Term Note
Exhibit A-3 - Form of Revolving Credit Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Assignment and Acceptance
Exhibit D - Form of Security Agreement
<PAGE>
v
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 Borrowing Base Certificate
<PAGE>
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
SECOND AMENDED AND RESTATED CREDIT AGREEMENT dated as of May
7, 1999 among Central Tractor Farm & Country, Inc., a Delaware corporation (to
be renamed, Quality Stores, Inc.) (the "Borrower"), CT Holding, Inc., a Delaware
corporation (to be renamed QSI Holdings, Inc.) ("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 an Amended and
Restated Credit Agreement as of July 3, 1997 (as heretofore amended, modified,
or otherwise supplemented, the "Existing Credit Agreement"), with the financial
institutions and other institutional lenders party thereto (the "Existing
Lenders"), Fleet, as administrative agent for the Existing Lenders, NationsBank,
N.A., as syndication agent for the Existing Lenders and DLJ Capital Funding,
Inc., as documentation 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 $150,000,000,
on the terms and conditions set forth therein.
(3) The Borrower has entered into an agreement and plan of
reorganization dated as of March 27, 1999 (as the same may be amended, modified
or otherwise supplemented from time to time in accordance with the provisions of
this Agreement, the "Merger Agreement") among Holding, the Borrower, Quality
Stores, Inc., a Delaware corporation (the "Company"), and certain shareholders
of the Company (the "Company Shareholders"), pursuant to which the Company will
merge with and into the Borrower, with the Borrower being the surviving
corporation (the "Merger").
(4) Immediately following the Merger, the Borrower will change
its name to "Quality Stores, Inc.", and Holding will change its name to "QSI
Holdings, Inc."
(5) 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
<PAGE>
2
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 $320,000,000. 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.
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):
"Accepting Lenders" has the meaning specified in Section
2.06(c).
"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 5000 10 Agency Services Wire Suspense, Account No.
1510352-03-156, Attention: Timothy J. Callahan.
"Advance" means a Tranche A Term Advance, a Tranche B 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.
<PAGE>
3
"Agreement Value" means, for each Hedge Agreement, on any date
of determination, an amount determined by the Administrative Agent
equal to: (a) in the case of a Hedge Agreement documented pursuant to
the Master Agreement (Multicurrency-Cross Border) published by the
International Swap and Derivatives Association, Inc. (the "Master
Agreement"), the amount, if any, that would be payable by any Loan
Party or any of its Subsidiaries to its counterparty to such Hedge
Agreement, as if (i) such Hedge Agreement was being terminated early on
such date of determination, (ii) such Loan Party or Subsidiary was the
sole "Affected Party", and (iii) the Administrative Agent was the sole
party determining such payment amount (with the Administrative Agent
making such determination pursuant to the provisions of the form of
Master Agreement); or (b) in the case of a Hedge Agreement traded on an
exchange, the mark-to-market value of such Hedge Agreement, which will
be the unrealized loss on such Hedge Agreement to the Loan Party or
Subsidiary of a Loan Party party to such Hedge Agreement determined by
the Administrative Agent based on the settlement price of such Hedge
Agreement on such date of determination, or (c) in all other cases, the
mark-to-market value of such Hedge Agreement, which will be the
unrealized loss on such Hedge Agreement to the Loan Party or Subsidiary
of a Loan Party party to such Hedge Agreement determined by the
Administrative Agent as the amount, if any, by which (i) the present
value of the future cash flows to be paid by such Loan Party or
Subsidiary exceeds (ii) the present value of the future cash flows to
be received by such Loan Party or Subsidiary pursuant to such Hedge
Agreement; capitalized terms used and not otherwise defined in this
definition shall have the respective meanings set forth in the above
described Master Agreement.
"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.
"Applicable Margin" means (x) during the period from the date
hereof through October 31, 1999, (i) in respect of the Tranche A Term
Facility and the Revolving Credit Facility, 1.50% per annum for Prime
Rate Advances and 2.75% per annum for Eurodollar Rate Advances, and
(ii) in respect of the Tranche B Term Facility, 2.00% per annum for
Prime Rate Advances and 3.25% 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:
<PAGE>
4
<TABLE>
<CAPTION>
Tranche A Term Facility/ Tranche B Term Facility
------------------------ -----------------------
Revolving Credit Facility
-------------------------
Prime Rate Eurodollar Prime Rate Eurodollar
Advances Rate Advances Advances Rate Advances
-------- ------------- -------- -------------
<S> <C> <C> <C> <C>
Level I .375% 1.625% 1.75% 3.0%
less than 2.5:1
Level II .625% 1.875% 1.75% 3.0%
2.5:1 or greater,
but less than 3.0:1
Level III .875% 2.125% 2.0% 3.25%
3.0:1 or greater,
but less than 3.5:1
Level IV 1.25% 2.5% 2.0% 3.25%
3.5:1 or greater,
but less than 4.0:1
Level V 1.5% 2.75% 2.0% 3.25%
4.0:1 or greater
</TABLE>
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
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 October 31, 1999, 0.50% per annum and (y)
thereafter, a percentage per annum determined by reference to the Debt
to EBITDA Ratio as set forth below:
<PAGE>
5
Debt to EBITDA Ratio Applicable Percentage
-------------------- ---------------------
Level I
less than 3.5:1 0.375%
Level II
3.5:1 or greater 0.5%
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 Tranche A Term Facility, the Tranche B Term Facility or
Revolving Credit Facility, 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.
"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.
<PAGE>
6
"Borrowing" means a Tranche A Term Borrowing, a Tranche B 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 Base 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 or New
York, New York 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 (without duplication) (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 and all cash
expenditures made during such period to acquire a Person that as a
result of such acquisition becomes a wholly owned Subsidiary whose
assets include equipment, fixed assets, real property or improvements
to be reflected as additional property, plant or equipment plus (b) the
aggregate principal amount of all Debt (including Obligations under
Capitalized Leases) assumed or incurred in connection with any such
expenditures. For purposes of this definition, the purchase price of
equipment that is purchased simultaneously with the trade-in of
existing equipment or with insurance proceeds or Net Cash Proceeds
shall be included in Capital Expenditures only to the extent of the
gross amount of such purchase price less the credit granted by the
seller of such equipment for the equipment being traded in at such time
or the amount of such insurance proceeds or Net Cash Proceeds, as the
case may be. For purposes of the Loan Documents, Capital Expenditures
for any Person for any period shall exclude (x) all expenditures made,
directly or indirectly, by such Person or any of its Subsidiaries
during such period in connection with the asset acquisitions described
on Schedule XVI hereto plus (y) the aggregate principal amount of all
Debt (including Obligations under Capitalized Leases) assumed or
incurred in connection with any such expenditures.
<PAGE>
7
"Capitalized Leases" means all leases that have been or should
be, in accordance with GAAP, recorded as capitalized leases.
"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,
(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, or (d) mutual funds which invest exclusively in
those assets described in clauses (a)-(c) hereto.
"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.
<PAGE>
8
"Commitment" means a Tranche A Term Commitment, a Tranche B
Term Commitment, a Revolving Credit Commitment or a Letter of Credit
Commitment.
"Company" has the meaning specified in the Preliminary
Statements.
"Company Shareholders" has the meaning specified in the
Preliminary Statements.
"Confidential Information" means information that any Loan
Party or Affiliate thereof 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 a Loan Party or Affiliate or
advisor thereof.
"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.
"Country General" means Country General, Inc., a Delaware
corporation.
"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 all items (including
taxes accrued as estimated, but excluding Debt) 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 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
<PAGE>
9
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), (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) for the purposes of determining
whether a Default has occurred under Section 6.01(e) only, 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 for Borrowed Money" of any Person means all items of
Debt that, in accordance with GAAP, would be classified as indebtedness
on a Consolidated balance sheet of such Person (and excluding, in any
event, Debt under Hedge Agreements).
"Debt to EBITDA Ratio" means, for any fiscal month 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 month (provided, that the amount of Debt in
respect of Revolving Credit Advances as at the end of such fiscal month
shall be deemed to be the average aggregate amount of Revolving Credit
Advances outstanding hereunder or under the Existing Credit Agreement
during the last twelve months) less the sum of cash and Cash
Equivalents held by Holding and its Subsidiaries as at the end of such
fiscal month to (B) Consolidated EBITDA for the most recently completed
twelve fiscal months of Holding and its Subsidiaries.
<PAGE>
10
"Declining Lenders" has the meaning specified in Section
2.06(c).
"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 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).
<PAGE>
11
"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.
"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, (e)
amortization expense, (f) all extraordinary, unusual or non-recurring
losses (and in any event including all write-offs resulting from SFAS
121 adjustments, and all non-cash losses, and including without
limitation, costs associated with closing the Iowa facility, severance
payments, stay bonuses, and other integration costs) deducted in
determining such net income (or net loss) less all extraordinary,
unusual or non-recurring gains added in determining the net income (or
net loss) for such Period, (g) all expenses relating to the Merger
(including without limitation, costs associated with closing the Iowa
facility, severance payments, stay bonuses, and other integration
costs) to the extent deducted from such net income (or net loss) for
such Period, and (h) for the period ending July 31, 1999, $1,952,000,
and for the period ending October 31, 1999, $955,000 (in each case
representing earnings and non-recurring expenses in connection with
certain acquisitions made by the Borrower in 1998), in each case of
Holding and its Subsidiaries (including, without limitation, for all
calculations of EBITDA, the Company 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
<PAGE>
12
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 (i) in excess
of $500,000,000 in the case of assignees under the Revolving Credit
Facility, and (ii) in excess of $100,000,000 in all other cases; 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;
(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;
<PAGE>
13
(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 or a Subsidiary (other
than Inventory in transit);
(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;
(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
<PAGE>
14
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 out of the ordinary course of
business;
(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.
"Employment Agreements" means each of the agreements, dated on
or about May 7, 1999, among the Borrower, Holding, and each of David E.
Enos, G. Dean Longnecker, James T. McKitrick, Denny Starr and John R.
Pearson.
"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.
"Environmental Law" means any federal, state, local or foreign
statute, law, ordinance, rule, regulation, code, order, writ, judgment,
injunction, decree or legally binding and enforceable 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.
<PAGE>
15
"Environmental Permit" means any permit, approval,
identification number, license or other authorization required under
any Environmental Law.
"Equity Investors" means J.W. Childs and its Affiliates and
co-investors, Fenway Partners Capital Fund, L.P. and its Affiliates,
Fleet Equity Partners and its Affiliates, and stockholders of Holding
following the Merger that are parties to the Stockholders Agreement.
"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
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; provided, however, that the
occurrence of the event or condition described in Section 4042(a)(4) of
ERISA shall be an ERISA Event only if the PBGC has notified
<PAGE>
16
any Loan Party or any ERISA Affiliate in writing that it intends to
institute proceedings to terminate a Plan pursuant to such section or
has threatened in writing to do so.
"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 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.
<PAGE>
17
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 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 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 or
committed during such period to be paid in respect of Capital
Expenditures (so long as such commitment is required to be funded on or
prior to the date which is six months following the end of such period)
less (ix) to the extent not otherwise excluded from the calculation of
Excess Cash Flow for such period, an amount equal to the net gain, if
any, attributable to the sale, lease, transfer or any disposition of
property and assets of Holding and its Subsidiaries and included in
<PAGE>
18
determining the consolidated net income of Holding and its Subsidiaries
for such period less (x) without duplication, the aggregate amount of
all cash payments made by Holding and its Subsidiaries in respect of
the permanent reduction of Debt (of the type referred to in clauses
(a), (b), (c), (d), (e), (f) and (g) of the definition thereof) during
such period exceeds (b) $4,000,000; provided, however, that the amount
of Capital Expenditures deducted pursuant to clause (viii) shall not
include any amounts deducted in the calculation of Excess Cash Flow in
the prior period.
"Existing Credit Agreement" has the meaning specified in the
Preliminary Statements.
"Existing Debt" means Debt of the Borrower, the Company and
their respective 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 (a) 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 reinvested (or in respect of which expenditures were
previously incurred) in the business of the Borrower and its
Subsidiaries, so long as such reinvestment is made within 15 months
after the receipt of such Extraordinary Receipts or (b) amounts
received by any Person in respect of any third party claim against such
Person and applied to pay (or to reimburse such Person for its prior
payment of) such claim and the costs and expenses of such Person with
respect thereto.
"Facility" means the Tranche A Term Facility, the Tranche B
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
<PAGE>
19
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 same may be amended, modified or otherwise
supplemented from time to time in accordance with the provisions of
this Agreement.
"Fiscal Year" means, for Holding and its Consolidated
Subsidiaries, (i) the fiscal year ending in October 1998, (ii) the
fiscal year ending in January 2000 and (iii) thereafter, each fiscal
year ending in January or February of any calendar year.
"Fixed Charge Coverage Ratio" means, at any date of
determination, the ratio of (a) (i) Consolidated EBITDA for the most
recently completed four fiscal quarters of Holding or its Subsidiaries
less (ii) the amount of cash Capital Expenditures made by Holding and
its Subsidiaries during such fiscal period less (iii) the amount of
cash income taxes paid by Holding and its Subsidiaries during such four
fiscal quarter period to (b) the sum of (i) cash interest payable on
all Debt for Borrowed Money plus (ii) principal amounts of all Debt for
Borrowed Money required to be repaid (in the case of Advances other
than Advances under the Term Facilities, only to the extent accompanied
by a permanent reduction in the related Commitments), in the case of
each item specified in this clause (b), by Holding and its Subsidiaries
during such four fiscal quarters; provided, however, that if such four
fiscal quarter period includes any or all of the fiscal quarters ending
on July 31, 1999, October 31, 1999, or January 31, 2000, (x) the amount
referred to in clause (b)(i) shall be the actual amount for the fiscal
quarters ended after the Closing Date multiplied by a fraction the
numerator of which is four and the denominator of which is the number
of fiscal quarters that have elapsed since the Closing Date and (y) the
amount referred to in clause (b)(ii) shall be $6,200,000.
"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.
<PAGE>
20
"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.
"Hedge Bank" means any Lender Party or an Affiliate of a
Lender Party in its capacity as a party to a Secured Hedge Agreement.
"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 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;
<PAGE>
21
(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, 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.
<PAGE>
22
"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.
"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, (v) each Secured Hedge Agreement, and (vi) 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.
<PAGE>
23
"Material Adverse Change" means any material adverse change in
the business, condition (financial or otherwise), operations,
performance, properties or prospects of the Borrower or Holding and
their respective Subsidiaries, in each case 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 the Borrower or Holding and
their respective Subsidiaries, in each case taken as a whole, (b) the
rights and remedies of the Administrative Agent or any Lender Party
under any Loan Document or (c) the ability of the Loan Parties (taken
as a whole) to perform their Obligations under the Loan Documents.
"Material Contract" means, with respect to any Loan Party,
each contract to which such Person is a party involving aggregate
consideration payable to or by such Person of $10,000,000 or more in
any year or otherwise material to the business, condition (financial or
otherwise), operations, performance, properties or prospects of the
Loan Parties taken as a whole.
"Merger" has the meaning specified in the Preliminary
Statements.
"Merger Agreement" has the meaning specified in the
Preliminary Statements.
"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 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
<PAGE>
24
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, actually paid (or required to be 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) 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 and (d) in the case of any
lease that is a sublease, any rentals payable under the prime lease;
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 reinvested in the business of the Borrower and its
Subsidiaries, so long as such reinvestment is made within 15 months
after the receipt of such Net Cash Proceeds.
"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 Tranche A Term Note, a Tranche B 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).
"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.
<PAGE>
25
"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" means a taxable year of any Loan Party or any of
its Subsidiaries or Affiliates for which Federal income tax returns
have been filed and for which the applicable statute of limitations for
assessment or collection has not occurred by reason of extension or
otherwise.
"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 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
<PAGE>
26
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; (d) any interest or title of a lessor or sublessor and any
restriction or encumbrance to which the interest or title of such
lessor or sublessor may be subject that is incurred in the ordinary
course of business and, either individually or when aggregated with all
other Permitted Liens in effect on the date of determination, could not
be reasonably expected to have a Material Adverse Affect; (e) Liens in
favor of customs and revenue authorities arising as a matter of law or
pursuant to a bond to secure payment of customs duties in connection
with the importation of goods; (f) Liens arising out of judgments or
awards that do not constitute events of default under Section 6.01(g)
or (h), and (g) 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.
"Prepayment Amount" has the meaning specified in Section
2.06(c).
"Prepayment Date" has the meaning specified in Section
2.06(c).
"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.
<PAGE>
27
"Prime Rate Advance" means an Advance that bears interest as
provided in Section 2.07(a)(i).
"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 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.
"Receipt Date" has the meaning specified in Section 2.06(c).
"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 (other than as
provided in the Stockholders Agreement or an Employment Agreement);
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 Merger Agreement, the
Stockholders Agreement, the Childs Management Agreement, the Fenway
Management Agreement, the Employment Agreements 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 Tranche A Term
Facility at such time, (d) the aggregate unused Commitments under the
Tranche B Term Facility, and (e) 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
<PAGE>
28
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.
"Revolving Credit Advance" has the meaning specified in
Section 2.01(c).
"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-3 hereto, evidencing the aggregate
indebtedness of the Borrower to such Lender resulting from the
Revolving Credit Advances made by such Lender.
"Secured Hedge Agreements" means any Hedge Agreement required
or permitted under Article V that is entered into by and between the
Borrower and any Hedge Bank.
"Secured Obligations" has the meaning specified in the
Security Agreement.
"Secured Parties" means the Administrative Agent, the Lender
Parties, and the Hedge Banks.
<PAGE>
29
"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 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.
"Stockholders Agreement" means the QSI Holdings, Inc.
Stockholders Agreement dated as of May 7, 1999 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,
the Persons listed as the "Management Holders" on the signature pages
thereof and the Persons listed as "Quality 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
<PAGE>
30
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 Country General 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(d) or (b) any Revolving Credit
Lender pursuant to Section 2.02(b).
"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 Facilities" means the Tranche A Term Facility and the
Tranche B Term Facility.
"Termination Date" means the earlier of April 30, 2006 and the
date of termination in whole of the Tranche A Term Commitments, the
Tranche B Term Commitments, the Letter of Credit Commitments and the
Revolving Credit Commitments pursuant to Section 2.05 or 6.01.
"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.
<PAGE>
31
"Tranche A Term Advance" has the meaning specified in Section
2.01(a).
"Tranche A Term Borrowing" means a borrowing consisting of
simultaneous Tranche A Term Advances of the same Type made by the
Tranche A Term Lenders.
"Tranche A Term Commitment" means, with respect to any Tranche
A Term Lender at any time, the amount set forth opposite such Lender's
name on Schedule 1(a) hereto under the caption "Tranche A 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 "Tranche A Term Commitment," as such amount may be reduced at
or prior to such time pursuant to Section 2.05.
"Tranche A Term Facility" means, at any time, the aggregate
amount of the Tranche A Term Lenders' Tranche A Term Commitments at
such time.
"Tranche A Term Lender" means any Lender that has a Tranche A
Term Commitment.
"Tranche A Term Note" means a promissory note of the Borrower
payable to the order of any Tranche A Term Lender, in substantially the
form of Exhibit A-1 hereto, evidencing the indebtedness of the Borrower
to such Lender resulting from the Tranche A Term Advance made by such
Lender.
"Tranche A Termination Date" means the earlier of October 31,
2004 and the date of termination in whole of the Tranche A Term
Commitments, the Letter of Credit Commitments and the Revolving Credit
Commitments pursuant to Section 2.05 or 6.01.
"Tranche B Term Advance" has the meaning specified in Section
2.01(b).
"Tranche B Term Borrowing" means a borrowing consisting of
simultaneous Tranche B Term Advances of the same type made by the
Tranche B Term Lenders.
"Tranche B Term Commitment" means, with respect to any Tranche
B Term Lender at any time, the amount set forth opposite such Lender's
name on Schedule 1(b) hereto under the caption "Tranche B 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 "Tranche B Term Commitment," as such amount may be reduced at
or prior to such time pursuant to Section 2.05.
"Tranche B Term Facility" means, at any time, the aggregate
amount of the Tranche B Term Lenders' Tranche B Term Commitments at
such time.
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32
"Tranche B Term Lender" means any Lender that has a Tranche B
Term Commitment.
"Tranche B Term Note" means a promissory note of the Borrower
payable to the order of any Tranche B Term Lender, in substantially the
form of Exhibit A-2 hereto, evidencing the indebtedness of the Borrower
to such Lender resulting from the Tranche B Term Advance made by such
Lender.
"Transaction" means the Merger and the amendment and
restatement of the Existing Credit Agreement.
"Transaction Documents" means, collectively, the Loan
Documents and the Related Documents.
"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(d) 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.
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33
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 "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 Tranche A Term Advances.
Each Tranche A Term Lender severally agrees, on the terms and conditions
hereinafter set forth, to make a single advance (a "Tranche A Term Advance") to
the Borrower on the date hereof in an amount not to exceed such Lender's Tranche
A Term Commitment at such time. The Tranche A Term Borrowing shall consist of
Tranche A Term Advances made simultaneously by the Tranche A Term Lenders
ratably according to their Tranche A Term Commitments. Amounts borrowed under
this Section 2.01(a) and repaid or prepaid may not be reborrowed.
(b) The Tranche B Term Advances. Each Tranche B Term Lender
severally agrees, on the term and conditions hereinafter set forth, to make a
single advance (a "Tranche B Term Advance") to the Borrower on the date hereof
in an amount not to exceed such Lender's Tranche B Term Commitment at such time.
The Tranche B Term Borrowing shall consist of Tranche B Term Advances made
simultaneously by the Tranche B Term Lenders ratably according to their Tranche
B Team Commitments. Amounts borrowed under this Section 2.01(b) and repaid or
prepaid may not be reborrowed.
(c) 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
Tranche A Termination Date in an amount for each such Advance not to exceed such
Lender's Unused Revolving Credit Commitment at such time; provided, however,
that Revolving Credit Advances on the date hereof shall not exceed an aggregate
principal amount equal to $70,000,000. 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
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34
Lender's Unused Revolving Credit Commitment in effect from time to time, the
Borrower may borrow under this Section 2.01(c), prepay pursuant to Section
2.06(a) and reborrow under this Section 2.01(c).
(d) 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
Tranche A Termination Date (i) in an aggregate amount not to exceed at any time
outstanding $10,000,000 (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 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(d), repay pursuant to Section 2.04(d) or
prepay pursuant to Section 2.06(a) and reborrow under this Section 2.01(d).
(e) 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 30 days before the Tranche A
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 5 days before the Tranche A 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"); 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 5 days before the
<PAGE>
35
Tranche A 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(e), repay any Letter of Credit Advances resulting from drawings
thereunder pursuant to Section 2.03(c) and request the issuance of additional
Letters of Credit under this Section 2.01(e).
(f) All "Advances" under the Existing Credit Agreement shall
be deemed to be Advances for all purposes hereunder.
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
<PAGE>
36
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 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
<PAGE>
37
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 Advances may not
be outstanding as part of more than 20 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. 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.
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38
(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"). All "Letters of
Credit" under the Existing Credit Agreement shall be deemed to be Letters of
Credit for all purposes under the Loan Documents. If (x) the requested form of
such Letter of Credit is acceptable to the Issuing Bank in its sole discretion
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
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39
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 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) Tranche A Term
Advances. The Borrower shall repay to the Administrative Agent for the ratable
account of the Tranche A Term Lenders the aggregate outstanding principal amount
of the Tranche A 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):
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40
Date Amount
---- ------
July 31, 1999 $1,875,000
October 31, 1999 $625,000
January 31, 2000 $1,875,000
April 30, 2000 $625,000
July 31, 2000 $7,500,000
October 31, 2000 $2,500,000
January 31, 2001 $7,500,000
April 30, 2001 $2,500,000
July 31, 2001 $7,500,000
October 31, 2001 $2,500,000
January 31, 2002 $7,500,000
April 30, 2002 $2,500,000
July 31, 2002 $7,500,000
October 31, 2002 $2,500,000
January 31, 2003 $7,500,000
April 30, 2003 $2,500,000
July 31, 2003 $7,500,000
October 31, 2003 $2,500,000
January 31, 2004 $7,500,000
April 30, 2004 $2,500,000
July 31, 2004 $11,250,000
October 31, 2004 $3,750,000
provided, however, that the final principal installment shall be repaid on the
Tranche A Termination Date and in any event shall be in an amount equal to the
aggregate principal amount of the Tranche A Term Advances outstanding on such
date.
(b) Tranche B Term Advances. The Borrower shall repay to the
Administrative Agent for the ratable account of the Tranche B Term Lenders the
aggregate outstanding principal amount of the Tranche B 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
---- ------
July 31, 1999 $450,000
October 31, 1999 $150,000
January 31, 2000 $450,000
April 30, 2000 $150,000
July 31, 2000 $450,000
October 31, 2000 $150,000
January 31, 2001 $450,000
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41
April 30, 2001 $150,000
July 31, 2001 $450,000
October 31, 2001 $150,000
January 31, 2002 $450,000
April 30, 2002 $150,000
July 31, 2002 $450,000
October 31, 2002 $150,000
January 31, 2003 $450,000
April 30, 2003 $150,000
July 31, 2003 $450,000
October 31, 2003 $150,000
January 31, 2004 $450,000
April 30, 2004 $150,000
July 31, 2004 $450,000
October 31, 2004 $150,000
January 31, 2005 $28,350,000
April 30, 2005 $9,450,000
July 31, 2005 $28,350,000
October 31, 2005 $9,450,000
January 31, 2006 $28,350,000
April 30, 2006 $9,450,000
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.
(c) Revolving Credit Advances. The Borrower shall repay to the
Administrative Agent for the ratable account of the Revolving Credit Lenders on
the Tranche A Termination Date the aggregate outstanding principal amount of the
Revolving Credit Advances then outstanding.
(d) 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 Tranche A Termination Date.
(e) 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 Tranche A Termination Date the aggregate outstanding principal
amount of the Letter of Credit Advances then outstanding.
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(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 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 Tranche A Term Commitments, the Tranche B Term Commitments and the Letter
of Credit Facility and the Unused Revolving
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43
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. Each
reduction of the unused portion of the Commitments under the Term Facilities
pursuant to this subsection (a) shall be applied pro rata to each of the Term
Facilities.
(b) Mandatory. (i) After the date of the Tranche A Term
Borrowing, upon each repayment or prepayment of the Tranche A Term Advances, the
aggregate Tranche A Term Commitments of the Tranche A Term Lenders shall be
automatically and permanently reduced, on a pro rata basis, by an amount equal
to the amount by which the aggregate Tranche A Term Commitments immediately
prior to such reduction exceed the aggregate unpaid principal amount of the
Tranche A Term Advances then outstanding.
(ii) After the date of the Tranche B Term Borrowing, upon each
repayment or prepayment of the Tranche B Term Advances, the aggregate Tranche B
Term Commitments of the Tranche B Term Lenders shall be automatically and
permanently reduced, on a pro rata basis, by an amount equal to the amount by
which the aggregate Tranche B Term commitments immediately prior to such
reduction exceed the aggregate unpaid principal amount of the Tranche B Term
Advances then outstanding.
(iii) 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 a Term Facility, 50% of the amount
of such prepayment in respect of such Term Facility shall be applied to the
installments of such Term Facility in direct order of maturity and the remaining
50% shall be applied to the installments of such Term Facility in inverse order
of maturity.
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44
(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 January 2001), 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. The
Borrower shall also, on the sixth month anniversary of each Fiscal Year, prepay
an aggregate principal amount of 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% and (y) at all other times, 75% of any Capital
Expenditures deducted in the calculation of Excess Cash Flow for the preceding
Fiscal Year and not actually made on or prior to such sixth month anniversary.
Each such prepayment shall be applied ratably to each of the Term Facilities;
provided, however, that 50% of the amount of such prepayment in respect of a
Term Facility shall be applied to the installments of such Term Facility in
direct order of maturity and the remaining 50% shall be applied to the
installments of such 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)), subject to the proviso to the definition of Net Cash Proceeds, (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 the sale or issuance of (w)
capital stock (other than Redeemable capital stock) of Holding to any Equity
Investor, (x) any capital stock or rights or options to acquire capital stock in
Holding to officers, employees or directors of Holding or any Subsidiary
thereof, (y) common stock of Holding as contemplated by the Merger Agreement and
(z) capital stock by any wholly-owned Subsidiary of any Loan Party to such Loan
Party) 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 (subject to the proviso to the definition of
Extraordinary Receipt), 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 each of the Term
Facilities; provided, however, that 50% of such amount of such prepayment in
respect of a Term Facility shall be applied to the installments of such Term
Facility in direct order of maturity and the remaining 50% shall be applied to
the installments of such 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).
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45
(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 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.
(c) Tranche B Term Opt-Out. Any Tranche B Term Lender, may,
with the approval of the Borrower, elect not to accept any prepayment of the
Tranche B Term Facility. Upon receipt by the Administrative Agent of any
prepayment, the amount of the prepayment that is available to prepay the Tranche
B Term Advances shall be deposited in the Cash Collateral Account (the
"Prepayment Amount"), pending application of such amount on the Prepayment Date
as set forth below and promptly after such receipt (the date of such receipt
being the "Receipt Date"), the Administrative Agent shall give written notice to
the Tranche B Term Lenders of the amount available to prepay the Tranche B Term
Advances and the date on which such prepayment shall be made (the "Prepayment
Date"), which date shall be 5 days after the Receipt Date. Any Lender declining
such prepayment (a "Declining Lender") shall give written notice to the
Administrative Agent by 11:00 A.M. (Boston, Massachusetts time) on the Business
Day immediately preceding the Prepayment Date. On the Prepayment Date, an amount
equal to that portion of the Prepayment Amount accepted by the Tranche B Term
Lenders other than the Declining Lenders (such Lenders being the "Accepting
Lenders") to prepay Tranche B Term Advances owing to such Accepting Lenders
shall be withdrawn from the Cash Collateral Account and applied to prepay
Tranche B Term Advances owing to such
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46
Accepting Lenders on a pro rata basis. Any amounts that would otherwise have
been applied to prepay Advances under the Tranche B Term Facility owing to
Declining Lenders shall instead be applied ratably to prepay the remaining
Tranche A Term Advances as provided in Sections 2.06(a) or (b) as the case may
be; provided further that upon prepayment in full of the Tranche A Term
Advances, the remainder of any Prepayment Amount shall be applied ratably to
prepay Tranche B Term Advances owing to Declining Lenders.
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 on
the 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.
(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.
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47
(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 Tranche A Termination Date,
payable in arrears on the last Business Day of each March, June, September and
December, commencing June 30, 1999, and on the Tranche A Termination Date, at a
rate equal to the Applicable Percentage per annum on the sum of the average
daily Unused Revolving Credit Commitment of each Appropriate Lender plus such
Lender's 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 June 30, 1999, and on the earliest to
occur of the full drawing expiration, termination or cancellation of any such
Letter of Credit and on the Tranche A Termination Date, on such Lender's Pro
Rata Share of the average daily aggregate Available Amount during such quarter
of (A) all Standby 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 and (B) all Trade Letters of
Credit outstanding from time to time at a rate per annum equal to the excess of
(x) the Applicable Margin in effect from time to time for Eurodollar Advances
comprising a Revolving Credit Borrowing over (y) 1.00%.
(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 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
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48
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 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 rate or 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
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49
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 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
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50
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, in each case after the date hereof, shall make it unlawful, or,
after the date hereof, 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, on the last day of the
then existing Interest Period therefor, if permitted by applicable law, or
otherwise 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 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
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51
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
365 days (360 days, with respect to Eurodollar Rate Advances), 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 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
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52
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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53
(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, or (in the case of a
Lender Party that has certified in writing to the Administrative Agent that it
is not a "bank" as defined in Section 881(c)(3)(A) of the Internal Revenue Code)
form W-8 (and, if such Lender Party delivers a form W-8, a certificate
representing that such Lender Party is not a "bank" for purposes of Section
881(c) of the Internal Revenue Code, is not a 10-percent shareholder (within the
meaning of Section 871(h)(3)(B) of the Internal Revenue Code) of the Borrower
and is not a controlled foreign corporation related to the Borrower (within the
meaning of Section 864(d)(4) of the Internal Revenue Code)), 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 or, in the case of a Lender Party providing a form W-8, certifying that
such Lender Party is a foreign corporation, partnership, estate or trust. 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.
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54
(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) 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
<PAGE>
55
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 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
shall be available (and the Borrower agrees that it shall use such proceeds)
solely to finance the Merger and costs associated therewith, to pay transaction
fees and expenses, to refinance certain Existing Debt, to repurchase shares of
common stock of Holding from certain members of management (to the extent
permitted hereby) and for general corporate purposes of 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).
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56
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 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
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57
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 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.
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58
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 without limitation amounts owing pursuant to
Section 2.10 or 2.3), 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 Merger Agreement shall be in full force and effect and
the Merger shall be consummated immediately following the funding of
the Advances in all material respects in accordance with the Merger
Agreement, without any waiver or amendment not consented to by the
Administrative Agent of any material term, provision or condition set
forth therein, and in compliance with all applicable laws.
(b) The aggregate amount of cash proceeds received by the
Company Shareholders in connection with the Merger shall not exceed
$111,600,000.
(c) 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 (or will be, immediately following the
Merger) prepaid, redeemed or defeased in full or otherwise satisfied
and extinguished; the aggregate principal amount of Revolving Credit
Advances outstanding after giving effect to all Borrowings on the
Effective Date) shall not exceed $70,000,000.
(d) Before giving effect to the Merger 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
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59
or prospects of (x) the Borrower and its Subsidiaries, taken as a
whole, since October 31, 1998, and (y) the Company and its
Subsidiaries, taken as a whole, since January 30, 1999.
(e) 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 Merger, 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.
(f) 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.
(g) 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, taken as a whole,
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 inconsistent in any material
adverse respect with the Pre-Commitment Information or that could
reasonably be expected to have a Material Adverse Effect.
(h) The Borrower shall have paid all accrued fees of the
Administrative Agent.
(i) 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.
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60
(ii) Certified copies of the resolutions of the Board
of Directors of the Borrower and each other Loan Party
approving the Merger, 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 Merger,
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 state where the Borrower and each other Loan Party has
a place of business, 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; and
(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 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(j)(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
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61
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 each Subsidiary Guarantor, 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) signed originals of proper financing
statements, to be 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,
(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
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62
(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) signed originals of proper financing
statements, to be 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.
(x) An amended and restated 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 each
Subsidiary Guarantor.
(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.
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(xii) Certificates, in substantially the form of
Exhibit G, attesting to the Solvency of each Loan Party after
giving effect to the Merger 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, to the extent not previously
furnished.
(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 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 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):
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64
(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.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties. Each of Holding
and the Borrower represents and warrants that, immediately following the Merger:
(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
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65
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
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.
(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 Merger 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
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66
on or affecting any Loan Party, any of its Subsidiaries or any of their
properties except as identified on Schedule IV or (iv) except for the
Liens created under the Loan Documents and other Liens permitted
hereunder, 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 Merger 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 (i) 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, and (ii) 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 Merger 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 Merger 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.
(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 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 October 31, 1998, and the related Consolidated
statement of income and Consolidated statement of cash flows of the
Borrower and its Subsidiaries for the fiscal year then
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67
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 January 30, 1999 and the related
Consolidated statement of income and Consolidated statement of cash
flows of the Borrower and its Subsidiaries for the three 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 such balance sheet as at January 30,
1999, and said statement of income and cash flows for the three 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 October 31, 1998, 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 January 30, 1999, 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 LLP, independent public
accountants, copies of which have been furnished to each Lender Party,
fairly present, subject, in the case of said balance sheet as at April
3, 1999, and said statement of income and cash flows for the two months
then ended, to year-end audit adjustments, 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 January 30, 1999, 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(h) 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
reasonable estimate of its future financial performance (although the
actual results during the periods covered by such forecasts may differ
materially from the forecasted results).
(h) None of the information, exhibits or reports (other than
financial projections and pro forma financial information) 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.
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(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 (other than the Disclosed
Litigation) or (ii) purports to affect the legality, validity or
enforceability of the Merger, 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.
(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.
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69
(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 the Environmental Due Diligence
Investigation: Quality Stores, Inc. dated April, 1999 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 material 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 dated June 1997 prepared by
O'Brien & Gere Engineers, Inc., or as disclosed in the Environmental
Due Diligence Investigation: Quality Stores, Inc. dated April, 1999 by
O'Brien & Gere Engineers, Inc., or as otherwise disclosed on Schedule
XV, none of
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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 for any such actions that could not, either
individually or in the aggregate, be reasonably likely to have a
Material Adverse Effect, and except as disclosed in the Environmental
Due Diligence Investigation, Country General Stores dated June 1997
prepared by O'Brien & Gere Engineers, Inc., or the Environmental Due
Diligence Investigation: Quality Stores, Inc. dated April, 1999 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.
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(x) Upon the filing of UCC-1 financing statements in the
appropriate offices and the taking of all action contemplated by the
Loan Documents, the Security Agreement will create valid and perfected
security interests in the Collateral having the priority set forth in
such Collateral Documents, securing the payment of the Secured
Obligations. The Loan 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, except for any such taxes, assessments, levies, fees and
other charges, the amount, applicability or validity of which is being
contested in good faith and by appropriate proceedings diligently
conducted and with respect to which the Borrower has established
appropriate and adequate reserves in accordance with GAAP.
(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 $1,000,000. 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 $1,000,000. 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.
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(dd) Set forth on Schedule VI hereto is a complete and
accurate list of all Existing Debt that will be outstanding immediately
following the Merger, showing the principal amount that will be
outstanding thereunder at such time.
(ee) Set forth on Schedule VII hereto is a complete and
accurate list of all real property owned in fee by any Loan Party or
any of its Subsidiaries immediately following the Merger, showing as of
such date 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.
(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 immediately following the
Merger, showing as of such date 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 immediately following the Merger, showing as of such date
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), as of the date hereof each such
Material Contract has been duly authorized, executed and delivered by
all parties thereto, has not been amended or otherwise modified in a
manner adverse to the interests of such Loan Party, is in full force
and effect and is binding upon and enforceable against all parties
thereto in accordance with its terms, and as of the date hereof 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 immediately following the Merger, showing as of such date
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 immediately following the
Merger, showing the jurisdiction in which registered, the registration
number, the date of registration and the expiration date.
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73
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.
(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 (other
than Permitted Liens); 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 or to the extent that its
failure to do so could not reasonably be expected to have a Material
Adverse Effect.
(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
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74
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 Borrower and any Subsidiary may merge with
or into any Person to the extent permitted by 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 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 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
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75
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 and the Fenway Management Agreement and
Stockholders Agreement.
(k) Cash Concentration Accounts. Maintain main cash
concentration accounts with Fleet or one or more banks acceptable to
the Administrative Agent that 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 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. 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 August 7, 1999, 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 $1,500,000), duly executed by the
Company, together with:
(A) evidence that counterparts of the Mortgages have
been duly recorded on or before August 7, 1999 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,
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76
(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
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 and as the Borrower shall be able to
obtain (using all reasonable efforts),
(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 its
Subsidiaries, use their reasonable efforts to deliver, on or prior to
August 7, 1999, 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
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77
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) Interest Rate Hedging. Enter into prior to
October 30, 1999, interest rate Hedge Agreements with Persons
acceptable to the Administrative Agent, covering a notional amount of
not less than $65,000,000 and providing for such Persons to make
payments thereunder for a period of no less than 2 years to the extent
that interest rates exceed 7.0%.
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 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 (other than
assignments for collection purposes and other assignments in the
ordinary course of business), 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
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78
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
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)(v)(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:
(i) In the case of the Borrower, Debt in respect of
Hedge Agreements designed to hedge against fluctuations in
interest rates incurred in the ordinary course of business and
consistent with prudent business practice with the aggregate
Agreement Value thereof not to exceed $2,500,000 at any time
outstanding;
(ii) in the case of Holding, (A) Debt under the Loan
Documents, (B) Debt in an aggregate principal amount not to
exceed $10,000,000 at any time issued pursuant to the
Stockholders Agreement or an Employment Agreement provided
that (w) such Debt is evidenced by a promissory note in
substantially the form of Exhibit B to the Stockholders
Agreement or otherwise 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) amortization of such Debt is not
required prior to the Termination Date, and (C) Debt under the
13% Subordinated Notes due May 31, 2009 issued by Holding;
(iii) in the case of the Borrower and its
Subsidiaries, the Permanent Debt in an aggregate principal
amount not to exceed $105,000,000;
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79
(iv) 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; and
(v) 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
$10,000,000 at any time outstanding,
(C) Capitalized Leases not to exceed in the
aggregate $20,000,000 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 (other than Debt comprised of
senior bank financing or other similar working
capital financing) of any Person that becomes a
Subsidiary of the Borrower after the date hereof in
accordance with the terms of Section 5.02(f) that is
existing at the time such Person becomes a Subsidiary
of the Borrower (other than Debt incurred solely in
contemplation of such Person becoming a Subsidiary of
the Borrower), provided that the aggregate principal
amount of any such Debt of a Person acquired in any
Fiscal Year (together with the aggregate amount of
Capital Expenditures made in such Fiscal Year) shall
not exceed the amount set forth in Section 5.02(p)
for such Fiscal Year.
(G) other Debt in an aggregate principal
amount not to exceed $7,500,000 at any time
outstanding.
(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
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80
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 (giving pro forma effect to all
acquisitions during such period).
(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 the Borrower or 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 the Borrower or
a wholly owned Subsidiary of the Borrower, as the case may be;
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, damaged or unmarketable
inventory,
(ii) sales or other disposals of obsolete, worn-out
or surplus 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 $5,000,000 in any Fiscal Year,
provided that the Borrower shall, to the extent required by
Section 2.06(b)(ii), prepay the Advances pursuant to, and in
the amount and order of priority set forth in, such Section
2.06(b)(ii),
(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,
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81
(vi) leases or subleases of assets in the ordinary
course of business by the Borrower or any of its Subsidiaries
as lessor or sublessor, as the case may be,
(vii) sales or other disposals of Cash Equivalents in
the ordinary course of business, and
(viii) 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 $10,000,000 in any Fiscal Year,
provided that, within nine months following the date of such
sale, the Borrower or such Subsidiary shall lease back such
asset.
(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
existence immediately after the Merger;
(ii) Investments by the Borrower in Hedge Agreements
permitted under Section 5.02(b)(i) or Section 5.02(b)(v)(A);
(iii) (A) promissory notes issued to Holding
representing the unpaid purchase price of capital stock of
Holding issued to managers of Holding or its Subsidiaries, and
secured by a perfected pledge of such capital stock, and (B)
loans and advances to employees of the Borrower and its
Subsidiaries in an aggregate principal amount not to exceed
$1,500,000 at any time outstanding;
(iv) Investments by the Borrower and its Subsidiaries
in Cash Equivalents;
(v) Investments consisting of intercompany Debt
permitted under Section 5.02(b)(iv);
(vi) Investments existing on the date hereof and
described on Schedule X hereto;
(vii) Investments in the capital stock of a Person
that, as a result of such investment or purchase, becomes a
wholly-owned Subsidiary of the Borrower, to the extent
permitted by Section 5.02(p); provided that with respect to
Investments made under this clause (vii): (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
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82
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 (vii) shall be in the same
line of business as the business of the Borrower or any of its
Subsidiaries;
(viii) in the case of the Borrower and its
Subsidiaries, other Investments in an aggregate outstanding
amount not to exceed $10,000,000.
(ix) Investments by Holding in the capital stock of
the Borrower; and
(x) in the case of Holding, Investments by Holding in
its capital stock as a result of the transactions described in
Section 5.02(b)(ii)(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
(other than to Holding), 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 (other than to the Borrower),
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 the Employment
Agreements (and promissory notes issued pursuant thereto), to
repurchase shares of common stock of Holdings from certain members of
management 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 (x) $5,000,000 in Fiscal
Year 2000 and (y) thereafter, the sum of $7,500,000 plus any amount
permitted to be paid pursuant to clause (x) and not so used and (ii)
any Subsidiary of the Borrower may (A) declare and pay cash dividends
to the Borrower
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83
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 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 (i) the Advances in
accordance with the terms of this Agreement or (ii) any Capitalized
Leases or Debt of the type described in Section 5.02(b)(v)(B), 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 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 could, in any such case, reasonably be
expected to have a Material Adverse Effect or that would materially
adverse effect 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
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84
(i) in favor of the Secured Parties or (ii) any prohibition or
condition contained in the Permanent Debt Documents or (iii) any Debt
that is permitted to be secured hereunder (including Capital Leases).
(n) Partnerships, Etc. Become a general partner in any general
or limited partnership, 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.
(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 required under Section 5.01(p).
(p) Capital Expenditures. In the case of the Borrower, make,
or permit any of its Subsidiaries to make, any Capital Expenditures
(excluding the lease of any asset sold in accordance with Section
5.02(e)(viii)) that would cause the aggregate of all such Capital
Expenditures made by the Borrower and its Subsidiaries in any period
set forth below (together with the aggregate amount of Debt incurred
during such period pursuant to Section 5.02(b)(v)(F)) to exceed the
amount set forth below for such period:
Fiscal Year Ending In Amount
--------------------- ------
2000 $30,000,000
2001 $30,000,000
2002 $35,000,000
2003 $35,000,000
2004 $38,000,000
2005 $40,000,000
2006 $41,000,000
; 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.
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:
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85
(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 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.
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(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 Deloitte
Touche LLP or other independent public accountants of nationally
recognized standing, 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 the Borrower in
determining, as of the end of such Fiscal Year, 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 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.
(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 that has resulted or
is reasonably expected to result in a Material Adverse Effect, 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
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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 the request therefor by
any Lender Party, a copy of the annual actuarial valuation report for
any Plan.
(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); provided, however, that such copies
must be provided only if such imposition of Withdrawal Liability,
reorganization or termination has resulted or is reasonably expected to
result in a Material Adverse Affect, or otherwise upon the request of
any Lender Party (through the Administrative Agent).
(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 which could reasonably be
expected to have a Material Adverse Effect.
(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) 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
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88
by the Administrative Agent, such information and reports regarding the
Related Documents and the Material Contracts as the Administrative
Agent may reasonably request.
(m) 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.
(n) Real Property. As soon as available and in any event
within 90 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 (with a fair market
value of at least $1,500,000) 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 (with a fair market value of at least
$1,500,000) 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.
(o) Insurance. As soon as available and in any event within 90
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 the Administrative Agent may reasonably specify.
(p) 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.
(q) 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.
(r) 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
the Administrative Agent may from time to time reasonably request.
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89
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) Fixed Charge Coverage Ratio. Maintain at the end of each
fiscal quarter of Holding a Fixed Charge Coverage Ratio 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 Ratio
-------------------------------------- -----
July 31, 1999 1.05
October 31, 1999 1.05
January 31, 2000 1.05
April 30, 2000 1.05
July 31, 2000 1.05
October 31, 2000 1.05
January 31, 2001 1.05
April 30, 2001 1.05
July 31, 2001 1.05
October 31, 2001 1.05
January 31, 2002 1.10
April 30, 2002 1.10
July 31, 2002 1.10
October 31, 2002 1.10
January 31, 2003 1.10
April 30, 2003 1.10
July 31, 2003 1.10
October 31, 2003 1.10
January 31, 2004 1.10
April 30, 2004 1.10
July 31, 2004 1.10
October 31, 2004 1.10
January 31, 2005 1.00
April 30, 2005 1.00
July 31, 2005 1.00
October 31, 2005 1.00
January 31, 2006 1.00
April 30, 2006 1.00
(b) 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 of the
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90
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, 1999 2.00
October 31, 1999 2.00
January 31, 2000 2.00
April 30, 2000 2.00
July 31, 2000 2.25
October 31, 2000 2.50
January 31, 2001 2.50
April 30, 2001 2.50
July 31, 2001 2.50
October 31, 2001 2.75
January 31, 2002 2.75
April 30, 2002 2.75
July 31, 2002 2.75
October 31, 2002 3.00
January 31, 2003 3.00
April 30, 2003 3.00
July 31, 2003 3.00
October 31, 2003 3.25
January 31, 2004 3.25
April 30, 2004 3.25
July 31, 2004 3.25
October 31, 2004 3.25
January 31, 2005 3.25
April 30, 2005 3.25
July 31, 2005 3.25
October 31, 2005 3.25
January 31, 2006 3.25
April 30, 2006 3.25
; provided, however, that for each fiscal quarter of Holding ending
closest to July 31, 1999, October 31, 1999, January 31, 2000 and April
30, 2000, cash interest payable for such four fiscal quarter period
shall be the actual cash interest payable during such period since the
date of the consummation of the Merger 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.
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91
(c) Debt to EBITDA Ratio. Maintain at the end of each fiscal
quarter of Holding a 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, 1999 5.00
October 31, 1999 4.75
January 31, 2000 4.75
April 30, 2000 4.75
July 31, 2000 4.25
October 31, 2000 4.00
January 31, 2001 4.00
April 30, 2001 4.00
July 31, 2001 3.75
October 31, 2001 3.50
January 31, 2002 3.50
April 30, 2002 3.50
July 31, 2002 3.50
October 31, 2002 3.00
January 31, 2003 3.00
April 30, 2003 3.00
July 31, 2003 3.00
October 31, 2003 3.00
January 31, 2004 3.00
April 30, 2004 3.00
July 31, 2004 3.00
October 31, 2004 3.00
January 31, 2005 3.00
April 30, 2005 3.00
July 31, 2005 3.00
October 31, 2005 3.00
January 31, 2006 3.00
April 30, 2006 3.00
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92
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:
(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), 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(a), (b), (c) or (d) 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 the Required Lenders; 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
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93
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
(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 60 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; provided, however, that any such
judgment, order or payment shall be disregarded for the purposes of
this paragraph (g) to the extent that (A) the amount of such judgment,
order or payment is covered by a valid and binding policy of insurance
between the defendant and the insurer covering payment thereof and (B)
such insurer has been notified, and, in the case of such judgment,
order or payment, has not disputed the claim made for payment, or the
amount of such judgment or order or payment; or
(h) any non-monetary judgment or order shall be rendered
against any Loan Party or any of its Subsidiaries that can be
reasonably expected to have a Material Adverse Effect, and 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
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94
(i) any Loan Document, or any material provision thereof,
after delivery thereof pursuant to Section 3.01 or 5.01(l), shall for
any reason (other than pursuant to the provisions thereof) 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 25% or more of the combined 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 for more than five Business Days;
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95
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 the Borrower 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 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.
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96
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.
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
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97
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.
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
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98
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 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
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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 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
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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.
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;
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(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.
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.
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(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 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
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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) change the number of Lenders or the percentage
of (x) the Commitments, (y) the aggregate unpaid 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, (ii) 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, (iii) release all or
substantially all of the Collateral in any transaction or series of related
transactions, and (iv) 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 Facilities or Revolving Credit
Facility if directly 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
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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: Steve Curran; 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 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,
duplication, appraisal, 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,
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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 Merger and any of the other transactions contemplated hereby) by
Holding, the Equity Investors or any of their respective Subsidiaries or
Affiliates of all or 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
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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.
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.
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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 one or more Facilities, (ii)
except in the case of an assignment to a Person that, immediately prior to such
assignment, was a Lender or an Affiliate of 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 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, and (vi) 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
$3500.00.
(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
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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
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 (or the Agent and Borrower shall have consented
to such assignment); (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, acting for this purpose (but
only for this purpose) as the agent of the Borrower, 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
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109
Administrative Agent and the Lender Parties shall 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, A-2 or A-3 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 $3500.00.
(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
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110
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 pledge or 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), but no
such pledge or grant of a security interest shall relieve a Lender of its
Obligations hereunder.
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; (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 to the extent 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
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111
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, investors, 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
any Lender.
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 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
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112
Documentation Agent or any Lender Party in the negotiation, administration,
performance or enforcement thereof.
<PAGE>
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: Adam Suttin
Title: Vice President
CT HOLDING, INC.
By: Adam Suttin
Title: Vice President
FLEET NATIONAL BANK, as
Administrative Agent
By: John A. Skrobe
Title: Vice President
NATIONSBANK, N.A., as
Syndication Agent
By: Johns Ellington
Title: Vice President
DLJ CAPITAL FUNDING, INC., as
Documentation Agent
By: Dana F. Klein
Title: Vice President
<PAGE>
FIRST UNION NATIONAL BANK, as
Co-Agent
By: Jorge A. Gonzalez
Title: Senior Vice President
THE HUNTINGTON NATIONAL BANK, as
Co-Agent
By: John Norkus
Title: Asst. Vice President
U.S. BANK NATIONAL ASSOCIATION, as
Co-Agent
By: Elliot Jaffee
Title: Vice President
<PAGE>
Initial Issuing Bank
FLEET NATIONAL BANK
By: John A. Skrobe
Title: Vice President
Initial Lenders
FLEET NATIONAL BANK
By: John A. Skrobe
Title: Vice President
NATIONSBANK, N.A.
By: Johns Ellington
Title: Vice President
DLJ CAPITAL FUNDING, INC.
By: Dana F. Klein
Title: Vice President
<PAGE>
FIRST UNION NATIONAL BANK
By: Jorge A. Gonzalez
Title: Senior Vice President
THE HUNTINGTON NATIONAL BANK
By: John Norkus
Title: Asst. Vice President
U.S. BANK NATIONAL ASSOCIATION
By: Elliot Jaffee
Title: Vice President
HELLER FINANCIAL, INC.
By: Sheila C. Weimer
Title: Vice President
HARRIS TRUST AND SAVINGS BANK
By: Christopher Fisher
Title: Vice President
COMERICA BANK
By: Robert Porterfield
Title: Vice President
<PAGE>
NATIONAL CITY BANK
By: Wilmer J. Jacobs
Title: Officer
STEIN ROE FLOATING RATE LIMITED
LIABILITY COMPANY
By: Brian W. Good
Title: Vice President and Portfolio Manager
Stein Roe & Farnham Incorporated, as
Advisor to the Stein Roe Floating Rate
Limited Liability Company
KEY CORPORATE CAPITAL INC.
By: Alexander Strazella
Title: Vice President
UNION BANK OF CALIFORNIA, N.A.
By: J. William Bloore
Title: Vice President
FIRSTAR BANK, NATIONAL ASSOCIATION
By: Thomas Gibbons
Title: Vice President
<PAGE>
The following Schedules and Exhibits to this agreement have been
omitted from this filing. The Registrant will furnish supplementally a copy of
any such Schedule or Exhibit to the Securities and Exchange Commission upon
request.
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 - Reserved
Schedule XIII - Liens
Schedule XIV - Surviving Debt
Schedule XV - Environmental Disclosure
Schedule XVI - Excluded Asset Acquisitions
EXHIBITS
Exhibit A-1 - Form of Tranche A Term Note
Exhibit A-2 - Form of Tranche B Term Note
Exhibit A-3 - Form of Revolving Credit Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Assignment and Acceptance
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 Borrowing Base Certificate
